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.

 

--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 Company		(626,916)	(514,194)

 

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 capital	Share premium	Capital redemption reserve	reserve	Convertible loan note reserve	Share based payment reserve	Foreign currency reserve	Retained losses	TOTAL EQUITY
	£	£	£	£	£	£	£	£	£
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 Capital	Share Premium	Capital Redemption Reserve	Merger Reserve	Convertible Loan Note Reserve	Share Based Payment Reserve	Retained Losses	TOTAL EQUITY
	£	£	£	£	£	£	£	£
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 the Group and Company's financial statements	37,500	34,000
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 2022		2023	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 share.	(396,241)
On 9 November 2023, the Company issued 8,446,393 new ordinary shares at 1p per share.	8,446,393

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 share.	113,781

 

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.