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 John Regan (CEO)   +44 (0)7721 348826   Allenby Capital (Nominated Adviser and Joint Broker) Jeremy Porter Piers Shimwell Dan Dearden-Williams   020 3328 5656   Axis Capital Markets (Joint Broker) Richard Hutchison   020 3026 0320     Global Investment Strategy UK (Joint Broker) James Sheehan     020 7048 9400 Yellow Jersey (Financial PR) Charles Goodwin Annabelle Wills Bessie Elliot     020 3004 9512 electric@yellowjerseypr.com

 

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 2024		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 £'000	Year ended 31 March 2023 £'000
	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 £'000	Year ended 31 March 2023 £'000
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)
	Financing activities
	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: