Condensed Consolidated Statement of Financial Position

As at 30 June 2024

** Comparative restated at the year end due to prior year error, see note 8 for details

Condensed Statement of Changes in Equity    

As at 30 June 2024

Condensed Statement of Cash Flows

For the 6 months ended 30 June 2024

Notes to the Condensed Financial Statements

1.     General Information

The Interim Financial Statements are for the six months ended 30 June 2024 and are presented in British Pounds (£), which is the functional currency of the parent company.

EARNZ plc ("EARNZ" or the "Company" or the "Group") is a public limited company incorporated, registered and domiciled in England and Wales (registration number 10114644), whose shares are quoted on the Alternative Investment Market on the London Stock Exchange. Its registered office is located at Holborn Gate, 330 High Holborn, London, WC1V 7QH.

EARNZ is an AIM Rule 15 cash shell seeking acquisition targets in the energy services sector.

The Interim Financial Statements have been approved for issue by the Board of Directors on 7 August 2024.

2.     Basis of Preparation of Half-year Report

The financial information presented in this condensed consolidated interim report for the half-year has been prepared in accordance with the recognition and measurement requirements of UK adopted International Accounting Standards ("UK IAS"). The principal accounting policies adopted in the preparation of the financial information in this Interim Report are unchanged from those used in the Company's financial statements for the year ended 31 December 2023.

They have been prepared in accordance with IAS 34 'Interim Financial Reporting'. They do not include all of the information required in annual financial statements in accordance with UK IAS and should be read in conjunction with the consolidated financial statements for the year ended 31 December 2023. The condensed consolidated interim report has not been reviewed or audited by our independent auditors.

The financial information for the year ended 31 December 2023 presented in this Interim Report does not constitute the Company's statutory accounts for that period but has been derived from them.  The Annual Report and Accounts for the year ended 31 December 2023 were audited and have been filed with the Registrar of Companies.  The Independent Auditors' Report on the Annual Report and Accounts for the year ended 31 December 2023 did not contain statements under s498(2) or (3) of the Companies Act 2006, but did contain a material uncertainty in relation to going concern, and the audit opinion was qualified in respect of inventories as the auditor was unable to attend the stock count at the year end.  The income statement comparative for the year ended 31 December 2023 included in this Interim Report has been represented to show discontinued operations separately. The impact of this is set out in note 5.

The financial information for the 6 month periods ended 30 June 2023 and 30 June 2024 is unaudited.

A copy of the Company's audited consolidated financial statements for the year ended 31 December 2023 is available on the website https://earnzplc.com/.

New Standards adopted as at 1 January 2024

Accounting pronouncements which have become effective from 1 January 2024 are:

·      IFRS 16 Leases (Amendment - Liability in a Sale and Leaseback). In September 2022, the IASB finalised narrow-scope amendments to the requirements for sale and leaseback transactions in IFRS 16 Leases which explain how an entity accounts for a sale and leaseback after the date of the transaction.

·      IAS 1 Presentation of Financial Statements (Amendment - Non-current Liabilities with Covenants) Amendments made to IAS 1 Presentation of Financial Statements in 2020 and 2022 clarified that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the entity's expectations or events after the reporting date.

·      IAS 7 and IFRS 7 (Amendments - Supplier finance arrangements) - On 25 May 2023, the IASB issued 'Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)' to add disclosure requirements, and 'signposts' within existing disclosure requirements, that ask entities to provide qualitative and quantitative information about supplier finance arrangements.

These accounting pronouncements do not have a significant impact on the Group's financial results or position and no changes to existing accounting policies were required as a result of adopting any amendments.

Going concern

Following the Disposal, the Company has ceased to own, control, or conduct all or substantially all its previous trading business, activities and assets and, on 1 March 2024, became an AIM Rule 15 cash shell.  As such, the Company is required to make an acquisition or acquisitions which constitute a reverse takeover under AIM Rule 14 ("Reverse Takeover") or be re-admitted to trading on AIM as an investing company (which requires, inter alia, the raising of at least £6.0 million) under the AIM Rules, on or before the date falling six months from 1 March 2024. If the Company does not complete a Reverse Takeover in accordance with AIM Rule 14, or otherwise if re-admitted to trading on AIM as an investing company fails to implement its investing policy to the satisfaction of the London Stock Exchange within twelve months of becoming an investing company, the London Stock Exchange will suspend trading in the Company's AIM securities pursuant to AIM Rule 40.

Following the Board changes in March, May and June 2024, the monthly cost of maintaining the Company has reduced.

The directors have a clear strategy to identify Reverse Takeover targets and have several opportunities in the pipeline. The cash resources of the Company are sufficient to cover the costs of a Reverse Takeover. As announced this morning, subject to shareholder approval on 27 August 2024, the Company will be making two acquisitions before 31 August 2024. However, as the successful completion of any Reverse Takeover target cannot be assured at this time, the directors have concluded that a material uncertainty exists as to the Company's ability to continue as a going concern beyond the AIM Rule 15 timetable. This uncertainty arises primarily because should the Company's shares be suspended from trading on AIM or its listing is cancelled, the Company's ability to raise finance for the longer term would be significantly impaired.

Notwithstanding the above, as at the date of approval of the financial statements, the base case cash flow forecast indicated that no additional cash resources will be required over the course of the next 12 months. The directors therefore consider the Group and the Company to be a going concern and have therefore prepared these financial statements on the going concern basis. It is noted that management has successfully raised money in the past, but there is no guarantee that adequate funds will be available when needed in the future.

Dividends

        The Directors do not propose the payment of an interim dividend.

Material changes in accounting estimates or judgments

The preparation of unaudited interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses for the current and its corresponding financial period under review. Actual results may differ from these estimates.

In preparing the unaudited interim financial information, the significant judgements made by the management in applying the Group's accounting policies and the sources of estimates uncertainty were consistent with those applied to the audited financial statements for the year ended 31 December 2023. It is relevant to note that as the Solar Business was disposed of on 29 February 2024 (see Note 5), the trade-related estimates and judgements such as warranty provision, stock valuation, other receivables measurement, revenue recognition and convertible loan note treatment are no longer considered material to the Group at 30 June 2024.

3.     Loss Per Share 

The calculation of loss per share is based on the following loss and number of shares:

Basic loss per share is calculated by dividing the loss for the period from continuing operations of the Group by the weighted average number of ordinary shares in issue during the period. Due to the loss in the periods and there are no potentially dilutive ordinary shares, meaning the basic and diluted loss per share were the same.

On 4 April 2024 a share consolidation was approved, so that every 100 shares in the Company was consolidated to 1 share. This increased the nominal value of each share from £0.0004 to £0.04, and reduced the number of shares from 954,649,497 to 9,546,495 shares. Accordingly, the comparative number of shares at June 2023 and December 2023 has been represented.

4.    Loans and Borrowings

In May 2023 the Group raised £500,000 in secured convertible loan, with an associated coupon of 7%. The convertible loan notes were redeemable 2 years from the date of issue and were convertible at the option of the noteholder into ordinary shares. As a result of the disposal of Verditek Solar Italy srl ("VSI") on 29 February 2024, there was an agreement with the loan note holders that the principal of the convertible loan and accrued interest to date was satisfied, £528,340 in return for the sale of the Solar Business (see Note 5).

In February 2024 the Company entered into a loan agreement with Bob Holt, prior to his appointment as a director of the Company, for up to £300,000, of which £250,000 was drawn down on 28 February 2024 prior to the disposal of the Solar Business in order to settle outstanding liabilities of the Group. The remaining £50,000 was subsequently drawn down. The loan was unsecured and interest free, convertible in part or in whole at any equity fundraising undertaken by the Company after the date of the drawdown. The loan was converted into 4,000,000 ordinary shares on 8 April 2024.

5.   Share capital and reserves

On 4 March 2024 400,000,000 ordinary shares were issued at a price of 0.075 pence per share. On 4 April 2024 83 ordinary shares were issued at a price of 0.04 pence per share. On 4 April 2024 there was a share consolidation, so that every 100 shares in the Company would be consolidated to 1 share. This increased the nominal value of each share from £0.0004 to £0.04, and reduced the number of shares from 954,649,500 to 9,546,495 shares. On 8 April 2024 53,333,333 ordinary shares were issued at a price of 7.5 pence per share.

There have been no new options granted or exercised in the period and options over 2,700,000 shares were forfeit as part of the agreement to dispose of the Solar Business, see Note 5. Following the share consolidation on 4 April 2024, the number of options outstanding and exercise price was amended accordingly. A further 22,500 warrants lapsed during the period. The number of shares outstanding on which options have been granted at 30 June 2024 is 6,667: (30 June 2023: 19,500,000).

6.   Discontinued operations

On 28 February 2024 the Company's members approved the disposal of wholly owned subsidiary Verditek Italy srl and all related business assets of the Company (collectively, "Solar Business") to a newly incorporated private company, Verditek Solar Limited, in return for satisfaction of the outstanding secured convertible loan notes and accrued interest, £528,340 (see Note 4). Verditek Solar Limited is a company owned by the convertible loan note holders.  The disposal of the Solar Business included:

-     All issued share capital in Verditek Solar Italy srl

-     All intellectual property rights associated with the Group's solar operations

-     The Company's interest in an agreement with Net Zero Valley, an unrelated third party, to develop a solar panel manufacturing plant in Italy

-     The Company's interest in the joint development project with Paragraf Limited

-     Any monies receivable from the earn-out agreement from the sale of Industrial Climate Solutions Inc, which was disposed of by the Group in 2022.

On 29 February 2024, the Company completed the disposal of the Solar Business. The results for the discontinued operations were not previously classified as discontinued or held for sale in the 31 December 2023 year-end financial statements as the criteria for such classification were not met as at that date. The results of the discontinued Solar Business is presented below for the period, along with comparative information:

* For comparability purposes, loss per share for comparative periods has been represented based on a reduced number of shares resulting from the share consolidation in April 2024 referred to in Note 3.

The loss for the period from discontinued operations, £134,292, was entirely attributable to the owners of the Company. The loss for the period from continuing operations, £907,711, was entirely attributable to the owners of the Company.

7.   Events after the reporting date

There were no events after the reporting date.

8.   Prior period restatement

During 2023, the Group determined that the Non-Controlling Interest Reserve recognized at prior balance sheet dates in connection with BBR Filtration should have been released to accumulated losses during 2021. A correction to the opening balance sheet position as at 1 January 2022 was presented in the 31 December 2023 year end financial statements. During 2023 it was determined that a provision against a recoverable VAT balance recognized in prior years should have been partially reversed in 2022, as there was information available at the time which suggested that it was recoverable. A prior year adjustment has been made as a result of there being an error identified in the estimate made as at 31 December 2022.

The errors described have been corrected at 30 June 2023 by restating each of the affected line items for prior periods. The impact on shareholders' equity and assets is summarized as follows:

9.   Copies of the interim report

Copies of this interim report will be available on the Company's website at https://earnzplc.com/ and from the Company's registered office, Holborn Gate, 330 High Holborn, London, WC1V 7QH.