REG - IQ-AI Limited - Publication of Annual Report
29/04/2024 15:30
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RNS Number : 4602M IQ-AI Limited 29 April 2024
IQ-AI Ltd
("IQ-AI" or the "Company")
Publication of Annual Report
The Board of IQ-AI Ltd is pleased to announce the Company's audited financial
statements for the year ended 31 December 2023.
The Annual Report will be available on the Company's corporate website
at www.iq-ai.ltd (http://www.iq-ai.ltd/) .
--ENDS-
The Directors of the Company accept responsibility for the contents of this
announcement.
For further information, please contact:
IQ-AI Ltd
Trevor Brown/Vinod Kaushal/Brett Skelly/Michael Schmainda
Tel: 020 7469 0930
Peterhouse Capital Limited (Financial Adviser and Broker)
Lucy Williams/Heena Karani
Tel: 020 7220 9797
Highlights
• Revenue increased to £609k (2022 - £536k)
• Entered into a global distribution agreement with
GE HealthCare
• Achieved multiple regulatory milestones for our
drug candidate IB003 (oral gallium maltolate, GaM)
Introduction
Clinicians rely on our software to improve the accuracy of their diagnostic
decisions, assess how well patients respond to treatment, non-invasively grade
tumors, and guide surgical biopsies. We continue to advance into new areas and
extend the base functionality of our solutions. Our exceptional client
retention, funding from National Institutes of Health (NIH) grants, and our
on-going research collaborations with key opinion leaders will help us sustain
and broaden our leadership position.
In 2023 our revenue increased to £609k (2022 - £536k) and revenue generated
from imaging product sales increased 23% over the prior period. We added
clients, rolled out a new mobile app, sustained and financed the Phase 1
clinical trial, and achieved multiple regulatory milestones for our oral brain
cancer candidate drug, IB003. Motivated by the promising, early results of the
phase 1 trial, we made the decision to make IB003 available to a broader group
of patients via an Expanded Access Program (EAP). The EAP offers an
opportunity to accelerate our understanding of IB003 and potentially help
patients who have run out of treatment options. The EAP will be our primary
operational focus in 2024.
Operational Highlights
• In February 2023, we obtained our first Orphan
Drug Designation (ODD) for our candidate drug IB003 in the treatment of
glioblastoma (GBM) which applies to both adult and paediatric populations.
• We applied for FDA Fast Track Designation for
IB003 and this was granted in December 2023.
• A Paediatric Rare Disease (PRD) designation
request was submitted to the FDA for IB003 (paediatric glioblastoma, p-GBM).
Following the FDA's response and guidance, the initial submission was
separated into two PRD designation requests: each representing a different
patient cohort. Responses from the FDA for the two submissions are expected in
mid-May 2024.
• The first installation of IB Nimble was completed
at the Medical College of Wisconsin (MCW) Orthopaedic Department for
metastatic bone cancer treatment.
• A second installation of IB Nimble (for brain
metastases) was initiated at another hospital and is expected to be completed
early Q3 2025.
• Product development is well underway for IB Nimble
and includes the harmonization of the app's code base for both Android and
iOS, automated testing, functional enhancements, cybersecurity vulnerability
mitigation, and preparation for viewing medical images using the mobile app.
• The development of IB Zero G™ is ongoing in
collaboration with a major paediatric hospital. Specifically, clinicians aim
to minimize or eliminate the use of gadolinium-based contrast agents (GBCAs)
in these patients, with a joint validation study planned.
IB Clinic
We believe our exclusive neuro-oncology platform offers distinct advantages
over other commercial products. This is backed by a growing body of
peer-reviewed publications including many from multi-centre trials that
continuously underscore the clinical advantages of our solutions.
Our objective moving forward is to leverage our distinct advantages to reach a
wider audience within the brain tumour treatment team, with particular
emphasis on neuro-oncologists and neurosurgeons.
The next release of IB Clinic is scheduled for early Q3 2024. This release
will include a longitudinal reporting feature that tracks and reports
volumetric changes over time. This ability to graphically display quantitative
changes based on MR perfusion blood volume measurements is, as far as the
Directors are aware, unique to IB. Additionally, other features help address
the global problem of "radiologist burnout" by incorporating processing
improvements and automation in our more sophisticated mapping solutions.
We are also enthused by the growing neurosurgical "pull" of our technologies
into the operating room. Surgical tools and technologies, such as targeted
radiation treatment, laser interstitial thermal therapy (LITT), and even the
scalpel can be enhanced when used in combination with IB's accurate mapping
technologies that distinguish highly vascular (aggressive) tissue from low
vascular (necrotic or non-tumour) tissue.
In Q2, we are planning a strategic initiative to rationalise and simplify our
portfolio of channel partners. Terminating contractual agreements with
certain low-performing partners will allow tighter alignment and focus on a
select few. Moving forward, internal resources will be allocated to support
partners that have established an active list of sales leads and trial sites.
These partners should also possess ample bandwidth and expertise to
effectively market our solutions, thereby gaining global traction and scaling
our operations. For instance, we recently collaborated with the teams at Bayer
on a revised European pricing model based on payer and market variances by
region. And current conversations with GE Healthcare now include the potential
for direct selling of IB software independent of an integrated platform
option.
We are working on an updated CPT code application for direct reimbursement of
post-processing perfusion data. The initial application, combining acquisition
and post-processing, received positive feedback. Based on panel guidance, we
will submit a simplified application later in 2024. Currently, sites can be
reimbursed under a generic code, but direct billing is not streamlined. A
dedicated CPT for perfusion post-processing will enhance reimbursement
efficiency.
IB Zero G
We are optimistic about IB Zero G's potential to generate "with-contrast"
image output solely from non-contrast images as input, a capability currently
in ongoing development. The patented technology, which the Board believes has
disruptive potential in an established global market that is valued at over $2
billion, remains to be validated and translated into the clinical setting. Our
optimism is motivated in part by the collaborative interest of our partners at
a major paediatric hospital. Together, we are applying IB Zero G to this
specific patient population with the goal of providing an alternative to
receiving intravenous injections of GBCAs. An expert clinical review of output
generated by IB Zero G compared against actual "ground truth" images will
provide meaningful insights of IB Zero G's readiness for a revised FDA
submission. If the clinical review is successful, a subsequent FDA application
would be the next step and would be targeted for this smaller patient
population. While this population represents a subset of the overall potential
market opportunity, it would still introduce a shift in current clinical
paradigms and provide paediatric patients an alternative to receiving GBCAs.
The end goal would be a new-to-the-world, fully automated, application that
provides a no-GBCA option to paediatric patients and to patients who cannot
otherwise receive GBCAs due to compromised renal function or other
contraindications. Annual subscriptions to IB Zero G would be based on a given
site's estimated procedural volume, thereby enabling clinics of all sizes to
access the technology. Moreover, the data required by IB Zero G are commonly
acquired as part of routine clinical exams. Therefore, no special or custom MR
scanner acquisition sequence is necessary.
IB Nimble
Enabling multidisciplinary, real-time collaboration for complex diseases
represents another disruptive shift in how healthcare can and will be
provided. IB Nimble is well-positioned to lead this shift. Its flexible
backbone architecture can accommodate a wide range of diseases. As disease
options for IB Nimble proliferate, so do its licensing options. Over time, we
anticipate having the ability to present healthcare institutions with a menu
of IB Nimble-driven algorithms from which to choose, including enterprise-wide
installations spanning multiple departments, bundled packages, and so on.
As mentioned previously, the code base of the IB Nimble application is
undergoing an overhaul to allow enhancements to be made faster and easier,
facilitate easier maintenance, and enable widespread distribution and support.
We continue to be guided by Dr Joseph Bovi, MD, one of the inventors of IB
Nimble, and his growing relationships with national groups and leading centres
which treat metastatic brain cancer. Additional groups are growing
increasingly aware of the impact IB Nimble is having on healthcare outcomes as
Dr Bovi continues to be an invited guest lecturer at various sites and we have
actively introduced IB Nimble at tradeshows, IB software product
demonstrations, and through the IB User's Group Webinar series. In parallel
with the development of IB Nimble, we will continue marketing and outreach
efforts and attempt to increase the backlog of interested clients.
IB003 candidate drug for Glioblastoma (GBM)
Glioblastoma (GBM) is a brain disease which has been described as the
"deadliest, most-complexed, and treatment-resistant cancers."
The 5-year prognosis (survival rate) for people who have this disease is 5%
and the average life expectancy currently stands at 12-18 months with a median
of around 14 months.
The Stupp Protocol, defined in 2005, established the standard of care for
treating GBM. It consists of maximal surgical resection followed by
concomitant chemotherapy and radiation therapy. Unfortunately, even after
treatment, GBM always recurs. More recent developments include tumour treating
fields (TTFields) that works by using alternating low-frequency electrical
fields to disrupt cell division promoting cell death.
Despite all these efforts, improvements in overall survival (OS) have been
minimal and the prognosis for GBM patients remains dismal. In addition,
certain treatments are extremely toxic with harsh side effects and
significantly compromise the quality of life for these patients. For these
reasons, there is a clear medical need for an effective glioblastoma treatment
offering good patient tolerability which can be used either as monotherapy or
in combination with other innovations. Our goal is to help achieve that.
Our brain cancer candidate lead drug, IB003, is a potential treatment where,
unlike many other NCEs (new chemical entities), much is already known about
its anti-tumour mechanism at the pre-clinical level as well as some
early-stage clinical data in cancer patients. Our partnership with the Medical
College of Wisconsin (MCW) is a strategic asset. The clinical and scientific
teams have attained a strong understanding spanning decades of research and
testing that is propelling IB003 into new applications and patient
populations. The growing evidence to date and our own ongoing Phase 1 study
already offer us promise in its potential role as a glioblastoma treatment and
give us confidence to further accelerate our development plans. Our lead
investigator, Professor Jennifer Connelly, MD, recently reported that in the
Phase 1 trial "patients seem to tolerate it IB003 very well". As mentioned,
good tolerability will encourage patients to stay on the treatment regime
thereby increasing the chances of showing positive efficacy. Coupled with the
granting of a Fast-Track Designation by the US FDA and other milestones as
highlighted below, we are hopeful that IB003 will become a major asset in the
fight against brain cancer.
Overall, 2023 was a busy, productive, and successful year for IQ-AI on IB003.
While it is still early in the development of IB003, we are heartened by the
numerous achievements that the Company has made in this area to date. The
Company is well positioned for the continued development of IB003 with its
postulated mode of action, which makes it a potentially unique and distinctive
treatment. There is also a great synergy in the usage of IB's imaging know-how
and brands which we believe will help accelerate that development.
Going forward in 2024, our focus is to finalize our Phase 1 study and get a
clearer understanding of IB003's dosage and safety profile to enable us to
further refine its product and clinical features. We will also focus on
further building our own Intellectual Property (IP) as well as shoring up any
gaps in our development to date to ensure we are able to expedite our
progress. The EAP (below) is an example of that understanding as well as the
level of interest being generated for IB003, even at this early stage. We
shall also be looking further at the utility and value of IB003 in other
cancers.
Expanding our reach with IB003 to territories beyond the USA to a global
approach is also another focus of our attention in 2024 and beyond because the
issue of glioblastoma prevalence is world-wide. This includes pursuing
regulatory designations and approvals in other key markets such as the EU and
in APAC. We will pursue orphan drug designations in markets that offer
similar programs to those in the USA. Additionally, we will seek to implement
managed access programs where available.
We remain confident, motivated, and encouraged by our successes to date and
look forward to continued success with IB003 for 2024 and beyond.
The most important aspect of this project is the added value that our efforts
can potentially make for the patient. Seeing levels of success in IB003
development, however incremental they may be, inspires our efforts. To that
end, we encourage you to watch this video link to see what has already been
achieved, as well as to gain insight into the planned EAP:
Expanded Access Program ("EAP")
While the development of IB003 continues via the current Phase 1 and planned
Phase 2 clinical trials, and with significant regulatory milestones already
attained in the USA, we made the decision to make the drug available via an
Expanded Access Program (EAP) at the end of 2023. EAPs, also referred to as
"compassionate use", enable patients with no other treatment alternatives to
gain access to investigational agents that currently do not have FDA approval.
We believe IB003 is ideally suited for an EAP. It requires no special shipping
or handling, it can be taken in the comfort of one's home, it has exhibited an
excellent safety profile and, most importantly, it has the potential to help
patients who have exhausted other options.
EAPs are not part of the drug development process. They are formal programs
authorized by the FDA that provide a way for patients with serious or
immediate life-threatening diseases to access investigational treatment
outside of clinical trials.
We worked in conjunction with the clinical team leading the on-going phase 1
study at MCW in defining the EAP protocol. In addition, we have enlisted a
company that specializes in facilitating EAPs and have a proven platform that
collects and structures the data acquired from the EAP. Whereas phased
clinical trials are highly controlled with tight inclusion/exclusion criteria,
EAPs provide flexibility allowing a broader cohort of patients to participate.
The FDA views this data favourably as it represents "real world data" (RWD) or
data more reflective of the general population.
This is significant as EAP data can facilitate discussions with the FDA as we
leverage our Fast Track Designation for IB003. In some cases, compelling
outcomes from EAPs have eliminated the need for subsequent research studies or
they have substantially reduced the size and scope of subsequent research
studies. Other potential advantages include:
• EAP data may identify a biomarker or subsets of
responders that may not otherwise be well represented in the research trial
• RWD from EAPs is also believed to support
post-approval discussions with payers.
Ultimately, we might help patients sooner by enabling access to a potentially
promising agent prior to regulatory approval.
For us to make IB003 available via an EAP, we will need to leverage the
FDA-allowed cost recovery mechanism. Cost recovery is an FDA-authorized
program that allows sponsors of an agent to charge patients for the direct
costs of receiving the treatment. IB003 is currently an investigational agent
and does not have FDA approval, so insurers will not cover it and patients
will need to pay for the agent themselves. We are actively reaching out to
various philanthropic organizations and patient advocacy groups who may
provide financial assistance to these patients.
We have submitted the documentation package for the EAP to the FDA and a
decision is expected by early May. Once we receive authorization,
institutional review board (IRB) approvals will need to be obtained before
patients can enrol. This will take two to three additional weeks. We are
acutely aware of the potential benefit IB003 may provide patients and are
maintaining our focus on a swift and successful EAP launch. In addition,
amendments to the EAP can be made to accommodate new findings, support
inclusion of new patient groups (such as paediatric cancers), add combination
therapies, and other updates. We are also considering expanding managed
patient access in territories including UK, Germany, Spain, Scandinavia, and
France. Each of these territories has specific localised processes according
to their laws. A few patients in these areas have expressed an interest in
accessing GaM.
Outlook
The new financial year has started off well, and revenue to date is higher
than the comparable period in 2023. If this trend continues, we expect to
exceed last year's revenue.
Trevor Brown
Chief Executive Officer
Consolidated Income Statement
For the year ended 31 December 2023
2023 2022
Notes £ £
Continuing operations
Revenue 609,390 535,886
Cost of sales (11,636) (1,782)
Gross profit 597,754 534,104
Administrative expenses (1,004,086) (1,035,005)
Other income 8 10
Operating loss 5 (406,324) (500,891)
Impairment of goodwill and intangible assets 10 & 11 (207,627) -
Finance costs 4 (9,865) (10,710)
Loss before income tax (623,816) (511,601)
Income tax 7 - -
Loss for the year from continuing operations (623,816) (511,601)
Loss for the year attributable to the owners of the Company (623,816) (511,601)
Earnings per share attributable to owners of the Company
From continuing operations:
Basic and diluted (pence per share) 8 (0.34) (0.28)
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
2023 2022
£ £
Loss for the period (623,816) (511,601)
Other comprehensive income
Items that may be subsequently reclassified as profit or loss
Exchange differences on translation of foreign operations (3,100) (2,593)
(3,100) (2,593)
Total comprehensive loss for the year attributable to the owners of the (626,916) (514,194)
Company
Consolidated Statement of Financial Position
As at 31 December 2023
2023 Restated
2022
£ £
Notes
Non-current assets
Property, plant and equipment 9 1,677 4,233
Goodwill 10 71,420 158,026
Intangible assets 11 340,870 531,866
Total non-current assets 413,967 694,125
Current assets
Trade and other receivables 13 168,018 197,273
Cash and cash equivalents 138,751 313,985
Total current assets 306,769 511,258
Current liabilities
Trade and other payables 14 625,812 498,310
Total current liabilities 625,812 498,310
Net current (liabilities)/assets (319,043) 12,948
NET ASSETS 94,924 707,073
Equity
Share capital 15 1,906,715 1,826,214
Share premium 20,555,087 20,553,499
Capital redemption reserve 23,616 23,616
Merger reserve 160,000 160,000
Convertible loan note reserve 18 100,953 217,784
Share based payment reserve 81,696 81,696
Foreign currency reserve 22,866 21,064
Retained losses (22,756,009) (22,176,800)
Equity attributable to owners of the Company 94,924 707,073
TOTAL EQUITY 94,924 707,073
Company Statement of Financial Position
As at 31 December 2023
2023 2022
£ £
Notes
Non-current assets
Investments 12 543,823 668,823
Total non-current assets 543,823 668,823
Current assets
Trade and other receivables 13 814,413 1,255,093
Cash and cash equivalents 1,825 107,849
Total current assets 816,238 1,362,942
Current liabilities
Trade and other payables 14 307,725 263,587
Total current liabilities 307,725 263,587
Net current assets 508,513 1,099,355
NET ASSETS 1,052,336 1,768,178
Equity
Share capital 15 1,906,715 1,826,214
Share premium 20,555,087 20,553,499
Capital redemption reserve 23,616 23,616
Merger reserve 160,000 160,000
Convertible loan note reserve 18 100,953 217,784
Share based payment reserve 81,696 81,696
Retained losses (21,775,731) (21,094,631)
Equity attributable to owners of the Company 1,052,336 1,768,178
TOTAL EQUITY 1,052,336 1,768,178
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Share Share Capital redemption reserve Convertible loan note reserve Share based payment reserve Foreign currency reserve Retained TOTAL EQUITY
capital premium losses
reserve
£ £ £ £ £ £ £ £ £
Balance at 1 January 2022 1,825,076 20,547,343 23,616 160,000 207,074 71,808 20,973 (21,665,199) 1,190,691
Loss for the year - - - - - - - (511,601) (511,601)
Exchange differences on translation of foreign operations - - - - - - (2,593) - (2,593)
Total comprehensive loss for the year - - - - - - (2,593) (511,601) (514,194)
Shares issued 1,138 6,156 - - - - - - 7,294
Share based payments - - - - - 9,888 - - 9,888
Movement in the year - - - - 10,710 - 2,684 - 13,394
Transactions with owners, recognised directly in equity 1,138 6,156 - - 10,710 9,888 91 (511,601) (483,618)
Balance at 31 December 2022 1,826,214 20,553,499 23,616 160,000 217,784 81,696 21,064 (22,176,800) 707,073
Loss for the year - - - - - - - (623,816) (623,816)
Exchange differences on translation of foreign operations - - - - - - (3,100) - (3,100)
Total comprehensive loss for the year - - - - - - (3,100) (623,816) (626,916)
Transactions with shareholders:
Loan conversion
84,464 42,232 - - (126,696) - - - -
Shares cancelled (3,963) (40,644) - - - - - 44,607 -
Movement in the year - - - - 9,865 - 4,902 - 14,767
Transactions with owners, recognised directly in equity 80,501 1,588 - - (116,831) - 1,802 (579,209) (612,149)
Balance at 31 December 2023 1,906,715 20,555,087 23,616 160,000 100,953 81,696 22,866 (22,756,009) 94,924
Company Statement of Changes in Equity
For the year ended 31 December 2023
Share Share Capital Redemption Reserve Merger Convertible Loan Note Reserve Share Based Payment Reserve Retained TOTAL EQUITY
Capital Premium Reserve Losses
£ £ £ £ £ £ £ £
Balance at 1 January 2022 1,825,076 20,547,343 23,616 160,000 207,074 71,808 (20,704,621) 2,130,296
Total comprehensive loss for the year - - - - - - (390,010) (390,010)
Shares issued 1,138 6,156 - - - - - 7,294
Unclaimed dividends - - - - - - - -
Share based payments - - - - - 9,888 - 9,888
Movement in the year - - - - 10,710 - - 10,710
Transactions with owners, recognised directly in equity 1,138 6,156 - - 10,710 9,888 (390,010) (362,118)
Balance at 31 December 2022 1,826,214 20,553,499 23,616 160,000 217,784 81,696 (21,094,631) 1,768,178
Total comprehensive loss for the year - - - - - - (725,707) (725,707)
Loan conversion 84,464 42,232 - - (126,696) - - -
Shares cancelled (3,963) (40,644) - - - - 44,607 -
Cost of shares issued - - - - - - - -
Movement in the year - - - - 9,865 - - 9,865
Transactions with owners, recognised directly in equity 80,501 1,588 - - (116,831) - (681,100) (715,842)
Balance at 31 December 2023 1,906,715 20,555,087 23,616 160,000 100,953 81,696 (21,775,731) 1,052,336
Consolidated and Company Statement of Cash Flows
For the year ended 31 December 2023
GROUP COMPANY
2023 2022 2023 2022
£ £ £ £
Operating loss (623,816) (511,601) (725,707) (390,010)
Adjustment for:
Depreciation and amortisation 115,401 140,609 - -
Impairment of intangible assets 207,627 - - -
Impairment of the investment in a subsidiary - - 125,000 -
Fees in exchange for shares - 7,292 - 7,292
Share based payment expense - 9,888 - 9,888
Foreign exchange (loss)/ gain 37,338 (73,418) - -
Finance costs 9,865 10,710 9,865 10,710
Decrease/(increase) in receivables 29,254 (119,084) 440,679 (124,787)
Increase in payables 127,502 160,933 44,139 125,989
Net cash used in operating activities (96,829) (374,671) (106,024) (360,918)
Cash flows used in investing activities:
Purchase of equipment - (1,525) - -
Purchase of intangible assets (78,405) (38,405) - -
Net cash used in investing activities (78,405) (39,930) - -
Cash flows from financing activities
Shares issued net of share costs - - - -
Net cash from financing activities - - - -
Net decrease in cash and cash equivalents (175,234) (414,601) (106,024) (360,918)
Cash and cash equivalents brought forward 313,985 728,586 107,849 468,767
Cash and cash equivalents carried forward 138,751 313,985 1,825 107,849
Notes to the financial statements Annual Report and Financial Statements
For the year ended 31 December 2023Summary of significant accounting policies
IQ-AI Limited (the "Company") is a limited liability company limited by shares
incorporated and domiciled in Jersey. The address of the registered office
is given on page 55.
The financial statements are presented in pound sterling ("£"), which is also
the functional currency of the company, since that is the currency of the
primary environment in which the Group and Company operates.
The principal accounting policies applied in the preparation of these
financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
These financial statements have been prepared and approved by the Directors in
accordance with the EU-endorsed international financial reporting standards.
The financial statements have been prepared under the historical cost
convention.
The preparation of financial statements in conformity with EU-endorsed IFRS
requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 2.
Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Chief
Executive Officer's Statement. In addition, note 20 to the financial
statements includes the Group's and Company's objectives, policies and
processes for managing its capital and its financial risk management
objectives.
The Group meets its day to day working capital requirements through its
revenue generating cashflows, discrete fund raises and the issue of
convertible loan notes.
The current economic conditions continue to create uncertainty, particularly
over (a) the level of demand for the group's products; and (b) the
availability of finance for the foreseeable future. The Directors are
satisfied that the Group has sufficient resources to meet any obligations over
the going concern period. At 31 December 2023, the Group had cash balances of
£138,751 (2022: £313,985).
Additional financial support, if required, will be available from the Chief
Executive Officer through a convertible loan facility. In addition, all
existing convertible loans including accrued interest are not repayable in
cash. After the year end, the remaining loans were converted into shares.
In February 2024, the Company placed 24,733,333 new ordinary shares at a price
of 1.5p per share to raise £371,000 before expenses.
Taking in to account the comments above, the Directors have, at the time of
approving the financial statements, a reasonable expectation that the Company
and the Group have adequate resources to continue in operational existence for
the foreseeable future. Therefore, they continue to adopt the going concern
basis of accounting in preparing the financial statements. There has been no
direct impact to the Company and the Group due to the war in the Ukraine.
New standards, amendments and interpretations adopted by the Group and Company
The Group has adopted all recognition, measurement and disclosure requirements
of IFRS, including any new and revised standards and interpretations of IFRS,
in effect for annual periods commencing on or after 1 January 2023. The
adoption of these standards and amendments did not have any material impact on
the financial result of position in the Group.
At the date of authorisation of these financial statements, the following
Standards and Interpretation, which have not yet been applied in these
financial statements, were in issue, but not yet effective:
Standards /interpretations Application
IAS 1 amendments Presentation and Classification of Liabilities as Current or Non current
IAS 16 Amendments Lease liability in a sale and leaseback
IAS 1 Amendments Presentation of Financial Statements
There are no IFRS's or IFRIC interpretations that are not yet effective that
would be expected to have a material impact on the Company or Group.
Basis of consolidation
The Group financial statements consolidate the financial statements of the
Company and all its subsidiaries ("the Group"). Subsidiaries include all
entities over which the Group is exposed, or has rights, to variable returns
from its involvement with the investee and has the ability to affect those
returns through its power over the investee. The existence and effect of
potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another entity.
Subsidiaries are consolidated from the date on which control commences until
the date that control ceases. Intra-group balances and any unrealised gains
and losses on income or expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
The acquisition method of accounting is used to account for business
combinations. The cost of an acquisition is measured as the fair value of the
assets given, equity instruments issued, and liabilities incurred or assumed
at the date of exchange, and the equity interests issued. Identifiable assets
acquired, and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair value at the acquisition
date. Acquisition related costs are expensed as incurred. Where necessary,
amounts reported by subsidiaries have been adjusted to conform with the
Group's accounting policies.
Investments in subsidiaries
Investments in subsidiaries are held at cost less any impairment.
Goodwill
Goodwill on acquisition of subsidiaries represents the excess of the cost of
acquisition over the fair value of the Group's share of the identifiable net
assets and contingent liabilities acquired. Identifiable assets are those
which can be sold separately, or which arise from legal rights regardless of
whether those rights are separable. Goodwill on acquisition of subsidiaries is
included in intangible assets. Goodwill is not amortised but is tested
annually, or when trigger events occur, for impairment and is carried at cost
less accumulated impairment losses.
Foreign currency translation
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the income
statement. Foreign exchange gains and losses are presented in the income
statement within 'finance income or costs.'
The results and financial position of Group entities that have a functional
currency different from the presentation currency are translated into the
presentation currency as follows:
· assets and liabilities for each Statement of Financial Position
presented are translated at the closing rate at the date of that Statement of
Financial Position;
· income and expenses for each Income Statement presented are
translated at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the
rate on the dates of the transactions); and
· all resulting exchange differences are recognised in other
comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate. Exchange differences arising are recognised in
other comprehensive income.
Property, plant and equipment
Property, plant and equipment is stated at historical cost less depreciation.
Historical cost includes expenditure that is directly attributable to the
acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the group and the cost
of the item can be measured reliably. The carrying amount of the replaced part
is derecognised. All other repairs and maintenance are charged to the income
statement during the financial period in which they are incurred.
Depreciation on other assets is calculated using the straight-line method to
allocate their cost or revalued amounts to their residual values over their
estimated useful lives, as follows:
Equipment
3 - 8 years
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at the end of each reporting period.
Intangible assets - Intellectual property and internally generated software
Separately acquired intellectual property is shown at historic cost.
Intellectual property acquired in a business combination is recognised at fair
value at the acquisition date. Amortisation is calculated using the
straight-line method over the estimated useful life of up to 5 years.
Development costs that are directly attributable to the design and testing of
identifiable and unique software products controlled by the Group are
recognised as intangible assets when the following criteria are met:
· it is technically feasible to complete the software product so
that it will be available for use;
· management intends to complete the software product and use or
sell it;
· there is an ability to use or sell the software product;
· it can be demonstrated how the software product will generate
probable future economic benefits;
· adequate technical, financial and other resources to complete the
development and use or sell the software product are available; and
· the expenditure attributable to the software product during its
development can be reliably measured.
Directly attributable costs that are capitalised as part of the software
product include the software development employee costs and an appropriate
portion of relevant overheads.
Other development expenditure that does not meet these criteria is recognised
as an expense as incurred. Development costs previously recognised as an
expense are not recognised as an asset in a subsequent period. Software
development costs recognised as assets are amortised over their estimated
useful lives, which do not exceed 5 years. Amortisation commences when
regulatory approval is obtained, and the product is commercially available.
Impairment of non-financial assets
Intangible assets that have an indefinite useful life or intangible assets not
ready to use are not subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for
the amount by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset's fair value less
costs of disposal and value in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are largely
independent cash inflows (cash-generating units). Prior impairments of
non-financial assets (other than goodwill) are reviewed for possible reversal
at each reporting date.
Financial instruments
Financial assets and financial liabilities are recognised in the Group's
balance sheet when the Group becomes a party to the contractual provisions of
the instrument.
Financial assets
The Group classifies its financial assets in the following categories
financial assets as "at fair value through profit and loss" and "loans and
receivables". The classification depends on the nature and purpose of the
financial assets and is determined at the time of initial recognition.
Management determines the classification of its financial assets at initial
recognition.
Loans and receivables
Trade receivables are amounts due from customers for merchandise sold or
services performed in the ordinary course of business. Trade receivables are
held with the objective of collecting the contractual cash flows. If
collection is expected in one year or less (or in the normal operating cycle
of the business if longer), they are classified as current assets. If not,
they are presented as non-current assets.
Trade receivables are recognised initially at fair value, and subsequently
measured at amortised cost using the effective interest method, less provision
for impairment. The Group applies the IFRS 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss allowance for all
trade receivables and contract assets.
Due to the short-term nature of the other current receivables, their carrying
amount is considered to be the same as their fair value.
A financial asset is assessed at each reporting date to determine whether
there is any evidence that it is impaired. A financial asset is considered
impaired if objective evidence indicates that one or more events have had a
negative effect on the estimated future cash flows of that asset. Individual
significant financial assets are tested for impairment on an individual basis.
The remaining financial assets are assessed collectively in groups that share
similar credit risk characteristics. All impairment losses are recognised in
the consolidated income statement.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
banks and other short-term highly liquid investments with maturities of three
months or less.
Financial liabilities and equity instruments issued by the group
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument
is any contract that evidences a residual interest in the assets of the Group
after deducting all of its liabilities. Equity instruments issued by the Group
are recorded at the proceeds received, net of direct issued costs.
Convertible loan notes
The convertible loan note ("CLN") is a compound financial instrument that can
be converted to share capital at the option of the holder. As the CLN, and the
accrued interest, can only be repaid by the issue of shares, it has been
recognised in equity only, with no liability component. Interest is accounted
for on an accruals basis and charged to the Consolidated Income Statement and
added to the carrying amount of the equity component of the CLN.
Trade and other payables
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from suppliers. Accounts payable
are classified as current liabilities if payment is due within one year or
less (or in the normal operating cycle of the business if longer). If not,
they are presented as non-current liabilities.
Trade and other payables are recognised initially at fair value, and
subsequently measured at amortised cost using the effective interest method.
The carrying amounts of trade and other payables are considered to be the same
as their fair values.
Segment reporting
An operating segment is a component of the Group that engages in business
activity from which it may earn revenues and incur expenses, including
revenues and expenses that relate to transactions with and of the Group's
other components. All operating segments' operating results, for which
discrete financial information is available, are reviewed regularly by the
Group's Board to make decisions about resources to be allocated to the segment
and assess its performance. The Group reports on a two-segment basis - holding
company expenses and medical software.
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares and share options are recognised
as a deduction from equity, net of any tax effects, from the proceeds.
Share-based payments
The Company operates an equity-settled, share-based compensation plan, under
which the entity receives services from employees as consideration for equity
instruments (options) of the Company. The fair value of the employee
services received in exchange for the grant of the options is recognised as an
expense. The total amount to be expensed is determined by reference to the
fair value of the options granted:
· including any market performance conditions (for example, an
entity's share price);
· excluding the impact of any service and non-market performance
vesting conditions (for example, profitability or sales growth targets, or
remaining an employee of the entity over a specified time period); and
· including the impact of any non-vesting conditions (for example,
the requirement for employees to save or holding shares for a specific period
of time).
At the end of each reporting period, the group revises its estimates of the
number of options that are expected to vest based on the non-market vesting
conditions and service conditions. It recognises the impact of the revision to
original estimates, if any, in the income statement, with a corresponding
adjustment to equity.
In addition, in some circumstances employees may provide services in advance
of the grant date and therefore the grant date fair value is estimated for the
purposes of recognising the expense during the period between service
commencement period and grant date.
When the options are exercised, the company issues new shares. The proceeds
received net of any directly attributable transaction costs are credited to
share capital (nominal value) and share premium.
The grant by the Company of options over its equity instruments to the
employees of subsidiary undertakings in the Group is treated as a capital
contribution. The fair value of employee services received, measured by
reference to the grant date fair value, is recognised over the vesting period
as an increase in investment in subsidiary undertakings, with a corresponding
credit to equity in the parent entity accounts.
The social security contributions payable in connection with the grant of the
share options is considered an integral part of the grant itself, and the
charge will be treated as a cash-settled transaction.
Revenue recognition
The group derives revenue from the transfer of goods and services at a point
in time and over time. Revenue from external customers arise on the sales of
software licences, including associated maintenance, and consultancy services.
Revenue from licence sales is measured at the agreed transaction price at a
point in time. A receivable is recognised when access to the software is
granted, since this is the point in time that the consideration is
unconditional because only the passage of time is required before the payment
is due. Support and maintenance services are provided on the product supplied;
this is deemed to be a separately identifiable product and is recognised over
time. Revenue from consulting services are recognised in the accounting period
in which the services are rendered.
Taxation
The Company is registered in Jersey, Channel Islands and is taxed at the
Jersey Company standard rate of 0%. However, the Company's subsidiaries are
situated in jurisdictions where taxation may become applicable to local
operations.
The major components of income tax on profit or loss include current and
deferred tax.
The tax currently payable is based on the taxable profit for the period using
the tax rates that have been enacted or substantially enacted by the balance
sheet date. Taxable profit differs from the net profit as reported in the
income statement because it excludes items of income or expense that are
taxable or deductible in other years and it further excludes items that are
never taxable or deductible.
Deferred tax is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the Group financial statements. Deferred tax is determined
using tax rates that have been enacted or substantially enacted at the balance
sheet date and are expected to apply when the related deferred income tax
asset is realised of the deferred tax liability is settled.
Deferred tax assets are only recognised to the extent that it is probable that
future taxable profit will be available against which the asset can be
utilised. Deferred tax is charged or credited in the income statement, except
when it relates to items charged or credited to equity, in which case the
deferred tax is also dealt with in equity.
2. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The
resulting accounting estimates will, by definition, seldom equal the related
actual results. The estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
Impairment of intangible assets
The directors have reviewed the valuation of Stone Checker Software Limited in
the year and valued the company based on the last offer that was received in
the previous year for the company and its software. Since the offer, there has
been very little in the way of sales and the asset has been impaired
accordingly. Refer to Note 10 and Note 11.
Critical judgments in applying the entity's accounting policies
The following are the critical judgements that the Directors have made in the
process of applying the Group's accounting policies and that have the most
significant effect on the amounts recognised in the financial statements.
Capitalisation of internally developed software
Distinguishing the research and development phases of the software suites and
determining whether the recognition requirements for the capitalisation of
development costs are met requires judgement. After capitalisation, management
monitors whether the recognition requirements continue to be met and whether
there are any indicators that capitalised costs may be impaired. Refer to Note
11.
3. Segmental analysis
The Directors are of the opinion that under IFRS 8 - "Segmental Information"
the Group operated in two primary business segments in 2023: being holding
company expenses and medical software. The secondary segment is geographic.
The Group's losses and net assets by primary business segments are shown
below.
Segmentation by continuing businesses:
The following is an analysis of the Group's assets and liabilities by
reportable segment as at 31 December 2023 and the capital expenditure for the
year then ended:
Holding company Medical Software Oral GaM Total
Total assets 13,936 292,833 - 306,769
Total liabilities (112,524) (143,972) (369,315) (625,811)
Intangible assets 71,420 340,869 - 412,289
PP&E - 1,677 - 1,677
(27,168) 491,407 (369,315) 94,924
The following is an analysis of the Group's assets and liabilities by
reportable segment as at 31 December 2022 and the capital expenditure for the
year then ended:
Holding company Medical Software Oral GaM Total
Total assets 123,946 387,312 - 511,258
Total liabilities (65,733) (239,924) (192,652) (498,309)
Intangible assets 158,026 531,866 - 689,892
PP&E - 4,232 - 4,232
216,239 683,486 (192,652) 707,073
The following is an analysis of the Group's revenue and results by reportable
segment in 2023:
Holding company Medical software Oral GaM Total
Revenue - 609,390 - 609,390
Cost of sales - (11,636) - (11,636)
Gross profit - 597,754 - 597,754
Administration expenses (376,296) (436,590) (191,200) (1,004,086)
Other income 8 - - 8
Operating profit (376,288) 161,164 (191,200) (406,324)
Impairment of goodwill and intangible assets (207,627) - - (207,627)
Finance costs (9,865) - - (9,865)
Profit / (loss) before tax (593,780) 161,164 (191,200) (623,816)
Tax (charge) / credit for the year - - - -
Profit / (loss) for the year (593,780) 161,164 (191,200) (623,816)
The following is an analysis of the Group's revenue and results by reportable
segment in 2022:
Holding company Medical software Oral GaM Total
Revenue - 535,886 - 535,886
Cost of sales - (1,782) - (1,782)
Gross profit - 534,104 - 534,104
Administration expenses (379,310) (486,722) (168,973) (1,035,005)
Other income 10 - - 10
Operating profit (379,300) 47,382 (168,973) (500,891)
Finance costs (10,710) - - (10,710)
Profit / (loss) before tax (390,010) 47,382 (168,973) (511,601)
Tax (charge) / credit for the year - - - -
Profit / (loss) for the year (390,010) 47,382 (168,973) (511,601)
Segmentation by geographical area:
2023 2022
£ £
Revenue to external customers
United States of America 609,390 535,886
609,390 535,886
The following is an analysis of the Group's assets and liabilities by
reportable segment as at 31 December 2023 and the capital expenditure for the
year then ended:
Jersey United Kingdom United States of America Total
Total assets 13,936 74 292,759 306,769
Total liabilities (112,524) - (513,287) (625,811)
Intangible assets 71,346 - 340,943 412,289
PP&E - - 1,677 1,677
(27,242) 74 122,092 94,924
The following is an analysis of the Group's assets and liabilities by
reportable segment as at 31 December 2022 and the capital expenditure for the
year then ended:
Jersey United Kingdom United States of America Total
Total assets 123,946 74 387,238 511,258
Total liabilities (65,733) (432,576) (498,310)
Intangible assets 158,026 125,000 406,866 689,892
PP&E 4,232 4,232
216,239 125,074 365,760 707,073
The following is an analysis of the Group's revenue and results by reportable
segment in 2023:
Jersey United Kingdom United States of America Total
Revenue - - 609,390 609,390
Cost of sales - - (11,636) (11,636)
Gross profit - - 597,754 597,754
Administration expenses (376,296) - (627,790) (1,004,086)
Other income 8 - - 8
Operating profit (376,288) - (30,036) (406,324)
Impairment of goodwill and intangible assets (207,627) - - (207,627)
Finance costs (9,865) - - (9,865)
Profit / (loss) before tax (593,780) - (30,036) (623,816)
Tax (charge) / credit for the year - - - -
Profit / (loss) for the year (593,780) - (30,036) (623,816)
The following is an analysis of the Group's revenue and results by reportable
segment in 2022:
Jersey United Kingdom United States of America Total
Revenue - - 535,886 535,886
Cost of sales - - (1,782) (1,782)
Gross profit - - 534,104 534,104
Administration expenses (379,300) (775) (654,930) (1,035,005)
Other income - - 10 10
Operating profit (379,300) (775) (120,816) (500,891)
Finance costs (10,710) - - (10,710)
Profit / (loss) before tax (390,010) (775) (120,816) (511,601)
Tax (charge) / credit for the year - - - -
Profit / (loss) for the year (390,010) (775) (120,816) (511,601)
Revenue is attributable to the principle activities of the Group. In 2023 and
2022, all revenue arose within the United States of America.
Group Group
2023 2022
£ £
Grant income 141,598 153,943
Software income 467,792 381,943
609,390 535,886
The Group derives revenue from the transfer of goods and services over time
and at a point in time in the following major product lines:
2023 Grant income Software income Total
Timing of revenue recognition
At a point in time 141,598 626 142,224
Over time - 467,166 467,166
141,598 467,792 609,390
2022 Grant income Software income Total
Timing of revenue recognition
At a point in time 153,943 - 153,943
Over time - 381,943 381,943
153,943 381,943 535,886
Finance costs
2023 2022
£ £
Interest payable on unsecured convertible loan notes 9,865 10,710
5. Operating loss
2023 2022
£ £
The following items have been included in arriving at operating loss
Staff costs 326,632 398,620
Amortisation of internally generated intangible assets 113,068 138,413
439,700 537,033
Auditor's remuneration has been included in arriving at operating loss as
follows:
Fees payable to the Company's auditor and their associates for the audit of 37,500 34,000
the Group and Company's financial statements
Total audit fees payable to the Group auditors 37,500 34,000
6. Employee information
The average monthly number of employees (including Executive Directors) was:
2023 2022
Number Number
Administration 7 7
£ £
Staff costs (for the above employees)
Wages and salaries 324,456 396,145
Social security costs and pension contributions 2,176 2,475
326,632 398,620
Directors' remuneration and transactions
2023 2022
£ £
Directors' remuneration
Emoluments and fees 160,000 160,000
Remuneration of the highest paid director:
Emoluments and fees 100,000 100,000
100,000 100,000
7. Income tax expense
2023 2022
The tax assessed for the period is different from the standard rate of income £ £
tax, as
Income tax as explained below:
Loss before tax on continuing operations (623,816) (511,601)
Loss before tax multiplied by the standard rate of Jersey income tax of 0% - -
Adjustments to tax in respect of prior periods - -
Tax (credit)/charge for period - -
8. Earnings per share
Basic and diluted
Earnings per share is calculated by dividing the loss attributable to the
equity holders of the Company by the weighted average number of Ordinary
shares in issue during the period, excluding Ordinary shares purchased by the
Company and held as treasury shares.
2023 2022
Group:
Loss attributable to equity holders of the parent (£) (623,816) (511,601)
Weighted average number of shares in issue (Number) 183,700,212 182,609,544
Potentially dilutive ordinary shares 6,792,500 6,792,500
For diluted earnings per ordinary share 190,492,712 189,402,044
Basic and diluted loss per share (pence) from continuing operations (0.34) (0.28)
The diluted loss per Ordinary Share is calculated by adjusting the weighted
average number of Ordinary Shares outstanding to consider the impact of
options, warrants and other dilutive securities. As the effect of potential
dilutive Ordinary Shares in the current year would be anti-dilutive, they are
not included in the above calculation of dilutive earnings per Ordinary Share.
9. Property, plant and equipment
Equipment Total
Group £ £
Cost
At 1 January 2022 16,020 16,020
Additions 1,525 1,525
Exchange differences 1,121 1,121
At 31 December 2022 18,666 18,666
Additions
Exchange differences (672) (672)
At 31 December 2023 17,994 17,994
Depreciation
At 1 January 2022 (11,580) (11,580)
Charge for the year (2,194) (2,194)
Exchange differences (659) (659)
At 31 December 2022 (14,433) (14,433)
Charge for the year (2,333) (2,333)
Exchange differences 449 449
At 31 December 2023 (16,317) (16,317) -
Carrying amount
At 31 December 2023 1,677 1,677
At 31 December 2022 4,233 4,233
10. Goodwill
Group £
Cost
At 1 January 2022 - as restated 149,795
Exchange differences 8,231
At 31 December 2022 - as restated 158,026
Exchange differences (3,979)
Impairment (82,627)
At 31 December 2023 71,420
The goodwill at 31 December 2023 represents the goodwill recognised at the
purchase of the Company's subsidiary companies Imaging Biometrics and Stone
Checker Software Limited. The goodwill is not amortised but is reviewed on an
annual basis for impairment, or more frequently if there are indications that
goodwill might be impaired. The impairment review comprises a comparison of
the carrying amount of the goodwill with its recoverable amount (the higher of
fair value less costs to sell and value in use). The goodwill of Stone Checker
Software Limited has been fully impaired in the year.
11. Intangible assets - intellectual property, imaging and diagnostic
software
Group £
Cost
At 1 January 2022 959,775
Exchange differences 60,613
Additions from internal development 38,405
Impairment -
At 31 December 2022 1,058,793
Exchange differences (29,302)
Additions from internal development 78,405
Impairment (125,000)
At 31 December 2023 982,896
Accumulated Amortisation
At 1 January 2022 392,715
Exchange differences (4,201)
Charge for the year 138,413
At 31 December 2022 526,927
Exchange differences 2,031
Charge for the year 113,068
At 31 December 2023 642,026
Net book value
At 31 December 2023 340,870
At 31 December 2022 531,866
The Directors have reviewed the valuation of Stone Checker Software Limited in
the year and concluded that the current commercial position is that the asset
should be written down to its recoverable amount of £nil.
12. Investments in subsidiaries
Company Shares in group undertakings
£
Cost
At 1 January 2022 668,823
Impairment - -
At 31 December 2022 668,823
Impairment (125,000)
At 31 December 2023 543,823
At 31 December 2023, the Group consisted of a parent company, IQ-AI Limited,
registered in Jersey and its two wholly owned subsidiaries.
Subsidiaries:
Imaging Biometrics LLC
Registered Office: 13406 Watertown Plank Road, Elm Grove, WI 53122, United
States of America
Nature of business: develops ready-to-use software applications for the
healthcare industry.
Class of share %
Holding
Ordinary shares 100
Stone Checker Software Limited
Registered Office: Unit 12 Westway Business Centre, Marksbury, Bath, BA2 9HN,
United Kingdom
Nature of business: supplier of technology solutions in the field of kidney
stone analysis and kidney stone prevention.
Class of share %
Holding
Ordinary shares 100
The impairment of £125,00 as shown above is in relation to the value of the
investment in Stone Checker Software Limited, of which the Directors have
written down the value to its current recoverable amount as stated within Note
11.
13. Trade and other receivables
Group Company
2023 2022 2023 2022
£ £ £ £
Amounts owed by group undertakings - - 802,303 1,238,995
Trade receivables 105,640 150,647 - -
Other receivables 34,458 10,320 - -
Prepayments 27,920 36,306 12,110 16,098
168,018 197,273 814,413 1,255,093
In the Directors' opinion, the carrying amounts of receivables is considered a
reasonable approximation of fair value. The Group monitors on a monthly basis
the receivable balance and makes impairment provisions when debt reaches a
certain age. There are no significant known credit risks as at 31 December
2023 (2022: none).
14. Trade and other payables
Group Company
2023 Restated 2023 2022
2022
£ £ £ £
Amounts owed to group undertakings - - 245,201 185,655
Loans - - - -
Other creditors 136,215 12,302 - -
Accruals and deferred income 489,597 486,008 62,524 77,932
625,812 498,310 307,725 263,587
In the Directors' opinion, the carrying amount of payables is considered a
reasonable approximation of fair value.
15. Share capital
2023 2022 2023 2022
Number Number £ £
Allotted, called up and fully paid
Ordinary shares of 1p each 190,671,542 182,621,390 1,906,715 1,826,214
190,671,542 182,621,390 1,906,715 1,826,214
The movement in share capital is detailed below:
Number of shares issued
On 18 August 2023, the Company cancelled 396,241 new ordinary shares at 1p per (396,241)
share.
On 9 November 2023, the Company issued 8,446,393 new ordinary shares at 1p per 8,446,393
share.
The movement in share capital of the previous year is detailed below:
Number of shares issued
On 8 February 2022, the Company issued 113,781 new ordinary shares at 5p per 113,781
share.
16. Reserves
The Group's reserves are made up as follows:
Share capital: Represents the nominal value of the issued share capital.
Share premium account: Represents amounts received in excess of the nominal
value on the issue of share capital less any costs associated with the issue
of shares.
Capital redemption reserve: Reserve created on the redemption of the Company's
shares
Merger reserve: Represents the difference between the nominal value of the
share capital issued by the Company and the fair value of Stone Checker
Software Limited at the date of acquisition.
Convertible loan note reserve: Represents the equity portion of the
Convertible Loan Notes issued by the Company.
Foreign currency translation reserve: Reserve arising from the translation of
foreign subsidiaries at consolidation.
Retained earnings: Represents accumulated comprehensive income for the year
and prior periods.
17. Share-based payments
On 1 November 2018, 6,017,500 shares in IQ-AI Limited were granted under
option to David Smith. The shares are exercisable at 2.60p and the option will
vest over 3 years, with 1/3(rd) vesting on 1 August 2019 and the remainder
vesting at a rate of 1/36(th) per month on the last day of each month, until
the shares become fully vested. The option will be exercisable for 10 years
and will lapse on 1 August 2028. There are no cash settlement alternatives.
The fair value is estimated as at the date of grant using a Black-Scholes
model, taking into account the terms and conditions upon which the options
were granted. The following table lists the inputs to the model.
On 20 September 2022, 775,000 shares in IQ-AI Limited were granted under
option to employees of Imaging Biometrics LLC. The shares are exercisable at
2.253p and the options are exercisable over 10 years from the date of grant.
The fair value is estimated as at the date of grant using a Black-Scholes
model, taking into account the terms and conditions upon which the options
were granted. The following table lists the inputs to the model.
2018
Exercise price (pence) 2.60p
Shares under option 6,017,500
Risk free interest (%) 2
Expected volatility (%) 52%
Expected life in years 3
2022
Exercise price (pence) 2.253p
Shares under option 775,000
Risk free interest (%) 3
Expected volatility (%) 65%
Expected life in years 5
The total charge for the year relating to share-based payments was £0 (2022:
£9,888).
18. Convertible loan note reserve
2023 2022
£ £
At the beginning of the year 217,784 207,074
Interest charge for the year 9,865 10,710
Conversion (126,696) -
At the end of the year 100,953 217,784
The above reserve was created on the issue and conversions of the Convertible
Loan Notes ("CLNs"). The above amount relates to the equity portion of the
CLNs. The capital and accrued interest are wholly repayable by the issue of
shares in the Company. Interest is charged to the company at 6%.
On the 9(th) November 2023, £100,000 of CLNs were converted for equity shares
within the Company. £26,696 of interest was converted on the same date due to
the original transaction.
19. Commitments
Financial commitments
The Group had no contracts in respect of lessee arrangements. The registered
office is provided by the Company Secretary as part of their services. The
contract has a cancellation policy of 3 months.
20. Financial instruments
Financial risk management
The Group's activities expose it to a variety of financial risks: market risk
(including currency risk, fair value interest rate risk, cash flow interest
rate risk and price risk), credit risk and liquidity risk. The Group's overall
risk management programme focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the Group's financial
performance.
The Group has exposure to the following risks from its use of financial
instruments:
(a) Credit risk
(b) Liquidity risk
(c) Market risk
(d) Currency risk
(e) Interest rate risk
(f) Capital risk management
This note presents information about the Group's exposure to each of the above
risks, the Group's objectives, policies and processes for measuring and
managing risks and the Group's management of capital. Further quantitative
disclosures are included throughout these consolidated financial statements.
The Group's risk management policies are established to identify and analyse
the risks faced by the Group, to set appropriate risk limits and controls, and
to monitor risks and adherence to limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions and the Group's
activities.
The Group Audit Committee oversees how management monitors compliance with the
Group's risk management policies and procedures and reviews the adequacy of
the risk management framework in relation to the risks faced by the Group.
The Board of Directors has overall responsibility for the establishment and
oversight of the Group's risk management framework.
(a) Credit risk
Credit risk is the risk of financial loss to the Group if a customer fails to
meet its contractual obligations. Each local entity is responsible for
managing and analysing the credit risk for each of their new clients before
standard payment and delivery terms and conditions are offered.
Trade and other receivables
The Group's exposure to credit risk is influenced by the type of customer the
Group contracts with. The Group has minimal trade receivables.
The immediate credit exposure of financial instruments is represented by those
financial instruments that have a net positive fair value by counterparty at
31 December 2023. The Group considers its maximum exposure to be:
2023 2022
£ £
Financial instrument
Cash and cash equivalents 138,751 313,985
Trade and other receivables 105,640 150,647
244,391 464,632
All cash balances and short-term deposits are held with an investment grade
bank who is our principal banker (Barclays Bank PLC). Although the Group has
seen no direct evidence of changes to the credit risk of its counterparties,
the current focus on financial liquidity in all markets has introduced
increased financial volatility. The Group continues to monitor the changes to
its counterparties' credit risk.
(b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due.
The Board are jointly responsible for monitoring and managing liquidity and
ensures that the Group has sufficient liquid resources to meet unforeseen and
abnormal requirements. The current forecast suggests that the Group has
sufficient liquid resources.
The following are the contractual maturities of financial liabilities:
Carrying Contractual 6 months 6 to 12 1 to 2 2 to 5
31 December 2023 Amount cash flows or less months years years
£ £ £ £ £ £
Trade and other payables 625,812 - 625,812 - - -
Borrowings - - - - - -
625,812 - 625,812 - - -
Carrying Contractual 6 months 6 to 12 1 to 2 2 to 5
31 December 2022 - Restated Amount cash flows or less months years years
£ £ £ £ £ £
Trade and other payables 498,310 - 498,310 - - -
Borrowings - - - - - -
498,310 - 498,310 - - -
Available liquid resources and cash requirements are monitored using detailed
cash flow and profit forecasts which are reviewed at least quarterly, or more
often as required. The Directors decision to prepare these accounts on a going
concern basis is based on assumptions which are discussed in the going concern
paragraph in note 1.
(c) Market risk
Market risk is the risk that changes in market prices, such as foreign
exchange rates, interest rates and equity prices will affect the Group's
income or the value of its holdings of financial instruments. The objective of
market risk management is to manage and control market risk exposures within
acceptable parameters, while optimising the return. Given the Group began
revenue generating operations in the year, the risk for the year was minimal.
(d) Currency risk
The Group is exposed to currency risk as the assets of its subsidiary, Imaging
Biometrics LLC, are denominated in US Dollars. At 31 December 2023, the net
foreign liabilities were £513,287 (2022: £370,379). Differences that arise
from the translation of these assets from US Dollar to Pound Sterling are
recognised in other comprehensive income and the cumulative effect as a
separate component in equity.
(e) Interest rate risk
The Group has no floating rate loans. Therefore, the Group has no exposure to
interest rate risk.
(f) Capital risk management
The Group manages its capital to ensure that entities in the Group will be
able to continue as a going concern while maximising the return to
stakeholders as well as sustaining the future development of the business. In
order to maintain or adjust the capital structure, the Group may adjust
dividends paid to shareholders, return capital to shareholders, issue new
shares or sell assets to reduce debt.
The capital structure of the Group consists of net debt, which includes loans,
cash and cash equivalents, and equity attributable to equity holders of the
parent, comprising issued capital, reserves and retained earnings.
Fair value of financial assets and liabilities
Book value Fair value Book value Fair value
2023 2023 2022 2022
£ £ £ £
Financial assets
Cash and cash equivalents 62,378 62,378 313,985 313,985
Trade and other receivables 105,640 105,640 150,647 150,647
20.
Total at amortised cost 168,018 168,018 464,632 464,632
Financial liabilities
Trade and other payables 625,812 625,812 498,310 498,310
Borrowings - - - -
Total at amortised cost 625,812 625,812 498,310 498,310
21. Related party transactions
Non-Executive Chairman, Brett Skelly, is also an employee of GBAC Limited.
During the year GBAC Limited charged the Company a total of £30,000 (2022:
£30,000) in respect of services provided by Mr Skelly. The balance
outstanding at year end was £nil (2022: £nil).
22. Post balance sheet events
In January 2024, the remaining convertible loans in the Company were converted
into 6,304,914 ordinary shares.
In February 2024, the Company placed 24,733,333 new ordinary shares at a price
of 1.5p per share to raise £371,000 before expenses.
23. Prior year adjustment
The accounts have been restated in order to take out a loan to Mike Schmainda
that had should have been written off when Imaging Biometrics was acquired.
Changes to the Consolidated Statement of Financial Position
As previously Adjustment at Adjustment at Restated
Reported 31 December 2022 1 January 2022 31 December 2022 31 December 2022
£ £ £ £
Non current assets
Goodwill 220,224 (55,409) (6,789) 158,026
Current liabilities
Trade and other payables (560,508) 55,409 6,789 (498,310)
As previously Adjustment at Restated
Reported 1 January 2022 1 January 2022 1 January 2022
£ £ £
Non current assets
Goodwill 205,203 (55,409) 149,794
Current liabilities
Trade and other payables (392,787) 55,409 (337,378)
There have been no changes to the consolidated income statement, retained
earnings or the consolidated statement of cash flow.
The figures in the individual company has not changed and so a detailed
breakdown has not been provided.
24. Ultimate Controlling Party
There is no ultimate controlling party.
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