REG - Narf Industries PLC - Audited Financial Results
Thu 07:01
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RNS Number : 2903T Narf Industries PLC 31 July 2025
31 July 2025
NARF INDUSTRIES PLC
Audited Financial Results
For the 12-month period ended 31 March 2025
Narf Industries plc (LSE: NARF), a leading U.S.-based cybersecurity group
specialising in advanced threat intelligence and software system security, is
pleased to announce its Audited Financial Results for the year-ended 31 March
2025. The Report is available in full on the Company's website at
https://narfgroup.com/investor-relations/corporate-document
(https://narfgroup.com/investor-relations/corporate-document) .
Overview
· Strategic priority shifted to a scalable Software-as-a-Service
(SaaS) model launching Ranger.ai, an Agentic AI threat and remediation
platform for securing Open Source Software.
· US federal budget delays early in the period and subsequent DOGE
disruptions resulted in a 50% annualized revenue decline.
· Costs were tightly managed and other significant contract wins,
including its largest-ever $6.8 million INGOTS award, enabled the Company to
advance within its financial resources.
· Strong foundation going forward, no need for new capital to
execute core plans, and clear path to growth.
Executive Chairman's Statement
I am pleased to present the audited financial results for Narf Industries PLC
for the year ended 31 March 2025.
The past year marked a significant strategic transition for the Group. For
several years, we had been advancing cutting-edge government research and
development ("R&D") work under our Social Cyber initiative - applying
behavioural analytics and Agentic AI to secure open-source software ("OSS").
Then, in March 2024, the discovery of a backdoor in XZ Utils, a compression
utility embedded in major Linux distributions, exposed just how vulnerable
critical open-source infrastructure had become. That event brought urgency and
clarity. We made the decision to shift resources and leadership focus toward
rapidly transforming our Social Cyber R&D into a productised platform, now
launched as Ranger.ai.
While Ranger.ai formally launched after the year end, its foundation was laid
during the reporting period through intensive technical and product
preparation. Ranger.ai represents a first-of-its-kind approach to open-source
software security, combining behavioural analytics and an Agentic AI framework
to expose vulnerabilities that traditional scanning tools often miss.
More than a technical milestone, Ranger.ai marks our first major step toward a
scalable Software-as-a-Service (SaaS) business model - transitioning
project-based R&D to build a recurring revenue foundation capable of
supporting long-term growth. Early traction with government customers is
already validating both the opportunity and the Group's strategic priority.
This shift in priority, however, coincided with external headwinds. U.S.
federal budget delays and broader agency disruptions, like Department of
Government Efficiency ("DOGE") intervention, materially impacted revenue,
particularly in our Government Services and Solutions ("GS&S") segment.
Despite these challenges, we advanced the business by tightly managing cost
and securing critical follow-on research contracts enabling us to execute our
strategy with existing financial resources during the period.
Our GR&D business continues to reflect our ability to deliver frontier
cybersecurity capabilities with a direct path to operational use. The $1.3
million U.S. Air Force contract for AI-powered Social Cyber Solution,
announced in August 2024, marked a major milestone to transition project-based
work to a more scalable SaaS model. The $6.8 million DARPA INGOTS win in
January 2025, represented both a major technical milestone and the
largest-ever contract in the Group's history.
Looking ahead, we expect GS&S will grow as its the primary delivery engine
for our Ranger.ai platform to U.S. government customers. This involves
early-stage deployments and building capacity to scale implementations across
a close-knit network of agencies and their prime contractors. Commercial
adoption is expected to follow, with efforts focused on partnerships and joint
ventures to access broader market expansion.
The Board remains committed to executing this strategy with discipline. We
entered the current period with a strong technical foundation, operational
clarity, and the confidence that the decisions made over the past year will
begin to yield visible, durable results. The Company's current contract
pipeline and prudent cash flow management provides sufficient runway to
execute our strategy through the current financial year, without reliance on
new capital resources or significant near-term contract wins.
We remain confident that the intersection of our deep government expertise,
technical excellence, and R&D transition to operational mission vision
uniquely positions Narf for long-term value creation. Ranger.ai is a clear
example of strategy in action - a cutting-edge cyber security product built to
tackle some of the most urgent and complex challenges our customers face. As
we prepare for broader rollout of Ranger.ai, we're encouraged by the early
traction and exciting about the growth potential it represents.
John Herring
Executive Chairman
For further information visit www.narfgroup.com or contact:
Narf Industries plc John Herring jh@narfgroup.com
Joint Broker Peter Krens Tel: +44 (0)207 186 9030
Tennyson Securities plc
Financial PR, UK Paul Dulieu narf@stbridespartners.co.uk
St Brides Partners Isabel de Salis
NARF INDUSTRIES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2025
Year 15-month period
ended ended
31 March 2025 31 March 2024
Notes US$ US$
Continuing operations
GR &D Revenue 3 2,931,041 4,509,908
GS & S Revenue 3 67,334 3,012,545
Commercial Revenue - 49,000
Total revenue 2,998,375 7,571,453
Direct salaries (2,219,175) (3,037,080)
Sub-contracting and other direct costs (364,102) (1,092,696)
Gross profit 415,098 3,441,677
Operating expenses (2,155,955) (3,276,580)
(Loss)/profit before depreciation, amortisation, impairment, share based (1,740,857) 165,097
payments, interest and taxes
Depreciation, amortisation and impairment of fixed assets (1,210,825) (509,756)
Share-based payment expense 15 (499,932) (1,023,074)
Operating loss 4 (3,451,614) (1,367,733)
Interest receivable and other finance income 2 13
Finance costs (109,198) (71,259)
Loss before taxation (3,560,810) (1,438,979)
Corporate tax 6 - (15,248)
Loss for the year/period (3,560,810) (1,454,227)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange differences on foreign operations (57) 54,756
Total comprehensive loss for the year/period attributable to the owners of the (3,560,867) (1,399,471)
company
Earnings per share
Earnings per share (basic and diluted) attributable to the equity holders 7 (0.21) (0.08)
(cents)
NARF INDUSTRIES PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2025
As at As at
31 March 2025 31 March 2024
Note US$ US$
NON-CURRENT ASSETS
Intangible assets 8 - 1,198,096
Right of use assets 16 - 42,981
Tangible assets 9 - -
- 1,241,077
CURRENT ASSETS
Trade and other receivables 11 789,953 605,544
Cash and cash equivalents 12 136,704 654,365
926,657 1,259,909
TOTAL ASSETS 926,657 2,500,986
CURRENT LIABILITIES
Trade and other payables 13 3,914,930 2,739,573
TOTAL LIABILITIES 3,914,930 2,739,573
NET LIABILITIES (2,988,273) (238,587)
EQUITY
Share capital 14 204,012 204,012
Share premium 14 35,294,816 35,294,816
Reverse acquisition reserve (16,747,959) (16,747,959)
Foreign exchange reserve 11,288 11,345
Share based payment reserve 15 1,991,693 1,483,635
Retained deficit (23,742,123) (20,484,436)
TOTAL SHAREHOLDERS DEFICIT (2,988,273) (238,587)
NARF INDUSTRIES PLC
PARENT COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2025
As at As at
31 March 2025 31 March 2024
Note US$ US$
NON-CURRENT ASSETS
Intangible assets 8 - 1,198,096
Investment in subsidiary undertakings 10 12,802,000 18,002,000
12,802,000 19,200,096
CURRENT ASSETS
Trade and other receivables 11 358,575 60,705
Cash and cash equivalents 12 599 5,126
359,174 65,831
TOTAL ASSETS 13,161,174 19,265,927
CURRENT LIABILITIES
Trade and other payables 13 340,268 210,317
TOTAL LIABILITIES 340,268 210,317
NET ASSETS 12,820,906 19,055,610
EQUITY
Share capital 14 204,012 204,012
Share premium 14 35,294,816 35,294,816
Share based payment reserve 15 1,991,693 1,483,635
Foreign exchange reserve 11,288 11,345
Retained deficit (24,680,903) (17,938,198)
TOTAL EQUITY 12,820,906 19,055,610
The Company has elected to take the exemption under Section 408 of the
Companies Act 2006 from presenting the Parent Company profit and loss account.
The Parent` Company loss for the year was $7,045,828 (fifteen-month period to
31 March 2024: loss $9,291,165).
NARF INDUSTRIES PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2025
Year 15 months
ended ended
31 March 2025 31 March 2024
Note US$ US$
OPERATING ACTIVITIES
Loss for the period before interest and taxation (3,451,614) (1,367,733)
Adjusted for:
Depreciation 9 - 15,990
Amortisation and impairment of intangibles 8 1,210,825 493,766
Amortisation of right of use asset 16 42,981 48,173
Unrealised foreign exchange adjustment (12,787) (16,408)
Non cash management charge 811,182 1,023,074
Operating cash flow before movements in working capital: (1,399,413) 196,862
(Decrease)/increase in trade and other receivables (184,408) 129,699
Decrease in trade and other payables (273,260) (153,502)
Net cash (used in)/generated from operating activities (1,857,081) 173,059
FINANCING ACTIVITIES
Costs recovered related to share issues - 106,162
Loan amount received from/(repaid to) Director 1,340,250 (22,500)
Repayment of vehicle financing loan - (22,312)
Net interest paid (830) (7,547)
Net cash inflow from financing activities 1,339,420 53,803
Taxation paid 6 - (15,248)
Net (decrease)/increase in cash and cash equivalents (517,661) 211,614
Cash and cash equivalents at beginning of the year/period 654,365 442,751
Cash and cash equivalents at end of the year/period 136,704 654,365
NARF INDUSTRIES PLC
PARENT COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2025
Year 15 months
ended ended
31 March 2025 31 March 2024
Note US$ US$
OPERATING ACTIVITIES
Loss for the period before interest and taxation (7,045,828) (9,287,928)
Adjusted for:
Amortisation and impairment of intangibles 8 1,210,825 493,766
Impairment of investment in subsidiary 10 5,200,000 7,600,000
Share based payments 811,182 1,023,074
Unrealised foreign exchange adjustment (12,787) (16,408)
Operating cash flow before movements in working capital: 163,392 (187,496)
(Increase)/decrease in trade and other receivables (297,870) 6,660
Increase/(decrease) in trade and other payables 129,951 (125,209)
Net cash used in operating activities (4,527) (306,045)
INVESTING ACTIVITIES
Cash amounts paid to acquire subsidiary undertaking 10 - (2,000)
Net cash outflow from investing activities - (2,000)
FINANCING ACTIVITIES
Costs recovered related to share issues - 106,162
Interest received - 11
Net cash inflow from financing activities - 106,173
Taxation paid - (3,284)
Net decrease in cash and cash equivalents (4,527) (205,156)
Cash and cash equivalents at beginning of the year/period 5,126 210,282
Cash and cash equivalents at end of the year/period 599 5,126
NARF INDUSTRIES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2025
Share Share FX Share-based Reverse Retained Total
Capital Premium Reserve Payment Acquisition Deficit
Reserve Reserve
US$ US$ US$ US$ US$ US$ US$
AS AT 1 JANUARY 2023 204,012 35,074,061 (43,411) 575,154 (16,747,959) (19,030,209) 31,648
Loss for the period - - - - - (1,454,227)) (1,454,227))
Foreign exchange gain on translation of parent - - 54,756 - - 54,756
Total comprehensive profit/(loss) for the period - - 54,756 - - (1,454,227)) (1,399,471)
Share issue costs recovered - 106,162 - - - - 106,162
Cancellation of warrants - 114,593 - (114,593) - - -
Share based payments (Note 16) - - - 1,023,074 - - 1,023,074
AS AT 31 MARCH 2024 204,012 35,294,816 11,345 1,483,635 (16,747,959) (20,484,436) (238,587)
Loss for the year - - - - - (3,560,810) (3,560,810)
Foreign exchange gain on translation of parent - - (57) - - - (57)
Total comprehensive loss for the year - - (57) - - (3,560,810) (3,560,867)
Options lapsed - - - (303,123) - 303,123 -
Share based payments (Note 16) - - - 811,181 - - 811,181
AS AT 31 MARCH 2025 204,012 35,294,816 11,288 1,991,693 (16,747,959) (23,742,123) (2,988,273)
NARF INDUSTRIES PLC
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2025
Share Share Share-based FX Retained Total
Capital Premium Payment Reserve Deficit
Reserve
US$ US$ US$ US$ US$ US$
AS AT 1 JANUARY 2023 204,012 35,074,061 575,154 (43,411) (8,647,033) 27,162,783
Loss for the period - - - - (9,291,165) (9,291,165)
Foreign exchange gain on translation to reporting currency - - - 54,756 - 54,756
Total comprehensive profit/(loss) for the period - - - 54,756 (9,291,165) (9,236,409)
Shares issue costs recovered - 106,162 - - - 106,162
Cancellation of warrants - 114,593 (114,593) - - -
Share based payments - - 1,023,074 - - 1,023,074
AS AT 31 MARCH 2024 204,012 35,294,816 1,483,635 11,345 (17,938,198) 19,055,610
Loss for the year - - - - (7,045,828) (7,045,828)
Foreign exchange gain on translation to reporting currency - - - (57) - (57)
Total comprehensive loss for the year - - - (57) (7,045,828) (7,045,885)
Options lapsed - - (303,123) - 303,123 -
Share based payments - Note 16 - - 811,181 - - 811,181
AS AT 31 MARCH 2025 204,012 35,294,816 1,991,693 11,288 (24,680,903) 12,820,906
Share capital - the ordinary issued share capital of the Company.
Share premium - consideration less nominal value of issued shares and costs
directly attributable to the issue of new shares.
Share based payment reserve - the value of equity settled share-based payments
provided to past and present employees, including key management personnel,
and third parties for services provided.
Foreign exchange reserve - a reserve arising on conversion of company balances
in the functional currency of sterling and the reporting currency of US$.
Reverse acquisition reserve - the difference between the cost of acquiring the
parent company and the fair value of the parent company's net assets on the
acquisition date together with the deemed cost of listing.
Retained deficit - Cumulative net gains and losses recognised in the Statement
of Comprehensive Income
NARF INDUSTRIES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2025
1 GENERAL INFORMATION
The principal activity of Narf Industries Plc (the "Company") and its
subsidiaries (the "Group'') is the provision of research and software
development services aimed at enhancing the cybersecurity measures of its US
government agency clients. The subsidiaries consist of Narf Industries LLC, a
California limited liability company, Narf Industries PR, LLC, a Puerto Rican
limited liability company ("Narf US" or the "Operating Group") and Narf
Holdings US, Inc. a Delaware corporation which was dormant throughout the
period. The Company is the parent and sole shareholder of Narf Holdings US,
Inc which, in turn, is the sole member of each entity in the Operating Group.
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 ACCOUNTING POLICIES
2.1 Basis of preparation
The Consolidated Financial Statements of the Group have been prepared in
accordance with UK-adopted international accounting standards.
The Financial Statements have been prepared under the historical cost
convention unless otherwise stated. The principal accounting policies are set
out below and have, unless otherwise stated, been applied consistently.
They have been prepared to reflect the acquisition of Narf Industries LLC and
Narf Industries PR LLC via a reverse takeover on 15 March 2022, which resulted
in the Company becoming the ultimate holding company of the Group.
The Financial Statements are prepared in US Dollar ("US$", "USD" or "$") and
presented to the nearest dollar.
2.2 Consolidation and Acquisitions
The Financial Statements consolidate the financial information of the Company
and companies controlled by the Group (its subsidiaries) at each reporting
date following the reverse takeover on 15 March 2022.
In the consolidated statement of financial position, the share capital and
share premium as at 31 March 2024 and 31 March 2025 is that of Narf Industries
Plc with the reverse acquisition reserve representing the difference between
the deemed cost of the acquisition and the net assets of Narf Industries plc
at 15 March 2022. The consolidated statement of comprehensive income for the
fifteen-month period ended 31 March 2024 and the year ended 31 March 2025
include the results of both the parent and the Operating Group throughout the
period.
Control is achieved where the Company has the power to govern the financial
and operating policies of an investee entity, has the rights to variable
returns from its involvement with the investee entity and has the ability to
use its power to affect its returns. The results of subsidiaries acquired or
sold are included in the financial information from the effective date of
acquisition or up to the effective date of disposal, as appropriate. Where
necessary, adjustments are made to the results of acquired subsidiaries to
bring their accounting policies into line with those used by the Group. All
intra-Group transactions, balances, income and expenses are eliminated on
consolidation. The financial statements of all Group companies are adjusted,
where necessary, to ensure the use of consistent accounting policies.
The Group applies the acquisition method to account for any business
combinations that fall within the scope of IFRS 3.
Acquisition-related costs are expensed as incurred.
2.3 Comparative information
The Parent Company extended its period end from 31 December 2023 to 31 March
2024. Accordingly, prior period information covers the fifteen-month period to
31 March 2024 and therefore is not directly comparable to the current 12-month
period.
2.4 Going concern
The Directors believe the Company and the Group have sufficient resources to
continue in operational existence for the foreseeable future and at least
until 31 July 2026, being 12 months after the date these financial statements
were issued. Therefore, the Directors have applied the going concern basis
of accounting in preparing the financial statements.
The Group has current liabilities (primarily due to the existing line of
credit ("LOC") from the CEO) which are greater than current assets at the
reporting date and there is a deficit on shareholders' equity.
However, the Directors believe that the Group's existing contract backlog and
cash flow management provides sufficient runway to enable it to continue
through the next period to execute its medium-term strategy without new
capital resources or significant reliance on near term additional contracts
awards. Over the year to 31 March 2025, the Group demonstrated its
ability to respond rapidly to adverse circumstances by reducing costs whilst
accessing its LOC. Despite the significant setbacks in GS&S revenue the
Group was able to deliver on existing contracts, keep up to date with payments
to suppliers and win new business.
The Group recently extended the existing LOC provided by the Group's CEO
through to July 2026, whilst revenues from existing contracts in place at the
time of this report are sufficient to cover all overheads and to start
repaying the LOC drawn down. The Group continues to closely manage its
operational expenses and has demonstrated significant flexibility to adjust
its resources and expenses in line with its contracted revenues.
The Board is also open to potential joint ventures should an attractive
opportunity arise, but the work to reduce cash outgoings along with the
extension of the LOC means the Board need only consider those opportunities
which add significant value to the Group. The Board further notes the
Company's potential to pursue an LSE market fundraise in the event this is
deemed appropriate and market conditions allow.
The Directors believe the Group's plan is based on sound analysis, however,
since the Group's plans, to a certain extent, are reliant on market conditions
and/or third parties there remains a material uncertainty as to the Group's
ability to remain a going concern.
2.5 Revenue Recognition
Substantially all of the Group's revenues derive from long-term contracts with
US government agencies. The majority of contracts are fixed price with
monthly or quarterly milestones with contractual payments due on completion of
deliverables identified with those milestones. The contractual arrangements
fall into four types:
Research where the principal asset transferred to the client are ideas about
potential cybersecurity threats and source code to test those threats.
Infrastructure where the principal asset transferred is a test environment
along with the ongoing maintenance of the ability to test various scenarios
and meetings where the principal asset transferred is the intellectual input
to those meetings.
Meetings-based where the contract specifies a requirement for Group employees
to prepare for and attend meetings where they will share their expertise and
provide insights to the meeting.
Cost plus where the Group receives a fee based on the hours worked on a
project with reimbursement of travel and sub-contract costs.
The nature of the research and infrastructure contracts is such that the
deliverables themselves are of little value to the customer. The main value of
the contract to the customer is the inherent promise that the Group will
continue to provide the ideas and support to allow the customer to enhance its
understanding of cybersecurity threats and how to counter them. Given that the
deliverables themselves have no inherent value, the Group takes the view that
revenue from research and infrastructure contracts should be recognized over
time based on progress towards a milestone. For meetings-based contracts
revenue is recognized when the meetings occur, as this is the point at which
an asset is transferred to the client. For cost plus contracts revenue is
recognised based on the hours worked on that project up to the period end.
2.6 Segmental Reporting
The Group has two business sectors, GR&D and GS&S as described in the
Strategic Direction section of this Annual Report. The revenues attributable
to each business segment are detailed in the Statement of Comprehensive Income
whilst an analysis of those costs attributable to each business segment is
provided in Note 3.
2.7 Foreign currency translation
The financial information is presented in US Dollars, which is the Group's
presentational and functional currency as substantially all of the Group's
operational activities are undertaken in US Dollars. The Company's
functional currency is Sterling. Sterling amounts recorded in the accounting
records of the Company are converted using the year-end foreign exchange rate
for the year end balances and the average foreign exchange rate for movements
during the year.
Transactions in currencies other than the functional currency are recognised
at the rates of exchange on the dates of the transactions. At each balance
sheet date, monetary assets and liabilities are retranslated at the rates
prevailing at the balance sheet date with differences recognised in the
Statement of Comprehensive Income in the period in which they arise.
2.8 Cash and cash equivalents
Cash and cash equivalents comprise cash at hand and current and instant access
deposit balances at banks.
2.9 Intangible assets
Intangible assets comprise non-physical assets comprising the cost of
acquiring the licensing rights in relation to the commercialisation of TIGR
that can be determined with reasonable certainty. Royalty payments due to the
licensor upon future sales cannot be determined with any certainty and
accordingly have not been included in cost.
The license is amortised over the useful life of the license, which is based
on the term of that license agreement.
All intangible assets have been assessed by management for impairment.
Management consider the assets for impairment by considering if any impairment
indicators, such as those listed in IAS 38, are met and that if any are met,
they assess the recoverable value of the asset, being the higher of the fair
value less costs to sell and value in use, and then compare this to the
carrying value of the asset.
2.10 Tangible fixed assets
Tangible assets comprise physical assets such as cars, office furniture and
leasehold improvements which will benefit the Group over their useful life.
Tangible fixed assets are being depreciated on a straight-line basis over
their estimated useful lives as follows:
Cars
4 years
Office furniture & equipment 4 years
Leasehold improvements Life of the
lease
2.11 Leased assets
Identification of leased assets
For any new contracts entered into, the Group considers whether a contract is,
or contains a lease. A lease is defined as 'a contract, or part of a contract,
that conveys the right to use an asset (the underlying asset) for over a year
in exchange for consideration'. To apply this definition the Group assesses
whether the contract meets two key evaluations which are whether:
i) the contract contains an identified asset, which is
either explicitly identified in the contract or implicitly specified by being
identified at the time the asset is made available to the Group
ii) the Group has the right to obtain substantially all of
the economic benefits from use of the identified asset throughout the period
of use, considering its rights within the defined scope of the contract the
Group has the right to direct the use of the identified asset throughout the
period of use.
The Group assesses whether it has the right to direct 'how and for what
purpose' the asset is used throughout the period of use.
Measurement and recognition of leases
At lease commencement date, the Group recognises a right-of-use asset and a
lease liability on the balance sheet. The right-of-use asset is measured at
cost, which is made up of the initial measurement of the lease liability, any
initial direct costs incurred by the Group, and any lease payments made in
advance of the lease commencement date (net of any incentives received). The
Group depreciates the right-of-use
assets on a straight-line basis from the lease commencement date to the
earlier of the end of the useful life of the right-of-use asset or the end of
the lease term. The Group also assesses the right-of-use asset for impairment
when such indicators exist. At the commencement date, the Group measures the
lease liability at the present value of the lease payments unpaid at that
date, discounted using the interest rate implicit in the lease if that rate is
readily available or the Group's incremental borrowing rate. Subsequent to
initial measurement, the liability will be reduced for payments made and
increased for interest accrued.
2.12 Trade and other receivables
Trade receivables are amounts due from customers for goods or services
rendered in the ordinary course of business. Trade receivables are initially
recognised at the amount of consideration that is unconditional, i.e. fair
value and subsequently measured at amortised cost using the effective interest
method, less loss allowance. Prepayments and other receivables are stated at
their nominal values.
Due to the short-term nature of the current receivables, their carrying amount
is considered to be the same as their fair value.
2.13 Trade and other payables
Trade payables are recognised initially at their fair value and subsequently
measured at amortised cost, less repayments.
2.14 Financial instruments
Initial recognition
A financial asset or financial liability is recognised in the Statement of
Financial Position when it arises or when the Group becomes part of the
contractual terms of the financial instrument.
Classification
Financial assets at amortised cost
The Group measures financial assets at amortised cost if both of the following
conditions are met:
· the asset is held within a business model whose objective is
to collect contractual cash flows; and
· the contractual terms of the financial asset generating cash
flows at specified dates only pertain to capital and interest payments on the
balance of the initial capital.
Financial assets which are measured at amortised cost, are measured using the
Effective Interest Rate Method (EIR) and are subject to impairment. Gains and
losses are recognised in profit or loss when the asset is derecognised,
modified or impaired.
Financial liabilities at amortised cost
Financial liabilities measured at amortised cost using the effective interest
rate method include current borrowings and trade and other payables that are
short term in nature. Financial liabilities are derecognised if the Company's
obligations specified in the contract expire or are discharged or cancelled.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the effective
interest rate ("EIR"). The EIR amortisation is included as
finance costs in profit or loss. Trade payables other payables are
non-interest bearing and are stated at amortised cost using the effective
interest method.
Derecognition
A financial asset is derecognised when:
· the rights to receive cash flows from the asset have expired,
or
· the Company has transferred its rights to receive cash flows
from the asset or has undertaken the commitment to fully pay the cash flows
received without significant delay to a third party under an arrangement and
has either (a) transferred substantially all the risks and the assets of the
asset or (b) has neither transferred nor held substantially all the risks and
estimates of the asset but has transferred the control of the asset.
Impairment
The Company recognises a provision for impairment for expected credit losses
regarding all financial assets. Expected credit losses are based on the
balance between all the payable contractual cash flows and all discounted cash
flows that the Company expects to receive. Regarding trade receivables, the
Company applies the IFRS 9 simplified approach in order to calculate expected
credit losses. Therefore, at every reporting date, provision for losses
regarding a financial instrument is measured at an amount equal to the
expected credit losses over its lifetime without monitoring changes in credit
risk. To measure expected credit losses, trade receivables and contract assets
have been grouped based on shared risk characteristics.
2.15 Equity
Share capital is determined using the nominal value of shares that have been
issued.
The Share premium account includes any premiums received on the initial
issuing of the share capital. Any transaction costs associated with the
issuing of shares are deducted from the Share premium account, net of any
related income tax benefits.
Equity-settled share-based payments are credited to a "Share based payments
reserve" within the Consolidated Statement of Financial Position and the
Parent Statement of Financial Position as a component of equity until related
options or warrants are exercised or lapse.
The share-based payment reserve comprises share warrants issued to service
providers and options issued to employees under long-term incentive schemes.
Both share options and warrants are measured at fair value at the date of
issue and treated as a separate component of equity.
The Foreign exchange reserve includes all exchange differences arising from
translating the net assets of the parent from sterling into US Dollars, being
the presentational currency.
Members equity represents the combined interests of each member of Narf US and
Narf PR prior to the reverse acquisition ("RTO").
The Reverse acquisition reserve relates to the costs associated with the
acquisition of Narf Industries Plc. A reverse acquisition occurs if the entity
that issues securities (the legal acquirer) is identified as the acquiree for
accounting purposes and the entity whose equity interests are acquired (legal
acquiree) is the acquirer for accounting purposes.
The reverse acquisition in a previous year did not constitute a business
combination and was accounted for in accordance with IFRS 2 "Share-based
Payments" and associated IFRIC guidance. Although the reverse acquisition was
not a business combination, the Company has become a legal parent and is
required to apply IFRS 10 and prepare consolidated financial statements.
The Directors have prepared these financial statements using the reverse
acquisition methodology, but with the result that rather than recognising
goodwill, the difference between the equity value given up by Narf US's former
owners and the share of the fair value of the net assets gained by these
former owners, is charged to the Consolidated Statement of Comprehensive
Income as a share-based payment on reverse acquisition.
Retained earnings include all current and prior period results as disclosed in
the income statement.
2.16 Foreign currency
For the purposes of the consolidated financial statements, the results and
financial position of each Group company are expressed in US Dollars ("$"),
which is the functional currency of all of the operating entities in the
Group, excluding the Company, and the presentation currency for the
consolidated financial statements.
Exchange differences are recognised in the Statement of Comprehensive Income
in the period in which they arise other than those arising on conversion of
the Company's Statement of Financial Position on consolidation which are
recognised as a foreign exchange reserve.
2.17 Earnings per share
Basic earnings per share is calculated by dividing:
The Group loss attributable to owners of the Company, excluding any costs of
servicing equity other than ordinary shares by the weighted average number of
ordinary shares outstanding during the financial period.
As the Group is currently loss making, none of the options or warrants in
issue are dilutive to the basic earnings per share figure.
2.18 Share-based payments
The Parent Company has issued options to Directors and Group employees under
long-term incentive arrangements.
Equity-settled share-based payments are measured at fair value (excluding the
effect of non-market based vesting conditions) at the date of grant. The fair
value so determined is expensed on a straight-line basis over the vesting
period, based on the Parent Company's estimate of the number of shares that
will eventually vest and adjusted for the effect of non-market based vesting
conditions.
Fair value is measured using the Black Scholes pricing model. The key
assumptions used in the model have been adjusted, based on management's best
estimate, for the effects of non-transferability, exercise restrictions and
behavioural considerations.
At the time of the RTO, Narf US had entered into agreements with a number of
key employees whereby they were entitled to an interest in Narf Industries
LLC. Ahead of the RTO those employees entered into redemption agreements, so
as to release Narf US from the obligation to provide such an interest. As at
31 March 2024 two former employees were owed a total of $335,435 under these
redemption agreements. During the year $311,250 was settled through the issue
of warrants and $20,000 was settled in cash.
2.19 Taxation
The Parent Company is subject to taxes in the United Kingdom tax jurisdiction
and, to the extent there are look through profits in the Operating Group, is
also subject to taxes in the United States. Substantially all revenue
related operations are conducted by Narf Industries LLC. Both operating
subsidiaries are limited liability companies taxed as partnerships for US
federal taxes. As partnerships, neither operating subsidiary is subject to
US federal income tax and the federal tax effect of those activities now
accrue to Narf Holdings, Inc, the sole member. Narf Industries LLC is also
subject to a nominal California franchise tax, whilst Narf Industries PR LLC
is subject to the Government of the Commonwealth of Puerto income tax rate of
4%. The Operating Group currently has substantial tax losses attributable to
the Parent Company, for which no deferred tax has been recognised and
accordingly, differences between Narf US's taxable income per IFRS and the
basis used for tax reporting have not given rise to any deferred tax assets or
liabilities.
Taxable losses of the Parent Company from its activities in the United Kingdom
and that inure to the Parent Company from the two members of the Operating
Group as their sole partner differ from losses for the Parent Company as
reported in the accompanying consolidated income statement because it excludes
items of income and expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible. The Parent
Company's liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised on differences between the carrying amounts of
assets and liabilities in the accompanying parent company financial statements
and the corresponding tax bases used in the computation of taxable profit and
is accounted for using the balance sheet liability method. Deferred tax
liabilities are generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from initial recognition of goodwill or from
the initial recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable profit nor
the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Parent Company is able to control the reversal of
the temporary difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled, or the asset realised. Deferred tax is
charged or credited to profit or loss, except when it relates to items charged
or credited directly to equity, in which case the deferred tax is also dealt
with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Parent Company intends to settle its current tax assets and
liabilities on a net basis.
2.20 Critical accounting judgements and key sources of estimation
uncertainty
In the process of applying the entity's accounting policies, management makes
estimates and assumptions that have an effect on the amounts recognised in the
financial information. Although these estimates are based on management's best
knowledge of current events and actions, actual results may ultimately differ
from those estimates. The Directors consider that the following judgements are
critical to an understanding of these accounts:
Licenses
The Parent Company was historically granted certain licenses relating to the
commercialisation of cybersecurity software which potentially could be key to
the future business strategy. The license was granted by SRI International,
under an agreement which became effective on 15 March 2022, for a combination
of cash, shares and a royalty equal to 7.5% of future revenues deriving from
the license. The Directors recognised the fair value of the license on
acquisition as being the cash paid plus the market value of shares issued to
SRI International.
The value of the license has been assessed by management for impairment.
Management considers the asset value for impairment by considering if any
impairment indicators, such as those per IAS 38, are met and that if any are
met, they assess the recoverable value of the license, being the higher of the
Fair value less costs to sell and Value in use, and then compare this to the
carrying value of the license. Management has made the decision to fully
impair the license because a feasibility study is being considered and until
this is completed, any assessment of Value in Use is considered too subjective
to quantify. Further details are provided in Note 8.
Impairment of Narf US
The Parent Company Statement of Financial Position includes the investment in
Narf US at cost less impairment. The Directors undertook an impairment review
as at 31 December 2024. At that time, the Directors took the view that the
investment should be written down further in light of the GS &S revenue
impact. Management increased the impairment provision by $5.2 million to $12.8
million which reflected the delay in expected future cash flows and the
significant reduction in the share price. A further impairment review was
conducted ahead of the issue of these financial statements and no further
impairment was deemed appropriate. This review involves judgements about
potential future cash flows which are highly subjective and subject to matters
outside the control of the Directors.
Segmental Reporting
Note 3 seeks to analyse the contribution of each business segment to the
profitability of the Group. The allocation of costs includes the costs of some
employees who work on both business segments which requires judgements as to
the allocation of resources. Management have not sought to allocate costs
related to the time of the CEO because he has agreed to waive any remuneration
until his loan is repaid.
Share Based Payments
Equity-settled share-based payments are measured at fair value. Fair value is
measured using the Black Scholes pricing model. The key assumptions used in
the model have been adjusted, based on management's best estimate, for the
effects of non-transferability, exercise restrictions and behavioural
considerations. The fair value also makes certain assumptions about whether
non-market vesting conditions will be met and such assumptions are highly
subjective.
2.20 Critical accounting judgements and key sources of estimation
uncertainty
Revenue recognition
The Group's revenues arise from contracts which generally have monthly or
quarterly payment milestones. Some of these contracts span more than one
accounting period and some are based on provisional calculations of indirect
costs, which are subject to independent audit and revision. The Group
generally recognises revenue based on milestones that have been met, the
labour hours incurred or the amount of time that has progressed towards a
milestone which has been met post period-end.
Nonetheless there is some uncertainty at each milestone date as to the extent
to which additional work may have been completed and the extent to which the
contracted amount attributable to each milestone represents a fair proportion
of the overall contract. Management rely on the output method to allocate
revenue between accounting periods.
2.21 Standards, amendments and interpretations to existing standards
that are not yet effective
New standards, amendments to standards and interpretations:
The Company has adopted all of the new and revised Standards and
Interpretations that are relevant to their operations and effective for
accounting periods beginning 1 April 2024. The Company has not adopted any
standards or interpretations in advance of their required implementation
dates.
The following Standards and Interpretations have become effective and, if
relevant, have been adopted in these financial statements. No other Standards
or Interpretations have been adopted early in these financial statements.
Standard/Interpretation Subject
IAS 1 Amendments - Classification of Liabilities
IAS 7 Amendments - Supplier Finance Arrangements
IFRS 16 Amendments - Lease Liability in a Sale and Leaseback
The new standards have not had a material impact on these consolidated
financial statements.
Standards not yet applied
At the date of authorisation of these financial statements, the following
relevant Standards and Interpretations, which have not been applied in these
financial statements, were in issue but not yet effective.
Standard Impact on initial application Effective date
IFRS7 &9 Amendments to the Classification and Measurement of Financial Instruments 1 January 2026
Annual Improvements to IFRS Accounting Standards
All Presentation and Disclosure in Financial Statements 1 January 2026
IFRS 16 1 January 2027
The Group intends to adopt these new and amended standards and
interpretations, if applicable, when they become effective.
2.22 Financial Risk Management Objectives and Policies
The Group does not enter into any forward exchange rate contracts nor does it
have any other market risks apart from the Sterling assets held by the Parent
Company which are matched by Sterling liabilities.
The main financial risks arising from the Group's activities are interest rate
risk, credit risk, liquidity risk and capital risk management. Further details
on the risk disclosures can be found in Notes 19 and 20.
3. REVENUE AND SEGMENTAL REPORTING
The Group records contract revenue in accordance with IFRS 15 Revenue from
Contracts with Customers, which requires that revenue be recorded over time
as/when performance obligations within contracts are performed/delivered.
Whilst some performance obligations are defined within the Group's contracts,
management considers that the main asset transferred to the customers over the
term of the contract is the implied promise that the customer will have access
to Group employees throughout the duration of the contract. The customer is
expecting that those employees will be able to come up with ideas, explaining
outputs from the software developed and generally push the boundaries to
understand how to develop what may start as a concept into something that has
commercial value. The Group invoices customers based on a billing schedule
contained within each contract. The Group considers trade and other
receivables to be fully collectible as it has no history of non-payment;
accordingly, no allowance for doubtful accounts has been recorded at either
period end. Costs incurred to obtain contracts are expensed as incurred and
losses on contracts are recognised in the period when determined. The Group
sometimes warrants that its deliverables will perform within parameters
contained in the statements of work referenced in the contracts.
Revenue for performance obligations is generally recognised as each
performance obligation is completed and, to the extent applicable, delivered -
an output measurement. Where a performance obligation crosses a period end,
revenue for that performance allocation is pro-rated on a time expired basis
and allocated proportionately to the relevant period.
As performance obligations are completed and delivered, invoices are issued to
customers and the debtor recorded in the Trade Accounts Receivables, which
represents a conditional right to consideration, which generally becomes an
unconditional right on payment. There were no amounts invoiced that were
subsequently challenged as being in excess of completed performance
obligations as at 31 March, 2025 or 31 March, 2024. To the extent that the
measurement of outputs suggests that a future milestone has been met in part,
a debtor is recorded in the caption Prepayments and Accrued Income.
During the period under review the Group established the two separate business
segments of GR & D and GS & S, with each segment having a business
head. The prior year numbers have been restated to reflect the different
business segments.
Based on the above categories, disaggregated contract revenues and their
related costs as follow
Year ended 15 months ended
31 March 31 March 2024
US$
2025
US$
GR & D GS& S Total GR & D GS & S Comm Total
Revenue 2,931,041 67,334 2,998,375 4,509,908 3,012,545 49,000 7,571,453
Sub-contractors (364,102) - (364,102) (1,092,696) - - (1,092,696)
Direct salaries (1,779,885) (439,290) (2,219,175) (1,964,774) (1,072,306) - (3,037,080)
Gross profit/(loss) 787,054 (371,956) 415,098 1,452,438 1,940,239 49,000 3,441,677
Customers comprising 10% or more of Contract Revenue were as follows:
Year ended 31 March 2025 US$ Percent 15 months ended 31 March 2024 US$ Percent
IARPA 1,287,875 43.0% - -
DARPA 1,208,495 40.3% 3,068,234 40.5%
Charles River Analytics, Inc 355,155 11.8% - -
US government agency - - 3,012,545 39.8%
Others - less than 10% 146,850 4.9% 1,490,674 19.7%
2,998,375 100.0% 7,571,453 100.0%
For contractual reasons, the Company may not disclose the name of the US
government procurement agency or the agencies for which this entity is
pass-through. DARPA stands for Defense Advanced Research Projects Agency, a US
government research and development organisation. IARPA stands for
Intelligence Advanced Research Projects Activity, another US government
research and development organisation.
4. OPERATING LOSS
This is stated after charging:
Year to 15 months to
31 March 31 March 2024
US$
2025
US$
Auditor's remuneration
- audit of the Parent Company 165,856 137,464
Amortisation and impairment of intangible assets 1,210,825 493,766
Depreciation of tangible fixed assets - 15,990
Amortisation of right of use asset 42,981 48,173
Directors' remuneration 323,883 476,614
Other staff costs (see note 5) 3,288,824 4,989,973
Legal, professional and consultancy fees 472,014 548,113
5. DIRECTORS AND STAFF COSTS
The average number of persons employed by the Group, including Directors, was:
Year to 31 March 2025 15 months to 31 March 2024
Management and technical 15 18
Remuneration, other benefits supplied and social security costs to the
directors and staff during the period was as follows:
Year to 15 months to
31 March 2025 31 March 2024
US$
US$
Directors and Employees:
Director fees and salaries 113,000 263,908
Other salaries 2,531,960 3,396,771
Social security costs 123,472 286,216
Pension costs and other benefits 344,343 496,518
Director share- based payments 210,883 212,706
Other share-based payments 289,049 810,368
3,612,707 5,466,487
6. TAXATION
Year ended 31 March 2025 15 months ended
US$ 31 March 2024
US$
The charge for the period is made up as follows:
Penalties, Federal and State filing fees - 15,248
Deferred tax - -
Taxation charge - 15,248
A reconciliation of the tax charge / credit appearing in the income statement
to the tax that would result from applying the standard rate of tax to the
results for the period is:
Year ended 31 March 2025 15 months ended 31 March 2024
US$ US$
Loss before taxation (3,560,810) (1,438,979)
Tax credit at the small company rate of corporation tax in the UK (19%) (676,554) (273,406)
Impact of expenses disallowed for tax purposes 327,171 291,038
Penalties, Federal and State filing fees - 15,248
Impact of unrelieved tax losses/(tax losses utilised) carried forward 349,383 (17,632)
Tax charge - 15,248
Estimated tax losses of $8.2 million (2024: $6.1 million) are available for
relief against future UK profits and estimated tax losses of $2.9 million
(2024: $1.2 million) are available for relief against future US profits. No
related deferred tax asset has been provided for in the accounts based on the
uncertainty as to when profits will be generated against which to relieve said
asset. The amount of the deferred tax asset not recognised in relation to
losses for the Group is $2.7 million (2024: $1.4 million) and for the Company
$2.1 million (2024: $1.1 million).
7. EARNINGS AND DILUTED EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the loss attributable to
equity holders of the Company by the weighted average number of ordinary
shares in issue during the period.
15 months ended
Year ended 31 March 2025 31 March
US$ 2024
US$
Loss from continuing operations attributable to equity holders of the company (3,560,867) (1,399,471)
Weighted average number of ordinary shares in issue 1,697,381,100 1,687,381,100
Basic and fully diluted loss per share from continuing operations (cents) (0.21) (0.08)
No dilution has been applied in respect of the options outstanding at the
period end because the Group is loss making.
8. INTANGIBLE ASSETS - GROUP AND PARENT COMPANY
Licenses
US$
Cost
At 1 April 2024 1,996,823
Foreign exchange movement 49,351
At 31 March 2025 2,046,174
Amortisation and impairment
At 1 April 2024 798,727
Charge for the period 403,606
Impairment 807,219
Foreign exchange movement 36,622
At 31 March 2025 2,046,174
Net book amount
At 31 March 2025 -
At 31 March 2024 1,198,096
Amortisation ad impairment of licenses is charged to the Income statement in
the period to which it relates and disclosed within "Depreciation,
amortisation and impairment of fixed assets".
9. TANGIBLE ASSETS - GROUP
Car Leasehold Improvements US$ Furniture & Total
Equipment
US$ US$ US$
Cost
At 1 April 2024 147,098 25,425 222,723 395,246
Additions - - - -
At 31 March 2025 147,098 25,425 222,723 395,246
Depreciation/Impairment
At 1 April 2024 147,098 25,425 222,723 395,246
Charge for the period - - - -
At 31 March 2025 147,098 25,425 222,723 395,246
Net book amount
At 31 March 2025 - - - -
At 31 March 2024 - - - -
Depreciation of tangible assets is charged to the Income statement in the
period to which it relates and disclosed within "Depreciation, amortisation
and impairment of fixed assets". The car was sold to the CEO after the year
end (see note 22).
10. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS - PARENT COMPANY
US$
Shareholdings and member interests in subsidiary undertakings: 25,602,000
Cost (7,600,000)
Impairment during the period ended 31 March 2024 18,002,000
Balance at 31 March 2024
Impairment during the year (5,200,000)
Closing balance at 31 March 2025 12,802,000
Investments in subsidiary undertakings are valued at cost less the Directors'
impairment assessment which reflects changes in the business plan of the
subsidiaries since the reverse takeover.
Principal subsidiaries
The group's subsidiaries at 31 March 2025 are set out below. Two of the
subsidiaries are LLCs, which have no issued share capital and accordingly the
proportion of ownership interests held equals the voting rights held by the
group. The country of incorporation or registration is also their principal
place of business.
Ownership
Name Country of Incorporation Registered office 2025 2024
Principal Activity
Narf Industries LLC USA 548 Market St. #37005 Provision of security goods and services to USG and affiliated entities 100% 100%
San Francisco, CA 94104
Narf Industries PR LLC USA 1413 Avenue Ponce de León, San Juan, Puerto Rico 00907 Provision of security goods and services to Non-USG entities 100% 100%
Narf Holdings US, Inc USA 251 Little Falls Drive, Wilmington, DE 19808 Holding company 100% 100%
11. TRADE AND OTHER RECEIVABLES - GROUP AND PARENT COMPANY
Group Company
As at As at As at As at 31 Mar 2024
US$
31 Mar 31 Mar 31 Mar 2025
2025 2024 US$
US$ US$
Accounts receivable 257,321 314,429 - 252
Prepayments and accrued income 477,009 250,150 21,293 19,488
Amounts due from subsidiary undertakings - 308,250 -
Other receivables 55,623 40,965 29,032 40,965
789,953 605,544 358,575 60,705
The Directors consider that the carrying value amount of trade and other
receivables approximates to their fair value.
11. TRADE AND OTHER RECEIVABLES - GROUP AND PARENT COMPANY (CONTINUED)
Ageing analysis
The following presents an ageing analysis of Accounts Receivable:
As at 31 March 2025 As at 31 March 2024
US$ US$
Current 257,321 157,006
0-30 days - 157,423
257,321 314,429
The Group considers trade and other receivables to be fully collectible;
accordingly, no bad debt provision or expenses have been recorded in either
financial period ending 31 March 2025 and 31 March 2024 respectively and all
amounts listed in Accounts Receivable were received post period-end.
12. CASH AND CASH EQUIVALENTS - GROUP AND PARENT COMPANY
Group Company
31 Mar 31 Mar 31 Mar 2025 31 Mar 2024
US$
2025 2024 US$
US$ US$
Cash at bank and in hand 136,704 654,365 599 5,126
136,704 654,365 599 5,126
Cash at bank comprises balances held by the Company in current bank accounts,
instant access deposit accounts and electronic wallets. The carrying value of
these approximates to their fair value. The majority of cash is held in a bank
with a BBB+ credit rating.
13. TRADE AND OTHER PAYABLES - GROUP AND PARENT COMPANY
Group Company
31 Mar 31 Mar 31 Mar 2025 31 Mar 2024
US$
2025 2024 US$
US$ US$
Accounts payable 153,408 291,499 69,929 90,155
Loan from Director and CEO 2,999,211 1,550,595 - -
Lease liabilities (Note 16) 94,625 93,793 - -
Other payables due within one year 56,205 168,862 - -
Accrued expenses 611,481 634,824 270,339 120,162
3,914,930 2,739,573 340,268 210,317
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and continuing costs. The Directors consider that the carrying value
amount of trade and other payables approximates to their fair value. Refer to
Note 18.
The Loan from Director and Chief Executive Officer represents advances to the
Group (plus accrued interest of $169,461) for working capital purposes from
Steve Bassi, CEO (see Note 22). The loan was, until 28 June 2024, part of a
$2 million credit facility accruing simple interest daily at the US Federal
short term 1 year interest rate (4.86% at 11 April, 2023). On 28 June 2024
the credit facility was increased to $2.5 million and the term extended to 31
July 2025, with the same rate of interest. On 29 December 2024 the credit
facility was increased to $3 million. Effective 1 August 2025 the credit
facility was extended until 31 July 2026. A portion or all of the note may
be repaid early without penalty and the Director may request the Group to pay
amounts when working capital exceeds $500,000 at the end of any given month.
This credit facility is being presented without any discount to account for
time as the facility may be partially or fully repaid prior to the due date of
31 July, 2026.
14. SHARE CAPITAL / SHARE PREMIUM - GROUP AND PARENT COMPANY
The Company has only one class of share. All ordinary shares of 0.1p each
("Shares") have equal voting rights and rank pari passu for the distribution
of dividends and repayment of capital. As at 31 March 2025 and 31 March 2024
the Company's issued and outstanding capital structure comprised 1,697,381,100
shares and there were no other securities in issue and outstanding.
At 31 March 2025 the Company had 202.8 million options outstanding and 51.6
million warrants outstanding (see note 15)
Number of shares on issue Share capital Share premium Total
US$
US$
US$
Balance as at 1 April 2024 1,697,381,100 204,012 35,294,816 35,498,828
Balance at 31 March 2025 1,697,381,100 204,012 35,294,816 35,498,828
15. SHARE BASED PAYMENT RESERVE- GROUP AND PARENT COMPANY
Details of the warrants that were outstanding at 31 March 2025 are as follows:
Warrants
Granted Exercisable from Expiry date Number outstanding Exercise price
01.09.24 01.09.24 08.09.33 41,400,000 £0.01
Details of the options that were outstanding at 31 March 2025 are set out
below:
Options
Granted Exercisable from Expiry date Number outstanding Exercise price
24.05.22 24.05.22 24.05.25 50,000,000 £0.02
08.09.23 08.09.23 08.09.33 72,750,000 £0.01
08.09.23 31.12.23 08.09.33 10,333,333 £0.01
08.09.23 03.01.24 08.09.33 1,250,000 £0.01
08.09.23 01.02.24 08.09.33 750,000 £0.01
08.09.23 31.03.24 08.09.33 10,520,833 £0.01
08.09.23 30.06.24 08.09.33 10,520,833 £0.01
08.07.24 30.06.24 08.09.34 250,000 £0.0126
08.09.23 15.08.24 08.09.33 1,250,000 £0.01
08.09.23 30.09.24 08.09.33 10,520,833 £0.01
08.07.24 30.09.24 08.09.34 250,000 £0.0126
08.09.23 31.12.24 08.09.33 10,833,333 £0.01
08.07.24 31.12.24 08.09.34 250,000 £0.0126
08.09.23 31.03.25 08.09.33 24,512,058 £0.01
08.07.24 31.03.25 08.09.34 250,000 £0.0126
An additional 109.4 million £0.01 options and 2 million £0.0126 options had
been granted at the period end which are subject to vesting conditions which
hadn't been met at 31 March 2025 but are expected to be met in the future. The
movements in the share-based payment reserve are as follows:
Year to 31 March 2025 15 months to 31 March 2024
US$
USS$
At beginning of period 1,483,635 575,154
Fair value of warrants waived/lapsed during the period (303,123) (114,593)
Fair value of warrants and options issued/vested during the period 811,181 1,023,074
At end of period 1,991,693 1,483,635
Of the amount credited to share based payment reserve $499,831 (15 months to
31 March, 2024: $1,023,074) related to options issued for services provided
and therefore resulted in a charge to the Statement of Comprehensive Income
and $311,250 (15 months to 31 March, 2024 $nil) related to an amount due to a
former employee that had previously been accrued for.
A share-based payment credit of $303,123 (fifteen months to 31 March 2024
$114,593) was recognised during the year on options that lapsed due to
employees leaving or vesting conditions not being met.
The estimated fair value of the options granted in September 2023 and July
2024 and the warrants granted in August 2024 were calculated by applying the
Black-Scholes option pricing model. The assumptions used in the calculation
were as set out below:
2024/5 2023/4
Model input/output 10 year warrants 10 year options 10-year options 5-year options 16 mth options
Share price at grant date 0.75p 1.15p 0.75p 0.75p 0.75p
Exercise price 1p 1.26p 1p 1p 1p
Expected volatility* 76% 76% 76% 76% 76%
Expected dividends Nil Nil Nil Nil Nil
Vesting criteria None Time Mainly time Governance Handover
Risk-free rate 4.1% 4.2% 4.1% 4.2% 4.9%
Fair value per option 0.75 cents 0.93 cents 0.73 cents 0.56 cents 0.25 cents
*The expected volatility was calculated using historical 360-day volatility of
the share price of Narf Industries plc for the year to 31 March 2023 (since
the shares were suspended for a significant part of the period from 1 April
2023 to the date of grant).
The movements in share options and share warrants are as follows:
Number of options Weighted average exercise price Number of warrants Weighted average exercise price
Outstanding as at beginning of period 420,036,175 1.1p - N/A
Granted 3,000,000 1.3p 41,400,000 1p
Lapsed (107,321,275) 1p - N/A
Outstanding as at end of period 315,714,900 1.2p 41,400,000 1p
Exercisable as at end of period 204,241,225 1.2p 41,400,000 1p
Unvested as at end of period 111,473,675 1p - N/A
16. LEASES - GROUP
As further discussed in Note 20, the Group has a lease agreement in relation
to their office in California which expires on 1 December 2025, including
minimum rental payments of $5,000 per month. As this lease has a term of one
year it is considered a short-term lease under the requirements of IFRS 16 -
Leases and the monthly rent is being accounted for in the Statement of
Comprehensive Income as it becomes due.
Commitments payable in respect of short-term leases comprise:
As at 31 March 2025 As at 31 March 2024
US$
USS$
Less than 1yr 45,000 -
Effective 1 June 2023, the Group entered into a lease agreement in relation to
their office in California which expired on 31 December 2024, including
minimum rental payments of $5,000 per month. As this lease had a term of over
one year it has been accounted for in accordance with the provisions of IFRS
16
- Leases with a right of use asset recognised in the Statement of Financial
Position and an offsetting lease liability.
Additional information on the right of use asset is as follows:
Carrying Depreciation Carrying
Amount B/Forward Amount C/Forward
Office $42,981 $(42,981) $Nil
The net present value of lease liabilities accounted for under IFRS 16 are all
due within 1 year and comprise
As at 31
As at 31 March
March 2025 2024
$ $
Lease payments 91,154 91,154
Finance charges 3,471 2,639
94,625* 93,793
* The lease liability relates to a former right of use asset where the lease
has ended but the Group has not settled the lease payments due.
17. CONTINGENT LIABILITIES
There were no contingent liabilities at 31 March 2025 (31 March 2024: £nil).
18. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Group's financial instruments comprise primarily cash and various items
such as trade debtors and trade payables which arise directly from operations.
The main purpose of these financial instruments is to provide working capital
for the Group's operations. The Group does not utilise complex financial
instruments or hedging mechanisms.
Financial assets by category
The categories of financial assets are as follows:
Group Company
31 Mar 31 Mar 31 Mar 2025 31 Mar 2024
US$
2025 2024 US$
US$ US$
Current assets at amortised cost:
Accounts receivable 257,321 314,429 - 252
Amounts due from subsidiary undertaking - - 308,250 -
Other receivables 55,858 40,965 29,032 40,965
Cash and cash equivalents 136,704 654,365 599 5,126
449,883 1,009,759 337,881 46,343
Financial liabilities by category
The categories of financial liabilities are as follows:
Group Company
31 Mar 31 Mar 31 Mar 2025 31 Mar 2024
2025 2024 US$ US$
US$ US$
Current Liabilities measured at amortised cost:
Accounts payable 153,408 291,499 69,929 90,155
Other payables 150,830 262,655 - -
Short term loans 2,999,211 1,550,595 - -
3,303,449 2,104,749 69,929 90,155
All amounts owed by the Parent Company and the Group are short term and
payable in 0 to 3 months, apart from the short-term loan which is disclosed in
Notes 13 and 20.. The short-term loan facility has been extended to 30 June
2026 but is repayable on demand under certain circumstances.
Credit risk
Credit risk is the risk that an amount owed to the Parent Company or the Group
will not be settled as a result of the failure of the counterparty. Credit
risk is considered to be minimal as accounts receivable are due from US
government agencies with no history of non-payment, other receivables
represent VAT due from the UK government or payroll taxes recoverable from the
IRS and cash is held in high street banks with most of the deposits protected.
The maximum exposure to credit risk at the reporting date by class of
financial asset was:
Group Company
31 Mar 31 Mar 31 Mar 2025 31 Mar 2024
US$
2025 2024 US$
US$ US$
Accounts receivable 257,321 314,429 - 252
Amounts due from subsidiary undertaking - - 308,250 -
Other receivables 55,858 40,965 29,032 40,965
Cash and cash equivalents 136,704 654,365 599 5,126
449,883 1,009,759 337,881 46,343
Foreign exchange risk
The Group operates principally in the USA with income and operating costs
possibly arising in US Dollars. The majority of the operating revenues and
costs are incurred in US Dollars although there are a number of Sterling costs
incurred by the Parent Company in relation to the costs of maintaining a
listing. The Company does not hedge potential future income or costs, since
the existence, quantum and timing of such transactions cannot be accurately
predicted. The Company's and therefore the Group's exposure to non- US Dollar
assets and liabilities is detailed below.
Company and Group
31 Mar 2025 31 Dec 2024
US$
Sterling assets US$
Accounts receivable - 252
Other debtors 29,032 40,965
Cash and cash equivalents 303 4,736
29,335 45,953
31 Mar 2025 31 Mar 2024
US$
Sterling liabilities US$
Accounts payable 69,929 90,155
Net sterling exposure (40,594) (44,202)
Given the insignificant foreign exchange exposure, management do not believe
that sensitivity analysis would provide any meaningful information to readers
of these accounts.
Interest rate risk
The only Parent Company or Group's asset or liability that is subject to any
material interest rate risk is the loan from the CEO which has a variable
interest rate. All deposits are placed with main clearing banks with minimal
amounts attracting interest.
Liquidity risk
The Parent Company and the Group seek to maintain adequate bank balances to
meet those financial liabilities that are payable in the short term (between 0
to 3 months) but has access to the CEO's credit facility in the event of a
shortfall.
19. CAPITAL MANAGEMENT
The Group manages its capital with a view to ensuring that it will be able to
continue as a going concern while maximising the return to shareholders
through the optimisation of the balance between debt and equity. The Group
utilizes options on its shares to seek to incentivize the Directors and Group
employees to remain loyal and meet strategic goals which will add shareholder
value.
The capital structure of the Group as at 31 March, 2025 consisted of negative
equity attributable to the equity holders of the Group, totalling $2,988,273
(2024: $238,587) bolstered by working capital advances from an officer and
shareholder of $2,999,211 (2024: $1,550,595) (see Notes 13 and 20).
The Group reviews the capital structure on an on-going basis. As part of this
review, the directors consider the cost of capital and the risks associated
with each class of capital. The Group will balance its overall capital
structure through new share issues or potentially through the issue of
convertible debt instruments. There are no plans to pay dividends for the
foreseeable future.
20. RELATED PARTY TRANSACTIONS
The compensation payable to Key Management personnel, who comprise the
Directors, comprised $113,000 in amounts payable by the Group together with
the fair value of options issued in respect of services to the Group. Full
details of the compensation for each Director are provided in the Directors'
Remuneration Report. At year-end, an amount of $14,853 was due to a former
director and officer in respect of Directors remuneration.
Included in Trade and Other Payables in the accompanying Consolidated
Statement of Financial Position are balances of $16,300 and $16,000 at 31
March, 2025 and 31 March, 2024 respectively, related to an office operating
lease agreement with a term of one year between the Group and an entity in
which Steve Bassi is an owner. Included in Trade and Other Payables in the
accompanying Consolidated Statement of Financial Position are balances of
$94,625 and $93,793 at 31 March, 2025 and 31 March, 2024 respectively, related
to an office operating lease agreement which had an original term of over
one year between the Group and an entity in which Steve Bassi is an owner. The
amount remains unpaid. The amount reported as a Right of Use Asset in the
Consolidated Statement of Financial Position of $nil (2024: $42,981) is a
right over an asset owned by that same entity.
Included in Administrative Expenses on the accompanying Consolidated Statement
of Comprehensive income is US$300 (2024: US$24,000) in operating lease
expense, $48,173 (2024: $42,981) in amortisation of right of use asset and
$832 (2024: $2,639) of lease interest relating to leases entered into with
that related entity.
As further discussed in Note 13, a Director and CEO made loans to the Company
which at period end totalled $2,999,211 including accrued interest (2022:
$1,550,595). The amounts represent a drawdown on a $3 million credit facility
with a variable rate of interest.
21. PRIOR YEAR ADJUSTMENT
During the preparation of these financial statements, it was noted that the
share-based payment charge was classed as an expense in Narf Industries PLC
company accounts in the prior period. This was a classification error as the
charge is borne by the group's subsidiaries as employer of the staff holding
share options. The share-based payment charge then adjusts the intercompany
management charge used to recharge expenses.
Accordingly, there is no adjustment to the results as previously reported but
references to share based payments in the PLC company cash flow statement have
been corrected to reflect the expense as a management charge rather than a
share based payment.
22. EVENTS SUBSEQUENT TO YEAR END
Effective 1 August the loan facility of $3 million provided by the CEO was
extended to 31 July 2026. Under this agreement the Group's car (see Note 9)
was transferred to the CEO with a profit on disposal to the Group of $30,000.
23. CONTROL
In the opinion of the Directors there is no single ultimate controlling party.
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