REG - Narf Industries PLC - Interim Results

Narf IndustriesAnnouncement

27/09/2023 07:00

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RNS Number : 7522N  Narf Industries PLC  27 September 2023

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.

 

27 September 2023

 

NARF INDUSTRIES PLC

 

INTERIM RESULTS

 

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, today announces its
unaudited results for the six months ended 30 June 2023 ("HY2023").

 

HY 2023 Highlights

·    Record revenue growth increasing by 125% to $3.26m (HY2022: $1.45m)

·    Management maintains full year guidance of at least $5.8 million
revenue

·    EBITDA moves into positive territory of $190,000 (HY2022: loss
$1.28m)

·    Operating expenses reduced by 11% to $2.39m (HY2022: $2.69m)

·    Cash and receivables at period end of $1.85m (HY2022: $2.04m)

 

Post Period End

·    Suspension lifted and trading of the Company's shares recommenced on
14 July

·    Awarded new Task Orders of $1.2 million under US Government "Omnibus
Contract" announced on 4 September

·    Adoption of employee share option plan to reward and incentivize
employees and directors announced on 11 September

·    Financial organization has matured with changes to accounting systems
providing prompt financial reporting and ongoing strengthening of corporate
governance

·    Challenges experienced in the 2022 audit have been addressed, most
significantly enabling auditor's access to all Company contracts

·    Confident that full year revenue will be at least $5.8 million

 

 

Executive Chairman John Herring said: "Since assuming the role of Executive
Chairman earlier this year, I have worked to establish clear financial
expectations that are both realistic and aligned to reflect the progress and
milestone successes of our business strategy.

 

"In my annual report statement in July, I set out specific objectives we had
set ourselves regarding revenue growth, expense reduction and EBITDA
performance. I am pleased to report that, at the half-year point, our
financial performance has met or exceeded these targets resulting in the
Company reporting record revenue growth, reduced expenses, and positive EBITDA
performance. We therefore remain confident in our 2023 guidance of at least
$5.8 million in revenue. This will be achieved through the growth we are
experiencing in both our Government Solutions and Services (GS&S) and
Government Research & Development (GR&D) business.

 

"This performance and growth are driven and sustained responsibly through
internal cash generation and current credit facilities and is being achieved,
in part, by our CEO Steve Bassi working to instill a culture of
accountability, ambition and diligence throughout the organization, and
through the dedication of our team of cybersecurity professionals working hard
to deliver cutting-edge capabilities and products that continue to gain
traction across an expanding customer base. I extend my thanks to them all.

 

"Accompanying this growth, we have advanced the organization's financial
policies and processes to achieve consistent and comprehensive record keeping
that enables prompt financial reporting.  These actions, alongside enabling
auditors' access to all Company contracts, overcome the key challenges we
faced in timely completion of our 2022 audit.

 

"Looking ahead, we will uphold our dedication to responsible growth and
continue to share our progress and challenges openly with our shareholders,
who I thank for their continued support."

 

ENDS

For further information on the Group please visit www.narfgroup.com
(http://www.narfgroup.com/)  or contact:

 

 John Herring                                    NARF                 jh@narfgroup.com
 Catherine Leftley/Paul Dulieu /Isabel de Salis  St Brides Partners   narf@stbridespartners.co.uk
 Peter Krens                                     Tennyson Securities  Tel: +44 (0)207 186 9030

 

About NARF Industries plc

Narf Industries (LSE: NARF)(OTCQB: NFIN.F) is a US based cyber security group
specialising in high-end threat intelligence and is commercialising a
portfolio of products.  The Group aims to further strengthen its portfolio
organically and via acquisition; its team of highly qualified cyber security
experts is well placed to identify opportunities.

 

 

 

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 six-month period was $156,200
(interim period to 30 June 2022 : restated loss of $16,661,899) and the
Group's unaudited net assets as at 30 June 2023 were $1,830,678 (30 June 2022:
$3,584,056).

Directors

The following directors held office during the period:

Steven Bassi                       Chief Executive
Officer

John Herring                      Executive Chairman

Rory Heier                           Non-Executive
Director

Robert Mitchell                 Non-Executive Director
(resigned 23 April 2023)

Responsibility Statement

The Directors confirm that to the best of their knowledge:

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

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

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

Cautionary Statement

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

Going Concern

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

Principal Risks and Uncertainties

The principal risks and uncertainties affecting the business activities of the
Group remain those detailed in the annual report and accounts 2022, a copy
of which is available on the Company website
at https://narfgroup.com/investor-relations/corporate-documents
(https://narfgroup.com/investor-relations/corporate-documents/) .  By order
of the Board

 

 

Steve Bassi

Chief Executive

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                                                        Six months   Six months                Year
                                                                                        Ended        Ended                     Ended
                                                                                        30.6.2023    30.6.2022                 31.12.2022
                                                                                        (Unaudited)  (Unaudited and restated)  (Unaudited)
                                                                                 Notes  US$          US$                       US$
 Continuing operations
 Contract revenue                                                                       3,261,179    1,446,032                 2,547,125
 Sub-contractors                                                                        (685,087)    (39,676)                  (126,199)
 Operating expenses                                                                     (2,386,994)  (2,687,650)               (5,006,271)
 Profit/(loss) before depreciation and software licence amortisation, share             189,098      (1,281,294)               (2,585,345)
 based payments, interest and taxes

 Depreciation and software license amortisation                                         (329,735)    -                         (329,999)
 Other share based payment expense                                                      -            -                         (147,580)

 Operating loss                                                                         (140,637)    (1,281,294)               (3,062,924)

 RTO share based payment expense                                                        -            (15,355,123)              (15,355,123)
 Interest receivable and other finance income                                           299          -                         3,376
 Finance costs                                                                          (3,862)      (274)                     (3,197)

 Loss before taxation                                                                   (144,200)    (16,636,691)              (18,417,868)

 Taxation                                                                               (12,000)     (7,839)                   (7,839)

 Loss for the period                                                                    (156,200)    (16,644,530)              (18,425,707)

 Other comprehensive income
 Items that may be reclassified subsequently to profit or loss:
 Exchange differences on foreign operations                                             306,915      -                         -

 Total comprehensive income/(loss) for the period attributable to the owners of         150,715      (16,644,530)              (18,425,707)
 the company

 Earnings per share
 Earnings per share (basic and diluted) attributable to the equity holders       3      (0.01)       (1.3)                     (1.2)
 (cents)

 

 

 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

                                    As at         As at                     As at
                                    30.6.2023     30.6.2022                 31.12.2022
                                    (Unaudited)   (Unaudited and restated)  (Unaudited)
                              Note  US$           US$                       US$

 NON-CURRENT ASSETS
 Intangible assets                  2,465,009     3,001,212                 2,697,076
 Tangible assets                    -             32,755                    15,990
 Investments                        -             -                         -
                                    2,465,009     3,033,967                 2,713,066
 CURRENT ASSETS
 Trade and other receivables        1,486,482     557,751                   756,481
 Cash and cash equivalents          361,045       1,477,764                 442,751
                                    1,847,527     2,035,515                 1,199,232

 TOTAL ASSETS                       4,312,536     5,069,482                 3,912,298

 CURRENT LIABILITIES

 Trade and other payables           1,229,859     382,726                   595,962
 NON-CURRENT LIABILITIES
 Loans from directors               1,252,000     1,102,700                 1,513,727
 TOTAL LIABILITIES                  2,481,859     1,485,426                 2,109,689

 NET ASSETS                         1,830,678     3,584,056                 1,802,609

 EQUITY
 Share capital                4     204,012       204,012                   204,012
 Share premium                4     34,951,415    35,074,061                35,074,061
 Reverse acquisition reserve        (16,747,959)  (16,747,959)              (16,747,959)
 Foreign exchange reserve           263,504       (43,411)                  (43,411)
 Share based payment reserve        229,185       229,185                   229,185
 Retained deficit                   (17,069,479)  (15,131,832)              (16,913,279)

 TOTAL EQUITY                       1,830,678     3,584,056                 1,802,609

 

Company number: 11701224

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

                                                    Share        Share           FX            Share-based      Reverse           Retained          Total
                                                    Capital       Premium        Reserve       Payment          Acquisition       Deficit
                                                                                               Reserve          Reserve
                                                    US$          US$             US$           US$              US$               US$               US$
 AS AT 1 JULY 2022 (Unaudited and restated)         204,012      35,074,061      (43,411)      229,185          (16,747,959)      (15,131,832)      3,584,056

 Loss for the period                                -            -               -             -                -                 (1,781,447)       (1,781,447)
 Total comprehensive loss for the period            -            -               -             -                -                 (1,781,447)       (1,781,447)

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

 Loss for the period                                -            -               -             -                -                 (156,200)         (156,200)
 Foreign exchange gain on conversion of subsidiary  -            -               306,915       -                -                 -                 306,915
 Total comprehensive income for the period          -            -               306,915       -                -                 (156,200)         150,715
 Shares issue costs                                 -            (122,646)       -             -                -                 -                 (122,646)

 AS AT 30 JUNE 2023 (Unaudited)                     204,012      34,951,415      263,504       229,185          (16,747,959)      (17,069,479)      1,830,678

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

                                                                       Six months   Six months                Year
                                                                       Ended         Ended                    Ended
                                                                       30.6.2023    30.6.2022                 31.12.2022
                                                                       (Unaudited)  (Unaudited and restated)  (Unaudited)
                                                                       US$          US$                       US$

 OPERATING ACTIVITIES
 Loss for the period before taxation                                   (144,200)    (16,636,691)              (18,417,868)
 Adjusted for:
 Depreciation and software license amortisation                        216,266      16,765                    329,999
 Software development amortisation                                     113,469      216,021                   226,938
 Unrealised foreign exchange adjustment                                225,237      (4,864)                   -
 RTO and other share based payment expenses                            -            15,355,123                15,502,703
 Operating cash inflow/(outflow) before movements in working capital:  410,772      (1,053,646)               (2,358,228)

 Decrease in trade and other receivables                               (730,001)    (509,677)                 (701,723)
 Increase in trade and other payables                                  633,897      188,742                   67,140

 Net cash generated from/(used in) operating activities                314,668      (1,374,581)               (2,992,811)

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

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

 FINANCING ACTIVITIES
 Proceeds on the issue of shares                                       -            7,650,881                 7,650,881
 Costs related to share issues                                         (122,646)    (1,145,814)               (1,145,814)
 Loan from former member                                               -            270,388                   702,000
 Loan repayment                                                        (261,727)    -                         (20,292)
 Drawings by former members                                            -            (75,000)                  (75,000)
 Net interest received                                                 -            180                       180

 Net cash (outflow)/inflow  from financing activities                  (384,373)    6,700,635                 7,111,955

 Taxation paid                                                         (12,000)     (7,839)                   (7,839)

 Net (decrease)/increase in cash and cash equivalents                  (81,705)     1,202,782                 (4,128)
 Cash and cash equivalents at beginning of period                      442,751      274,982                   446,879

 Cash and cash equivalents at end of period                            361,045      1,477,764                 442,751

Notes to the CONSOLIDATED Financial Statements

interim results to 30 june 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 27
September 2023. Copies of this interim report can be found on the Company's
website at https://narfgroup.com/investor-relations/corporate-documents
(about%3Ablank) .

These condensed interim financial statements for the six months ended 30 June
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.

 

2.    Summary of Significant Accounting Policies (contiNUED)

 

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 period ended 30 June
2022 assumes that all shares have been included in the computation based on
the weighted average number of days since issue. Since the Group has made a
loss in the current and each of the prior periods, the warrants in issue are
not dilutive.

                                                                         Six months to  Six months to  Year to

                                                                         30 June 2023   30 June 2022   31 Dec 2022

                                                                         US$            US$            US$
 Loss attributable to owners of the Group :                              (156,200)      (16,644,530)   (18,425,707)
 Weighted average number of ordinary shares in issue for basic earnings  1,697,381,100  1,243,631,762  1,475,948,904
 Weighted average number of shares in issue for fully diluted earnings   1,697,381,100  1,243,631,762  1,475,948,904
 LOSS PER SHARE (CENTS PER SHARE)                                        (0.01)         (1.3)          (1.2)
 BASIC AND FULLY DILUTED:
 - from continuing and total operations (cents)                          (0.01)         (1.3)          (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 1 July 2022                                         204,012        35,074,061

                      1,697,381,000
 At 31 December 2022                                    204,012        35,074,061

                      1,697,381,000
 At 30 June 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 but readers of these
accounts should be aware that the Company announced it had granted 391,214,900
employee share options in September 2023 and this will impact on losses as
well as the share based payment reserve in the 2023 accounts.

 

 

 

ENDS

For further information on the Group please visit www.narfgroup.com or
contact:

 John Herring                                      NARF                 Tel: +44 (0) 20 3468 2212
 Catherine Leftley/Charlotte Page/Isabel de Salis  St Brides Partners   narf@stbridespartners.co.uk
 Peter Krens                                       Tennyson Securities  Tel: +44 (0)207 186 9030

 

 

About NARF Industries plc

Narf Industries (LSE: NARF)(OTCQB: NFIN.F) is a US based cyber security group
specialising in high-end threat intelligence with a focus on critical
infrastructure. The Group leads commissioned cyber security R&D and is
commercialising a portfolio of products including a DARPA-backed product (an
agency within the US Department of Defence) that can be used by utilities and
cyber first responders to restore power to electric grids and protecting other
key infrastructure that have suffered a cyber-attack.  The Group aims to
further strengthen its portfolio organically and via acquisition; its team of
highly qualified cyber security experts is well placed to identify
opportunities.

 

Important notice

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