30 September 2024
Electric Guitar PLC
("Electric Guitar" or the "Company")
Annual Report and Financial Statements of Electric Guitar for the year ended 31 March 2024
and
Financial Statements of 3radical Limited for the year ended 31 March 2024
Electric Guitar PLC (LSE: ELEG), the digital marketing and advertising company providing first-party data solutions, today publishes its financial results for the year ended 31 March 2024, a period during which it was still a Special Purpose Acquisition Company.
Post-period end, the Company completed the acquisition of 3radical Limited ("3radical") in May 2024, which corresponded with the cancelling of its listing on the Standard Segment of the Official List and trading on the Main Market of the London Stock Exchange, and subsequent admission to trading on AIM. Accordingly, the Company also today publishes the annual results of 3radical for the year ended 31 March 2024, the financial statements for which are set out at the end of this announcement.
Since the year-end, the Company has made significant progress in advancing its strategy and building commercial opportunities.
Post-Period End Strategic and Operational Highlights:
· Completed the £1.3 million all-share acquisition of 3radical, a leader in gamification solutions that help brands gain deeper engagement with their audiences and better marketing ROI, as the Company's first acquisition in its buy-and-build strategy.
· Transferred to the AIM market of the London Stock Exchange, successfully raising £2.2 million in new equity and agreeing a new £600k loan facility.
· Enhanced 3radical's management, adding additional sales and marketing resources, winning new clients and prospects, and launching a new rapid-deployment solution for customer engagement, the Voco Solutions Portal ("VSP").
· Launched an AI joint venture to create AI-based products for businesses to increase their marketing ROI by targeting audiences more effectively, drawing initially from 3radical's unique store of over 1 billion data points of how consumers engage with digital advertising.
· Acquired Mymyne Limited ("Mymyne"), a software and sales & marketing services business in an all-share transaction valuing the business at up to a maximum of £154k, achieving synergies that alone more than offset the value of the consideration.
· Entered into collaborations with Sophus3, Digital Alchemy and Little Birdie: businesses with access to new markets, technologies and products.
John Regan, CEO of Electric Guitar PLC, commented: "The past year has been one of transformation for Electric Guitar. The acquisition of 3radical and admission to AIM were pivotal moments for the Company, allowing us to revitalise operations and accelerate innovation at 3radical.
"The subsequent launch of VSP, recent strategic collaborations and a further acquisition, paired with the strength of 3radical's unique data set, position us at the forefront of the evolving digital marketing landscape.
"We are now confident in our outlook as we continue to integrate new technologies, deepen customer engagement and pursue growth opportunities as part of our wider buy-and-build strategy."
The Company's annual report and accounts for the year ended 31 March 2024 will be sent to shareholders today. A copy of the annual report will shortly be made available on the Company's website at: www.electricguitarplc.com.
For further information:
| Electric Guitar PLC
|
Notes to Editors
Electric Guitar PLC (AIM: ELEG) is the provider of first-party data solutions for the marketing and advertising industry, empowering businesses to realise the value of their first-party data. In an era of changing consumer attitudes towards the use of their data, tighter privacy legislation, and the demise of third-party cookies, first-party data is now the key to success in digital marketing. Electric Guitar's strategy is to acquire and scale businesses that help marketers maximise the value of first-party data by curating, managing, and deploying it, and in doing so making Electric Guitar the industry standard for first-party data solutions.
As the first part of this strategy, Electric Guitar acquired 3radical Limited, a company that utilises its Software as a Service platform, 3radical Voco, to enable organisations to engage individuals and request their data directly using interactive digital experiences. It has since entered into collaborations with several other businesses operating in the field, as well as a joint venture with Exelia Technologies Limited called Marcomms.ai for producing AI-driven products and services for the digital marketing and advertising industry.
For further information please visit www.electricguitarplc.com.
Chair's Statement
Since it was listed on the Standard List and the Main Market of the London Stock Exchange in January 2022 as a Special Purpose Acquisition Company, the Company has investigated many potential acquisitions of trading companies, initially to reverse into one of them as its first acquisition which culminated in the acquisition of 3radical, and with a view to creating a pipeline for further acquisitions and collaborations.
I am grateful to our supportive shareholders who have joined and stayed with us on this journey, despite some very difficult stock market conditions. I would also like to thank the executive team led by John Regan and Richard Horwood who have applied themselves with skill, vigour and imagination to achieve the Company's goals, as well as the non-executive directors who have served the Company during this period and since the year-end - Sarfraz Munshi, Grahame Cook, Caroline Worboys and David Eldridge - whose wise counsel has proved invaluable.
First acquisition and admission to AIM
Led by industry expert John Regan as Chief Executive Officer and following the appointment in April 2023 of experienced M&A professional Richard Horwood as an executive director - subsequently appointed Chief Operating Officer - the Company focused on a shortlist of acquisition targets. This quickly led to the announcement of non-binding heads of terms on 6 July 2023 to acquire, through a reverse takeover subject to regulatory and shareholder approval and due diligence, all the outstanding shares in 3radical in an all-share transaction (the "Transaction").
The Transaction was subsequently completed on 3 May 2024, despite difficult stock market conditions. At the same time, the Company cancelled its listing on the Main Market of the London Stock Exchange and had its Ordinary share capital, as enlarged following the completion of the Transaction at the negotiated value of £1.3 million satisfied in shares and of a successful £2.2 million equity fundraising ("Fundraising"), admitted to trading on AIM, a market operated by the London Stock Exchange ("Admission"). It was one of a very small number of successful new admissions on AIM in the last year.
Market environment
As outlined in last year's annual report, the online marketing industry is fundamentally shifting from targeting consumers en masse through third-party data cookies intrusively planted on their devices and indiscriminately monitoring their online activities, to understanding and engaging consumers better using first-party information they have willingly provided.
At the same time, the market is being disrupted by the competing drivers of consumer privacy and data protection on the one hand, and AI-driven demands for more personalised marketing on the other. As a result, consented first-party data has become increasingly critical for marketing and providing a compelling customer experience, optimising communications, designing products and services and, ultimately, driving revenues.
The initial excitement over general purpose generative AI, such as ChatGPT, has led to heightened awareness of the capabilities of AI and its use in marketing, with major brands such as Coca Cola and BMW beginning to deploy advertising created by AI. As the industry gets to grips with this rapidly advancing technology, there is increasing awareness that accessing the right data is fundamental to this process. This has further bolstered interest in first-party data, and businesses with access to their own proprietary data which can be deployed to create AI for specific use cases, such as consumer engagement, have a significant advantage as the market for AI develops.
The emergence of Web 3.0 technologies is beginning to influence this evolving landscape. By leveraging decentralised platforms and blockchain technology, Web 3.0 empowers consumers with greater control over their personal data and online interactions, supporting the shift towards transparency and user consent. Recognising these trends, marketers are beginning to explore Web 3.0 solutions to stay ahead of the curve.
These industry shifts are coupled with continuing relatively high interest rates and less readily available private equity for SMEs, leaving many growth-oriented technology-based companies with less access to the capital they need. This is resulting in increasingly realistic valuations by target company founders and their private investors, creating more opportunities for the Company to acquire complementary businesses at attractive valuations, both by using its now AIM-quoted equity as an acquisition currency that can grow in value as the acquired businesses deliver on their potential and as a way to access growth capital.
..............................
John Hutchinson
Chairman
30 September 2024
Chief Executive Officer's Report
After acquiring 3radical in May 2024, we immediately enhanced its sales and marketing activities, following an extended period of retrenchment that inevitably impacted revenues and sales opportunities. We also brought in new and experienced senior management and bore down on non-revenue-generating overheads; generated significant synergies by in-housing the services previously provided by Mymyne; and established several new collaborations for additional products, technologies and access to new markets.
Product development was refocused on client-related activities and the development of the Voco Solutions Portal. VSP is an evolution of 3radical's established Voco platform, designed specifically to provide businesses with a streamlined and rapid deployment solution for customer engagement, with much shorter sales and implementation lead times, and clearer marketing ROI.
3radical's business in the context of Electric Guitar's strategy
Voco is a robust and sophisticated Software as a Service (SaaS) platform, which enables organisations to engage individuals and request their first-party data directly, using progressive and interactive digital experiences, at scale. A trailblazer in digital consumer engagement solutions and based in the UK, 3radical also has an operation in Singapore, and customers across the UK, US and Asia-Pacific.
With Voco offering marketers a tried and tested way to earn valuable first-party data and with 3radical's existing global reach, it fits Electric Guitar's buy-and-build strategy of capitalising on the structural disruption in the marketing industry.
In addition, having provided its online engagement solutions to marketers for some years, 3radical has built up a unique global dataset of anonymised data with over 1 billion data points, including detailed information on how consumers engage with digital advertising ("Global Data Store"). This unique data asset is exactly the kind of proprietary data that AI needs.
Marcomms.ai joint venture
Post-period end, on 31 July 2024, the Company announced the launch of Marcomms.ai as a UK joint venture with Exelia Technologies Limited ("Exelia"), with the aim of positioning the joint venture, and by extension Exelia and Electric Guitar, as a leading authority in AI-enhanced marketing and advertising solutions.
Exelia is a Cyprus-based software development business with a specialised team of developers proficient in blockchain, machine learning, data processing and AI. The joint venture combines these capabilities with Electric Guitar's administration, sales and general commercialisation expertise, and access to 3radical's Global Data Store. It will also benefit from access to 3radical's established clients in the marketing communications and advertising industry, providing both valuable data and a ready market for the joint venture's offerings in the marketing communications and advertising sectors.
Marcomms.ai's first product, Engagement Intelligence (EI), will use the more than 1 billion data points in the Global Data Store to provide detailed understanding of how consumers engage with digital advertising, enabling marketers to increase ROI by providing information to help optimise their marketing campaigns to increase engagement. This strategic integration marks a crucial step in the development of AI-based products designed to enable businesses to connect with their audiences more effectively.
Exelia is funding the joint venture's initial working capital in relation to data engineering and transformation, data analysis and dashboard creation based on 3radical's Global Data Store. Electric Guitar is funding the initial costs relating to incorporation and administration of the joint venture company, access to the Global Data Store, and the introduction of a minimum viable product to customers and prospects.
Other collaborations
On 15 July 2024, 3radical agreed a mutual reseller arrangement with Sophus3, a well-established business working with some of the world's largest automotive brands such as Ford, Hyundai and Volkswagen. Sophus3 analyses behavioural data collected from multiple websites to understand the habits, influences and behaviours of online car buyers. Sophus3 has developed 'Engage' as its own SaaS platform that allows clients to respond to consumer behaviour in real-time and serve them the right content at the right moment to maximise sales. Under the agreement, 3radical can offer Engage to assist its clients, and Sophus3 can offer Voco to some of the world's largest car brands at a time when first-party data is becoming increasingly important in the automotive industry, as manufacturers seek to engage and retain their car buyers directly rather than through distributors.
On 25 September 2024 in Singapore, 3radical launched its strategic collaboration with Digital Alchemy, a global marketing automation consultancy based in Asia-Pacific and North America, to deliver comprehensive and personalised engaging marketing solutions. This further strengthens 3radical's existing presence in Asia-Pacific, enhancing relationships with its existing client base, as well as attracting and retaining new clients by leveraging Digital Alchemy's expertise in marketing automation and its robust technological partnerships with Salesforce, Adobe, SAS, Braze and HCL. The event enabled 3radical to extend its network and establish relationships with leading enterprises looking to enhance their digital marketing strategies through cutting-edge technologies.
Also on 25 September 2024, the Company announced a collaboration with Little Birdie, a subscription and recurring payments management platform, to create a loyalty app that integrates first-party 'Open Banking' data with 3radical's Global Data Store, enabling clients to enhance consumer engagement by providing personalised financial insights into customer spending habits, preferences and financial behaviours.
Mymyne
As stated in the Company's AIM Admission document and in anticipation of the Transaction, 3radical had engaged Mymyne, a business related to the Company due to shareholdings in it by two of the Company's directors (John Hutchinson and myself), to start to provide 3radical's needed sales and marketing expertise and capabilities, payment for which was conditional on completion of the Transaction.
On 28 August 2024, the Company completed an all-share acquisition of Mymyne, valuing it at up to a maximum of approximately £154k based on the closing mid-market price of the Company's shares immediately prior to announcing the proposed acquisition on 9 August 2024. This acquisition was conducted solely by Electric Guitar's independent directors, and was approved by shareholders at a General Meeting on 27 August 2024. This brought Mymyne's capabilities in-house, and achieved substantial cost-savings that will more than offset the value of the consideration.
3radical's trading
As anticipated in the Company's AIM Admission document, and as reflected in 3radical's interim results to 30 September 2023 contained therein, 3radical's trading in the year to 31 March 2024 was adversely affected by an extended period of retrenchment from late 2022 up to completion of the Transaction, due to lack of resources especially in its sales, marketing and account management functions.
This resulted in 3radical's revenues for the financial year ended 31 March 2024 falling to £0.4 million from £0.7 million in the previous year, exacerbated by the transition from direct sales to indirect sales net of reseller commissions of typically 50 per cent, as well as to some attrition in the customer base, in line with the Board's expectations.
Despite the substantial cost reductions mainly in sales and marketing, the lower turnover - coupled with larger than expected exceptional costs incurred for the Transaction and an adverse effect of foreign exchange losses - increased operating losses for the financial year ended 31 March 2024 to £1.5 million from £1.1 million in the previous financial year.
The Transaction in May 2024 not only brought in additional resources from the Fundraising but has also enabled 3radical to start to benefit from the Company's expertise in productisation, sales and marketing. For example, in just the first few months we have nearly doubled 3radical's inbound website traffic and increased dwell time by 400%; and have more than doubled UK direct sales lead generation, resulting in 36 new live conversations with significant brands in the last 3 months, almost halving the historic average sales cycle.
On 19 September 2024, 3radical launched VSP at the Digital Marketing Exposition & Conference ("DMEXCO") in Cologne, Germany; and on 25 September 2024 at the joint event with Digital Alchemy in Singapore. While the Voco platform has long been a comprehensive tool for creating interactive and personalised digital experiences, VSP focuses on enabling organisations to quickly and efficiently deploy engagement strategies without the need for extensive technical expertise, reducing the time needed for clients to implement Voco from months to hours.
The recent event in Singapore was attended by senior members of the digital advertising community from across the Asia-Pacific region, and our recent roll-out of activity with MediaCorp, Singapore's largest content creator and national media network, demonstrates that momentum is returning to this region.
I thank all our staff who have worked tirelessly to reinvigorate the business after an extended period of constrained resources, and the inevitable distraction of a lengthy takeover period since the proposed acquisition of 3radical was announced in July 2023, before we were able to bring in new resources and skills. It takes time to turn a business around in such circumstances, but I am hugely encouraged by the progress we have made and look forward to our future success.
..............................
John Regan
Chief Executive Officer
30 September 2024
MANAGEMENT REPORT
For the year ended 31 March 2024
Principal activities
The Company was established in March 2021 as a Special Purpose Acquisition Company to seek acquisition targets in the digital media sector. In January 2022 its Ordinary shares were admitted to the Standard Segment of the Official List and to trading on the Main Market of the London Stock Exchange, following a successful placing of 40,000,000 Ordinary shares at £0.03 per share raising gross proceeds of £1,200,000 before expenses.
The principal activity of the Company during the period to 31 March 2024 was that of identifying potential companies, businesses, or assets for acquisition.
Financial review
As a Special Purpose Acquisition Company for the period, the Company had no revenue and incurred a net loss of £1,367,797 in the year ended 31 March 2024 (2023: £537,690). At 31 March 2024, the Company held cash at bank totalling £137 (2023: £491,635), and £650,000 of available loan facilities.
Post balance sheet events
In May 2024, the Company cancelled the listing of its Ordinary shares on the Standard Segment of the Official List and had its Ordinary shares admitted to trading on AIM, a market operated by the London Stock Exchange.
At the same time, it acquired 3radical through an all-share reverse takeover by issuing 61,184,843 ordinary shares at £0.021 per share valuing 3radical at £1,284,882; and issued a further 104,785,670 ordinary shares at £0.021 per share raising £2,200,499 before expenses, through a combination of subscription, placing, and the conversion of certain liabilities to new Ordinary shares.
As a result, the Company's principal activity changed to the provision of first-party data solutions for the digital marketing and advertising industry as well as identifying potential companies, businesses, or assets for acquisition.
In August 2024, the Company acquired Mymyne through an all-share acquisition by issuing 9,834,521 Ordinary shares at £0.0073 per share on completion, plus deferred consideration of up to a maximum of 11,191,665 Ordinary shares after a year subject to conditions, valuing Mymyne at a maximum of £153,491 at the closing mid-market price of the Company's Ordinary shares on 8 August 2024. At the same time, the Company issued a further 9,589,042 Ordinary shares at £0.0073 per share in satisfaction of £70,000 in fees to professional advisers.
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2024
|
|
Note | Year ended 31 March |
| Year ended 31 March 2023 |
|
|
| £ |
| £ |
|
|
|
|
|
|
| Administration expenses - Acquisition costs - Other costs |
5 4 |
(927,605) (447,547) | |
- (544,420) |
| | | | | |
| Operating loss |
| (1,375,152) |
| (544,420) |
|
|
|
|
|
|
|
|
|
|
|
|
| Finance income- interest received | | 7,355 | | 6,730 |
| | | | | |
| Loss before income tax | 7 | (1,367,797) |
| (537,690) |
| | | | | |
| Income tax | 8 | - | | -
|
| Loss and other comprehensive income for the year |
| (1,367,797)
|
| (537,690) |
| Loss per share | | | | | |
| Basic (pence) | 6 | (2.36) | (0.93) | | |
| Diluted (pence) | 6 | (2.36) | (0.93) | | |
There was no other comprehensive income for the year(2023: £nil).
The notes on pages 46 to 61 form part of these financial statements.
STATEMENT OF FINANCIAL POSITION
for the year ended 31 March 2024
|
|
| 2024 |
| 2023 | |||
| | Note | £ |
| £ | |||
| ASSETS | | | | | |||
| NON-CURRENT ASSETS | |
|
|
| |||
| Property, plant and equipment | | 5,529 |
| - | |||
|
| |
|
|
| |||
| CURRENT ASSETS | |
|
|
| |||
| Other receivables | 9 | 75,745 | | 29,533 | |||
| Cash and cash equivalents | 10 | 137 | | 491,635 | |||
|
|
| 75,882 |
| 521,168 | |||
| | | | | |||
| TOTAL ASSETS | | 81,411 | | 521,168 | |||
EQUITY | | | | | |||
| SHAREHOLDERS' EQUITY | | | | | |||
| Share capital | 11 | 289,314 | | 289,314 | |||
| Share premium | 13 | 948,629 | | 948,629 | |||
| Accumulated losses | 13 | (2,150,874) | | (783,077) | |||
|
| | | | | |||
| TOTAL EQUITY- (deficiency) | | (912,931) | | 454,866 | |||
|
LIABILITIES CURRENT LIABILITIES |
|
|
|
| |||
| Financial liabilities | | | | | |||
| Borrowings | 14 | 251,928 | | - | |||
| Trade and other payables | 15 | 742,414 | | 66,302 | |||
| |
| | | | |||
| TOTAL LIABILITIES | | 994,342 | | 66,302 | |||
|
| |
| |
| |||
| TOTAL EQUITY AND LIABILITIES | | 81,411 | | 521,168 | |||
|
|
|
|
|
The financial statements were approved by the Board of Directors and authorised for issue on 30 September 2024 and were signed on its behalf by:
........................................................................
John Hutchinson
Director
The notes on pages 46 to 61 form part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2024
| | Share capital | Share premium | Retained earnings |
Total |
|
| | £ | £ | £ | £ |
|
|
|
|
|
|
|
|
| At 1 April 2022 | 289,314 | 948,629 | (245,387) | 992,556 |
|
| | | | | |
|
| Change in equity |
|
|
|
|
|
| Loss for the year | - | - | (537,690) | (537,690) |
|
|
|
|
|
|
| |
| At 31 March 2023 | 289,314 | 948,629 | (783,077) | 454,866 |
|
| Change in equity |
|
|
|
|
| Loss for the year | - | - | (1,367,797) | (1,367,797) |
| At 31 March 2024 | 289,314 | 948,629 | (2,150,874) | (912,931) |
The notes on pages 46 to 61 form part of these financial statements.
STATEMENT OF CASH FLOWS
for the year ended 31 March 2024
| | | Year ended 31 March 2024 |
| Year ended 31 March 2023 |
| | | £ |
| £ |
| Cash flow from operating activities | | | | |
| Loss for the year | | (1,367,797) | | (537,690) |
| | | | | |
| Adjustments for: | | | | |
| Finance income | | (7,355) | | (6,730) |
| Depreciation charges | | 257 | | - |
| (Increase)/decrease in other receivables | | (46,212) | | 2,254 |
| Increase in trade and other payables | | 676,112 | | 30,740 |
| Net cash used in operating activities |
| (744,095) |
| (511,426) |
| | | | | |
| Cash flow from investing activities | | | | |
| Finance income | | 7,355 | | 6,730 - |
| Purchase of tangible fixed assets | | (5,786) | | |
| Net cash from / (used in) investing activities |
| 1,569 |
| 6,730 |
| | | | | |
| Cash flow from financing activities | | | | |
| Borrowings during the year | | 251,928 | | |
| Net cash from financing activities |
| 251,928 |
| - |
|
|
|
|
|
|
| Net increase/(decrease) in cash and cash equivalents |
| (491,498) |
| (504,696) |
|
|
|
|
|
|
| Cash and cash equivalents at the beginning of the year |
|
491,635 |
|
996,331 |
| |
|
|
|
|
| Cash and cash equivalents at the end of the year |
| 137 |
| 491,635 |
|
|
|
|
|
|
The notes on pages 46 to 61 form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2024
1. General information
Electric Guitar Plc is a public limited company, registered in England and Wales. The Company's registered office is One Bartholomew Close, London, EC1A 7BL. The Company's principal activities and the nature of its operations are disclosed in the director's report.
The functional and presentational currency is Great British Pounds Sterling ("£") and the financial statements have been rounded off to nearest £.
2. Accounting policies
2.1 Basis of preparation
The financial statements have been prepared under historical cost convention, in accordance with UK adopted International Financial Reporting Standards (UK adopted IFRS) and the Companies Act 2006.
The following accounting principles have been applied:
2.2 Going concern
The financial statements have been prepared on a going concern basis. The board has assessed the Company's financial position as at 31 March 2024 and 30 September 2024 and the factors which may impact the Company's ability to continue as a going concern for a period of at least 12 months from the date of approval of these financial statements. Subsequent to the year-end, the Company has acquired control of the businesses for 3radical Limited and Mymyne Limited (see note 18). Management and the directors have also considered what the Group (Electric Guitar Ltd and its subsidiaries) is expected to look like following the completion of these business combination transactions, which includes the Group's working capital requirements over the period to 30 September 2025.
At as 31 March 2024, the Company had a deficiency in total equity of £913k. The Company also generated a loss for the year ended 31 March 2024 of £1,368k and a net cash outflow from operating activities of £745k. The Group has also incurred a loss for the current period and a net cash outflow from operating activities of approximately £1.2m for the period to 30 September 2024.
In assessing the ability of the Company to continue as a going concern and pay its debts as and when they fall due, the directors have taken into consideration the following matters:
· On 26 March 2024, the Group secured an additional loan facility with Sanderson Capital Partners of £600k. As at 31 March 2024, the Group had unutilised loan facilities of £650k.
· Management has prepared detailed cash flow forecasts and sales forecasts for the Group for the period September 2024 to September 2025. The Group is forecast to generate a significant increase in sales and cash receipts from customers and continue to operate within its agreed loan facilities for all periods from September 2024 to the end of September 2025. The directors have reviewed and approved these forecasts.
· As part of its assessment of the forecasts, certain sensitivity analyses were run on the forecast models. In the event the Group's actual sales for the period ended 30 September 2025 were lower than forecast by 20% and certain controllable costs were to be deferred, the Group would still have the ability to operate within its agreed loan facilities and pay its debts as and when they fall due for the same periods as above.
· The Group has a strong sales pipeline which continues to grow in size both in terms of potential total contract values and the number of opportunities with high profile international blue-chip businesses.
Based on the above matters, the directors have assessed that the ability of the Company to continue as a going concern is dependent on the Group achieving its sales forecasts for the periods to 30 September 2025. There is no guarantee that potential sales opportunities in the sales forecasts will be converted into actual sales contracts, orders, sales and cash receipts. In addition, lead times for conversion of sales opportunities into sales contracts, orders, sales and cash receipts could be longer than the periods assumed in its forecasts. Due to these factors, the Group may require more financing than the current facilities available to it. There is no guarantee the directors would be successful in raising additional financing required for its future growth and working capital. This matter indicates that a material uncertainty exists that may cast significant doubt on the ability of the Company to continue as a going concern at the time of approval of the financial statements. The financial statements do not include adjustments should the going concern basis be inappropriate. Nonetheless, in view of the successful track record of raising financing in recent years from both equity and debt sources and other available funding options, the directors are confident they would be successful in raising any necessary financing within the next 12 months from the date of approval of the financial statements.
For these reasons, the directors continue to adopt the going concern basis in preparing the financial statements.
2.3 Foreign currency translation
Transactions in currencies other than the functional and presentation currency of the Company, pound sterling, are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary assets and liabilities that are determined in foreign currencies are translated at the rates prevailing at the date when the fair value was determined.
Gains or losses arising from on retranslation of the monetary assets and liabilities are included in profit or loss for the period.
2.4 Taxation
The income tax expense represents the sum of tax currently payable and deferred tax.
Current tax
The tax currently payable is based on the taxable profit for the period. Taxable profit differs from net profit as reported in profit or loss 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. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounting for using the liability method.
Deferred tax assets are recognised on tax losses when there is convincing evidence that the Company will generate sufficient future taxable profits in the foreseeable future against which the tax losses can be utilised to reduce the Company's liabilities to corporation tax.
2.5 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank.
2.6 Share capital and share premium
Share capital represents the nominal value of shares that have been issued. Share premium includes any premiums received on issue of share capital. Any transactions costs associated with the issuing of shares are deducted from share premium.
2.7 Provisions for liabilities
Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to the statement of comprehensive income in the year that the Company becomes aware of the obligation and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the balance sheet.
2.8 Other receivables
Other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less loss allowance.
2.9 Trade and other payables
Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accruals and accounts payable are classified as current liabilities if payment is due within one year or less. Trade payables are initially recognised at fair value, and subsequently measured at amortised cost using the effective interest method.
2.10 Financial liabilities
All financial liabilities are recognised in the statement of financial position when the Company becomes party to the contractual provision of the instrument.
Financial liabilities measured at amortised cost
The Company's financial liabilities held at amortised cost comprise trade payables and other payables and borrowings.
These financial liabilities are initially measured at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a market rate on the balance of the liability carried in the statement of financial position.
Subsequent measurement
The amortised cost of a financial liability is the amount at which the financial liability is measure on initial recognition, minus the principal repayments, plus or minus the cumulative amortisation using effective interest method of any difference between the initial amount recognised and the maturity amount. Such amortisation amounts are recognised in the statement of comprehensive income. Due to the short-term nature of trade and other payables, they are stated at their nominal value, which approximates their fair value.
2.11 Share warrants
The Company has granted A-series warrants to directors and B-series warrants to service providers for services received at the time of listing in a prior period.
The A-series warrants and B-series warrants are issued to directors and service providers in respect of the service provided. The grant of the share warrants is recognised as equity settled share-based payments under IFRS 2. The warrants can be exercised by the holder of the warrants prior to the exercise date for a fixed number of equity shares at fixed price. The value of the share-based warrants is determined at the date of grant and expensed on a straight-line basis over the vesting period with a corresponding increase in equity based on the Company's estimate of the shares that will eventually vest at the time of the grant. At each balance sheet date, the Company revises its estimates of the number of warrants that are expected to vest based on service and non-market performance conditions.
The Company takes into account the market condition (i.e. target share price being in excess of the exercise price) at the time of estimating the fair value of the warrants. The amount expensed is adjusted over the vesting period for changes in the estimate of the number of shares that will eventually vest, except for changes resulting from any market-related performance conditions.
2.12 Capital management
Capital consists of ordinary shares, share premium and retained losses. The Board monitors the return on capital. The Company is not subject to any externally imposed capital requirements.
2.13 Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense. The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received.
2.14 Adoption of new and revised standards and changes in accounting policies
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning on or after 1 April 2023 and have not been applied in preparing these financial statements. None of these is expected to have a significant effect on the financial statements of the Company.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company.
3. Critical accounting judgements and estimates
The preparation of the financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise their judgment in applying the Company's accounting policies.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including future conditions that are assessed to be reasonable under the circumstances.
Classification of share warrants (note 11)
Management considers that the share warrants issued to directors and service providers are considered as equity settled share-based payments ("SBP") as these warrants are issued for the services received and can be exchanged only for a fixed number of equity shares at fixed price.
The measurement of the SBP expense recognised through profit or loss requires estimation of future fair values of instruments of instruments expected to vest.
4. Employees and directors remuneration
|
|
31 March 2024 |
|
31 March 2023 |
|
| £ |
| £ |
| | | | |
| Wages and salaries | 220,255 | | 74,700 |
| Social security costs | 14,413 | | 3,908 |
| Other pension costs | 6,469 | | - |
|
| 241,137 |
| 78,608 |
| | | | |
| The average number of employees and directors during the year was as follows: | |||
|
|
31 March 2024 |
|
31 March 2023 |
| Administration | 5 | | 3 |
| | | | |
The remuneration paid to directors is provided in the director's report accompanying the financial statements.
5. Acquisition costs
During the year, the Company incurred one-off expenses towards the planned acquisition of 3Radical Limited as part of the reverse takeover.
|
|
31 March 2024 |
|
31 March 2023 |
|
| £ |
| £ |
|
Legal fees |
393,276 | |
- |
| Corporate Finance & Brokerage | 115,197 | | - |
| Accountancy Advice | 235,090 | | - |
| Consultancy & Professional Advice | 124,500 | | - |
| Financing fees | 41,928 | | - |
| Listing fees | 17,614 | | - |
|
| 927,605 |
| - |
6. Loss per share
Basic earnings per share is calculated by dividing the loss attributable in the period to equity holders of the Company by the weighted average number of ordinary shares in issue during the period, excluding any ordinary shares purchased by the Company and held as treasury shares.
|
|
31 March 2024 |
|
31 March 2023 |
|
| £ |
| £ |
| Loss for the year/period attributable to equity holders of the Company |
(1,367,797) | |
(537,690) |
| Weighted average number of ordinary shares | 57,862,776 | | 57,862,776 |
| Loss per share (pence) | (2.36) |
| (0.93) |
Share warrants issued by the Company have an anti-dilutive effect on loss per share. Hence, under IAS requirements diluted loss per share is shown as being the same as basic loss per share.
7. Loss before income tax
The loss before income tax is stated after charging:
|
|
31 March 2024 |
|
31 March 2023 |
|
| £ |
| £ |
|
|
|
|
|
| Auditor's remuneration | | | |
| - For audit services | 29,500 | | 20,000 |
| - For non-audit services | 16,000 | | - |
| | 45,500 | | 20,000 |
Income tax
No liability to UK corporation tax arose for the year ended 31 March 2024 nor for the year ended 31 March 2023 as the Company generated tax losses for both years.
Prima facie tax reconciliation
The loss for the year was £1,368k (2023: £538k). For the year ended 31 March 2024, the standard rate of corporation tax in the UK is 25% (2022: 19%). The rate of corporation tax applicable in UK for profits up to £50k is 19%.
The expected tax credit on the loss for the year is £88k (2023: £73k). Actual tax credit recognised for the year was £NIL (2023: £Nil). The main reasons for the differences for both periods are tax losses not recognised due to uncertainty of taxable profits being generated in the foreseeable future.
Unrecognised tax losses
The Company has tax losses available for offset against taxable profits in future periods of £846k as at 31 March 2024 (2023: £383k).
8. Other receivables and prepayments
|
|
31 March 2024 |
|
31 March 2023 |
|
| £ |
| £ |
|
|
|
|
|
| Other receivables | - | | 53 |
| VAT receivable | 63,703 | | 19,781 |
| Prepayments and accrued income | 12,042 | | 9,699 |
|
| 75,745 |
| 29,533 |
The directors consider that the carrying amount of other receivables and VAT receivable approximates to their fair value.
9. Cash and cash equivalents
|
| 31 March 2024 |
| 31 March 2023 |
|
| £ |
| £ |
|
|
|
|
|
| Cash at bank and in hand | 137 | | 491,635 |
10. Share capital
|
|
31 March 2024 |
|
31 March 2023 |
|
| £ |
| £ |
|
|
|
|
|
| Authorised share capital | | | |
| 57,862,776 Ordinary shares of 0.5p each | 289,314 | | 289,314 |
|
| | | |
| Issued and fully paid | | | |
| 57,862,776 Ordinary shares of 0.5p each | 289,314 | | 289,314 |
|
| 289,314 |
| 289,314 |
The ordinary shares carry voting and dividend rights.
11. Share warrants
The company issued A-series warrants and B-series warrants to directors and service providers respectively. These warrants are exercisable at a price of 4.5p. The vesting period of the various warrant instruments are as provided below:
- Allocated A-series warrants vests over a period of 5 years, and should the options remain unexercised they lapse after the seventh anniversary of admission.
- Unallocated A-series (discretionary) warrants which are granted in the current year are vested on the date of grant and should the options remain unexercised they lapse after the seventh anniversary of admission.
- B-series warrants are vested on the date of grant, and should the options remain unexercised they lapse after the third anniversary of admission.
Warrants are valued using the Black Scholes option pricing model. The following table summarise the warrants outstanding at the end of the year and movements during the year.
| | A-series warrants | B-series warrants |
| Outstanding at 31 March 2022 | 3,599,064 | 1,157,256 |
| Granted during the period | 719,812 | - |
| Forfeited during the period | - | - |
| Expired during the period | - | - |
| Exercised during the period | - | - |
| Outstanding at 31 March 2023 | 4,318,876 | 1,157,256 |
| Granted during the year | 205,991 | - |
| Forfeited during the year | - | - |
| Expired during the year | - | - |
| Exercised during the year | - | - |
| Outstanding at 31 March 2024 | 4,524,867 | 1,157,256 |
| Options vested and not exercised as at 31 March 2024 |
2,365,429 |
1,157,256 |
| Options vested and not exercised as at 31 March 2023 |
1,439,625 |
1,157,256 |
12. Share warrants (continued)
The assumptions considered in the valuation of the warrants using the black-sholes model is as given below:
| | 31 March 2024 |
| |
|
| Exercise price | 4.5 pence |
| Share price at date of grant | 3 pence |
| Risk free interest rate | 1.25% |
| Volatility | 16% |
| Dividend yield | 0% |
| Contractual life of A-series warrants | 7 years |
| Contractual life of B-series warrants | 3 years |
The fair value of both A-series warrants, and B-series warrants as of 31 March 2024 is £nil (2023: £nil).
See note 18 for changes to share warrants subsequent to the year-end.
13. Reserves
Share premium account
The share premium account includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium.
Accumulated losses
This reserve records retained earnings and accumulated losses.
14. Financial Liabilities - Borrowings
| | | | |
| 31 March 2024 | 31 March 2023 | ||
|
| £ |
| £ |
|
| | | |
| Current: | | | |
| Borrowings | 251,928 | | - |
|
Term and debt repayment schedule
Borrowings
| | | Less than 1 year £ 251,928 |
| | | | |
On 27 October 2023, an unsecured loan facility of £250k was agreed with Sanderson Capital Partners Limited, a related party (the "£250k Facility"). A facility fee of £25k was incurred in addition to a drawdown fee of 10 percent per tranche to be paid on repayment date. No interest accrued. Of this facility, £50k was drawn down on 13 November 2023 and a further £150k on 6 December 2023, leaving £50k still available as at the year-end, and which has since been drawn down.
On 26 March 2024, a further unsecured loan facility of £600k was agreed with Sanderson Capital Partners Limited (the "£600k Facility"). A facility fee (to be satisfied in shares on the Company's AIM Admission) of £100k was incurred in lieu of any further costs of the £600k Facility, with a repayment date of 12 months from the Company's AIM Admission, and an option to extend for a further 8 months for an additional facility fee of £15,000 payable at the end of that extended period.
On 3 May 2024, the £250k Facility and all associated fees, and all fees associated with the £600k Facility, were settled in full by the issue of 20,238,095 shares in the Company at a price of 2.1p per share.
Of the £600k Facility, £50k was drawn down on 19 September 2024.
As at year-end, the borrowings balance included associated facility fees (£42k) and legal fees (£10k).
15. Trade and other payables
|
|
31 March 2024 |
|
31 March 2023 |
|
| £ |
| £ |
|
|
|
|
|
| Trade creditors | 376,824 | | 16,001 |
| Social security and other taxes | 11,705 | | 3,702 |
| Other creditors | 3,720 | | - |
| Pension payable to directors' personal SIPPs | 4,578 | | - |
| Accrued expenses | 345,587 | | 46,599 |
|
| 742,414 |
| 66,302 |
Trade payables and accruals primarily comprise amounts payable for services received from third parties. The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms. The directors considers that the fair value approximates the carrying value.
16. Financial risk management
The Company's activities expose it to liquidity risk, credit risk and foreign exchange risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance.
Capital risk management
The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of debt and equity instruments.
The capital structure of the Company consists of debt, cash and cash equivalents and equity comprising share capital and reserves. The Company reviews the capital structure annually and as part of this review considers the cost of capital and risks associated with each class of capital and debt.
Liquidity risk
Responsibility for management of liquidity risk rests with the board of directors, which has established an appropriate liquidity risk framework for the management of the Company's funding and liquidity requirements. The Company manages liquidity risk by maintaining adequate reserves, debt facilities and reserve borrowing facilities by continuously monitoring forecasts and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
Foreign exchange risk
The Company makes some purchases in foreign currencies. The payments in foreign currency are made using the exchange rates on the date of payment. As of year-end, the Company did not have any payables in foreign currency.
17. Related party transactions
During the year, the Company entered into the following transactions with related parties, all of which were conducted on an arm's length basis:
· The Company purchased services of £206,750 (2023: £10,112) from BDB Pitmans LLP. The amount payable as at year-end is £240,900 (2023: Nil). John Hutchinson serves as chairman of the Company and is managing partner of BDB Pitmans LLP.
· The Company purchased services of £36,000 (2023: £21,000) from Belmont Partners. The amount payable as at year-end is £7,200 (2023: Nil). Sarfraz Munshi was a director of the Company as at the end of financial year 2024 and also director of Belmont Partners.
· The Company purchased services of £95,000 (2023: Nil) from Mymyne Ltd. The amount payable as at year-end was Nil (2023: Nil). John Regan is a director of the Company and also director of Mymyne Ltd.
· See note 14 in relation to borrowings entered into with Sanderson Capital Partners Limited.
18. Post balance sheet events
On 3 May 2024, the Company acquired the entire issued share capital of 3radical Limited. At the same time, the Company cancelled its listing on the London Stock Exchange's Standard List, and had its ordinary share capital, as enlarged following completion of the Transaction at the negotiated value of £1.3 million paid in shares and of a successful £2.2 million equity fundraising, admitted to trading on the AIM Market of the London Stock Exchange.
On 3 May 2024, 3,494,910 A warrants were surrendered. These were replaced by an LTIP including options over 34,046,353 shares to the Directors. 205,991 warrants were issued to a former director. 2,238,833 warrants were issued to each of the brokers: namely Axis Capital Markets Limited, Global Investment Strategy Limited and Allenby Capital Limited. All options and warrants have an exercise price of 2.1p and the exercise period is 10 years from AIM Admission for the options issued under the LTIP and 3 years for the warrants.
On 9 August 2024, 9,589,042 shares were issued to certain professional advisors and consultants to settle their fees. Included in this amount was 5,479,452 shares issued to Tanvier Malik in relation to his role as Capital Markets Consultant. Since Mr Malik controls Sanderson Capital Partners Limited, this transaction constitutes a related party transaction.
On 28 August 2024, the independent directors of the Company, following careful review and consultation with its nominated adviser Allenby Capital Limited and approval of the transaction by shareholders in General Meeting on 27 August 2024 as a related party transaction, completed an all-share acquisition of Mymyne Limited, valuing it at up to a maximum of approximately £154,000 based on the closing mid-market price of the Company's shares immediately prior to announcing the proposed acquisition on 9 August 2024. The transaction was settled by the issue of 9,834,521 ordinary shares in the Company. This has brought Mymyne's capabilities in-house and has achieved substantial cost-savings that will more than offset the value of the consideration, and added additional software to enhance 3radical's product offering.
19. Controlling party
The Company considers that there is no ultimate controlling party.
Financial Statements of 3radical Limited for the year ended 31 March 2024
3radical Limited
Consolidated Income Statement
For the year ended 31 March 2024
| | | Year ended 31 March 2024 | Year ended 31 March 2023 |
|
| Notes | ||
| Continuing operations |
| | |
| Revenue | 4 | 411 | 710 |
| Cost of sales | | (155) | (212) |
| Gross Profit |
| 256 | 498 |
| Other operating income | | - | 7 |
| | | | |
| Administrative expenses | 6 | (1,741) | (1,550) |
| Operating loss |
| (1,485) | (1,045) |
| Finance expense | 8 | (218) | (5) |
| Loss before tax |
| (1,703) | (1,050) |
| Taxation | 9 | (4) | 190 |
| Loss for the year |
| (1,707) | (860) |
| Attributable to: | | | |
| Equity holders of the parent | | (1,707) | (860) |
| | | | |
| Loss per share | |||
| Basic and diluted (pence) | 10 | (25) | (30) |
| | | | |
3radical Limited
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2024
| |
|
|
|
|
| Year ended 31 | Year ended 31 | |
|
| March 2024 | March 2023 | |
|
| £'000 | £'000 | |
|
Loss for the year | |
(1,707) |
(860) |
| Other comprehensive income/expense): | | | |
| Exchange differences on translation of | | 185 | (248) |
| foreign operations | |
| |
| Total comprehensive loss for the year |
| (1,522) | (1,108) |
|
Attributable to: | |
| |
| Equity holders of the parent | | (1,522) | (1,108) |
The notes on pages 10-32 form an integral part of these financial statements
3radical Limited
Consolidated Statement of Financial Position
As at 31 March 2024
| |
Notes | Year ended 31 March 2024 | Year ended 31 March 2023 |
| ASSETS | | | |
| Non-current assets | | | |
| Property, plant & equipment | | - | 2 |
| Total non-current assets | | - | 2 |
| Current assets | | | |
| Trade and other receivables | 12 | 24 | 327 |
| Cash at bank | | 70 | 38 |
| Total current assets | | 94 | 365 |
| TOTAL ASSETS | | 94 | 367 |
|
EQUITY Share capital |
15 |
1,370 |
1,338 |
| Share premium account | 15 | 11,611 | 10,941 |
| Share based payments reserves | 16, 17 | 50 | 35 |
| Foreign currency translation reserve | 16 | 4 | (181) |
| Accumulated losses | | (13,785) | (12,101) |
| Total equity | | (750) | 32 |
| LIABILITIES | | | |
| Current liabilities | | | |
| Financial liabilities - borrowings | | | |
| Interest bearing loans and borrowings | 14 | 269 | - |
| Trade and other payables | 13 | 575 | 335 |
| Total liabilities | | 844 | 335 |
| TOTAL EQUITY AND LIABILITIES | | 94 | 367 |
The financial statements are approved by Board of Directors on 30 September 2024 and signed on their behalf by:
John Patrick Regan
Director
The notes on pages 10-32 form an integral part of these financial statements
3radical Limited
Consolidated Statement of Cashflows
For the year ended 31 March 2024
| | |
Share Capital | Share premium account | Share based payments reserve | Foreign currency translation |
Accumulated Losses |
Total Equity |
| Notes | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| As at 1 April 2022 | | 1,300 | 9,957 | 74 | 67 | (11,241) | 157 |
|
Comprehensive income | | | | | | | |
| Loss for the year | | - | - | - | - | (860) | (860) |
| Currency translation differences | |
- |
- |
- |
(248) |
- |
(248) |
| Total comprehensive loss for the year | |
- |
- |
- |
(248) |
(860) |
(1,108) |
| Transactions with owners | | | | | | | |
| Issue of shares | 15 | 38 | 984 | - | - | - | 1,022 |
| Share based payments | | - | - | (39) | - | - | (39) |
| Total transactions with owners | | 38 | 984 | (39) | - | - | 983 |
| As at 31 March 2023 | | 1,338 | 10,941 | 35 | (181) | (12,101) | 32 |
|
| |
|
|
|
|
|
|
| Comprehensive income | | | | | | | |
| Loss for the year | | - | - | - | - | (1,707) | (1,707) |
| Currency translation difference | |
- |
- |
- |
185 |
- |
185 |
| Total comprehensive loss for the year | |
- |
- |
- |
185 |
(1,707) |
(1,522) |
| Transactions with owners | | | | | | | |
| Issue of shares | 15 | 32 | 670 | - | - | - | 702 |
| Movement in reserve | | - | - | (23) | - | 23 | - |
| Share based payments | | - | - | 38 | - | - | 38 |
| Total transactions with owners | | 32 | 670 | 15 | - | 23 | 740 |
| As at 31 March 2024 | | 1,370 | 11,611 | 50 | 4 | (13,785) | (750) |
|
| | | | | | | |
| The notes on pages 10-32 form an integral part of these financial statements
| |||||||
3radical Limited
Consolidated Statement of Cashflows
For the year ended 31 March 2024
|
| | Year | Year | |
|
| ended 31 | ended 31 | ||
|
|
|
Note | March 2024 £'000 | March 2023 £'000 |
| Operating loss | (1,703) | (1,050) | ||
| Adjustments for: | | | ||
| Share based payment | 38 | 12 | ||
| Depreciation | 2 | 6 | ||
| Finance cost 8 | 218 | 5 | ||
| Foreign exchange differences | 218 | (298) | ||
|
| Operating cash flows before movements in the working capital | | (1,227) | (1,325) |
|
| (Increase)/decrease in receivables | | 113 | 203 |
|
| Increase/(decrease) in payables | | 235 | (78) |
|
| Cash used in operations | | (879) | (1,200) |
|
| Interest paid | | - | (5) |
|
| Tax refunds | 9 | 190 | 136 |
|
| Net cash used in operating activities | | (689) | (1,069) |
|
|
Investing activities | | | |
|
| Acquisition of property, plant and equipment | | - | (3) |
|
| Net cash used in investing activities | | - | (3) |
|
|
| | | |
|
| Proceeds on issue of shares | 502 | 1,022 | |
|
| New loan received during the year | 219 | | |
|
| Net cash from financing activities | 721 | 1,022 | |
|
| | | | |
|
| Net Increase/(decrease) in cash and cash equivalents | 32 | (50) | |
|
|
Cash and cash equivalents at beginning of year |
38 |
88 | |
|
| Cash and cash equivalents at end of year | 70 | 38 | |
The notes form an integral part of these financial statements
3radical Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2022, 31 March 2023, 31 March 2024
1. General information
3radical Limited ("3radical") is a private company limited by shares incorporated in England and Wales under the Companies Act 2006. The registered office address is Desklodge House, Redcliffe Way, Bristol, England, BS1 6NL.
The functional currency of 3radical is pounds sterling (£). Foreign operations use alternative currencies as their functional currency and are included in accordance with the accounting policies set out in note 3.
The financial statements are presented in pounds sterling (£) which is the presentational currency of the consolidated group comprising 3radical and each of its foreign subsidiaries (hereafter "the 3radical Group").
2. Adoption of new and revised Standards
Basis of accounting
The consolidated annual financial statements have been prepared in accordance with UK-adopted international accounting standards. The consolidated annual financial statements have been prepared on the historical cost basis. The principal accounting policies are set out below.
New standards and interpretations not yet adopted
Unless material the 3radical Group does not adopt new accounting standards and interpretations which have been published and that are not mandatory for reporting periods after 31 March 2024.
No new standards or interpretations issued by the International Accounting Standards Board ('IASB') or the IFRS Interpretations Committee ('IFRIC') have led to any material changes in the 3radical's accounting policies or disclosures during each reporting period.
The most significant new standards and interpretations to be adopted in the future are as follows:
| Ref | Title | Summary | Application date of standards |
| IAS 1 | Presentation of Financial Statements and IFRS Practice Statement 2 - Disclosure of Accounting Policies | Changes requirements from disclosing 'significant' to 'material' accounting policies and provides explanations and guidance on how to | Annual periods beginning on or after 1 January 2024. |
| | | identify material accounting policies. | |
| IAS 1 | Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current and Non-Current Liabilities with Covenants Date | Clarifies that only those covenants with which an entity must comply on or before the end of the reporting period affect the classification of a | Annual periods beginning on or after 1 January 2024. |
| | | liability as current or non-current. | |
 |
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on 3radical.
The directors are evaluating the impact that these standards will have on the financial statements of the 3radical Group.
2. Significant accounting policies
Basis of consolidation
The consolidated financial statements comprise the financial statements of the 3radical and entities controlled by the 3radical (its subsidiaries) (together the "3radical Group). These consolidated financial statements comprise results and cashflow for the year ended 31 March 2024, and statement of the financial position as at 31 March 2024.
Subsidiaries are all entities (including structured entities) over which the 3radical has control. Subsidiaries are fully consolidated from the date on which control is transferred to the 3radical Group. They are deconsolidated from the date that control ceases.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the 3radical Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Business combinations
The 3radical Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, less the liabilities incurred and the equity interests issued by the 3radical Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.
Going concern
The financial statements have been prepared on a going concern basis. The director has assessed the Group's (3radical Ltd and its subsidiaries, "3R Group") financial position as at 31 March 2024 and 30 September 2024 and the factors which may impact the Company's and Group's ability to continue as going concerns for a period of at least 12 months from the date of approval of these financial statements. Management and the director have considered the Group's working capital and financing requirements over the period to 30 September 2025. Subsequent to the year-end, the Company was acquired by Electric Guitar plc (see note 22) and is now wholly owned by Electric Guitar plc ("the Parent").
At as 31 March 2024, the Company had a deficiency in equity of £750k. The Company also generated a loss for the year ended 31 March 2024 of £1,707k and a net cash outflow from operating activities of £689k. The Group has also incurred a loss for the current period and a net cash outflow from operating activities for the period to 30 September 2024.
In assessing the ability of the Company to continue as a going concern and pay its debts as and when they fall due, the directors have taken into consideration the following matters:
· Subsequent to year-end, the Company's borrowings owed to third parties were settled through the issue of shares by the Parent.
· Management has prepared detailed cash flow forecasts and sales forecasts for the Group for the period September 2024 to September 2025. The Group is forecast to generate a significant increase in sales and cash receipts from customers and continue to operate within its facilities for all periods from September 2024 to the end of September 2025. The directors have reviewed and approved these forecasts.
· As part of its assessment of the forecasts, certain sensitivity analyses were run on the forecast models. In the event the Group's actual sales for the period ended 30 September 2025 were lower than forecast by 20% and certain controllable costs were to be deferred, the Group would still have the ability to operate within its facilities and pay its debts as when they fall due for the same periods as above.
· The Group has a strong sales pipeline which continues to grow in size both in terms of potential total contract values and the number of opportunities with high profile international blue-chip businesses.
· The Parent has agreed in writing that it will provide sufficient financial support to 3R Group as is required by 3R Group to enable it to pay its debts as and when they fall due for a period of at least twelve months from the date of signing of its non-statutory financial statements for the year-ended 31 March 2024. The Parent's board has also confirmed that they have reviewed the financial position of the Parent as at 27 September 2024 and the cash flows and financing requirements of the Parent and its subsidiaries for a period of at least twelve months from 27 September 2024 ("the cash flow period"). Upon completing this assessment, the Parent's board is confident that the Parent Company will be able to provide any necessary financial support to 3Radical Group over the cash flow period.
· The latest statutory financial statements for the Parent indicates that the Parent may require more financing than the current facilities available to it. In addition, there is no guarantee the Parent's directors would be successful in raising additional financing required for its future growth and working capital. This matter indicates that a material uncertainty exists that may cast significant doubt on the ability of the Parent to continue as a going concern over the cash flow period. There is also material uncertainty in relation to the Parent's ability to provide financial support to the 3R Group. Nonetheless, in view of the Parent's successful track record of raising financing in recent years from both equity and debt sources and other available funding options, the directors of 3R Group are confident that the Parent would be successful in raising any necessary financing within the next 12 months from the date of approval of its financial statements.
Based on the above matters, the director has assessed that the ability of 3R Group to continue as a going concern is dependent on 3R Group achieving its sales forecasts for the periods to 30 September 2025. There is no guarantee that potential sales opportunities in the sales forecasts will be converted into actual sales contracts, orders, sales and cash receipts. In addition, lead times for conversion of sales opportunities into sales contracts, orders, sales and cash receipts could be longer than the periods assumed in its forecasts. Due to these factors, the group may require more financing than the current facilities available to it. There is no guarantee the director would be successful in raising additional financing required for its future growth and working capital from its Parent or other finance providers. This matter indicates that a material uncertainty exists that may cast significant doubt on the ability of the Company to continue as a going concern at the time of approval of the financial statements. The financial statements do not include adjustments should the going concern basis be inappropriate.
Foreign currencies
The individual financial statements of each company in the 3radical Group is maintained in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each company in the 3radical Group are expressed in Pound Sterling, which is the functional currency of the 3radical Group, and the presentational currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the average rates of exchange for the period. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the spot rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency continue to be held at historic rates and are not retranslated.
Foreign currency differences arising on translation from a transaction currency into an entity's functional currency are recognised in profit and loss.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the 3radical Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity.
Taxation
The tax expense comprises current and deferred tax.
Current tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where 3radical's subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. Where uncertainty exists, it establishes provisions representing additional tax due under a reasonable worst-case scenario.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounting for using the liability method.
Deferred tax assets are recognised on tax losses when there is convincing evidence that the Company will generate sufficient future taxable profits in the foreseeable future against which the tax losses can be utilised to reduce the Company's liabilities to corporation tax.
Research and development
Research expenditure is incurred primarily in the form of software development costs, and these are all written off to the Income Statement during the period. Development expenditure is written off in the same way unless the Director is satisfied with all of the following conditions,
- an individual project is technically, commercially and financially viable,
- a project gives rise to a separately identifiable asset and arises from contractual or other legal rights,
- it is probable that future economic benefits that are attributable to the project will flow to 3radical,
- the cost or value of the asset can be measured reliably
If the above criteria are met, the development expenditure is capitalised as an intangible asset and is initially measured at cost. After initial recognition, development costs are amortised evenly over their estimated useful lives.
Financial assets
Classification
The 3radical Group classifies its financial assets as either: those measured at amortised cost (including trade and other receivables).
Trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 30 days and are therefore all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing components, in which case they are recognised at fair value. The 3radical Group holds the trade receivables with the objective of collecting the contractual cash flows, and so it measures them subsequently at amortised cost using the effective interest method.
Fair value of trade and other receivables
Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value.
Cash and Cash Equivalents
Cash and cash equivalents in the statement of financial position comprise cash at bank.
Financial liabilities
Trade and other payables
Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.
Share-based payments
Goods or services received or acquired in a share-based payment transaction are recognised when the goods or services are received. A corresponding increase in equity is recognised if the goods or services were received in an equity- settled share-based payment transaction or a liability if the goods or services were acquired in a cash-settled share based payment transaction.
When the goods or services received or acquired in a share-based payment, do not qualify for recognition as assets, they are recognised as expenses.
For equity-settled share-based payment transactions the goods or services received and the corresponding increase in equity are measured, directly, at the fair value of the goods or services received provided that the fair value can be estimated reliably.
If the fair value of the goods or services received cannot be estimated reliably, or if the services received are employee services, their value and the corresponding increase in equity, are measured, indirectly, by reference to the fair value of the equity instruments granted.
Vesting conditions, which are not market, related (i.e. service conditions and non-market related performance conditions) are not taken into consideration when determining the fair value of the equity instruments granted. Instead, vesting conditions which are not market related shall be taken into account by adjusting the number of equity instruments included in the measurement of the transaction amount so that, ultimately, the amount recognised for goods or services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest. Market conditions, such as a target share price, are taken into account when estimating the fair value of the equity instruments granted. The number of equity instruments is not adjusted to reflect equity instruments which are not expected to vest or do not vest because the market condition is not achieved.
If the share-based payments granted do not vest until the counterparty completes a specified period of service, the Group accounts for those services as they are rendered by the counterparty during the vesting period, (or on a straight- line basis over the vesting period).
If the share-based payments vest immediately the services received are recognised in full.
Employee benefits
Short-term employee benefits
The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted.
The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non- accumulating absences, when the absence occurs.
The expected cost of profit sharing and bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance.
Share capital and equity
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Share Capital
Share capital represents the amount subscribed for shares at nominal value.
Share Premium
The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.
Share-Based Payment Reserve
The share-based payment reserve represents the cumulative amount which has been expensed in the statement of comprehensive income in connection with share-based payments, less any amounts transferred to retained earnings on the exercise of share options.
Revenue recognition
The 3radicalGroup provides software licensing, consulting and support services.
The weighting of these and pricing of these services (which drives the revenue recognition) depends on the service level required by the client, and on the commercial imperatives and pricing sensitivities of the client. The contractual performance obligations will typically be embedded in an agreement with the client. Where that agreement is detailed, the revenue recognition will follow the allocation of fees and revenues against the completion of the agreed performance milestones in the accounting period.
Revenue from Software licensing contracts, ongoing support and consulting contracts is recognised over the contractual term when the customer simultaneously receives and consumes the benefits provided by the 3radicalGroup's performance, as the 3radicalGroup performs. Contract liabilities for goods and services paid for but not yet provided are recognised as of the period end.
The 3radical Group starts recognising revenue when all the following conditions are met:
- the parties have approved the contract and are committed to perform their respective obligations,
- the Group can identify each party's rights including payment terms for the goods or services to be transferred,
- the contract has commercial substance (i.e. the risk, timing or amount of the 3radical Group's future cash flows is expected to change as a result of the contract),
- it is probable that the 3radicalGroup will collect the consideration to which it will be entitled in exchange for the services that will be transferred to the customer,
- when specific criteria have been met for each of the 3radical Group's contracts with customers.
The 3radicalGroup bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. When evaluating whether an amount of consideration is likely to be collected, the 3radicalGroup considers only the customer's ability and intention to pay that amount of consideration when it is due.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Executive Chairman who is responsible for allocating resources and assessing performance of the operating segments.
3. Critical accounting judgements and key sources of estimation uncertainty
When applying the 3radical Group's accounting policies described in note 3, the Director is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other relevant factors. The actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The following are the critical judgements that the Directors have made in the process of applying the 3radical Group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements.
Research and development
It is the 3radical Group's policy to capitalise development expenditure only if the Director is satisfied as to the technical, commercial and financial viability of individual projects and if the asset recognition criteria under IAS 38 are met as disclosed in Note 2. The assessment of directly attributable costs to projects, future economic benefits generated by these intangible assets and the determination of their amortisation profile involve a significant degree of judgement based on estimation of future potential revenue and profit and the useful life of the assets. The nature of the staff roles and responsibilities in the period have meant that it is not possible to accurately measure the costs to be capitalised and therefore, no costs are capitalised in the financial statements.
Share-based payments
The estimation of share-based payment costs requires the selection of an appropriate valuation model and consideration as to the inputs necessary for the valuation model chosen. The 3radical Group has made estimates as to the volatility of its own shares, the probable life of options granted and the time of exercise of those options. The model used by the 3radical Group is the Black-Scholes model.
4. Revenue
The 3radical Group derives its revenue from the sale of SaaS licences, and associated configuration and delivery services. It's core Voco product enables the creation of sophisticated interactive digital experiences including quizzes, games and surveys.
Revenue relates to services transferred over time. Analysis of revenue by country of destination:
| |
| Year | Year |
|
| ended 31 | ended 31 | |
|
| March | March | |
|
| 2024 £'000 | 2023 £'000 | |
| Sales UK | | 174 | 307 |
| Sales USA | | 216 | 186 |
| Sales Rest of the world | | 21 | 217 |
| | | 411 | 710 |
Contract liabilities can arise on revenue which is being recognised over time and are included within "trade and other payables" on the face of the statement of financial position.
Contract liabilities are short term in nature with balances typically settled in the subsequent period.
| |
| Year ended 31 March 2024 | Year ended 31 March 2023 |
| Notes | £'000 | £'000 | |
| Contract liabilities as at 1 April | | 195 | 268 |
| Cash received in advance of | | 95 | 195 |
| performance and not recognised as revenue during the period | | | |
| Revenue recognised during the period | | (195) | (268) |
| Contract liabilities as at 31 March | 13 | 95 | 195 |
Remaining performance obligations
In respect of the above contract balances delivery of services will occur within 12 months of the statement of financial position date, or has already occurred. Therefore, the practical expedient in paragraph 121(a) of IFRS 15 has been applied.
5. Segmental Analysis
The 3radical Group's management has determined the operating segments based on the reports reviewed by the executive director that are used to make strategic decisions. He considers the business from a geographical perspective and the 3radical Group has four reportable segments, the UK, USA, Singapore, and Australia.
| Segment results Year ended 31 March 2024 | | ||||
| | UK £'000 | USA £'000 | Singapore £'000 | Australia £'000 | Total £'000 |
| Revenue | 254 | 216 | 21 | - | 491 |
| Intersegment eliminations | (80) | - | - | - | (80) |
| Revenue from external customers | 174 | 216 | 21 | - | 411 |
| Cost of sales, intersegment eliminations | (122) | (33) | - | - | (155) |
| Other income | - | - | - | - | - |
| Administrative expenses | (1,454) | (34) | (247) | (4) | (1,739) |
| Depreciation | (1) | - | (1) | - | (2) |
| Operating (Loss) / profit | (1,403) | 149 | (227) | (4) | (1,485) |
| Finance costs | (218) | - | - | - | (218) |
| Taxation | - | (4) | - | - | (4) |
| (Loss) / profit for the year | (1,621) | 145 | 227) | (4) | (1,707) |
|
Segment assets and liabilities | | | | | |
| Gross assets | 3,903 | 24 | 12 | 1 | 3,941 |
| Intersegmental eliminations | (3,846) | - | - | (1) | (3,847) |
| Consolidated total assets | 57 | 24 | 12 | - | 94 |
|
Segmental liabilities |
796 |
1,714 |
665 |
527 |
3,702 |
| Intersegmental eliminations | - | (1,689) | (643) | (526) | (2,858) |
| Consolidated total liabilities | 796 | 25 | 22 | 1 | 844 |
| 5. Segmental Analysis (continued) |
| | | | |
| Segment results | | | | | |
| Year ended 31 March 2023 | | | | | |
| | UK £'000 | USA £'000 | Singapore £'000 | Australia £'000 | Total £'000 |
| Revenue | 409 | 257 | 273 | 57 | 996 |
| Intersegment eliminations | (102) | (71) | (113) | - | (286) |
| Revenue from external customers | 307 | 186 | 160 | 57 | 710 |
| Cost of sales, intersegment eliminations | (155) | (49) | (7) | (1) | (212) |
| Other income | 4 | 3 | - | - | 7 |
| Administrative expenses | (736) | (553) | (252) | (3) | (1,544) |
| Depreciation | (3) | (1) | (2) | - | (6) |
| Operating (loss) / profit | (583) | (414) | (101) | 53 | (1,045) |
| Finance costs | (5) | - | - | - | (5) |
| Taxation | 190 | - | - | - | 190 |
| (Loss) / profit for the year | (398) | (414) | (101) | 53 | (860) |
|
Segment assets and liabilities | | | | | |
| Gross assets | 4,204 | 80 | 64 | - | 4,348 |
| Intersegmental eliminations | (3,927) | (3) | (51) | - | (3,981) |
| Consolidated total assets | 277 | 77 | 13 | - | 367 |
|
Segmental liabilities |
220 |
1,917 |
606 |
579 |
3,322 |
| Intersegmental eliminations | - | (1,834) | (574) | (579) | (2,987) |
| Consolidated total liabilities | 220 | 83 | 32 | - | 335 |
6. Expenses by nature
Loss for the year has been arrived at after charging the following under administrative expenses:
| |
| Year | Year |
|
| ended 31 | ended 31 | |
|
| March | March | |
|
| 2024 £'000 | 2023 £'000 | |
| Depreciation of property, plant and equipment | | 2 | 6 |
| Legal and professional | | 265 | 18 |
| Audit & accountancy fees | | 76 | 19 |
| Directors remuneration | | 145 | 271 |
| Employee Salaries | | 710 | 1,136 |
| IT | | 29 | 32 |
| Marketing | | 77 | 104 |
| FX losses / (gains) | | 186 | (290) |
| Other expenses | | 251 | 254 |
| |
| 1,741 | 1,550 |
7. Staff costs
|
| Year ended | Year ended |
|
| 31 March | 31 March |
|
| 2024 | 2023 |
|
| £'000 | £'000 |
| Directors |
145 |
271 |
| Employees cost Admin expenses Cost of sales
|
710 18 |
1,136 58 |
|
|
873 |
1,465 |
| The average number of employees (including directors) was: | | ||
| |
| Year ended 31 | Year ended |
| |
| March | 31 March |
| |
| 2024 No. | 2023 No. |
| Directors | | 4 | 4 |
| Employees | | 11 | 20 |
| Total |
| 15 | 24 |
8. Finance costs
|
| Year ended | Year ended |
|
| 31 March | 31 March |
|
| 2024 | 2023 |
|
| £'000 | £'000 |
|
Finance cost |
218 |
5 |
| Finance cost | 218 | 5 |
The finance cost is settled in the year through issue of shares (non-cash consideration). The finance costs include £160k expense recognised towards the fair value of bonus shares issued to lenders. The bonus shares are fair valued at a price of 14p being the value determined for reverse takeover (RTO) by Electric Guitar Plc.
9. Tax
| |
| Year ended 31 March 2024 £'000 | Year ended 31 March 2023 £'000 |
| Current year tax credit/(expense) | | (4) | 190 |
| Deferred tax credit | | - | - |
| Taxation |
| (4) | 190 |
UK corporation tax is calculated at 19.00% (2023:19.00%), of the estimated assessable loss for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
| |
| Year ended 31 March 2024 | Year ended 31 March 2023 |
|
| £'000 | £'000 | |
| Loss before tax from continuing operations | | (1,703) | (1,050) |
| Tax at the UK rate of 19.0% (2023: 19.0%) | | (324) | (200) |
| Effects Of: | | | |
| Expenses not deductible for tax purposes | | 108 | 11 |
| R&D tax credits | | - | (190) |
| Other tax differences | | 3 | 15 |
| Deferred tax not recognised | | 217 | 174 |
| Tax charge/(credit) for the year |
| 4 | (190) |
Tax losses have not been recognised in deferred tax due to uncertainty over their future recoverability. Gross tax losses available for offset against future taxable profits but not recognised in deferred tax amount to £10.97m at the Balance Sheet date (2023: £9.9m).
10. Loss per share
The calculation of the basic and diluted earnings per share is based on the following data:
| | | Year ended 31 March 2024 | Year ended 31 March 2023 |
| Loss for the year attributable to equity holders of the company (£) | | 1,706,591 | 859,204 |
| Weighted average number of ordinary shares | | 6,710,840 | 2,867,544 |
| Loss per share (pence) | | 25 | 30 |
The share options and warrants issued by the company have an anti-dilutive effect on the loss per share. Hence, under IAS requirements diluted loss per share is shown as being the same as basic loss per share.
11. Investments
Investments in subsidiaries
Details of 3radical's subsidiaries at each year end are as follows:
|
|
|
| Proportion of ownership & voting power held |
| |
| Name | Place of incorporation and operation | Date controlling interest acquired | Group % | Parent % | Principal activity |
| 3radical Pty Limited | Australia | 27/06/2014 | 100 | 100 | Operating Company |
| 3radical Pte Limited | Singapore | 16/02/2016 | 100 | 100 | Operating Company |
| 3radical Inc | United States | 27/03/2020 | 100 | 100 | Operating Company |
Registered address:
3radical Pte. Ltd. registered address: 51 Goldhill Plaza, #07-10/11, Singapore (308900).
3radical Pty Limited registered address: C/- Mas Partners, Level 5, 2 Defries Avenue, Zetland NSW 2017. 3radical Inc registered address: 564 W Randolph St FI2, Chicago, IL 60661.
12. Trade and other receivables
|
| As at 31 March | As at 31 March |
|
| 2024 | 2023 |
|
| £'000 | £'000 |
| Trade debtors | 22 | 126 |
| Prepayments | 2 | 11 |
| R&D tax credit receivable | - | 190 |
|
| 24 | 327 |
The receivables are considered to be held within a held-to-collect business model consistent with the 3radical Group's continuing recognition of the receivables.
Credit and market risks, and impairment losses
The 3radical Group did not impair any of its trade receivables as at the year end, as all trade receivables generated during the financial year were settled in full, prior to the year-end or close to their due dates.
The Director considers that the carrying amount of trade and other receivables approximates their fair value.
13. Trade and other payables - Current
| |
| As at 31 March 2024 £'000 | As at 31 March 2023 £'000 |
| Trade creditors | | 179 | 49 |
| Accruals | | 294 | 84 |
| Contract liabilities Social security and other taxes | | 95 7 | 195 7 |
| |
| 575 | 335 |
14. Financial Liabilities - Borrowings
| |
| As at 31 March 2024 £'000 | As at 31 March 2023 £'000 |
| Current: | | | |
| Short term borrowings | | 269 | - |
| |
| 269 | - |
On 16 November 2023, a loan of £50,000 was received from Anglia Securities Ltd. On 19 March 2024, a further £75,000 was advanced. Each tranche of the loan was subject to a 5% facility fee and interest accrued at a rate of 21% per annum. On 3 May 2025, £25,000 of the outstanding loan amount was part settled with the issue of 1,190,480 shares in Electric Guitar Plc with a fair value of 2.1p per share. On 24 May 2024, the remaining balance of £184,406.85 was settled in cash by Electric Guitar Plc.
Richard Horwood (a director of Electric Guitar Plc) and Ben Lister (an employee of Electric Guitar Plc) each advanced the company an amount of £12,500 on 21 December 2023 and 22 December 2023 respectively. These loans were subject to a fixed facility fee of £2,500 (20%) each as well as 155,841 A ordinary shares in 3radical Ltd issued to each of them. On 3 May 2024, Richard Horwood's outstanding loan amount and facility fee was settled with the issue of 714,286 shares in Electric Guitar Plc with a fair value of 2.1p per share. On 22 May 2024, Ben Lister's outstanding loan amount and facility fee was settled in cash by Electric Guitar Plc.
On 29 January 2024, a loan of £30,000 was received from Sanderson Capital Partners Ltd. On 20 February 2024, a further £25,000 was advanced and on 26 February 2024, a further £20,000 was advanced. These loans were subject to a fixed facility fee of £15,000 (20%) in total as well as 935,049 A ordinary shares in 3radical Ltd. On 3 May 2024, the outstanding loan amount and facility fee was settled with the issue of 4,285,714 shares with a fair value of 2.1p per share.
15. Share capital
| | 2024 | | 2023 | | |
| Ordinary shares of £1 | Number of | | | Number of | |
| each | shares | | £'000 | shares | £'000 |
|
At 1 April |
1,299,835 | |
1,300 |
1,299,835 |
1,300 |
| Issued during the period of £1 each | - | | - |
| - |
| At 31 March | 1,299,835 | | 1,300 | 1,299,835 | 1,300 |
| | |
2024 | |
2023 | |
| Ordinary A shares of | Number of | | Number of | | |
| £0.01 each | shares | £'000 | shares | £'000 | |
|
At 1 April |
3,803,133 |
38 |
- |
- | |
| Issued during the period of £0.01p each | 3,208,568 | 32 | 3,803,133 | 38 | |
| At 31 March | 7,011,701 | 70 | 3,803,133 | 38 | |
| Total Ordinary and Ordinary A shares | 8,311,536 | 1,370 |
5,102,968 | 1,338 | |
The following Ordinary Shares of £0.01 were issued during the year ended 31 March 2023:
a. Issued 20 September 2022: 2,250,395 at £0.27 per share
b. Issued 27 September 2022: 156,291 at £0.27 per share
c. Issued 19 December 2022: 650,155 at £0.27 per share
d. Issued 23 December 2022: 92,592 at £0.27 per share
e. Issued 10 February 2023: 653,700 at £0.27 per share
The following Ordinary Shares of £0.01 were issued during the year ended 31 March 2024:
f. Issued 4 April 2023: 533,324 at £0.27 per share
g. Issued 5 April 2023: 274,073 at £0.27 per share
h. Issued 28 July 2023: 777,774 at £0.27 per share
i. Issued 1 August 2023: 6,296 at £0.27 per share
j. Issued 20 September 2023: 370,370 at £0.27 per share
k. Issued 28 February 2024:F 1,246,731 at £0.01 per share with a fair value ascertained to be 14p
Of the shares issued during the year, 1,352,280 were issued for consideration other than cash.
16. Reserves
Share-based payments reserve
The share-based payments reserve is used to recognise the costs relating to share-based payments issued to employees and officers of the 3radical Group.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.
17. Share-based payments
3radical has issued share options to certain employees of the 3radical Group, and select external third parties. It has also issued warrants to 3radical's brokers for costs directly associated with share issuance. All share options and warrants vest immediately or within three years of the issue date. If the share options or warrants remain unexercised after the relevant time period from the date of grant, then they expire.
Details of 3radical's share options and warrants outstanding during the year are as follows:
| |
| | | FY 2024 | | | FY 2023 | | |
| |
| | Number of share options and warrants | Weighted | | Number of share options and warrants | Weighted average exercise price £ |
| |
|
|
| | average | |
| ||||
|
|
| | exercise | |
| ||||
|
|
| | price £ | |
| ||||
| Outstanding at 1 April | | | | 739,461 | 0.37 | | 45,612 | 6.84 |
|
| Granted during the year | | | | 425,000 | 0.01 | | 720,000 | 0.07 |
|
| Exercised during the year | | | | - | - | | - | - |
|
| Expired during the year | | | | (15,169) | 2.60 | | (26,151) | 3.33 |
|
| Outstanding at 31 March | | | | 1,149,292 | 0.21 | | 739,461 | 0.37 |
|
| Exercisable at 31 March | | | | 1,149,292 | 0.21 | | 739,461 | 0.37 |
|
On 21 August 2024, 3radical issued 425,000 options of which 300,000 have been awarded to Directors and a further 125,000 options have been awarded to UK employees of 3radical. The options vest over a 36 month period commencing on 1 September 2023, with an exercise price of 1p. Where an exit event occurs prior to all of the options vesting, the remaining options are treated as vested at the transaction date.
During the year ended 31 March 2024, 15,169 options were surrendered by directors and employees of 3radical.
All of the above share options and warrants are recognised as an expense in the income statement over their vesting period.
New options granted are valued using the Black Scholes model, a commonly used option-pricing model. The calculation of volatility used in the model is based upon the share price and equity instrument movements during the financial period. The following factors are all taken into consideration when the options are valued:
· Weighted average share price
· Expected volatility
· Expected dividends
· Stock price
· Exercise price
· Option life
· Risk free interest rate
| | Year ended 31 March 2024 | Year ended 31 March 2023 |
| Average spot at grant date (pence) | 0.27 | 0.27 |
| Expected volatility | 50% | 50% |
| Expected option life | 10 | 10 |
| Expected dividends | - | - |
| The risk free interest rate | 5.25% | 4.00% |
Expected volatility was determined by calculating the historical volatility of the 3radical Group's share price over the previous year.
The expected life used in the model has been adjusted; based on management's best estimate, for the effects of non- transferability, exercise restrictions, and behavioral considerations.
18. Non-cash transactions
The Company entered into the following material non-cash transactions during the year:
• Under the terms of loans entered into with Mr Richard Horwood (a director of Electric Guitar plc) and a former executive of Electric Guitar plc, the Company issued a total of 1,246,731 shares at 1 pence per share to these parties (nominal value of shares £12k). As the substance of the transaction was to issue equity shares to settle finance costs on the loans, finance costs of £172k, representing the fair value of the shares issued were recognized through the income statement. The corresponding entries in the financial statements were recognized through equity- share capital £12k and share premium £160k. (see note 14 for further details)
19. Financial instruments
Finance Risk Management
3radical has exposure to the following risks arising from financial instruments:
a. Capital
b. Market
c. Foreign currency
d. Credit
e. Liquidity
Management determines, as required, the degree to which it is appropriate to use financial instruments to mitigate risk. Currently the 3radical Group's principal financial instruments comprise cash, borrowings, trade receivables, trade payable and equity capital. The 3radical Group does not enter into complex derivatives to manage risk ass the cost would outweigh the benefit. There is no material difference between the book value and fair value of the 3radical Group's cash and cash equivalents balances, trade and other receivables balances or trade payables balances.
Significant accounting policies
Details of the significant accounting policies and methods adopted (including the criteria for recognition, the basis of measurement and the basis for recognition of income and expenses) for each class of financial asset, financial liability and equity instrument are disclosed in note 3.
Categories of financial instruments
The 3radical Group calculates the fair value of assets and liabilities by reference to amounts considered to be receivable or payable at the balance sheet date.
The book value of the 3radical Group's financial assets and liabilities approximates their fair value.
Trade payables are non-interest bearing and are normally settled within 30 days. All other payables are to be settled within the next 12 months, as and when they become due.
Capital risk management
3radical Group manages its capital to ensure that entities in the 3radical Group will be able to continue as going concerns. The 3radical Group is not subject to externally imposed capital requirements. The capital structure of the 3radical Group consists of cash and borrowing and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings.
The Director anticipates a net operating cash outflow for the 3radical Group for the next twelve months from the date of signing the financial statements.
Management have confirmed that they expect to source additional funding from the new parent company, Electric Guitar Plc in order to support the 3radical Group's capital requirements for the foreseeable future.
Market risk management
The 3radical Group's activities expose it primarily to the financial risks of foreign currency exchange rates. The 3radical Group applies a continuous review process to manage its exposure to foreign currency and equity price risk:
a. The respective exchange rates of the currencies for which the 3radical Group holds significant balances are monitored on a daily basis;
b. known cash requirements in the respective currencies in which the 3radical Group transacts are matched against cash reserves and any shortfalls are addressed through transfers across the longest practical timeframes to minimise foreign currency risk as best as possible; and
c. strategies are updated on a regular basis to reflect actual market data and the changing needs of the business.
Foreign currency risk management
The 3radical Group undertakes transactions denominated in foreign currencies and consequently is exposed to year end and average exchange rate fluctuations.
The primary currency that the 3radical Group is exposed to is the US Dollar (USD).
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the 3radical Group. The 3radical Group's principal financial assets are cash deposits and the credit risk on these liquid funds is limited because the counterparties are banks.
An allowance for impairment is made where there is an identified loss event, which is evidence of a reduction in the recoverable cash flows.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows:
| 31 March 2024 Financial assets at amortised cost £'000 | 31 March 2023 £'000 |
| Trade and other receivables 24 | 327 |
| Cash and cash equivalents 70 | 38 |
| 94 | 365 |
Liquidity risk management
Liquidity risk is the risk is the possibility that 3radical will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. 3radical's approach to managing liquidity is to ensure, as far as possible that it will always have sufficient liquidity to meet its liabilities when due, without incurring unacceptable losses. The following are contractual maturities of financial liabilities at the balance sheet date:
|
Financial liabilities at amortised cost | 31 March 2024 £'000 | 31 March 2023 £'000 |
| Trade and other payables | 568 | 328 |
|
| 568 | 328 |
20. Related party transactions
Balances and transactions between 3radical and its subsidiaries, which are related parties, have been eliminated on consolidation.
Remuneration of key management personnel
The remuneration of the Directors and other staff members, who are the key management personnel of the 3radical Group, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.
| | Year ended | Year ended |
| 31 March 2024 | 31 March 2023 | |
| £'000 | £'000 | |
| Salaries and other short-term employee benefits | 145 | 271 |
| Other staff benefits | (8) | (9) |
| Shared based payment | 37 | 12 |
| | 174 | 274 |
|
21. Ultimate controlling party
| | |
The Director believes there was no ultimate controlling party as at 31 March 2024. As from 3 May 2024, the ultimate parent undertaking of the Company is Electric Guitar Plc, a company registered in England and Wales which owns 100% of the issued share capital.
22. Events after balance sheet date
On 3 May 2024, the entire share capital of the Company was purchased by Electric Guitar Plc at the negotiated value of £1.3m. See Note 14 for further details of settlement of borrowings subsequent to year end.
23. Nature of the Consolidated Financial Statements
3radical Group's consolidated financial statements presented above does not constitute statutory accounts for the period under review.
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