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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Iq-ai Limited | LSE:IQAI | London | Ordinary Share | JE00BD4H0R42 | ORD GBP0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.05 | -3.03% | 1.60 | 1.50 | 1.70 | 1.65 | 1.60 | 1.65 | 334,160 | 09:47:17 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Florists | 609k | -624k | -0.0028 | -5.71 | 3.66M |
From Feb 2022 to Feb 2025
TIDMIQAI
RNS Number : 7683J
IQ-AI Limited
28 April 2022
28 April 2022
IQ-AI Ltd
("IQ-AI", the "Company" and, together with its subsidiaries, the "Group")
Publication of Annual Report
The Board of IQ-AI Ltd are pleased to present announce that the Company's audited financial statements for the year ended 31 December 2021.
The Annual Report will be available on the Company's corporate website.
The Directors of the Company accept responsibility for the contents of this announcement
For further information, please contact:
IQ-AI Limited Trevor Brown/Brett Skelly/Vinod Kaushal Tel: 020 7469 0930 Peterhouse Capital Limited (Financial Adviser and Broker) Lucy Williams/Heena Karani Tel: 020 7220 9797
Chief Executive Officer's Statement
To the Members of IQ-AI Limited
We are delighted to present the annual report for the twelve months ended 31 December 2021 for IQ-AI Limited.
Operational Progress
2021 was a transformational year for IQ-AI. We had record revenue of GBP521,069 (2020: GBP255,314), an annual growth rate of 104%, secured several new patents, made the strategic decision to sponsor a Phase I therapeutic clinical trial, and achieved new product development milestones. Several factors, both internal and external, drove these accomplishments. Hospitals and healthcare providers were able to resume the sales conversations that were postponed due to the pandemic, while IQ-AI's operating subsidiaries, Imaging Biometrics, LLC (IB) and Stone Checker Software Limited (SC), remained fully functional throughout this difficult period and were able to continue the development of new products.
Major Highlights
-- Early in 2021, we aligned and focused resources to accelerate the development of IB Zero G(TM), the Artificial Intelligence (AI) model for generating simulated "with contrast" images using non-contrast (0% gadolinium) images as input. The effort included the labelling of many datasets necessary to be used to perfect the AI model. Sufficient progress was made throughout the year and a 510(k) application to the US FDA is in now in preparation with submission for approval anticipated in May '22.
-- Last April 2021, we announced the sponsorship of a Phase I clinical trial. The trial follows a successful pre-clinical study that showed that the potential therapeutic compound Gallium Maltolate (GaM) shrunk glioblastoma (GBM) cells in animal models. In June 2021, the FDA approved the investigational new drug (IND) application for GaM and the treatment of the most aggressive form of brain cancer, GBM, and the first-in-human trial of an oral form of GaM has now commenced in the USA.
-- In April 2021, a $3 million grant was awarded in collaboration with Professor Kathleen Schmainda, PhD, from the Medical College of Wisconsin (MCW). The National Institutes of Health (NIH)-funded grant will be used to validate and translate an AI model that can detect infiltrating tumour cells before they are visible on standard imaging. This would represent the ultimate in early detection.
-- In June 2021, we were awarded a US patent for the AI technology contained in IB Zero G(TM). This 0% contrast media dose approach has the potential of offering remarkable benefits which include a more comfortable patient experience, more productive radiology departments, and reduced risks associated from the long-term, albeit uncertain, side effects of repeated GBCA use.
-- In September 2021, we received a European patent for IB's "dual-echo" technology. Previously patented in the US, this technology combines MR scanner data acquisition and post-processing to generate two unique sets of data that currently require two independent MR exams. In addition, the technology eliminates the need for the commonly accepted "pre-load" dose of gadolinium-based contrast agent and minimizes other imaging artefacts inherent with this type of imaging. The advancement of this technology is being done in collaboration with the Barrow Neurological Institute under a funded NIH grant. An additional aim of the grant is to harmonize this approach across all major scanner platforms.
-- In November 2021, MD Anderson Cancer Centre (University of Texas, Houston) adopted IB Clinic - container edition. MD Anderson is consistently ranked as the #1 cancer centre in the USA and is a recognized leader in using cutting edge technologies in an attempt to improve patient outcomes. This installation again underscores the significance of the automated and quantitative capability of IB Clinic - container edition.
Impacting Decisions, Impacting Lives
The limitations of conventional brain tumour imaging are well acknowledged. The inability to accurately distinguish between tumour and treatment effect can lead to erroneous decisions and suboptimal care. Yet, even today, the current standard to monitor treatment response in brain tumours relies exclusively on conventional imaging. Since our inception, we have maintained close collaborative relationships with scientific and clinical experts who have worked to establish a better way of monitoring treatment response. Leading this effort is Professor Kathleen Schmainda at MCW. The pioneering work conducted in her laboratory has paved the way for significant developments in MR quantitative imaging. Today, the proliferation of that foundational science continues to drive ground-breaking advances which have the potential to establish an entirely new standard in brain tumour imaging and application. These extended collaborative relationships, many of which are funded by various NIH grant mechanisms, leave us ideally positioned to selectively identify promising new advances which can be translated into new product opportunities. By doing so, we can help bridge the gap between the laboratory and routine clinical care and deliver products that make a difference in the lives of patients and their families.
The 2021 Inflection Point
One of the causes of an increase in revenue during the period was the effects of our fully automated processing enhancements. This new product packaging provided an opportunity to implement an annual subscription payment model based on procedural volume. Therefore, any size organization can benefit from our solutions. Prior to this, our products were solely packaged as "plugins" to the Apple(R) Mac platform and required manual user operation (e.g., an MR Technologist or neuroradiologist) to process the datasets. Because most hospitals use Windows(TM) PCs and busy neuroradiologists want all information available from a single workstation, our sales were limited hitherto. Since we made our products available as fully automated and platform-independent solutions, interest has grown. Now, high-volume cancer centres, located in large metropolitan areas, can take advantage of our advanced imaging solutions. Our competitors offer automated processing too. However, we are unique, as nobody else offers quantitative information that has been correlated with actual tissue samples. Our challenge is to make clinicians and patients aware of this unparalleled capability.
Focus areas 2022:
Business Growth
Building upon the record revenue levels established last year remains a priority. To meet this challenge and, as previously noted, we have added a Client Relations Manager with prior "blue chip company" and radiology technician experience. More recently, we have enlisted a marketing-advertising agency to help us heighten brand awareness to clinicians, patients, and administrators. Our core imaging platform, IB Clinic, is clinically validated, mature, and primed to scale rapidly.
In addition to our internal sales efforts, we continue to strengthen our channel partners' sales and marketing teams' understanding of our software products. And, as appropriate, we are asked to join sales calls and product demonstrations initiated by our partners. This puts prospective clients in direct contact with us and allows us to better explain the underlying technology and proven science of our applications. In effect, our partners act as an extension of our own sales and marketing teams and are introducing the unique aspects of our imaging platforms to new prospects around the world.
Our NIH-funded grants continue to fuel product development. These funds provide a significant boost to companies working to bring novel technologies to the market. Without resources such as these, the pathway to commercialization would be much longer and more burdensome for small to medium-sized companies. The specialized expertise we offer, such as making laboratory code "industrial-strength", regulatory experience, and distribution, helps ensure novel technologies will continue to find their way from the laboratory bench to the patient.
As we look forward and plan for 2022, we are planning to exhibit at several tradeshows this coming year. Our team, medical collaborators, and members of the Schmainda Lab at MCW have submitted abstracts to upcoming meetings scheduled for this spring and summer, many of which have been accepted for oral or poster presentations. For the past few years, COVID's impact on in-person meetings has limited exhibit opportunities and we look forward to "shaking hands" with clinical decision makers once again.
Finally, our growing collaborative networks, client base, and continued participation in the National Cancer Institute's (NCI) Quantitative Imaging Network (QIN), of which we are the only industrial member, continue to open new opportunities for joint development of novel solutions. As we selectively explore these opportunities, we focus on synergistic applications with potential to disrupt current clinical practice and "create the standard". While we think big, we also recognize that sometimes simple solutions can also be the most elegant.
Product Development
We remained focused on new product initiatives that have real potential for shifting the way healthcare is practiced today. Our experience and knowledge of the full spectrum of brain tumour care has identified gaps that need to be filled - from diagnosis, to therapy, and beyond. These initiatives are listed below:
-- IB Trax(TM) : Under a development agreement with The Mayo Clinic, IB Trax is a new product platform that will leverage the Company's existing quantitative solutions to streamline the identification and reporting of metastatic lesions. Metastatic brain cancer is 10x more prevalent than primary brain tumours. Moreover, improvements made in the treatment of lung, liver, bone, and other common cancers have resulted in the brain becoming a sanctuary site for these cancers. Again, conventional imaging makes the identification of these lesions challenging, and a systematic way to organize and report information is lacking. Which lesions are new? Which lesions have grown or shrunk? How much have the lesions changed? All these questions result in error rates as high as 30% using available tools. IB Trax will provide a solution that leverages IB's quantitative Delta T1 maps, and the longitudinal reporting capability being developed as part of IB Trax will be ported to other IB platforms. A beta version of the platform is due for completion by the end of September 2022.
-- IB Zero G(TM) : The US patent for the underlying technology of IB Zero G was a milestone achievement. From May through August 2021, many new datasets were labelled and made available to the development team for refining the AI model, advancements were made, and a 510(k) application is being prepared for submission with a target submission date of May 2022. The 0% dose of gadolinium-based contrast agent (GBCA) capability of IB Zero G has immediate application for patients who are at risk when, or have valid concerns of, receiving GBCA.
-- Automated "FTB" Maps : Since the development of Fractional Tumour Burden (FTB) maps, award-winning papers and a growing body of literature have been generated showing the impact these maps have on clinical decision making. The maps require inputs from IB Delta T1 and IB Neuro perfusion maps where the measurements of relative cerebral blood volume (rCBV) are stratified into user-defined classifications. The built-in standardization technology, which automatically calibrates the values to a fixed and consistent scale, enables volumetric assessment of change and makes the visualization of the classification volumes easy. The fully automated workflow, which uses technology contained in IB Zero G, has been implemented and is ready for beta deployment. The initial use will be for high-grade brain tumours. These types of brain tumours are highly invasive and present a challenge when attempting to automatically generate FTB maps. Thus, there may be a small percentage of maps that may still require a user to manually complete the processing. Internal testing, however, is showing that a large majority of cases processed by the automated workflow appear to be working quite well. This represents a significant time saving for the high-volume sites that are using the current semi-automated workflow.
-- Simultaneous Perfusion Imaging with Consecutive Echoes (SPICE) : With expanded patent protection awarded by the European Patent Office, this dual-echo technology is well-positioned for commercial success. This technology is a combined MR acquisition and post-processing approach that has several distinct advantages. First, it requires only a single dose of GBCA (not the accepted two-dose standard) which represents a 50% reduction in GBCA administration for perfusion DSC imaging. It also generates both dynamic susceptibility contrast (DSC) and dynamic contrast enhanced (DCE) parameter maps from a single MRI scan and, at the same time, eliminates challenging acquisition issues associated with DCE exams. From the patient's perspective, two sets of rich information could be generated from the same MR scan, each of which provides useful physiologic information for brain tumour assessment. In addition, SPICE generates high-quality maps more consistently. To our knowledge, we are the only company that offers multiple options to reduce GBCA exposure. Along with IB Zero G, the SPICE dual-echo and the low flip angle (LFA) methods each provide low dose or no dose alternatives for neuro exams. Currently, the DCE component of the SPICE dual-echo approach is being validated under an NIH-funded grant with Barrow Neurological Institute (BNI) which also includes standardizing MR acquisition and post-processing across all vendor platforms.
-- IB CAD(TM) : This AI solution will identify areas of infiltrating cancer cells invisible using current imaging techniques. While much more work and validation is needed, we believe the ability to "detect the undetectable" has the potential of revolutionizing the way brain cancer is monitored and how treatment platforms work. Funding for development continues under an NIH grant awarded to Professor Kathleen Schmainda.
Gallium Maltolate (GaM)
During the period, we announced our engagement with a team from the Medical College of Wisconsin Cancer Centre (MCWCC) and our commitment to sponsor an FDA Phase I clinical trial. The study is being led by Dr Jennifer Connelly, MD, and Dr Christopher Chitambar, MD, both from MCW and both long-standing collaborators with Professor Schmainda. Encouraged by the results of the pre-clinical animal study, we decided to financially sponsor the trial, the first trial at the MCWCC for in-human-use of an oral agent to combat GBM.
At the time of writing, all necessary approvals have been obtained and the trial is open for enrolment. While the primary aim of Phase I trials is to determine safe dosing levels for Phase II, we will be closely monitoring the response of these patients to the agent using our imaging technology. Our hope for Phase 1 is that we see the encouraging results in human subjects that were demonstrated in the pre-clinical study. Upon receiving positive feedback from the Phase I, we plan to continue to develop GaM with the aspiration to improve prognosis for patients suffering this disease.
Outlook
There is much going on and the range of potential outcomes from our projects and activities has never been wider. I anticipate an interesting and exciting future and to be communicating regularly with shareholders as events unfold.
Trevor Brown
Chief Executive Officer
Strategic Report
The Directors present their strategic report on the group for the year ended 31 December 2021.
Principal activities
The principal activity of the Group is the provision of convenient, cost-effective and clinical treatments to patients in the field of medical imaging diagnostics, based on proven technologies. A review of the business is included within the Chief Executive Officer's Statement on page 2.
Strategy
IQ-AI's vision is to become a leader in the field of medical imaging diagnostics. The Company purchased 100% of the equity in Stone Checker Software Limited in June 2017, and in March 2018 purchased Imaging Biometrics LLC ("IB") with its suite of advanced imaging diagnostic software products.
Event since the year end
Events since the year end are reported under Note 22 to the financial statements.
Results for the 2021 financial period
The summary results are found in the primary statements of the Group, primarily being the Income Statement, the Statement of Comprehensive Income and Statement of Financial Position.
In summary:
-- The net interest cost for the Group for the period was GBP10,710 (2020: GBP31,812) -- Group revenue for the year was GBP521,069 (2020: GBP255,314)
-- Administrative expenses from continuing operations increased to GBP994,388 (2020: GBP933,462)
-- Group loss after tax from continuing operations was GBP501,058 (2020: GBP717,534) -- Taxation charge was GBPnil for the period (2020: GBPnil) -- Basic and diluted loss per share from continuing operations was 0.29p (2020: 0.48p loss)
-- As at 31 December 2021, the Group had cash and cash equivalents of GBP728,586 (2020: GBP478,910)
-- The Group's net assets increased to GBP1,190,691 (2020: GBP1,071,354)
-- Intangible assets, comprising intellectual property, imaging and diagnostic software and goodwill, decreased to GBP772,263 (2020: GBP889,177)
Key performance indicators
The main KPI for the Group is achieving its cash flow forecasts whilst efforts continue to implement the new investing policy.
The Board monitors its cash flow carefully to ensure that it has the funds necessary to meet its on-going working capital requirements, and planned product development costs. Detailed forecasts are produced and reported against on a regular basis.
Future developments
With the encouraging results from the clinical studies, the Company is in an excellent position to deliver benefits to patients, as well as generate value for stakeholders. Further commentary on the Group's future developments can be found in the Chief Executive's Statement on page 2.
Principal risks and uncertainties
This section describes the principal risk factors that the Directors believe could materially affect the Group's risk and performance. Information relating to financial risk management is included in note 20 to the financial statements.
Liquidity risk
Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
The Board reviews cash flow projections at periodic intervals during the year as well as information regarding cash balances. At balance sheet date, the Group had cash balances of GBP728,586 (2020: GBP478,910). The financial forecasts indicate that the Group is expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances.
Interest rate risk
The Group has convertible loan notes totalling GBP207,074, including accrued interest, outstanding as at 31 December 2021 (2020: GBP196,364). The notes accrue interest at a fixed rate of 6% p.a. and, as such, carries a limited interest rate risk.
Cash resources are held in current, floating rate accounts.
Market risk
Market price risk arises from uncertainty about the future valuations of financial instruments held in accordance with the Group's investment objectives. These future valuations are determined by many factors but include the operational and financial performance of the underlying investee companies, as well as market perceptions of the future of the economy and its impact upon the economic environment in which these companies operate.
Risk Table
The following table, whilst not an exhaustive list as other risks may arise or existing risks may materially increase in the future, sets out the principal risks and uncertainties to the continuing Group. These are listed in no order of priority, and alongside the description of each risk is a note of the main mitigating factors and actions the Group is taking to address that risk.
Hot Features
Premium
Risks/uncertainties to the continuing Group
Issue Risk/Uncertainty Mitigation
------------------------------------- --------------------------------
Imaging Biometrics Without medical regulatory The products are medical
and Stone Checker approval it would be difficult devices under Classification
may be subject to market and sell the products. 1 (medical software),
to medical regulatory which is the lowest
risk level of classification
requiring the least
regulatory oversight
as they are non-invasive
and non-sterile. The
products are not used
for treatment but are
rather used for diagnosis.
Intellectual The Group's success depends, The Group invests in
p roperty in part, on its ability maintaining and protecting
to obtain and maintain protection this intellectual property
for its intellectual and to reduce risks over
proprietary information, the enforceability and
so that it can prevent others validity of the Group's
from making, using or selling patents. The Group works
its inventions or proprietary closely with its legal
rights. The Group's patent advisors and obtains
applications may not be where necessary opinions
granted, and its existing on the intellectual
patent rights may be successfully property landscape relevant
challenged and revoked. to the Group's programmes
and activities.
TexRAD Limited Stone Checker's ability Balaji Ganeshan of TexRAD
- use of Intellectual to exploit its products works very closely with
property is reliant upon the terms Stone Checker in the
of an exclusive licence development of the products.
from TexRAD Limited which The Group continuously
grants Stone Checker the monitors its ongoing
right to use the TexRAD's compliance with the
patents in the field of terms of the licence
urolithiasis and to research, agreement.
develop or have developed,
make or have made, keep,
use, import, export, sell
and supply products based
upon the TexRAD Plug-in
pursuant to the terms of
the licence agreement dated
20 August 2015.
TexRAD may terminate this
agreement under a number
of circumstances, which
would prevent Stone Checker
being able to develop and
sell its products.
Identifying further The Group is dependent upon The Group has formal
suitable investments the ability of the Directors investment criteria
to identify suitable investment to identify suitable,
opportunities and to implement earnings-enhancing acquisition
its investing policy. The targets and employs
Directors are continuing experienced professionals
their search to identify to drive the acquisition
further opportunities in process.
line with the Company's
investing policy for creating
value.
The Directors may be unable
to identify further targets
and thus the Company may
not be able to invest its
cash in a manner which accomplishes
its objectives.
There is no guarantee that
the Company will be able
to acquire further identified
opportunities, or indeed
complete the investment.
The Group's ability to ascertain
the merits or risks of the
operations of a target company
or business.
The Group's ability to deploy
the net proceeds on a timely
basis.
The availability and cost
of equity or debt capital
for future transactions.
Raising emergency In the event of a significant The Group monitors its
funding issue arising for which cash requirements carefully
the Group is required to and in the need of significant
access substantial liquid additional funds would
funds in excess of its available look to increase its
cash balances, it may not financing.
be easy to obtain additional
funds as and when required
and on acceptable terms.
------------------------------------- --------------------------------
Loss of key personnel The Group comprises of a The Group has a continuity
few key individuals in a program in place to
market which requires high ensure that Directors
quality experienced staff. would be able to minimise
Any unforeseen loss of these the disruption caused
key personnel would be damaging by the potential loss
to the Group. The retention of key personnel.
of their services cannot
be guaranteed.
------------------------------------- --------------------------------
The Group may Compliance with various The Group monitors legislative
be adversely laws and regulations does and regulatory changes
affected by the impose compliance costs and alters its business
enforcement of and restrictions on the practices where appropriate.
and changes in Group, with fines and/or
legislation and sanctions for non-compliance.
regulation affecting
its business
------------------------------------- --------------------------------
The Group relies The successful management The Group offers incentives
on the experience and operations of the Group in the form of share
and talent of are reliant upon the contributions options or warrants
its senior management of senior management and to incentivise its senior
and on its ability directors. In addition, management.
to recruit and the Group's future success
retain key employees depends in part on its ability
to continue to recruit,
motivate and retain highly
experienced and qualified
management and directors.
------------------------------------- --------------------------------
Going concern
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chief Executive Officer's Statement on page 2.
The financial position of the Group, its cash flows and liquidity position are described in this business review. In addition, note 20 to the financial statements include the Group's objectives, policies and processes for managing its capital, the financial risk management objectives, details of its financial instruments and its exposure to credit risk and liquidity risk. As highlighted in note 20, the Group meets its day to day working capital requirements through its revenue generating cash flows, discrete fund raises and the issue of convertible loan notes.
The Company's employees carry out their duties remotely, via the network infrastructure in place. As a result, there was no disruption to the operational activities of the Company during the COVID-19 social distancing and working from home restrictions. All key business functions continue to operate at normal capacity.
The Directors have prepared Group forecasts and projections, which show that the Group has a reasonable expectation of maintaining sufficient working capital to enable the Group to meet its liabilities as they fall due for the foreseeable future, being a period of not less than 12 months from the date of approval of this report. At 31 December 2021, the Group had cash balances of GBP728,586 (2020: GBP478,910). Additional financial support, if required, will be available from the Chief Executive Officer through the convertible loan facility.
After making appropriate enquiries, the Directors continue to adopt the going concern basis in preparing the annual report and accounts.
This report was approved by the board of directors on 28 April 2022 and signed on behalf of the board by:
Trevor Brown
Chief Executive Officer
Directors' Report
The Directors present their annual report and audited financial statements for the year ended 31 December 2021.
Incorporation
IQ-AI Limited is incorporated in Jersey, Channel Islands.
During 1996, the Group created a twinned share structure with IQ-AI Holdings (UK) plc to enable UK based shareholders to receive a UK dividend and thereby avoid being double taxed on the Jersey dividend.
As a result of a General Meeting held in June 2017, the twinned share structure has been discontinued. Shareholders now only hold shares in IQ-AI Limited, which are listed on the Main Market (standard segment) of the London Stock Exchange.
In January 2018, IQ-AI Holdings (UK) plc was dissolved and removed from the register at Companies House in the United Kingdom.
Full details of the share capital are provided in note 15 to the financial statements.
Results and dividends
The audited financial statements for the year for the Group and Company are set out on pages 25 to 46.
No dividends will be distributed for the year ended 31 December 2021 (2020: GBPnil).
Directors
The directors, who served throughout the year, were as follows:
Mr T Brown Chief Executive Officer
Non-Executive Chairman (resigned on 2 September
Dr Qu Li 2021)
Mr V Kaushal Non-Executive Director
Mr M Schmainda Non-Executive Director
Non-Executive Director (appointed on 2 September
Mr B Skelly 2021)
Biographical details of the Directors are given on page 17.
The interests of the Directors in the shares of the company and their service contracts are noted in the Remuneration Committee report on pages 18 to 19. The Directors have no interests in share options and awards.
The Directors have sought to ensure that the financial statements of the Company and the Group comply with the disclosure requirements of Jersey Company Law and the listing requirements of the UK Listing Authority.
Capital expenditure
During the year, the Group invested GBP5,874 in capital expenditure (2020: GBPnil). The Group made an investment in product development during the period of GBP50,691 (2020: GBP68,962).
Except for the loan received under the Paycheck Protection Program, the Group held no bank debt at 31 December 2021 (2020: GBPnil). Currently, the Group retains clearing facilities with the bank.
Share capital
Details of the authorised and issued share capital, together with details of the movements in the Company's issued share capital during the year, are shown in note 15. Each share carries the right to one vote at general meetings of the Company and carries no right to fixed income.
There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by the general provisions of the Articles of Association and prevailing legislation. The Directors are not aware of any agreements between holders of the Company's shares that may result in restrictions on the transfer of securities or on voting rights. No person has any special rights of control over the Company's share capital and all issued shares are fully paid.
Significant agreements/takeovers directive
There are a number of agreements that take effect, alter or terminate upon a change of control of the Group such as commercial contracts and employee share option/award schemes. None of these are deemed to be significant in terms of their potential impact on the business of the Group as a whole.
Charitable and political donations
The Company did not make any political or charitable donations during the year ended 31 December 2021 (2020: GBPnil).
Employees
The Company's policy is to provide equal opportunities to all present and potential employees, including, where practical, those who are disabled.
The Group believes in respecting individuals and their rights in the workplace. With this in mind, specific policies are in place covering harassment and bullying, whistle blowing, equal opportunities and data protection.
Ratio of men to women
At 31 December 2021, there were two women (2020: 2) employed across the Group making 32% (2020: 32%) of our Group-wide employee base.
The Board is satisfied that it has the appropriate balance of skills, experience and expertise necessary, and will give due regard to diversity in the event of further changes to both its own membership and/or the membership of the senior management team.
Health and safety
The Group is committed to providing a safe place of work for employees. Group policies are reviewed on a regular basis to ensure that policies regarding training, risk assessment, safe working and accident management are appropriate. There are designated officers responsible for health and safety and issues are reported at each board and executive meeting.
Greenhouse gas emissions
The Group is aware that it needs to measure its operational carbon footprint in order to limit and control its environmental impact. However, given the very limited nature of its operations during the year under review, it has not been practical to measure its carbon footprint. In the future, the Group will only measure the impact of its direct activities, as the full impact of the entire supply chain of its suppliers cannot be measured practically.
Statement of disclosure to independent auditors
Each of the persons who is a Director at the date of approval of this annual report confirms that:
-- so far as the Director is aware, there is no relevant audit information of which the Company's auditor is unaware; and
-- the Director has taken all the steps that he/she ought to have taken as a Director in order to make himself/herself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Independent auditor
PKF Littlejohn LLP have expressed their willingness to continue in office as auditor and will be proposed for reappointment at the next Annual General Meeting.
This report was approved by the board of directors on 28 April 2022 and signed on behalf of the board by:
Trevor Brown
Chief Executive Officer
Statement of Directors' Responsibilities
The Directors are responsible for preparing the annual report and the financial statements in accordance with the applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors are required to prepare the Group and Company financial statements in accordance with EU-endorsed international financial reporting standards (EU-endorsed IFRS).
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company, and of the profit or loss of the Group and Company for that period.
In preparing these financial statements the Directors are required to:
-- Select suitable accounting policies and then apply them consistently. -- Make judgements and estimates that are reasonable and prudent.
-- State whether the EU-endorsed IFRS have been followed, subject to any material departures disclosed and explained in the financial statements; and
-- Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.
The Directors are responsible for keeping accounting records that are sufficient to show and explain the Group's and Company's transactions. These records must disclose with reasonable accuracy at any time the financial position of the Group and Company and to enable the Directors to ensure that any financial statements prepared comply with the Companies (Jersey) Law 1991, as amended. They are also responsible for safeguarding the assets of the Company and Group and hence for taking reasonable steps for the prevention and detection of fraud, error, non-compliance with law and regulations and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic report, Directors' report, Directors' Remuneration report and Corporate Governance statement that comply with that law and those regulations.
The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with legislation in Jersey governing the preparation and dissemination of financial statements, which may vary from the legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
Corporate Governance Report
IQ-AI has a standard listing on the London Stock Exchange and is thus not required to comply with the requirements of the U.K. Corporate Governance Code ("the Code") as issued by the Financial Reporting Council. The disclosures below are required by the UKLA's Disclosure and Transparency Rule 7.
The Board is committed to ensuring the highest standards of corporate governance, and voluntarily complies with, subject to a small number of exceptions listed below, the supporting principles and provisions set out in the Code.
In order to implement its business strategy, the Company has adopted a corporate governance structure whereby the key feature is a board of directors comprising at present one executive and three non-executives, where despite the Company's early stage of development, and its registration being in Jersey, the board strives to observe the Quoted Companies Alliance revised Corporate Governance Code for Small and Mid-Size Quoted Companies ('the QCA Code') which the Company has voluntarily adopted. The voluntary adoption of the QCA Code is over and above the requirements of Jersey law.
The Company regularly updates its corporate governance policies and procedures to reflect the changes made to corporate governance guidelines. The following describes the ways in which the Company complies with the detailed provisions of the Code. It includes full disclosure of the limited number of areas in which the Company is non-compliant and explanations why this is so.
The two areas of non-compliance with the Code are:
-- neither the Chairman, nor the other member of the Audit Committee, has any relevant accounting experience; and
-- the Audit Committee is made up of only two members and not at least three independent non-executive Directors.
Meetings of the Board of Directors
Four Board meetings were held during the year. The Directors' attendance record during the year are as follows:
Attendance at
Board Meetings
----------------------------------------- ---------------
T Brown 5
Dr Q Li (resigned on 2 September 2021) 1
V Kaushal 5
M Schmainda 5
B Skelly (appointed on 2 September 2021) 4
------------------------------------------ ---------------
The terms of appointment of the Non-Executive Directors are made available for inspection at the AGM, along with the service contract for the Executive Director. The Non-Executives do not have a fixed term of office in their letters of appointment.
Re-election
The articles of association require each director to retire and submit themselves for re-election every three years, but also that at least one third of the Directors must be submitted for re-election every year.
On an annual basis, the Chairman considers the performance of the Board and discusses with the Company Secretary the re-election process. Given the performance of the Company, the Chairman has confirmed that the Directors being submitted for election in 2022 continue to be highly effective, qualified and committed to their respective roles.
Insurance cover
The Company maintains insurance with a limit of GBP5m to cover its Directors and officers against the cost of defending themselves against civil legal proceedings taken against them. To the extent permitted by law, the Company also indemnifies its Directors and officers. Neither protection applies in the event of fraud or dishonesty.
Board objectives and operation
The key objectives of the Board are as follows:
-- The agreement of strategy.
-- The agreement of the detailed set of objectives and policies that facilitate the achievement of strategy.
-- Monitoring the performance of executive management in the delivery of objectives and strategy.
-- Monitoring and safeguarding the financial position of the Company and Group to ensure that objectives and strategy can be delivered.
-- Approval of major capital expenditure and other expenditure that is not part of the defined objectives or strategic plan.
-- Approving corporate transactions - this includes any potential acquisition or disposal.
-- Delegating clear levels of authority to the Executive management team. This is represented by the defined system of internal controls which is reviewed by the Audit Committee.
-- Providing the appropriate framework of support and remuneration structures to encourage and enable Executive management to deliver the objectives and strategies of the Company.
-- Monitoring the risks being entered into by the Company and ensuring that all of these are properly evaluated.
-- Approval of all external announcements.
A schedule is maintained of matters reserved to the Board for decision.
The Board formally met five times in 2021 (2020: 4); the Directors' attendance is summarised on page 13.
For each Board meeting, each Board member receives a pack of information, including financial reports, project updates and a formal agenda together with any relevant documentation.
Nominations Committee
The committee consists of the Chairman and the Chief Executive. The committee meets as required to fulfil its duties of reviewing the Board structure and composition and identifying and nominating candidates to fill Board vacancies as they arise.
No formal induction process exists for new Directors, but the Chairman ensures that each individual is given a tailored introduction to the Company and fully understands the requirements of the role.
Appraisal of Non-Executive Directors
The Chief Executive normally carries out an annual formal appraisal of the performance of the Non-Executive Directors which takes into account the objectives set in the previous year and the individual's performance in the fulfilment of these objectives. However, given the CEO is the only Executive Director, a formal annual appraisal of the Chief Executive is carried out by the Non-Executive Chairman. All the appraisals of the Non-Executive Directors are provided to the Remuneration Committee.
Remuneration Committee
The report of the Remuneration Committee is included in this annual report. Formal terms of reference for the Remuneration Committee have been documented and are made available for review at the AGM.
Audit Committee
Formal terms of reference for the committee have been documented and are made available for review at the AGM.
The terms of reference of the Audit Committee include the following requirements:
-- To monitor the integrity of financial statements and of any formal announcements relating to the Company's financial performance.
-- To review the Company's internal controls and risk management systems.
-- To make recommendations to the Board in relation to internal control matters that require improvement or modification.
-- To make recommendations to the Board in relation to the appointment, re-appointment and removal of the external auditor and to approve remuneration.
-- To review and monitor the external auditor's independence and objectivity and the effectiveness of the audit process.
-- To establish and monitor whistle blowing procedures.
No internal audit function exists due to the size of the Group. This is reviewed annually by the Audit Committee which reflects on any increased risk or regulatory changes in the period under review in making their recommendation to the Board.
The Audit Committee met three times during the year and after the year end. Matters considered at these meetings included: reviewing and approving the report and financial statements for the year ended 31 December 2020, the half year results to 30 June 2021 and the report and financial statements for the year ended 31 December 2021; discussion with the external auditors to confirm their independence and scope for audit work; considering the reports from external auditors identifying any accounting or judgemental issues requiring the board's attention and the auditors' assessment of internal controls; reviewing the company's risk register and business continuity procedures; and considering the adequacy of the whistle-blowing facility, the anti-bribery training and monitoring and data protection policy and procedures.
The Audit Committee chairman has maintained dialogue with the auditors outside of the scheduled meetings and meets with the auditors without the presence of the Executive Director and members of the finance team.
The company did not engage its auditor for any non-audit services, which has safeguarded the Auditor's objectivity and independence.
The Audit Committee considers independence from a number of perspectives, not only the materiality of fee income to the audit firm in question. It is only after considering these aspects (along with a report on independence from the external auditor) does it conclude and make recommendations to the Board.
None of the members of the Audit Committee have a formal accounting qualification though all have operated at the highest levels of businesses. The Board is content that the overall level of qualification within the Audit Committee is currently sufficient to enable it to discharge satisfactorily its obligations.
In addition to the Non-Executive Director and the Chief Executive, the external auditor was invited to attend part of the meetings where relevant.
Internal controls
The Board is responsible for the Group and Company's system of internal control and for reviewing its effectiveness. Given the size of the organisation and the level of transactions involved there are limited controls documented and in operation which is appropriate for the Group in its current state.
The Audit Committee consider each year if the current level of internal control is appropriate. On advice from the Audit Committee, the Board does not consider any additional independent verification of the system of internal control to be required, based on the size of the Company and the Group, and the non-complex nature of both its management systems and financial structure.
The Group operates certain controls specifically relating to the production of consolidated financial information, covering operational procedures, validation and review.
The above procedures reflect the Group's commitment to ensuring it has policies in place that ensure high standards of integrity and transparency throughout its operations. Further, when these procedures detect unauthorised practises, the Group is committed to correction of such events. The Group is committed to analysing its internal controls to make them more robust and further limit the risk of such incidents. The Board believes such action properly reflects the Group's commitment to financial discipline and integrity at all levels. The Board has reviewed the effectiveness of internal control systems in operation during the financial period in accordance with the guidelines set out in the FRC's Risk Guidance report, through the processes set out above and no weaknesses or failings were identified.
Dialogue with major shareholders
The Company places considerable importance on communications with shareholders. Discussions take place with major shareholders with the Company's delegating authority to the Chairman and Chief Executive to present the strategy and financial results of the Group.
Annual general meeting
At its AGM the Company complies with the provisions of the Code relating to the disclosure of proxy votes, the separation of resolutions and attendance of Directors, particularly committee chairpersons. The timing of the despatch of the formal notice of the AGM also complies with the Code.
The Directors consider that all the resolutions to be put to the AGM, to be held in May/June 2022, are in the best interests of the Company and its shareholders. The Board will be voting in favour of them and unanimously recommends that shareholders do also.
Responsibility statement of the Directors in respect of the annual financial report
We confirm that to the best of our knowledge:
(i) the financial statements, prepared in accordance with EU-endorsed IFRS, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
(ii) the annual report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
This report was approved by the board of directors on 28 April 2022 and signed on behalf of the board by:
Trevor Brown
Chief Executive Officer
Directors' Information
Trevor Brown
Trevor has been a strategic investor in equities and real estate for more than 30 years. He is currently a Director of Chamberlain plc and Braveheart Group plc.
Dr Qu Li (resigned on 2 September 2021)
Qu Li is a Non-Executive Director of IQ-AI Limited. With over 25 years of experience in international mergers, acquisitions and joint ventures, Dr Li has completed turnkey transactions ranging from $5m-$200m and raised more than $300 million over the last 10 years. Dr Li is the founder and Chairman of China Ventures Ltd, a leading consultancy and venture capital company, specialising in Sino/Western business and offering a wide range of skills associated with international business transactions. Dr Li relocated to the UK over 20 years ago, where she obtained her Doctor of Philosophy at Leeds University and then established her business base. She is a qualified engineer and a successful business entrepreneur who has worked on activities related to government, industry and commerce in China, Southeast Asia, South America, Europe and the US for over 20 years.
Apart from her business commitments, Dr Li devotes great effort, interest and financial support to the development of young entrepreneurs across the globe. She sits on the advisory board of the Business School of Leeds University and is one of the Leaders in Resident for the postgraduates.
Vinod Kaushal
Vinod is a Non-Executive Director of IQ-AI Limited. Vinod is a well-seasoned healthcare industry executive with nearly 30 years' experience in predominantly commercial and general management roles. He has worked nationally, regionally and globally for several blue chip and SME companies.
Having been a member of the team which orchestrated the international launch of Losec(R)/Prilosec(R) at Astra to its place as the global No. 1 selling pharmaceutical, Vinod was Head of Global Marketing at Novo Nordisk, Senior Vice President Fresenius Kabi, Vice President of Amersham/GE Health's Neurology business, Vice President at Royal Numico/Danone and CEO of SPL amongst other pivotal roles.
Since leaving Big Pharma, Vinod has recently been focused on entrepreneurial activities with several successful SMEs in the Pharma/Healthcare space. With an impressive deal sheet to his name, Vinod has been involved in various IP and business acquisitions. His career has seen him relate to investors on several global stock exchanges and he is an accomplished external speaker. Vinod holds a BSc (Hons) in Biochemistry from Warwick University and an MBA from Henley Business School.
Michael Schmainda
Michael was appointed as a Non-Executive Director of IQ-AI Limited on 18 December 2019. Michael has a 20-year history of successfully building global medical imaging businesses including Prism Clinical Imaging and Imaging Biometrics. As co-founder of IB, and has overseen all aspects of the company's development, operation, and growth since its inception. He has established strong collaborative relationships with leaders in the medical imaging field who drive new product development and has led the translation and commercialisation of sophisticated imaging solutions, achieved regulatory approvals in the US and Europe, and global product adoption.
Michael's career began with 3M Company, a company renowned for bringing new products to market, where he held leadership roles across multiple industries including the life science sector. Prior to IB, Michael was a foundational member of Prism Clinical Imaging, secured the initial investment for the company, and served as president and COO.
Brett Skelly (appointed on 2 September 2021)
Brett has been working in the financial sector for GBAC Limited for over 17 years, carrying out various roles including preparing accounts and auditing a wide range of large and SME companies as well as preparing management information and forecasts. He has been involved in developing business plans and has also been involved in a number of company sales and MBOs over the years. In December 2017, Brett became the outsourced financial controller of Braveheart Investment Group Plc and is also the outsourced financial controller at Anticus Partners Limited.
Remuneration Committee Report
The Remuneration Committee presents its report for the year ended 31 December 2021.
Membership of the Remuneration Committee
The Remuneration Committee is currently comprised of B Skelly and V Kaushal.
Subject to what appears below, no other third parties have provided advice that materially assisted the Remuneration Committee during the period.
Remuneration policy
The Group's remuneration policy is to retain and motivate its staff with rewards linked to performance and results which promote the interest of the shareholders. Bonus awards for employees are assessed annually taking into account the Group results.
Policy Table:
Objective Operation Maximum potential value
Base salary Base salary is set annually on 1 January. Broadly pitched around the median level for comparable
The basic salary positions.
element of Salary levels are reviewed on an annual basis by
remuneration is reference to the median for comparable positions When considering any increases to base salaries in the
set in relation in main market companies of a similar market normal course (as opposed to a change
to capitalisation and with similar revenues to the in role or responsibility), the Board will take into
responsibilities, Group. Broadly the Group seeks to pitch base consideration:
length of salary around the median level for such comparable * Reference to the increases provided to Executives in
service and positions without tracking it mechanistically. the comparator group.
contribution to
the Group's
activities. * Pay and employment conditions of employees throughout
the Group, including increases provided to the
Reflects level of employee population
responsibility
and achievement
of individual. * Inflation
--------------------------------------------------- ------------------------------------------------------------------
Other benefits Futures benefits may include: Cost of providing life assurance, private medical insurance and
To provide * Private medical insurance. permanent health insurance.
competitive
levels of
employment * Permanent health insurance.
benefits.
* Life assurance of two times base salary.
The level of benefits provided is reviewed
annually to ensure they remain market
competitive.
--------------------------------------------------- ------------------------------------------------------------------
Non-Executive Fee levels are set at the level paid for Fee levels are set by reference to the median of this peer
Director Fees comparable roles at companies of a similar size group. Fee levels are reviewed
To attract and annually in January. When considering any increases to fee
Non-Executive complexity to IQ-AI Limited within the main levels in the normal course, the
Directors with market. The Non-Executive Director fee structure Board will take into consideration:
the requisite is a matter for the full Board. * Increases provided to comparable roles in the
skills and comparator group.
experience to
perform the
role. * Pay and employment conditions of employees throughout
the Company, including increases provided to the
employee population; and
* Inflation.
--------------------------------------------------- ------------------------------------------------------------------
Share options
No share option scheme is provided to the Directors of the Company.
Directors' pensions
The Company does not provide a pension scheme. Additionally, no dependent pensions or benefits are provided.
Remuneration policy for Executive and Non-Executive Directors
The Remuneration Committee seeks to provide the remuneration packages necessary to attract, retain and motivate Executive and Non-Executive Directors of the quality required to manage the business of the Group and seeks to avoid paying more than is necessary for this purpose. In establishing the level of remuneration of each director, the committee has regard to packages offered by similar companies.
Consistent with this policy, the benefit packages awarded to Executive and Non-Executive Directors comprise a mix of performance and non-performance elements. During 2021, the Executive and Non-Executive Directors' pay was not based on the Group achieving financial targets.
Directors' interests (held directly or indirectly) in the Company's shares
2021 2020
Number Number
------------------------------------------ ----------- -----------
T Brown 32,203,457 49,813,236
Dr Q Li (resigned on 2 September 2021) - -
V Kaushal - -
M Schmainda* 9,108,400 9,108,400
B Skelly (appointed on 2 September 2021) - -
------------------------------------------ ----------- -----------
* Includes shares held by related parties
Directors' emoluments
The following table summarises the emoluments of Directors during the year.
Salary 2021 2020
and fees Pension Benefits Total Total
GBP GBP GBP GBP GBP
----------------------- --------- -------- --------- -------- --------
T Brown 100,000 - - 100,000 100,000
V Kaushal 30,000 - - 30,000 30,000
Dr Q Li* (resigned
on 2 September
2021) 20,000 - - 20,000 30,000
M Schmainda - - - - -
B Skelly** (appointed
on 2 September
2021) 10,000 - - 10,000 -
----------------------- --------- -------- --------- --------
TOTAL 160,000 - - 160,000 160,000
----------------------- --------- -------- --------- -------- --------
*Dr Qu Li's services were invoiced by China Ventures Limited.
** Brett Skelly's services were invoiced by GBAC Limited.
Brett Skelly
Chairman of the Remuneration Committee
28 April 2022
Independent auditor's report to the members of IQ-AI Limited
Opinion
We have audited the financial statements of IQ-AI Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2021 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Statements of Financial Position, the Consolidated and Parent Company Statements of Changes in Equity, the Consolidated and Parent Company Statements of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and EU-endorsed International Financial Reporting Standards.
In our opinion, the financial statements:
-- give a true and fair view of the state of the group's and of the parent company's affairs as at 31 December 2021 and of the group's loss for the year then ended;
-- have been properly prepared in accordance with EU-endorsed IFRS; and
-- have been properly prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors' assessment of the group's and parent company's ability to continue to adopt the going concern basis of accounting included:
-- Reviewing management's assessment of going concern.
-- Determining if all relevant information has been included in the assessment of going concern including completeness of forecast expenditure.
-- Analysing cash flow forecasts and budgets, reviewing the underlying assumptions in relation to revenue and expenditure and checking mathematical accuracy.
-- Considering the cash position at and after the year end.
-- Reviewing and stress-testing the reasonable worst-case forecast scenario prepared by management and the financial resources available to deal with this outcome.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's or parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Our application of materiality
The quantitative and qualitative thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. The materiality applied to the group financial statements was GBP21,000 (2020: GBP27,000) based on 5% of the loss before tax. The performance materiality for the group was set at GBP14,700 (2020: GBP17,900), which is 70% of the financial statement's materiality. We have selected 70% because of the good control environment, and relatively few errors found in previous years.
The materiality applied to the parent company financial statements was GBP18,000 (2020: GBP17,000) based on 5% of the loss before tax. The performance materiality for the parent company was determined to be GBP14,400 (2020: GBP13,600). As a group whose trade is in the process of expanding through product development and existing product revenue streams, loss before tax was considered the most appropriate benchmark to shareholders. For each component in the scope of our group audit, we allocated a materiality that was less than our overall group materiality.
We agreed with those charged with governance that we would report all differences identified during the course of our audit in excess of GBP1,050 (2020: GBP1,350) for the group, and GBP900 (2020: GBP850) for the parent company. We also agreed to report any other differences below that threshold that we believe warrant reporting on qualitative grounds.
Our approach to the audit
Our audit is risk based and is designed to focus our efforts on the areas at greatest risk of material misstatement, aspects subject to significant management judgement as well as greatest complexity, risk and size.
In designing our audit, we determined materiality and assessed the risk of material misstatement in the group and parent company financial statements. We looked at areas involving significant accounting estimates and judgements by the directors and considered future events that are inherently uncertain, in particular with regard to the recognition and valuation of intangible assets. We also assessed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
In addition to the parent company, two material components were identified. Both components were subject to an audit conducted directly by us.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter How our scope addressed this matter
Recognition and valuation
of intangible assets (refer
to notes 2 and 11)
=================================================================
As shown in note 11 of the We performed the following work
financial statements, the to address the identified risk:
group reported GBP567,060
(2020: GBP685,116) of intangible * substantively tested a sample of development
assets as at 31 December 2021. expenditure to assess their eligibility for
There is a risk that the Intellectual capitalisation under IAS 38.
Property (IP) and software
developed and under development
may not be correctly capitalised * assessed any accounting policy differences regarding
in accordance with IAS 38 recognition and valuation between US GAAP and EU
Intangible Assets. endorsed IFRS with regards to accounting for
Additionally, there is a risk development costs.
that projects under development
are not fully recoverable,
and that impairment indicators * re-performed the calculation of the amortisation
exist for commercially available charge and agreed this was in line with the disclosed
products, which have not been accounting policy.
identified by management.
The subjectivity of the judgements
and estimates, together with * completed substantive testing on additions.
the significant carrying value
of intangible assets, make
this area a key focus for * assessed compliance of the capitalised IP expenditure
the audit. with the recognition criteria under IAS 38 and
challenged management on areas involving significant
judgement.
* inquired into any indicators of impairment for IP
which is commercially available and subject to
amortisation.
Based on the procedures performed,
we consider management's judgements
and estimates to be reasonable
and the related disclosures appropriate.
=================================================================
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the group and parent company financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion:
-- adequate accounting records have not been kept by the group and parent company, or returns adequate for our audit have not been received from branches not visited by us; or
-- the group and parent company financial statements are not in agreement with the accounting records and returns; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of the group and parent company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
-- We obtained an understanding of the group and parent company and the sector in which they operate to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management and the application of our cumulative audit knowledge and experience of the sector.
-- We determined the principal laws and regulations relevant to the group and parent company sin this regard to be those arising from the LSE listing rules on the standard segment, the Companies (Jersey) Law 1991 and regulations applicable to the US subsidiary. The group's products are classified as medical software in the US which require the lowest level of regulatory oversight as they are non-invasive, non-sterile and primarily used for diagnosis.
-- We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the group and parent company with those laws and regulations. These procedures included, but were not limited to:
-- enquiries of management; -- review of minutes and RNS announcements; and -- review of legal and regulatory correspondence.
-- We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that the potential for management bias was identified in relation to the impairment assessment of goodwill and intangible assets. We addressed this by challenging the assumptions and judgements made by management when evaluating any indicators of impairment.
-- As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to the testing of journals, reviewing accounting estimates for evidence of bias and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Article 113A of the Companies (Jersey) Law 1991. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
David Thompson (Engagement Partner) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
28 April 2022
Consolidated Income Statement
For the year ended 31 December 2021
2021 2020
Notes GBP GBP
Continuing operations
Revenue 521,069 255,314
Cost of sales (17,047) (8,547)
----------------------------------- ------ ---------- ----------
Gross profit 504,022 246,767
Administrative expenses (994,388) (933,462)
Other income 18 973
----------------------------------- ------ ---------- ----------
Operating loss 5 (490,348) (685,722)
Finance costs 4 (10,710) (31,812)
Loss before income tax (501,058) (717,534)
Income tax 7 - -
Loss for the year from continuing
operations (501,058) (717,534)
Loss for the year attributable to
the owners of the Company (501,058) (717,534)
Earnings per share attributable
to owners of the Company
From continuing operations:
Basic & diluted (pence per share) 8 (0.29) (0.48)
----------------------------------- ------ ---------- ----------
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
2021 2020
GBP GBP
Loss for the period (501,058) (717,534)
Other comprehensive income
Items that may be subsequently reclassified
as profit or loss
Exchange differences on translation
of foreign operations 737 12,781
--------------------------------------------- --------- ---------
737 12,781
-------------------------------------------- --------- ---------
Total comprehensive loss for the year
attributable to the owners of the Company (500,321) (704,753)
The accompanying accounting policies and notes are an integral part of these financial statements.
Consolidated Statement of Financial Position
As at 31 December 2021
2021 2020
GBP GBP
Notes
Non-current assets
Property, plant and equipment 9 4,440 1,283
Goodwill 10 205,203 204,061
Intangible assets 11 567,060 685,116
-------------------------------------- ------ ------------- -------------
Total non-current assets 776,703 890,460
-------------------------------------- ------ ------------- -------------
Current assets
-------------------------------------- ------ ------------- -------------
Trade and other receivables 13 78,189 63,573
Cash and cash equivalents 728,586 478,910
Total current assets 806,775 542,483
-------------------------------------- ------ ------------- -------------
Current liabilities
Trade and other payables 14 392,787 361,589
Total current liabilities 392,787 361,589
-------------------------------------- ------ ------------- -------------
Net current assets 413,988 180,894
-------------------------------------- ------ ------------- -------------
NET ASSETS 1,190,691 1,071,354
-------------------------------------- ------ ------------- -------------
Equity
Share capital 15 1,825,076 1,701,076
Share premium 20,547,343 20,076,343
Capital redemption reserve 23,616 23,616
Merger reserve 160,000 160,000
Convertible loan note reserve 18 207,074 196,364
Share based payment reserve 71,808 63,087
Foreign currency reserve 20,973 15,009
Retained losses (21,665,199) (21,164,141)
-------------------------------------- ------ ------------- -------------
Equity attributable to owners of the
Company 1,190,691 1,071,354
TOTAL EQUITY 1,190,691 1,071,354
-------------------------------------- ------ ------------- -------------
The financial statements on pages 25 to 46 were approved by the Board of Directors on 28 April 2022 and signed on its behalf by:
T Brown B Skelly Director Director
Company Registration Number: 2044
The accompanying accounting policies and notes are an integral part of these financial statements.
Company Statement of Financial Position
As at 31 December 2021
2021 2020
GBP GBP
Notes
Non-current assets
Investments 12 668,823 783,823
-------------------------------------- ------ ------------- -------------
Total non-current assets 668,823 783,823
-------------------------------------- ------ ------------- -------------
Current assets
Trade and other receivables 13 1,130,304 986,641
Cash and cash equivalents 468,767 407,766
Total current assets 1,599,071 1,394,407
-------------------------------------- ------ ------------- -------------
Current liabilities
Trade and other payables 14 137,598 139,204
Total current liabilities 137,598 139,204
-------------------------------------- ------ ------------- -------------
Net current assets 1,461,473 1,255,203
-------------------------------------- ------ ------------- -------------
NET ASSETS 2,130,296 2,039,026
-------------------------------------- ------ ------------- -------------
Equity
Share capital 15 1,825,076 1,701,076
Share premium 20,547,343 20,076,343
Capital redemption reserve 23,616 23,616
Merger reserve 160,000 160,000
Convertible loan note reserve 18 207,074 196,364
Share based payment reserve 71,808 63,087
Retained losses (20,704,621) (20,181,460)
-------------------------------------- ------ ------------- -------------
Equity attributable to owners of the
Company 2,130,296 2,039,026
TOTAL EQUITY 2,130,296 2,039,026
-------------------------------------- ------ ------------- -------------
The financial statements on pages 25 to 46 were approved by the Board of Directors on 28 April 2022 and signed on its behalf by:
T Brown B Skelly Director Director
Company Registration Number: 2044
The accompanying accounting policies and notes are an integral part of these financial statements.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Share Share Capital Merger Convertible Share Foreign Retained TOTAL
capital premium redemption reserve loan note based currency losses EQUITY
reserve reserve payment reserve
reserve
GBP GBP GBP GBP GBP GBP GBP GBP GBP
-------------- --------- ---------- ---------- -------- ----------- -------- --------- ------------ ---------
Balance at 1
January 2020 1,398,310 19,812,071 23,616 160,000 668,278 36,982 10,484 (20,450,092) 1,659,649
-------------- --------- ---------- ---------- -------- ----------- -------- --------- ------------ ---------
Loss for the
year - - - - - - - (717,534) (717,534)
Exchange
differences
on
translation
of foreign
operations - - - - - - 12,781 - 12,781
-------------- --------- ---------- ---------- -------- ----------- -------- --------- ------------ ---------
Total
comprehensive
loss
for the year - - - - - - 12,781 (717,534) (704,753)
-------------- --------- ---------- ---------- -------- ----------- -------- --------- ------------ ---------
Shares issued 302,766 264,272 - - - - - - 567,038
Unclaimed
dividends - - - - - - - 3,485 3,485
Share based
payments - - - - - 26,105 - - 26,105
Movement in
the year - - - - (471,914) - (8,256) - (480,170)
Balance at 31
December
2020 1,701,076 20,076,343 23,616 160,000 196,364 63,087 15,009 (21,164,141) 1,071,354
-------------- --------- ---------- ---------- -------- ----------- -------- --------- ------------ ---------
Loss for the
year - - - - - - - (501,058) (501,058)
Exchange
differences
on
translation
of foreign
operations - - - - - - 737 - 737
-------------- --------- ---------- ---------- -------- ----------- -------- --------- ------------ ---------
Total
comprehensive
loss
for the year - - - - - - 737 (501,058) (500,321)
-------------- --------- ---------- ---------- -------- ----------- -------- --------- ------------ ---------
Shares issued 124,000 496,000 - - - - - - 620,000
Cost of shares
issued - (25,000) - - - - - - (25,000)
Share based
payments - - - - - 8,721 - - 8,721
Movement in
the year - - - - 10,710 - 5,227 - 15,937
Balance at 31
December
2021 1,825,076 20,547,343 23,616 160,000 207,074 71,808 20,973 (21,665,199) 1,190,691
-------------- --------- ---------- ---------- -------- ----------- -------- --------- ------------ ---------
The accompanying accounting policies and notes are an integral part of these financial statements.
Company Statement of Changes in Equity
For the year ended 31 December 2021
Share Share Capital Merger Convertible Share Based Retained TOTAL EQUITY
Capital Premium Redemption Reserve Loan Note Payment Losses
Reserve Reserve Reserve
GBP GBP GBP GBP GBP GBP GBP GBP
-------------- --------- ---------- ------------- -------- ------------ ------------ ------------ ------------
Balance at 1
January 2020 1,398,310 19,812,071 23,616 160,000 668,278 36,982 (19,826,157) 2,273,100
-------------- --------- ---------- ------------- -------- ------------ ------------ ------------ ------------
Total
comprehensive
loss for the
year - - - - - - (358,788) (358,788)
-------------- --------- ---------- ------------- -------- ------------ ------------ ------------ ------------
Shares issued 302,766 264,272 - - - - - 567,038
Unclaimed
dividends - - - - - - 3,485 3,485
Share based
payments - - - - - 26,105 - 26,105
Movement in
the year - - - - (471,914) - - (471,914)
-------------- --------- ---------- ------------- -------- ------------ ------------ ------------ ------------
Balance at 31
December 2020 1,701,076 20,076,343 23,616 160,000 196,364 63,087 (20,181,460) 2,039,026
-------------- --------- ---------- ------------- -------- ------------ ------------ ------------ ------------
Total
comprehensive
loss for the
year - - - - - - (523,161) (523,161)
-------------- --------- ---------- ------------- -------- ------------ ------------ ------------ ------------
Shares issued 124,000 496,000 - - - - - 620,000
Cost of shares
issued - (25,000) - - - - - (25,000)
Share based
payments - - - - - 8,721 - 8,721
Movement in
the year - - - - 10,710 - - 10,710
-------------- --------- ---------- ------------- -------- ------------ ------------ ------------ ------------
Balance at 31
December 2021 1,825,076 20,547,343 23,616 160,000 207,074 71,808 (20,704,621) 2,130,296
-------------- --------- ---------- ------------- -------- ------------ ------------ ------------ ------------
The accompanying accounting policies and notes are an integral part of these financial statements.
Consolidated and Company Statement of Cash Flows
For the year ended 31 December 2021
GROUP COMPANY
2021 2020 2021 2020
GBP GBP GBP GBP
Operating loss (501,058) (717,534) (523,161) (358,788)
Adjustment for:
Depreciation and amortisation 133,474 116,504 - -
Impairment of intangible assets 42,303 - - -
Impairment of the investment in a subsidiary - - 115,000 -
Share based payment expense 8,721 26,105 8,721 26,105
Foreign exchange gain/(loss) 509 25,597 - -
Finance costs 10,710 31,812 10,710 31,812
(Increase) in receivables (14,616) (35,543) (143,663) (224,885)
Increase/(decrease) in payables 31,198 129,837 (1,606) 69,865
Net cash used in operating activities (288,759) (423,222) (533,999) (455,891)
------------------------------------------------------ ---------- ---------- ---------- ----------
Cash flows from investing activities:
Purchase of equipment (5,874) - - -
Purchase of intangible assets (50,691) (31,649) - -
Net cash from investing activities (56,565) (31,649) - -
------------------------------------------------------ ---------- ---------- ---------- ----------
Cash flows from financing activities
Shares issued net of share costs 595,000 26,000 595,000 26,000
Loan received - 38,421 - -
Unclaimed dividends - 3,485 - 3,485
Net cash from financing activities 595,000 67,906 595,000 29,485
------------------------------------------------------ ---------- ---------- ---------- ----------
Net increase/(decrease) in cash and cash equivalents 249,676 (386,965) 61,001 (426,406)
Cash and cash equivalents brought forward 478,910 865,875 407,766 834,172
Cash and cash equivalents carried forward 728,586 478,910 468,767 407,766
------------------------------------------------------ ---------- ---------- ---------- ----------
The accompanying accounting policies and notes are an integral part of these financial statements.
1. Summary of significant accounting policies
IQ-AI Limited (the "Company") is a limited liability company incorporated and domiciled in Jersey. The address of the registered office is given on page 47.
The financial statements are presented in pounds sterling (GBP) since that is the currency of the primary environment in which the Group and Company operates.
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
These financial statements have been prepared and approved by the Directors in accordance with the EU-endorsed international financial reporting standards.
The financial statements have been prepared under the historical cost convention, as modified for the assets held for sale measured at fair value less costs to sell.
The preparation of financial statements in conformity with EU-endorsed IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2.
Going concern
The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chief Executive Officer's Statement. In addition, note 20 to the financial statements includes the Group's and Company's objectives, policies and processes for managing its capital and its financial risk management objectives.
The Group meets its day to day working capital requirements through its revenue generating cashflows, discrete fund raises and the issue of convertible loan notes.
The current economic conditions continue to create uncertainty, particularly over (a) the level of demand for the group's products; and (b) the availability of finance for the foreseeable future. The Directors are satisfied that the Group has sufficient resources to meet any obligations over the going concern period. At 31 December 2021, the Group had cash balances of GBP728,586 (2020: GBP478,910).
The Group's employees carry out their duties remotely, via the network infrastructure in place. As a result, there has been no disruption to date to the operational activities of the Group during the COVID-19 social distancing and working from home restrictions. All key business functions continue to operate at normal capacity.
Taking in to account the comments above, the Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Therefore, they continue to adopt the going concern basis of accounting in preparing the financial statements.
New standards, amendments and interpretations adopted by the Group and Company
The following IFRS or IFRIC interpretations were effective for the first time for the financial year beginning 1 January 2021. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements:
Standards /interpretations Application
--------------------------- ------------------------------------------------
IAS 1 & IAS 8 amendments Definition of Material
IFRS 3 amendments Business Combinations
IFRS 16 Amendments to provide lessees with an exemption
from assessing whether a COVID-19 related
rent concession is a lease modification
New standards, amendments and interpretations not yet adopted
Standards /interpretations Application
--------------------------- -----------------------------------------------------
IAS 1 amendments Presentation of Financial Statements: Classification
of Liabilities as Current or Non-Current.
Effective: Annual periods beginning on
or after 1 January 2023
IFRS 3 amendments Business Combinations - Reference to the
Conceptual Framework.
Effective: Annual periods beginning on
or after 1 January 2022
IFRS 7, IFRS 9, Amendments regarding replacement issues
IFRS 16 in the contract of IBOR reform.
Effective: Annual periods beginning on
or after 1 January 2021
IFRS 16 Amended by Covid-19 Related Rent Concessions
beyond 30 June 2021 (amendment to IFRS
16)
Effective: Annual periods beginning on
or after 1 April 2021
IAS 1 amendments Presentation of Financial Statements: Classification
of Liabilities as Current or Non-Current.
Effective: Annual periods beginning on
or after 1 January 2023
There are no IFRS's or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company or Group.
Basis of consolidation
The Group financial statements consolidate the financial statements of the Company and all its subsidiaries ("the Group"). Subsidiaries include all entities over which the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control commences until the date that control ceases. Intra-group balances and any unrealised gains and losses on income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
The acquisition method of accounting is used to account for business combinations. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued, and liabilities incurred or assumed at the date of exchange, and the equity interests issued. Identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value at the acquisition date. Acquisition related costs are expensed as incurred. Where necessary, amounts reported by subsidiaries have been adjusted to conform with the Group's accounting policies.
Investments in subsidiaries
Investments in subsidiaries are held at cost less any impairment.
Goodwill
Goodwill on acquisition of subsidiaries represents the excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets and contingent liabilities acquired. Identifiable assets are those which can be sold separately, or which arise from legal rights regardless of whether those rights are separable. Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill is not amortised but is tested annually, or when trigger events occur, for impairment and is carried at cost less accumulated impairment losses.
Foreign currency translation
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Foreign exchange gains and losses are presented in the income statement within 'finance income or costs.'
Foreign currency translation (continued)
The results and financial position of Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
-- assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at the date of that Statement of Financial Position;
-- income and expenses for each Income Statement presented are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
-- all resulting exchange differences are recognised in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income.
Property, plant and equipment
Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives, as follows:
Furniture, fittings and equipment 3 - 8 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Intangible assets - Intellectual property and internally generated software
Separately acquired intellectual property is shown at historic cost. Intellectual property acquired in a business combination is recognised at fair value at the acquisition date. Amortisation is calculated using the straight-line method over the estimated useful life of up to 5 years.
Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met:
-- it is technically feasible to complete the software product so that it will be available for use;
-- management intends to complete the software product and use or sell it; -- there is an ability to use or sell the software product;
-- it can be demonstrated how the software product will generate probable future economic benefits;
-- adequate technical, financial and other resources to complete the development and use or sell the software product are available; and
-- the expenditure attributable to the software product during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.
Other development expenditure that does not meet these criteria is recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Software development costs recognised as assets are amortised over their estimated useful lives, which do not exceed 5 years. Amortisation commences when regulatory approval is obtained, and the product is commercially available.
Impairment of non-financial assets
Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date.
Financial instruments
Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.
Financial assets
The Group classifies its financial assets in the following categories financial assets as "at fair value through profit and loss" and "loans and receivables". The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Management determines the classification of its financial assets at initial recognition.
Loans and receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. Trade receivables are held with the objective of collecting the contractual cash flows. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.
Trade receivables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method, less provision for impairment. The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets.
Due to the short-term nature of the other current receivables, their carrying amount is considered to be the same as their fair value.
A financial asset is assessed at each reporting date to determine whether there is any evidence that it is impaired. A financial asset is considered impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. Individual significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in the consolidated income statement.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with maturities of three months or less. In the consolidated Statement of Financial Position, bank overdrafts are shown within borrowings in current liabilities.
Financial liabilities and equity instruments issued by the group
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issued costs.
Convertible loan notes
The convertible loan note ("CLN") is a compound financial instrument that can be converted to share capital at the option of the holder. As the CLN, and the accrued interest, can only be repaid by the issue of shares, it has been recognised in equity only, with no liability component. Interest is accounted for on an accruals basis and charged to the Consolidated Income Statement and added to the carrying amount of the equity component of the CLN.
Trade and other payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade and other payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method. The carrying amounts of trade and other payables are considered to be the same as their fair values.
Segment reporting
An operating segment is a component of the Group that engages in business activity from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with and of the Group's other components. All operating segments' operating results, for which discrete financial information is available, are reviewed regularly by the Group's Board to make decisions about resources to be allocated to the segment and assess its performance. The Group reports on a two-segment basis - holding company expenses and medical software.
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects, from the proceeds.
Share-based payments
The Company operates an equity-settled, share-based compensation plan, under which the entity receives services from employees as consideration for equity instruments (options) of the Company. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted:
-- including any market performance conditions (for example, an entity's share price);
-- excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales growth targets, or remaining an employee of the entity over a specified time period); and
-- including the impact of any non-vesting conditions (for example, the requirement for employees to save or holding shares for a specific period of time).
At the end of each reporting period, the group revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions and service conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
In addition, in some circumstances employees may provide services in advance of the grant date and therefore the grant date fair value is estimated for the purposes of recognising the expense during the period between service commencement period and grant date.
When the options are exercised, the company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.
The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase in investment in subsidiary undertakings, with a corresponding credit to equity in the parent entity accounts.
The social security contributions payable in connection with the grant of the share options is considered an integral part of the grant itself, and the charge will be treated as a cash-settled transaction.
Revenue recognition
The group derives revenue from the transfer of goods and services at a point in time and over time. Revenue from external customers arise on the sales of software licences, including associated maintenance, and consultancy services.
Revenue from licence sales is measured at the agreed transaction price at a point in time. A receivable is recognised when access to the software is granted, since this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. Support and maintenance services are provided on the product supplied; this is deemed to be a separately identifiable product and is recognised over time. Revenue from consulting services are recognised in the accounting period in which the services are rendered.
Taxation
The Company is registered in Jersey, Channel Islands and is taxed at the Jersey Company standard rate of 0%. However, the Company's subsidiaries are situated in jurisdictions where taxation may become applicable to local operations.
The major components of income tax on profit or loss include current and deferred tax.
The tax currently payable is based on the taxable profit for the period using the tax rates that have been enacted or substantially enacted by the balance sheet date. Taxable profit differs from the net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Group financial statements. Deferred tax is determined using tax rates that have been enacted or substantially enacted at the balance sheet date and are expected to apply when the related deferred income tax asset is realised of the deferred tax liability is settled.
Deferred tax assets are only recognised to the extent that it is probable that future taxable profit will be available against which the asset can be utilised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited to equity, in which case the deferred tax is also dealt with in equity.
2. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Impairment of intangible assets
The directors have reviewed the valuation of Stone Checker Software Limited in the year and valued the company based on the last offer that was received for the company and its software. Since the offer, the software has continued to be improved upon and therefore the directors feel that this valuation is acceptable. The asset has been impaired accordingly. Refer to Note 11.
Critical judgments in applying the entity's accounting policies
The following are the critical judgements that the Directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements.
Capitalisation of internally developed software
Distinguishing the research and development phases of the software suites and determining whether the recognition requirements for the capitalisation of development costs are met requires judgement. After capitalisation, management monitors whether the recognition requirements continue to be met and whether there are any indicators that capitalised costs may be impaired.
3. Segmental analysis
The Directors are of the opinion that under IFRS 8 - "Segmental Information" the Group operated in two primary business segments in 2021: being holding company expenses and medical software. The secondary segment is geographic. The Group's losses and net assets by primary business segments are shown below.
Segmentation by continuing businesses:
2021 2020
GBP GBP
(Loss)/ profit before income
tax
------------------------------------ ---------- ----------
Holding company (523,161) (358,788)
Medical software 22,103 (358,746)
(501,058) (717,534)
------------------------------------ ---------- ----------
Net assets
------------------------------------ ---------- ----------
Holding company 2,130,296 2,039,026
Medical software - net liabilities (939,605) (967,672)
--------------------------------------- ---------- ----------
Segmentation by geographical area:
2021 2020
GBP GBP
Revenue to external customers
------------------------------- ---------- ----------
Jersey - -
United Kingdom - -
United States of America 521,069 255,314
521,069 255,314
------------------------------- ---------- ----------
Loss before income tax
------------------------------- ---------- ----------
Jersey (523,161) (358,788)
United Kingdom (43,410) (8,167)
United States of America 65,513 (350,579)
(501,058) (717,534)
------------------------------- ---------- ----------
Segmentation by geographical area (continued) :
2021 2020
Net assets/(liabilities) GBP GBP
-------------------------- ---------- ----------
Jersey 2,130,296 2,039,026
United Kingdom (294,798) (251,389)
United States of America (519,216) (716,283)
----------------------------- ---------- ----------
4. Finance costs
2021 2020
GBP GBP
Interest payable on unsecured convertible
loan notes 10,710 31,812
------------------------------------------ ------ ------
5. Operating loss
2021 2020
GBP GBP
The following items have been included in
arriving at operating loss
Staff costs 380,631 388,066
Amortisation of internally generated intangible
assets 130,734 114,846
Auditor's remuneration has been included in
arriving at operating loss as follows:
Fees payable to the Company's auditor and
their associates for the audit of the Group
and Company's financial statements 28,500 28,500
Non-audit services - -
------------------------------------------------ ------- -------
Total audit fees payable to the Group auditors 28,500 28,500
6. Employee information
The average monthly number of employees (including Executive Directors) was:
2021 2020
Number Number
Administration 7 7
GBP GBP
------------------------------------------------ ------- -------
Staff costs (for the above employees)
Wages and salaries 378,912 386,406
Social security costs and pension contributions 1,719 1,660
380,631 388,066
------------------------------------------------ ------- -------
Directors' remuneration and transactions
2021 2020
GBP GBP
Directors' remuneration
Emoluments and fees 160,000 160,000
Remuneration of the highest paid director:
Emoluments and fees 100,000 100,000
Benefits and other fees - -
------------------------------------------- ------- -------
100,000 100,000
------------------------------------------- ------- -------
7. Income tax expense
2021 2020
The tax assessed for the period is different
from the standard rate of income tax, as GBP GBP
Income tax as explained below:
Loss before tax on continuing operations (501,058) (717,534)
Loss before tax multiplied by the standard
rate of Jersey income tax of 0% - -
Adjustments to tax in respect of prior periods - -
Tax (credit)/charge for period - -
----------------------------------------------- --------- ---------
8. Earnings per share
Basic and diluted
Earnings per share is calculated by dividing the loss attributable to the equity holders of the Company by the weighted average number of Ordinary shares in issue during the period, excluding Ordinary shares purchased by the Company and held as treasury shares.
2021 2020
Group:
-------------------------------------------------- ----------- -----------
Loss attributable to equity holders of the
parent (GBP) (501,058) (717,534)
Weighted average number of shares in issue
(Number) 172,757,472 148,008,694
Loss per share (pence) from continuing operations (0.29) (0.48)
9. Property, plant and equipment
Equipment Total
Group GBP GBP
Cost
At 1 January 2020 8,996 8,996
Additions - -
Exchange differences (135) (135)
Transferred from assets classified as held for
sale 1,249 1,249
-------------------------------------------------- --------- --------
At 31 December
2020 10,110 10,110
Additions 5,874 5,874
Exchange differences 36 36
-------------------------------------------------- --------- --------
At 31 December
2021 16,020 16,020
Depreciation
At 1 January 2020 (6,286) (6,286)
Charge for the
year (1,658) (1,658)
Exchange differences 72 72
On assets reclassified as held
for sale (955) (955)
------------------------------------------------- --------- --------
At 31 December
2020 (8,827) (8,827)
Charge for the
year (2,740) (2,740)
Exchange differences (13) (13)
At 31 December 2021 (11,580) (11,580)
Carrying amount
At 31 December
2021 4,440 4,440
-------------------------------------------------- --------- --------
At 31 December
2020 1,283 1,283
-------------------------------------------------- --------- --------
10. Goodwill
Group GBP Cost At 1 January 2020 128,296 ----------------------------------------- ------------ Reclassified from held for sale 82,627 Exchange differences (6,862) ----------------------------------------- ------------ At 31 December 2020 204,061 ----------------------------------------- ------------ Exchange differences 1,142 ----------------------------------------- ------------ At 31 December 2021 205,203 ----------------------------------------- ------------
The goodwill at 31 December 2021 represents the goodwill recognised at the purchase of the Company's subsidiary companies Imaging Biometrics and Stone Checker Software Limited. The goodwill is not amortised but is reviewed on an annual basis for impairment, or more frequently if there are indications that goodwill might be impaired. The impairment review comprises a comparison of the carrying amount of the goodwill with its recoverable amount (the higher of fair value less costs to sell and value in use). No impairment was deemed necessary for the year ended 31 December 2021.
11. Intangible assets - intellectual property, imaging and diagnostic software
Group GBP Cost At 1 January 2020 583,998 --------------------------------------------------------- --------- Exchange differences (27,690) Additions from internal development 68,962 Reclassified from assets held for sale 321,509 --------------------------------------------------------- --------- At 31 December 2020 946,779 --------------------------------------------------------- --------- Exchange differences 4,608 Additions from internal development 50,691 Impairment (42,303) At 31 December 2021 959,775 Accumulated Amortisation At 1 January 2020 144,898 --------------------------------------------------------- --------- Exchange differences 1,919 Charge for the year 114,846 At 31 December 2020 261,663 --------------------------------------------------------- --------- Exchange differences 318 Charge for the year 130,734 At 31 December 2021 392,715 --------------------------------------------------------- --------- Net book value At 31 December 2021 567,060 --------------------------------------------------------- --------- At 31 December 2020 685,116 --------------------------------------------------------- ---------
The Directors have reviewed the valuation of Stone Checker Software Limited in the year and valued the company based on the last offer that was received for the company and its software. Since the offer, the software has continued to be improved upon and therefore the directors feel that this valuation is acceptable. The asset has been impaired accordingly.
12. Investments in subsidiaries
Shares in
Company group undertakings
GBP
Cost
At 1 January 2020 543,823
Reclassified from investments held
for sale 240,000
--------------------------------------- ---------------------
At 31 December 2020 783,823
--------------------------------------- ---------------------
Impairment (115,000)
--------------------------------------- ---------------------
At 31 December 2021 668,823
--------------------------------------- ---------------------
At 31 December 2021, the Group consisted of a parent company, IQ-AI Limited, registered in Jersey and its two wholly owned subsidiaries.
Subsidiaries:
Imaging Biometrics LLC
Registered Office: 13406 Watertown Plank Road, Elm Grove, WI
53122, United States of America
Nature of business: develops ready-to-use software applications
for the healthcare industry.
%
Class of share Holding
------------------------------------- ----------------------------
Ordinary shares 100
------------------------------------- ----------------------------
Stone Checker Software Limited
Registered Office: Unit 12 Westway Business Centre, Marksbury,
Bath, BA2 9HN, United Kingdom
Nature of business: supplier of technology solutions
in the field of kidney stone analysis and kidney
stone prevention.
%
Class of share Holding
------------------------------------------------------ ------------------
Ordinary shares 100
------------------------------------------------------ ------------------
13. T rade and other receivables
Group Company
---------------- --------------------
2021 2020 2021 2020
GBP GBP GBP GBP
Amounts owed by group undertakings - - 1,114,810 971,393
Trade receivables 36,470 29,305 - -
Other receivables 13,076 7,611 - -
Prepayments 28,643 26,657 15,494 15,248
78,189 63,573 1,130,304 986,641
------------------------------------ ------- ------- ---------- --------
In the Directors' opinion, the carrying amounts of receivables is considered a reasonable approximation of fair value. The Group monitors on a monthly basis the receivable balance and makes impairment provisions when debt reaches a certain age. There are no significant known risks as at 31 December 2021 (2020: none).
14. Trade and other payables
Group Company
------------------ ------------------
2021 2020 2021 2020
GBP GBP GBP GBP
Amounts owed to group undertakings - - 98,449 48,137
Loans 55,409 93,313 - -
Other creditors 233,165 8,740 - -
Accruals and deferred income 104,213 259,536 39,149 91,067
392,787 361,589 137,598 139,204
------------------------------------ -------- -------- -------- --------
In the Directors' opinion, the carrying amount of payables is considered a reasonable approximation of fair value.
15. Share capital
2021 2020 2021 2020
Number Number GBP GBP
Allotted, called up and
fully paid
Ordinary shares of 1p each 182,507,609 170,107,609 1,825,076 1,701,076
---------------------------- ------------ ------------ ---------- ----------
182,507,609 170,107,609 1,825,076 1,701,076
---------------------------- ------------ ------------ ---------- ----------
The movement in share capital is detailed below:
Number of
shares issued
--------------------------------------------------- ---------------
On 14 October 2021, the Company issued 12,400,000
new ordinary shares at 5p per share. 12,400,000
16. Reserves
The Group's reserves are made up as follows:
Share capital: Represents the nominal value of the issued share capital.
Share premium account: Represents amounts received in excess of the nominal value on the issue of share capital less any costs associated with the issue of shares.
Capital redemption reserve: Reserve created on the redemption of the Company's shares
Merger reserve: Represents the difference between the nominal value of the share capital issued by the Company and the fair value of Stone Checker Software Limited at the date of acquisition.
Convertible loan note reserve: Represents the equity portion of the Convertible Loan Notes issued by the Company.
Foreign currency translation reserve: Reserve arising from the translation of foreign subsidiaries at consolidation.
Retained earnings: Represents accumulated comprehensive income for the year and prior periods.
17. Share-based payments
On 1 November 2018, 6,017,500 shares in IQ-AI Limited were granted under option to David Smith. The shares are exercisable at 2.60p and the option will vest over 3 years, with 1/3(rd) vesting on 1 August 2019 and the remainder vesting at a rate of 1/36(th) per month on the last day of each month, until the shares become fully vested. The option will be exercisable for 10 years and will lapse on 1 August 2028. There are no cash settlement alternatives.
The fair value is estimated as at the date of grant using a Black-Scholes model, taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model.
2018
---------
Exercise price (pence) 2.60p
Shares under option 6,017,500
Risk free interest (%) 2
Expected volatility (%) 52%
Expected life in years 3
The total charge for the year relating to this scheme was GBP8,721 (2020: GBP26,105).
18. Convertible loan note reserve
2021 2020
GBP GBP
At the beginning of the year 196,364 668,278
Interest charge for the year 10,710 31,812
Loan notes and interest converted - (503,726)
Loan notes issued during the year - -
----------------------------------- -------- ----------
At the end of the year 207,074 196,364
----------------------------------- -------- ----------
The above reserve was created on the issue and conversions of the following Convertible Loan Notes ("CLNs"). The above amount relates to the equity portion of the CLNs. The capital and accrued interest are wholly repayable by the issue of shares in the Company.
19. Operating lease commitments
Financial commitments
The Group had no contracts in respect of lessee arrangements. The registered office is provided by the Company Secretary as part of their services. The contract has a cancellation policy of 3 months.
20. Financial instruments
Financial risk management
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.
The Group has exposure to the following risks from its use of financial instruments:
(a) Credit risk (b) Liquidity risk (c) Market risk (d) Currency risk (e) Interest rate risk (f) Capital risk management
This note presents information about the Group's exposure to each of the above risks, the Group's objectives, policies and processes for measuring and managing risks and the Group's management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.
The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities.
The Group Audit Committee oversees how management monitors compliance with the Group's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.
The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework.
(a) Credit risk
Credit risk is the risk of financial loss to the Group if a customer fails to meet its contractual obligations. Each local entity is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered.
Trade and other receivables
The Group's exposure to credit risk is influenced by the type of customer the Group contracts with. The Group has minimal trade receivables.
The immediate credit exposure of financial instruments is represented by those financial instruments that have a net positive fair value by counterparty at 31 December 2021. The Group considers its maximum exposure to be:
2021 2020
GBP GBP
Financial instrument
Cash and cash equivalents 728,586 478,910
Loans and receivables, net of impairment 36,470 29,305
----------------------------------------- ------- -------
765,056 508,215
----------------------------------------- ------- -------
All cash balances and short-term deposits are held with an investment grade bank who is our principal banker (Barclays Bank PLC). Although the Group has seen no direct evidence of changes to the credit risk of its counterparties, the current focus on financial liquidity in all markets has introduced increased financial volatility. The Group continues to monitor the changes to its counterparties' credit risk.
(b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Board are jointly responsible for monitoring and managing liquidity and ensures that the Group has sufficient liquid resources to meet unforeseen and abnormal requirements. The current forecast suggests that the Group has sufficient liquid resources.
The following are the contractual maturities of financial liabilities:
1 to
Carrying Contractual 6 months 6 to 12 2 2 to 5
amount cash flows or less months years years
31 December 2021 GBP GBP GBP GBP GBP GBP
Non-derivative financial
liabilities
Trade and other payables 337,378 - 337,378 - - -
Borrowings 55,409 - 55,409 - - -
392,787 - 392,787 - - -
1 to
Carrying Contractual 6 months 6 to 12 2 2 to 5
Amount cash flows or less months years years
31 December 2020 GBP GBP GBP GBP GBP GBP
Non-derivative financial
liabilities
Trade and other payables 268,276 - 268,276 - - -
Borrowings 93,313 - 93,313 - - -
361,589 - 361,589 - - -
------------------------- -------- ----------- -------- ------- ----- ------
Available liquid resources and cash requirements are monitored using detailed cash flow and profit forecasts which are reviewed at least quarterly, or more often as required. The Directors decision to prepare these accounts on a going concern basis is based on assumptions which are discussed in the going concern paragraph in note 1.
(c) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. Given the Group began revenue generating operations in the year, the risk for the year was minimal.
(d) Currency risk
The Group is exposed to currency risk as the assets of its subsidiary, Imaging Biometrics LLC, are denominated in US Dollars. At 31 December 2021, the net foreign liabilities were GBP519,216 (2020: GBP827,311). Differences that arise from the translation of these assets from US Dollar to Pound Sterling are recognised in other comprehensive income and the cumulative effect as a separate component in equity.
(e) Interest rate risk
The Group has no floating rate loans. Therefore, the Group has no exposure to interest rate risk.
(f) Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders as well as sustaining the future development of the business. In order to maintain or adjust the capital structure, the Group may adjust dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The capital structure of the Group consists of net debt, which includes loans, cash and cash equivalents, and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings.
Fair value of financial assets and liabilities
Book value Fair value Book value Fair value
2021 2021 2020 2020
GBP GBP GBP GBP
Financial assets
Cash and cash equivalents 728,586 728,586 478,910 478,910
Loans and receivables, net of impairment 36,470 36,470 29,305 29,305
Total at amortised cost 765,056 765,056 508,215 508,215
Financial liabilities
Trade and other payables 337,378 337,378 268,276 268,276
Borrowings 55,409 55,409 93,313 93,313
Total at amortised cost 392,787 392,787 361,589 361,589
----------------------------------------- ---------- ---------- ---------- ----------
21. Related party transactions
During the year the Company was charged GBP10,000 (2020: GBP10,000) by Peterhouse Capital Limited ("Peterhouse") for the provision of corporate advisory services. The Company is connected to Peterhouse as Qu Li served as a director of Peterhouse up until 2 November 2020.
Non-Executive Chairman, Qu Li, is also a Director and major shareholder of China Ventures Limited. During the year China Ventures Limited charged the Company a total of GBP20,000 (2020: GBP 30,053 ) in respect of services provided by Dr Li. The balance outstanding at year end was GBPnil (2020: GBPnil).
At the year-end, the amount due to Michael Schmainda in respect of a loan provided to Imaging Biometrics LLC amounted to US$75,000 (2020: US$75,000). The loan is interest free and repayable on demand.
22. Events after the reporting period
On 4 January 2022, the Company granted an option to subscribe for 5,969,792 1p ordinary shares at an exercise price of 5.88p to Michael Schmainda, Director of IQ-AI Limited.
On 8 February 2022, the Company announced an allotment of 113,781 new ordinary shares at 6.41p per share to Mayo Clinic.
Market Abuse Regulation (MAR) Disclosure
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation EU 596/2014 as it forms part of retained EU law (as defined in the European Union (Withdrawal) Act 2018).
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END
FR BUGDSSUDDGDI
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April 28, 2022 12:52 ET (16:52 GMT)
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