REG - Narf Industries PLC - Corporate Update

Narf IndustriesAnnouncement

25/01/2024 07:00

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RNS Number : 8338A  Narf Industries PLC  25 January 2024

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK
VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH
LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED.  ON
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

25 January 2024

NARF INDUSTRIES PLC

 

Corporate Update

 

Six month & 12 Month unaudited financial results ending December 31, 2023

Key Appointments & Other Matters

 

Narf Industries plc ("NARF", the "Company", or the "Group") (LSE: NARF)
(OTCQB: NFIN.F), the cybersecurity group specializing in high-end threat
intelligence and critical infrastructure security, is pleased to provide an
update with regards to its corporate activities.

 

OVERVIEW

 

Financials

·    Year Over Year revenue growth of 130%

·    Up from $2.5 million in CY22 to $6.0 million in CY23

·    EBITDA positive, improving from CY22 loss of $2.6 million

·    Ending cash and short-term receivables $1.4 million, up from $1.2
million prior year

 

Appointments

●     Nick Davis as COO

●     Neil Warrender as CFO

●     Albert Hawk as a Non-executive Director

●     Haysmacintyre LLP as auditor

 

Other Matters

●     Change of fiscal year end

●     Board member and auditor resignation

 

John Herring, Executive Chairman of Narf said: "We've successfully worked the
past nine months to complete the transition from a private and entrepreneurial
led venture to the main operating business of an LSE listed company.  Our
financial results exceeded our market guidance, and we enter CY24 with strong
business momentum and upside potential.  My thanks to the entire NARF team.

 

"The appointments made here acknowledge those who did the heavy lifting during
the transition and those joining who set a solid foundation for our corporate
governance and financial accountability in this exciting new phase.

 

Prior to co-founding NARF, our COO Nick Davis led the Threat Analysis and
Network Forensics Department at the Navy Cyber Defense Operations Command
where he managed and coordinated a team of over a hundred employees and
contractors responsible for the defense of the Navy's global IT
infrastructure.

 

Our CFO Neil Warrender brings multi-decade experience as a UK qualified
chartered accountant, a non-executive director and company secretary for main
market LSE listed companies.

 

We are pleased to have Mr. Albert "Bud" Hawk join our Board.  He leads a
globally diversified and strategic advisory US firm with funds under
management and transactions exceeding $1 billion and has extensive board and
leadership experience in publicly traded and private equity businesses.

 

We are also pleased to welcome Haysmacintyre LLP as our new auditors.
Throughout the selection process its team showed a profound understanding of
our high-tech business and the sensitivity of customer information, a priority
in our criteria for a trusted auditing partner."

 

Steve Bassi, CEO of Narf said: "I would like to thank John for stepping in the
past year to help me drive this transition. It enabled me and the team to stay
laser focused on meeting our customer mission and research needs and
delivering on these aggressive growth objectives.  Importantly, we are
leveraging these non-dilutive funds to fuel next-gen products as we move to
expand into commercial markets."

 

OTHER MATTERS

 

Change of Accounting Period

The Company has changed its Accounting Period from the calendar year to a
fiscal year ending on 31 March. This avoids the peak period when auditors
prioritize larger accounts and ensures we have access to high-quality
resources for an efficient and thorough audit process.

 

Resignations

Rory Heier resigns from the Board concurrent with this announcement.  The
Board wishes to thank Rory for his work as a founding board member as he was
instrumental in the initial listing of the Company, the acquisition of the
Narf Group in 2022, as well as his support during this transition period.

 

PKF Littlejohn LLP resigned as auditors and advised there are no circumstances
connected with its resignation which it considers should be brought to the
attention of the members or creditors of the Company.

 

ENDS

 

For further information visit www.narfgroup.com or contact:

 

 John Herring      Executive Chairman    E: jh@narfgroup.com (mailto:jh@narfgroup.com)

                   Narf Industries plc
 Paul Dulieu       Financial PR, UK      E: narf@stbridespartners.co.uk

 Isabel de Salis   St Brides Partners
 Peter Krens       Broker, UK            T: +44 (0)207 186 9030

                   Tennyson Securities

 

About Narf Industries plc

Narf Industries (LSE: NARF) (OTCQB: NFIN.F) is a US based leading provider of
cybersecurity research, solutions, and services to government entities. With a
steadfast commitment to protecting national security and critical
infrastructure, it offers comprehensive expertise in addressing the evolving
cyber threats faced by its clients.

 

DIRECTORS' REPORT AND STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF
THE CONDENSED INTERIM REPORT AND CONDENSED FINANCIAL STATEMENTS

 

The results of the Group have been addressed above in the Chairman's
statement. The total comprehensive loss for the year was $1,152,024 (YE 2022
$18,425,707) and the Group's unaudited net assets as at 31 December 2023 were
$1,364,849 (31 December 2022: $1,802,609).

 

Directors

The following directors held office during the period:

Steven Bassi                       Chief Executive
Officer

John Herring                      Executive Chairman

Rory Heier                          Non-Executive Director
(resigned 25 January 2024)

Responsibility Statement

The Directors confirm that to the best of their knowledge:

a)    the condensed set of financial statements has been prepared in
accordance with International Accounting Standard 34 'Interim Financial
Reporting';

b)    the interim management report includes a fair review of the
information required by DTR 4.2.7R - namely an indication of important events
that have occurred during the year and their impact on the condensed interim
financial information, and a description of principal risks and uncertainties
for the remaining three months of the extended financial year; and

c)    the interim management report includes a fair review of the
information required by DTR 4.2.8R - disclosure of material related parties'
transactions in the year and any material changes therein).

 

Cautionary Statement

This Interim Management Report (IMR) has been prepared solely to provide
additional information to shareholders to assess the Group's strategies and
the potential for those strategies to succeed. The IMR should not be relied on
by any other party or for any other purpose.

 

Going Concern

The Directors' assessment of going concern is detailed in Note 2.

 

Principal Risks and Uncertainties

The principal risks and uncertainties affecting the business activities of the
Group remain those detailed in the consolidated report and accounts 2022, a
copy of which is available on the Company website at
https://narfgroup.com/investor-relations/corporate-documents (about%3Ablank) .
The Board considers that these remain a current reflection of the risks and
uncertainties facing the business for the remaining three months of the
extended financial year.

By order of the Board

 

Steve Bassi

Chief Executive

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                                                    Year         Year
                                                                                    Ended        Ended
                                                                                    31.12.23     31.12.2022
                                                                                    (Unaudited)  (Unaudited)
                                                                             Notes  US$          US$
 Continuing operations
 GR &D Revenue                                                                      3,786,889    1,705,294
 GS & S Revenue                                                                     2,169,047    841,831
 Commercial Revenue                                                                 49,000       -
 Total revenue                                                                      6,004,936    2,547,125
 Sub-contractors                                                                    (1,061,776)  (126,199)
 Operating expenses                                                                 (4,900,090)  (5,006,271)
 Profit/(loss) before depreciation and software licence amortisation, share         43,069       (2,585,345)
 based payments, interest and taxes

 Depreciation and software license amortisation                                     (639,444)    (329,999)
 Other share-based payment expense                                                  (836,910)    (147,580)

 Operating loss                                                                     (1,433,285)  (3,062,924)

 RTO share based payment expense                                                    -            (15,355,123)
 Interest receivable and other finance income                                       13           3,376
 Finance costs                                                                      (5,802)      (3,197)

 Loss before taxation                                                               (1,439,074)  (18,417,868)

 Corporate tax                                                                      (15,261)     (7,839)

 Loss for the year                                                                  (1,454,335)  (18,425,707)

 Other comprehensive income
 Items that may be reclassified subsequently to profit or loss:
 Exchange differences on foreign operations                                         302,311      -

 Total comprehensive loss for the year attributable to the owners of the            (1,152,024)  (18,425,707)
 Company

 Earnings per share
 Earnings per share (basic and diluted) attributable to the equity holders   3      (0.09)       (1.2)
 (cents)

 

 

 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

                                    As at         As at
                                    31.12.2023    31.12.2022
                                    (Unaudited)   (Unaudited)
                              Note  US$           US$

 NON-CURRENT ASSETS
 Intangible assets                  2,158,824     2,697,076
 Tangible assets                    -             15,990
                                    2,158,824     2,713,066
 CURRENT ASSETS
 Trade and other receivables        1,236,767     756,481
 Cash and cash equivalents          268,742       442,751
                                    1,505,509     1,199,232

 TOTAL ASSETS                       3,664,333     3,912,298

 CURRENT LIABILITIES

 Trade and other payables           1,016,485     595,962
 NON-CURRENT LIABILITIES
 Loans from directors               1,283,000     1,513,727
 TOTAL LIABILITIES                  2,299,485     2,109,689

 NET ASSETS                         1,364,849     1,802,609

 EQUITY
 Share capital                4     204,012       204,012
 Share premium                4     34,951,415    35,074,061
 Reverse acquisition reserve        (16,747,959)  (16,747,959)
 Foreign exchange reserve           258,900       (43,411)
 Share based payment reserve        951,502       229,185
 Retained deficit                   (18,253,021)  (16,913,279)

 TOTAL EQUITY                       1,364,849     1,802,609

 

Company number: 11701224

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

                                                    Share        Share           FX               Share-based      Reverse           Retained          Members'       Total
                                                    Capital       Premium        Reserve          Payment          Acquisition       Deficit           equity
                                                                                                  Reserve          Reserve
                                                    US$          US$             US$              US$              US$               US$               US$            US$
 AS AT 1 JANUARY 2022                               -            -               -                -                -                 -                 821,527        821,527

 Loss for the year                                  -            -               -                -                -                 (18,425,707)      -              (18,425,707)
 Total comprehensive loss for the year              -            -               -                -                -                 (18,425,707)      -              (18,425,707)
 Drawings by former members                         -            -               -                -                -                 -                 (75,000)       (75,000)
 Reclassification of members at acquisition         -            -               -                -                -                 746,527           (746,527)      -
 Recognition of Plc equity at acquisition date      112,346      15804717        (1,840,675)      -                3,097,995         765,901           -              17,940,284
 Issue of shares for acquisition                    84,330       17964360        1,797,264        -                (19,845,954)      -                 -              -
 Share based payments                               7,336        1419577         -                -                -                 -                 -              1,426,913
 Issue of warrants and options                      -            (114,593)       -                229,185          -                 -                 -              114,592

 AS AT 31 DECEMBER 2022                             204,012      35,074,061      (43,411)         229,185          (16,747,959)      (16,913,279)      -              1,802,609

 Loss for the year                                  -            -               -                -                -                 (1,454,335)       -              (1,454,335)
 Foreign exchange gain on conversion of subsidiary  -            -               302,311          -                -                 -                 -              302,311
 Total comprehensive loss for the year              -            -               302,311          -                -                 (1,454,335)       -              (1,152,024)
 Shares issue costs                                 -            (122,646)       -                -                -                 -                 -              (122,646)
 Cancellation of warrants                           -            -               -                (114,593)                          114,593           -              -
 Share based payments                               -            -               -                836,910          -                 -                 -              836,910

 AS AT 31 DECEMBER 2023                             204,012      34,951,415      258,900          951,502          (16,747,959)      (18,253,021)      -              1,364,849

CONSOLIDATED STATEMENT OF CASH FLOWS

                                                                       Year         Year
                                                                       Ended        Ended
                                                                       31.12.2023   31.12.2022
                                                                       (Unaudited)  (Unaudited)
                                                                       US$          US$

 OPERATING ACTIVITIES
 Loss for the year before taxation                                     (1,439,074)  (18,417,868)
 Adjusted for:
 Depreciation and software license amortisation                        15,990       329,999
 Amortisation of intangibles                                           623,454      226,938
 Unrealised foreign exchange adjustment                                102,516      -
 RTO and other share-based payment expenses                            836,910      15,502,703
 Operating cash inflow/(outflow) before movements in working capital:  139,796      (2,358,228)

 Decrease in trade and other receivables                               (480,286)    (701,723)
 Increase in trade and other payables                                  420,523      67,140

 Net cash generated from/(used in) operating activities                80,033       (2,992,811)

 INVESTING ACTIVITIES
 Net amounts paid to former members to acquire control                 -            (3,615,433)
 Licence fee expenditure                                               -            (500,000)

 Net cash outflow from investing activities                            -            (4,115,433)

 FINANCING ACTIVITIES
 Proceeds on the issue of shares                                       -            7,650,881
 Costs related to share issues                                         (122,646)    (1,145,814)
 Loan from former member                                               -            702,000
 Loan repayment                                                        (230,727)    (20,292)
 Drawings by former members                                            -            (75,000)
 Net interest received                                                 -            180

 Net cash (outflow)/inflow from financing activities                   (353,373)    7,111,955

 Taxation paid                                                         99,332       (7,839)

 Net decrease in cash and cash equivalents                             (174,009)    (4,128)
 Cash and cash equivalents at beginning of year                        442,751      446,879

 Cash and cash equivalents at end of year                              268,742      442,751

 

 

Notes to the CONSOLIDATED Financial Statements

interim results to 31 DECEMBER 2023

 

1.    Organisation and Trading Activities

The principal activity of Narf Industries plc (the "Company'') together with
its operating subsidiaries (together, the "Group") is high-end threat
intelligence. Its strategy is focussed on building a group capable of offering
cybersecurity solutions in the US and beyond. The Company is domiciled in the
United Kingdom and incorporated and registered in England and Wales as a
public limited company. The Company's registered office is 5 Fleet Place,
London EC4M 7RD. The Company's registered number is 11701224.

 

2.    Summary of Significant Accounting Policies

The principal accounting policies adopted and applied in the preparation of
these interim Group Financial statements are set out below.

 

These have been consistently applied to all the periods presented unless
otherwise stated:

 

Basis of accounting

These interim financial statements of Narf Industries plc (the "Group") have
been prepared in accordance with UK adopted international accounting standards
("UK-adopted IAS") applied in accordance with the provisions of the Companies
Act 2006.

 

The interim financial statements have been prepared under the historical cost
convention on the basis of the accounting policies as set out in the Group's
audited annual financial statements and are presented in US Dollars the
presentational and functional currency of the Group. The Group has applied IAS
34 in the preparation of these interim financial statements.

 

The interim financial statements 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 prior year interim numbers have been restated to
reflect the treatment as a reverse takeover whereas previously the numbers had
been reported under the acquisition method.

 

This announcement was approved and authorised by the Board of directors on 24
January 2024. Copies of this interim report can be found on the Company's
website at https://narfgroup.com/investor-relations/corporate-documents
(about%3Ablank) .

 

These condensed interim financial statements for the twelve months ended 31
December 2023 are unaudited and do not constitute fully prepared statutory
accounts. The comparative figures for the year ended 31 December 2022 are
extracted from the 2022 consolidated financial statements of the Company. The
independent auditor's report on the 2022 financial statements disclaimed
opinion due to the inability to gain sufficient and appropriate audit evidence
in respect of a number of areas and accordingly those numbers are stated as
being unaudited.

 

Going concern

Any consideration of the foreseeable future involves making a judgement, at a
particular point in time, about future events which are inherently uncertain.
The Directors have prepared cash flow forecasts covering the period to 31
December 2024 and those forecasts indicate that the Group will have sufficient
cash resources to meet all foreseeable liabilities through to a period which
is at least twelve months after the issue of these condensed interim financial
statements.

 

Accordingly, the Directors have a reasonable expectation that the Group will
be able to achieve the above in order to meet any future obligations and thus
to continue operating for the foreseeable future. For this reason, they
continue to adopt the going concern basis in preparing the interim financial
statements.

 

Basis of consolidation

The Financial Statements consolidate the financial information of the Company
and companies controlled by the Group (its subsidiaries) at each reporting
date following the acquisition in March 2022.

 

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 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 Financial Statements consolidate the financial information of the Company
and companies controlled by the Group (its subsidiaries) at each reporting
date. For commentary on how the acquisitions of Narf Industries US LLC and
Narf Industries PR LLC, which falls outside the scope of IFRS 3, was accounted
for, see note 8 to the consolidated financial statements for the year to 31
December 2022.

 

3.    EARNINGS per Share

The basic earnings per share is based on the loss for the period divided by
the weighted average number of shares in issue during the period. The weighted
average number of ordinary shares for the Company the year ended 31 December
2023 assumes that all shares have been included in the computation based on
the weighted average number of days since issue. Since the Group has made a
loss in the current and the prior period, the warrants in issue are not
dilutive.

 

                                                                             Year to        Year to

                                                                             31 Dec 2023    31 Dec 2022

                                                                             US$            US$
 Loss attributable to owners of the Group :                                  (1,454,335)    (18,425,707)
 Weighted average number of ordinary shares in issue for basic earnings      1,697,381,100  1,475,948,904
 Weighted average number of shares in issue for fully diluted earnings       1,697,381,100  1,475,948,904
 LOSS PER SHARE (CENTS PER SHARE)                                            (0.09)         (1.2)
 BASIC AND FULLY DILUTED:
 - from continuing and total operations (cents)                              (0.09)         (1.2)

 

4.    Share capital AND SHARE PREMIUM

The following table is presented in US Dollar equivalents:

                      Ordinary shares of £0.0001 each   Share Capital  Share Premium

                      Number                            $              $
 At 31 December 2022  1,697,381,000                     204,012        35,074,061
 At 31 December 2023                                    204,012        34,951,415

                      1,697,381,000

 

5.    Post period end events

There were no significant events subsequent to the balance sheet date which
have any bearing on these interim financial statements.

 

Important notice

The content of this announcement has not been approved by an authorised person
within the meaning of the Financial Services and Markets Act 2000 (FSMA). This
announcement has been issued by and is the sole responsibility of the Company.
The information in this announcement is subject to change. This announcement
is not an offer of securities for sale into the United States. The securities
referred to herein have not been and will not be registered under the U.S.
Securities Act of 1933, as amended (the Securities Act), and may not be
offered or sold, directly or indirectly, in or into the United States, except
pursuant to an applicable exemption from registration. No public offering of
securities is being made in the United States. This announcement is not for
release, publication or distribution, directly or indirectly, in or into
Australia, the Republic of South Africa, Japan or any jurisdiction where to do
so might constitute a violation of local securities laws or regulations (a
Prohibited Jurisdiction). This announcement and the information contained
herein are not for release, publication or distribution, directly or
indirectly, to persons in a Prohibited Jurisdiction unless permitted pursuant
to an exemption under the relevant local law or regulation in any such
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