TIDMIQAI
RNS Number : 5788X
IQ-AI Limited
30 April 2019
IQ-AI Ltd
("IQ-AI" or the "Company")
Publication of Annual Report
The Board of IQ-AI Ltd are pleased to announce that the
Company's audited financial statements for the year ended 31
December 2018 have been published.
The Annual Report will be available on the Company's corporate
website.
--S--
The Directors of the Company accept responsibility for the
contents of this announcement.
For further information, please contact:
IQ-AI Limited
Trevor Brown/Vinod Kaushal/Qu Li
Tel: 020 7469 0930
----------------------------------------------------------
Peterhouse Capital Limited (Financial Adviser and Broker)
Lucy Williams/Fungai Ndoro
Tel: 020 7220 9797
----------------------------------------------------------
The Company's financial statements have been extracted, without
material change, from the Company's Annual Report and reproduced
without material change:
Chief Executive Officer's Statement
Annual Report and Financial Statements
For the year ended 31 December 2018
To the members of IQ-AI Limited
I am pleased to present the Company's results for the twelve
months ended 31 December 2018.
IQ-AI's vision is to become a leader in the field of medical
imaging diagnostics. The Company currently comprises Stone Checker
Software Limited ("StoneChecker"), and since March 2018, Imaging
Biometrics LLC ("IB") suite of advanced imaging diagnostic software
products.
StoneChecker is a predictive diagnostic software product that
assists urologists in establishing the likelihood that a kidney
stone will disintegrate under vibration induced by sound wave
energy (lithotripsy). This predictive capability becomes important
in determining whether to subject a patient to multiple rounds of
lithotripsy or send them straight to surgery for stone removal.
StoneChecker offers possible economic benefits by avoiding
unnecessary lithotripsy procedures and reducing the time a patient
may spend in pain awaiting stone removal.
IB is an established provider of advanced imaging software
products used by leading brain cancer institutions in the USA,
including The Mayo Clinic (AZ), Barrow Neurological Institute and
Stanford University Medical Centre. More recently, IB have begun to
assist in the translation of novel imaging technologies into
commercialised products. One application aids in the detection and
staging of chronic liver disease and another leverages deep
learning algorithms for breast cancer screening.
IQ-AI's objectives in 2018 were to develop the existing suite of
products in preparation for their introduction to wider markets in
2019.
Operational report - David Smith
I joined the Company as Chief Executive Officer of the two
operating subsidiaries, Imaging Biometrics LLC and Stone Checker
Software Limited, in August 2018. During the year, new products
have been introduced and new appointments were made in the fields
of Artificial Intelligence and Deep Learning. These appointments
increase our product development and marketing capacity, and we are
poised for an exciting 2019.
The Company is in the final stages of securing FDA approval for
the StoneChecker software product and we hope to announce marketing
clearance shortly, which would give the Company an additional and
important revenue stream in the US during the 2nd half of 2019.
The Company will focus on four areas of revenue development in
2019:
1. Sales development of existing products
During 2018, the Company sold or trialled software at many of
the United States' most well-regarded hospitals and specialist
clinics. IB Neuro remains the only 'biopsy confirmed' neuro
perfusion software available on the market. Publicising this to all
potential users is a key element of the Company's 2019 plans. We
also intend to explore collaborative business relationships where
our sales reach can be expanded by encouraging other companies'
sales teams to promote our product for financial reward. This work
is already underway with a series of resellers such as aycan
Medical Systems, QMENTA, Blackford and Medimsight.
Subsequent to the year end, the Company sold an instance of the
IB Neuro product suite to Dr Marion Smits of Erasmus University,
Rotterdam. Dr Smits, one of the world's leading researchers in the
field of neuroradiology, is Professor of Applied Physiological
Imaging and Neuroradiologist at Erasmus MC, Vice President of the
European Society for Magnetic Resonance in Medicine and Biology,
and Chair of Neuroradiology of the Radiological Society of The
Netherlands.
Dr Smits stated, "We appreciate IB Neuro's ability to accurately
create quantitative perfusion maps for detecting regions of
aggressive tumour and for longitudinal assessment of treatment
response which will ultimately influence how we diagnose, track and
treat brain tumour patients." Dr Smits added, "It is critical to
know if a change in an imaging biomarker accurately represents a
tumour's biological background and whether changes in the tumour's
appearance are due to tumour growth or response to treatment.
Without it, surgeons, radiotherapists and oncologists may require
more tests or require more time to follow-up on the patients and to
know, with confidence, that a treatment protocol is effective."
Dr Smits' comments echo those made by other leaders in the field
of neuroradiology.
The Company sold and installed its first StoneChecker software
in South Korea through its distributor, demonstrating that the
remote sale and servicing of the product is a viable business
model. The Company will make international expansion a key
objective for 2019.
In the first quarter of 2019 the Company completed its first
sale of StoneChecker in the United Kingdom to the National Health
Service.
2. Development of new products
In 2019, the Company expects to make significant progress in
developing new products 'in-house' and through selective revenue
generating corporate collaborations.
-- Fee per Click Service
The capital cost of the Company's products can often exceed
$30,000 per installation. This amount typically requires approval
on annual capital budgeting forecasts which substantially lengthens
the overall sales cycle. To make IB's products more economically
accessible and to promote immediate widespread distribution, the
Company is developing a "Fee per Click" service model. This service
application would leverage the same proven code libraries as IB's
products and would reside on an external server networked to
transmit datasets to/from a site's IT infrastructure. The
application would anonymize and encrypt datasets to comply with
patient privacy laws and process the data without any manual
intervention. Diagnostic results would be available to the
clinician within seconds. Each time an IB core algorithm is
executed, an associated fee would be incurred.
-- IB Server
IB Server is an application that provides immediate access to
IB's clinically-validated processing algorithms available in IB
products: IB Neuro, IB Diffusion, IB DCE, and IB Delta Suite (Delta
T1 maps). The automated generation of IB's quantitative parameter
maps eliminates the post-processing steps frequently performed by
neuroradiologists or MR technologists.
IB Server can be installed on any existing computer platform and
can be readily integrated within a site's network. Once integrated,
relevant studies are automatically detected, the appropriate IB
software algorithm is executed, and the processed parameter maps
and QA information are sent to the resident PACS for viewing and
interpretation.
Analogous to the "Fee per Click" model, the Company has
developed an application that avoids sending Protected Health
Information ("PHI") offsite. The IB Server has been developed in
recognition that many hospitals need to be confident that the
anonymisation procedure is effective and sufficiently protective
for patients. IB Server is a subscription model of the Fee per
Click Service and offers the same automated processing options.
Customers identify the volume of patient studies and the
algorithms they intend to apply using IB Server. Based on those
projections, a subscription rate is negotiated, the application is
configured to output the desired information, and a corresponding
license is issued. This option ensures the PHI remains within a
site's IT infrastructure while all processing is automatically
routed to and from the application for instantaneous results. The
software is continuously updated by IB to ensure the hospital is
using the latest version and patients get the benefit of IB's
quantitative results. The IB server is currently being tested at a
major US neurological institution with one other beta site
currently being deployed.
-- Artificial Intelligence ("AI")
IB has recently expanded its development team with software
engineers experienced in artificial intelligence ("AI"). The
Company intends to strategically incorporate AI to further enhance
and automate its fractional tumour burden ("FTB") mapping for brain
tumour treatment monitoring. IB's FTB maps distinguishes viable
brain tumour from treatment associated changes. Currently, FTB map
generation involves the manual identification of contrast enhancing
regions of interest (ROI). While this step is greatly simplified
using IB's Delta T1 maps, it does require knowledge of brain
anatomy and may take in excess of 15 minutes to complete, depending
on the invasiveness of the tumour. Leveraging AI to automate this
step will provide clinicians with a fully-automated process of
generating a biologically-based quantitative imaging biomarker, and
a validated measure of tumour burden, on a per-voxel basis. In
addition, the Company will leverage AI to enhance current
intermediate steps including automated brain masking and
segmentation capabilities.
-- PC-based version of IB Plugins
Designed as platform independent plugins, IB's products were
initially integrated into the Apple Mac Computer based DICOM
viewer, OsiriX. The plugin approach allowed IB to align and focus
resources on the development of niche and sophisticated algorithms
and not on the development of commonly available applications.
While OsiriX remains a proven and extremely robust host environment
for IB, it is not available on common Microsoft Windows Corporation
PC platforms. This presented a sales impediment as some sites were
reluctant to support an Apple Mac Computer-based platform Software
in their PC-dominated environments. In 2018, IB completed the
integration of its products into the PC-based DICOM platform
ClearCanvas (Synaptive Medical, Toronto, CA). Once validation is
complete, the release of IB Software within the ClearCanvas
environment will give institutions a PC-based option to access and
leverage IB's quantitative biomarkers.
-- Gadolinium free imaging
Gadolinium is a rare earth metal which has paramagnetic
properties. When used in conjunction with Magnetic Resonance
Imaging ("MRI"), it can enhance the visualisation of soft tissues
such as those found in the brain. Compounds formulated using
gadolinium are the primary contrast agents used in radiology. The
clinical literature is replete with articles highlighting
Nephrogenic Systemic Fibrosis (NSF) and recent findings about
gadolinium deposition in the brain.
While concerns about the long-term toxicity effects of
gadolinium-based contrast agents ("GBCA") are unknown and more
research is needed to substantiate any link to health issues,
radiologists would like to move away from using GBCAs if a suitable
alternative could be offered. This would eliminate any potential
risks of using GBCAs, streamline clinical workflows and save
significant material expense.
IB has filed a patent for gadolinium free imaging. Using deep
learning networks, analogous images can be generated from
anatomical and functional images acquired without any exogenous
contrast material. Though the development and regulatory timelines
are significant, the Company already has technologies that reduce
the use of GBCAs. Specifically, the Company's patented Simultaneous
Perfusion Imaging with Consecutive Echoes ("SPICE") technology
eliminates one (preload) dose of the required two administrations
of GBCA during image acquisition for brain tumour perfusion
analysis. This patent has the additional benefit of providing both
dynamic susceptibility ("DSC") and dynamic contrast enhanced
("DCE") parameter maps using a single MR acquisition. Both DSC and
DCE imaging provide biological and physiological information about
the brain.
In addition, one of IB's founders, Kathleen Schmainda PhD, was
the lead author for a study that appeared in the American Journal
of Neuro Radiology in April 2019, "Moving Towards a Consensus
DSC-MRI Protocol: Validation of A Low Flip Angle Single Dose Option
as a Reference Standard for Brain Tumours". This study identified
that using IB Software to process data acquired on 3T MRI systems
configured with low-flip angle settings produced output comparable
to the accepted double contrast dose method. Thus, the preload dose
of contrast can be eliminated without compromising image quality.
Moreover, the output was further enhanced when IB's exclusive
machine-learned calibration technology was applied. The results of
this study were presented at the 2018 ASNR Meeting and, more
importantly, offers clinicians immediate access to a lower GBCA
alternative.
While these two approaches offer instant reductions to GBCA use
and improved workflows, the Company is committed to ultimately
introducing a GBCA free product.
Outlook
The Company's products are now sold in the USA, UK, The
Netherlands, Switzerland, Germany, Greece and South Korea. Our
objectives for 2019 are to expand sales and continue to develop new
products which utilise areas of our expertise where we believe we
have scientific and technological leadership.
As a result of product development and new users, sales have
continued to accelerate in 2019. We expect sales for the full year
2019 to more than double those for 2018. The future looks to be an
exciting place for IQ-AI.
Trevor Brown
Chief Executive Officer
Strategic Report
Annual Report and Financial Statements
For the year ended 31 December 2018
The Directors present their strategic report on the group for
the year ended 31 December 2018.
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.
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
In March 2019, the Company issued GBP268,500 in nominal amounts
of 6% unsecured convertible loan notes, convertible into 13,425,000
ordinary shares of 0.1p each in the Company ("Ordinary Shares") at
a price of 2 pence per share ("CLNs"). The funds raised as a result
of the issue of the CLNs will be used to provide additional working
capital for the Company.
Results for the 2018 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 GBP15,662 (2017: GBP23,087)
-- Group revenue for the year was GBP164,971 (2017: GBPnil)
-- Administrative expenses from continuing operations increased
to GBP878,648 (2017: GBP257,725)
-- Group loss after tax from continuing operations was GBP764,080 (2017: GBP280,812)
-- Taxation charge was GBPnil for the period (2017: GBPnil)
-- Basic and diluted loss per share from continuing operations was 0.82p (2017: 0.56p loss)
-- As at 31 December 2018, the Group had cash and cash
equivalents of GBP28,783 (2017: GBP386,954)
-- The Group's net assets increased to GBP762,884 (2017: GBP589,839)
-- Intangible assets, comprising intellectual property, imaging
and diagnostic software and goodwill, increased to GBP922,543
(2017: GBP294,595)
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 patient clinical studies,
and with the recent acquisition of Imaging Biometrics LLC, 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 Risk and
Performance. Information relating to financial risk management is
included in note 22 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
the balance sheet date, the Group had cash balances of GBP28,783
(2017: GBP386,954). The financial forecasts indicate that the Group
is expected to have sufficient liquid resources to meet its
obligations under all reasonably expected circumstances but may
need additional borrowing facilities to do so.
Interest rate risk
The Group has Convertible Loan Notes totalling GBP145,033,
including accrued interest, outstanding as at 31 December 2018
(2017: GBP368,933). The Notes accrue interest at a fixed rate of
6.75%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 my 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
beneath the description of each risk is a note of the main
mitigating factors and actions the Group is taking to address that
risk.
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 the Classification
may be subject to market and sell the 1 (medical software),
to medical regulatory products 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 property The Group's success depends, The Group invests in
in part, on its ability maintaining and protecting
to obtain and maintain this intellectual property
protection for its intellectual to reduce risks over
and proprietary information, the enforceability
so that it can stop others and validity of the
from making, using or selling Group's patents. The
its inventions or proprietary Group works
rights. The Group's patent closely with its legal
applications may not be advisors and obtains
granted, and its existing where necessary opinions
patent rights may be successfully on the intellectual
challenged and revoked. property landscape
relevant to the Group's
programmes and activities.
TexRAD Limited Stone Checker's ability Balaji Ganeshan of
- use of Intellectual to exploit its products TexRAD works very closely
property is reliant upon the terms with Stone Checker
of an exclusive licence in the development
from TexRAD Limited which of the products.
grants Stone Checker the The Group continuously
right to use the TexRAD's monitors its ongoing
Patents in the field of compliance with the
urolithiasis and to research, terms of the licence
develop or have developed, agreement.
make or have made, keep,
use, import, export, sell
and supply products based
upon the TexRAD Plug-in
pursuant to the terms of
a 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 The Group has formal
suitable investments upon the ability of the investment criteria
Directors to identify suitable to identity suitable,
investment opportunities earnings-enhancing
and to implement its investing acquisition targets
policy. The Directors are and employs experienced
continuing their search professionals to drive
to identify further opportunities the acquisition process.
in 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
funding issue arising for which its cash requirements
the Group is required to carefully and in the
access substantial liquid need of significant
funds in excess of its additional funds would
available cash balances, look to increase its
it may not be easy to obtain financing.
additional funds as and
when required and on acceptable
terms.
------------------------------------ ----------------------------------
Loss of key personnel The Group comprises a few The Group has a continuity
key individuals in a market program in place to
which requires high quality ensure that Directors
experienced staff. Any would be able to minimise
unforeseen loss of these the disruption of the
key personnel would be loss of key personnel.
damaging to the Group.
The retention of their
services cannot be guaranteed.
------------------------------------ ----------------------------------
The Group may Compliance with various The Group monitors
be adversely affected laws and regulations does legislative and regulatory
by the enforcement impose compliance costs changes and alters
of and changes and restrictions on the its business practices
in legislation Group, with fines and/or where appropriate.
and regulation sanctions for non-compliance.
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
and on its ability directors. In addition, senior 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.
The financial position of the Group, its cash flows and
liquidity position are described in this business review. In
addition, note 22 to the financial statements include the Group's
objectives, policies and processes for managing its capital; its
financial risk management objectives; details of its financial
instruments; and its exposure to credit risk and liquidity risk. As
highlighted in note 22, 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 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. The Chief Executive Officer has provided a letter of
financial support to the Group to make sufficient funds available,
if required, to ensure the Group can meet its obligations over the
going concern period.
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 30 April
2019 and signed on behalf of the board by:
Trevor Brown
Director
Directors' and Corporate Governance Report
Annual Report and Financial Statements
For the year ended 31 December 2018
The Directors present their annual report and audited financial
statements for the year ended 31 December 2018.
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 movement in share capital are given in note
16 to the financial statements.
Results and dividends
The audited financial statements for the year for the Group and
Company are set out on pages 24 to 46.
No dividends will be distributed for the year ended 31 December
2018 (2017: GBPnil).
Directors
The directors, who served throughout the year, were as
follows:
Mr T Brown Chief Executive Officer
Dr Qu Li Non-Executive Chairman
Mr V Kaushal Non-Executive Director
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. There are no Directors' interests in
share options and awards.
Dr Qu Li resigns at the AGM and, being eligible, offers herself
for re-election.
Although an overseas Company, 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.
Substantial shareholdings
As at 13 March 2019, other than the Directors' holdings, the
Company has been notified, in accordance with the Disclosure
Guidance and Transparency Rules, of the following interests in 3%
or more of its issued share capital:
Shareholder Number of shares % of Issued Share
Capital
--------------------------------- ----------------- ------------------
Aurora Nominees Limited 13,898,216 12%
Free Association Books Limited 11,868,112 10%
Hargreave Hale Nominees Limited 10,316,697 9%
Kathleen Schmainda 9,108,400 8%
Jim Nominees Limited 8,897,216 7%
Hargreaves Lansdown (Nominees)
Limited 6,479,241 5%
Interactive Investor Services
Nominees Limited 5,631,409 5%
Barclays Direct Investing
Nominees Limited 5,052,054 4%
Winterflood Securities Limited 4,909,960 4%
Interactive Investor Services
Nominees Limited 3,990,229 3%
Capital expenditure
During the year, the Group did not invest in any capital
expenditure (2017: GBPnil). The Group made an investment in product
development during the period of GBP62,147 (2017: GBP46,716).
During the year, the Company acquired 100% of the issued share
capital of Imaging Biometrics LLC by the issue of 8 million shares
in IQ-AI Limited at a price of 3p per ordinary share.
The Group held no bank debt at 31 December 2018 (2017: 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 16. 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 donation
during the year ended 31 December 2018 (2017: 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 2018, there were two women (2017: 1) employed
across the Group making 32% (2017: 16%) 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 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 International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
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 IFRSs as adopted by the European Union 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
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.
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 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 were appointed as auditor on 2 January
2019.
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.
Corporate governance
IQ-AI has a standard listing on the London Stock Exchange and is
thus not required to comply with the requirements of the 2016 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 two
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 4
Dr Q Li 4
V Kaushal 3
----------- ---------------
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 himself 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 2019
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 four times in 2019 (2018: 4), the
Executive Director attended every meeting during the year while in
office and the Non-Executive 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 2017, the half year results to 30 June 2018
and the report and financial statements for the year ended 31
December 2018; 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 all 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 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 2019, 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 IFRSs
as adopted by the European Union, 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 30 April
2019 and signed on behalf of the board by:
Trevor Brown
Director
Directors' Information
Annual Report and Financial Statements
For the year ended 31 December 2018
Trevor Brown
Trevor has been a strategic investor in equities and real estate
for more than 30 years. He is currently a Director of Remote
Monitored Systems plc and Braveheart Group plc.
Dr Qu Li
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, South East 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 post graduates.
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 a MBA from
Henley Business School.
Remuneration Committee Report
Annual Report and Financial Statements
For the year ended 31 December 2018
The Remuneration Committee presents its report for the year
ended 31 December 2018.
Membership of the Remuneration Committee
The Remuneration Committee is currently comprised of Dr Li 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 in to 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
To provide * Private medical insurance. insurance and 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
and annually in January. When considering any increases to fee
To attract complexity to IQ-AI Limited within the Main levels in the normal course, the
Non-Executive Market. The Non-Executive Director fee structure Board will take into consideration:
Directors with is a matter for the full Board. * Increases provided to comparable roles in the
the requisite comparator group;
skills and
experience to
perform the * Pay and employment conditions of employees throughout
role. the Company, including increases provided to the
employee population; and
* Inflation.
--------------------------------------------------- ------------------------------------------------------------------
Share options
No share option scheme is provided to the Directors.
Directors' pensions
The Company does not provide a pension scheme. Additionally, no
dependent pensions or benefits are provided.
Remuneration policy for Executive Directors
The Remuneration Committee seeks to provide the remuneration
packages necessary to attract, retain and motivate 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 Directors comprise a mix of performance and
non-performance elements. During 2018, the Executive Directors pay
was not based on the Group achieving financial targets.
Directors' interests (held directly or indirectly) in the
Company's shares
2018 2017
Number Number
----------- ----------- -----------
T Brown* 11,868,112 16,180,788
Dr Q Li - -
V Kaushal - -
----------- ----------- -----------
*Includes shares held by Free Association Books Limited.
Directors' emoluments
The following table summarises the emoluments of Directors
during the year.
Salary 2018 2017
and fees Pension Benefits Total Total
GBP GBP GBP GBP GBP
----------- --------- -------- --------- -------- -------
T Brown 65,000 - - 65,000 22,500
V Kaushal 30,000 - - 30,000 14,000
Dr Q Li* 30,000 - - 30,000 14,000
----------- --------- -------- --------- --------
TOTAL 125,000 - - 125,000 50,500
----------- --------- -------- --------- -------- -------
*Dr Qu Li's services were invoiced by China Ventures
Limited.
Dr Qu Li
Chairman of the Remuneration Committee
30 April 2019
Independent auditor's report to the members of IQ-AI Limited
Annual Report and Financial Statements
For the year ended 31 December 2018
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 2018 which comprise of the Consolidated Income
Statement, Consolidated Statement of Comprehensive Income,
Consolidated and Company Statements of Financial Position,
Consolidated and Company Statements of Changes in Equity,
Consolidated Statement of Cash Flows and notes to the financial
statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
In our opinion:
-- the financial statements give a true and fair view of the
state of the group and company's affairs as at 31 December 2018 and
of the group and company's loss for the period then ended;
-- the group and company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European Union;
and
-- the financial statements have been prepared in accordance
with the requirements 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 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
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you
where:
-- the directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate;
or
-- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the group's or the parent company's ability to continue
to adopt the going concern basis of accounting for a period of at
least twelve months from the date when the financial statements are
authorised for issue.
Our application of materiality
The scope of our audit was influenced by 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 GBP36,200 based on 5% of the loss
before tax. The performance materiality was GBP25,300. The
materiality applied to the Company financial statements was
GBP22,675 based on 5% of the loss before tax. The performance
materiality was GBP15,875. For each component in the scope of our
group audit, we allocated a materiality that was less than our
overall group materiality.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and
assessed the risk of material misstatement in the financial
statements. In particular, we looked at areas involving significant
accounting estimates and judgements by the directors and considered
future events that are inherently uncertain. 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. One component was subject to a full scope audit
conducted directly by PKF Littlejohn LLP. The other component is
located in the US and was audited by a component auditor under our
instruction and supervision under ISA 600.
An overview of the scope of our audit (continued)
The Senior Statutory Auditor interacted regularly with the
component audit team during all stages of the audit and was
responsible for the scope and direction of the audit process. This,
in conjunction with additional audit procedures performed at a
consolidation level, gave us sufficient appropriate evidence for
our opinion of the group and company financial statements.
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) that we identified. These matters included 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 the scope of our audit responded
to the key audit matter
Recognition and valuation We performed the following work
of intangible assets to address the identified risk:
There is a risk that the Intellectual
Property (IP) developed and * Issued detailed instructions to component auditors
under development may not
be correctly capitalised in
accordance with IAS 38. which addressed all assertions
relating to the costs
incurred on the development of
IP;
* Reviewed the agreed upon procedures and assessed any
accounting policy differences regarding recognition
and valuation between US GAAP and EU endorsed IFRS;
* Completed substantive testing on additions;
* Assessed compliance of the IP with the recognition
criteria under IAS38 and challenged
management on areas involving significant
judgement; and
* Inquired of any indicators of impairment.
=======================================================================
Accounting treatment on acquisition We performed the following work
of subsidiary to address the identified risk:
IQ-AI Limited acquired Imaging * Reviewed the purchase agreement and ensured that the
Biometrics LLC (IB) in March accounting treatment reflected the key contractual
2018. terms;
As IB applies US GAAP, there
is a risk that the net assets
are not stated in accordance * Documented and challenged management's assessment of
with IFRS. the fair value of assets and liabilities acquired,
There is a risk that the assets including the eligibility of separately identifiable
and liabilities acquired are intangibles in accordance with IFRS 3;
not stated at fair value,
including the recognition
of separately identifiable * Assessed the amortisation calculation and useful
intangibles.
economic lives of intangibles;
and
* Assessed the carrying value of goodwill and
intangible assets for impairment.
=======================================================================
Key audit matters (continued)
Key audit matter How the scope of our audit responded
to the key audit matter
Going concern We performed the following work
IQ-AI Limited relies solely to address the identified risk:
on funding raised on issuing * Reviewed the Director's going concern assessment and
equity or convertible loan challenged the assumptions based on our knowledge of
notes. the business and of the market.
Forecasts have been prepared
which form the basis of the
level of support required. * We noted that the Chief Executive Officer has
The risk for our audit was provided a letter of financial support to the Group
whether the above amounted to make sufficient funds available, if required, to
to a material uncertainty ensure the Group can meet its obligations over the
that may cast doubt about going concern period.
the ability of the Group to
continue as a going concern,
which if applicable, would
have required disclosure of
the fact.
=================================================================
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. Our opinion on the financial statements
does not cover the other information except to the extent otherwise
specifically stated in our report, and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, 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
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. 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
where The Companies (Jersey) Law 1991 requires us to report to you
if, in our opinion:
-- proper accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the 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 directors' responsibilities
statement, the directors are responsible for the preparation of the
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 financial statements, the directors are
responsible for assessing the group's and 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 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.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: http://www.frc.org.uk/auditors
responsibilities. 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 (Senior Statutory Auditor)
for and on behalf of PKF Littlejohn LLP
Statutory Auditor
1 Westferry Circus
Canary Wharf
London
E14 4HD
30 April 2019
Consolidated Income Statement
For the year ended 31 December 2018
2018 2017
GBP GBP
Notes
Continuing operations
Revenue 164,971 -
Cost of Sales (34,962) -
------------------------------------ ------ ---------- ----------
Gross profit 130,009 -
Administrative expenses (878,648) (257,725)
Other income 221 -
------------------------------------ ------ ---------- ----------
Operating loss 5 (748,418) (257,725)
Finance costs 4 (15,662) (23,087)
Loss before income tax (764,080) (280,812)
Income tax 7 - -
Loss for the year attributable to
owners of the Company (764,080) (280,812)
Loss per share attributable to owners of
the Company
From continuing operations:
Basic & diluted (pence per share) 8 (0.82) (0.56)
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2018
2018 2017
GBP GBP
Loss for the period (764,080) (280,812)
Other comprehensive income
Items that will not be reclassified
to profit or loss
Loss on disposal of treasury shares - (840,000)
--------------------------------------------- --------- -----------
- (840,000)
-------------------------------------------- --------- -----------
Items that may be subsequently reclassified
as profit or loss
Exchange differences on translation
of foreign operations 8,322 -
--------------------------------------------- --------- -----------
8,322 -
-------------------------------------------- --------- -----------
Total comprehensive loss for the year
attributable to the owners of the Company (755,758) (1,120,812)
The accompanying accounting policies and notes are an integral
part of these financial statements.
Consolidated Statement of Financial Position
As at 31 December 2018
2018 2017
GBP GBP
Notes
Non-current assets
Property, plant and equipment 9 918 -
Goodwill 11 201,274 82,627
Intangible assets 12 721,269 211,968
-------------------------------------- ------ ------------- -----------------------------
Total non-current assets 923,461 294,595
-------------------------------------- ------ ------------- -----------------------------
Current assets
-------------------------------------- ------ ------------- -----------------------------
Trade and other receivables 14 65,568 11,237
Cash and cash equivalents 28,783 386,954
Total current assets 94,351 398,191
-------------------------------------- ------ ------------- -----------------------------
Current liabilities
Trade and other payables 15 254,928 102,947
Total current liabilities 254,928 102,947
-------------------------------------- ------ ------------- -----------------------------
Net current (liabilities)/assets (160,577) 295,242
-------------------------------------- ------ ------------- -----------------------------
NET ASSETS 762,884 589,839
-------------------------------------- ------ ------------- -----------------------------
Equity
Share capital 16 1,203,465 675,594
Share premium 19,025,466 18,418,674
Capital redemption reserve 23,616 23,616
Merger reserve 160,000 160,000
Treasury share reserve - -
Warrant reserve - -
Convertible loan note reserve 19 145,033 368,933
Share based payment reserve 10,877 -
Foreign currency reserve 8,322 -
Retained losses (19,813,895) (19,056,978)
-------------------------------------- ------ ------------- -----------------------------
Equity attributable to owners of the
Company 762,884 589,839
TOTAL EQUITY 762,884 589,839
-------------------------------------- ------ ------------- -----------------------------
The financial statements on pages 24 to 46 were approved by the
Board of Directors on 30 April 2019 and signed on its behalf
by:
T Brown Dr Q Li
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 2018
2018 2017
GBP GBP
Notes
Non-current assets
Investments 13 783,823 240,000
-------------------------------------- ------ ------------- -------------
Total non-current assets 783,823 240,000
-------------------------------------- ------ ------------- -------------
Current assets
Trade and other receivables 14 449,618 112,161
Cash and cash equivalents 26,460 358,043
Total current assets 476,078 470,204
-------------------------------------- ------ ------------- -------------
Current liabilities
Trade and other payables 15 112,390 60,410
Total current liabilities 112,390 60,410
-------------------------------------- ------ ------------- -------------
Net current assets 363,688 409,794
-------------------------------------- ------ ------------- -------------
NET ASSETS 1,148,025 649,794
-------------------------------------- ------ ------------- -------------
Equity
Share capital 16 1,203,465 675,594
Share premium 19,025,466 18,418,674
Capital redemption reserve 23,616 23,616
Merger reserve 160,000 160,000
Treasury share reserve - -
Warrant reserve - -
Convertible loan note reserve 19 145,033 368,933
Share based payment reserve 10,877 -
Retained losses (19,420,432) (18,997,023)
-------------------------------------- ------ ------------- -------------
Equity attributable to owners of the
Company 1,148,025 649,794
TOTAL EQUITY 1,148,025 649,794
-------------------------------------- ------ ------------- -------------
The financial statements on pages 24 to 46 were approved by the
Board of Directors on 30 April 2019 and signed on its behalf
by:
T Brown Dr Q Li
Director Director
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 2018
Share Share Capital Merger Treasury Warrant Convertible Share Foreign Retained TOTAL
capital premium redemption reserve shares reserve loan note based currency losses EQUITY
reserve reserve payment reserve
reserve
GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
-------------- --------- ---------- ---------- ------- --------- -------- ----------- ------- -------- ------------ ---------
Balance at 1
January 2017 310,213 18,062,374 22,212 - (840,000) 12,977 410,351 - - (17,949,143) 28,984
-------------- --------- ---------- ---------- ------- --------- -------- ----------- ------- -------- ------------ ---------
Loss for the
year - - - - - - - - - (280,812) (280,812)
Sale of
treasury
shares - - - - 840,000 - - - - (840,000) -
Total
comprehensive
loss for the
year - - - - - - - - - (1,120,812)
-------------- --------- ---------- ---------- ------- --------- -------- ----------- ------- -------- ------------ ---------
Shares
redeemed (1,404) - 1,404 - - - - - - - -
Warrants
exercised - - - - - (12,977) - - - 12,977 -
Shares issued 366,785 409,470 - 160,000 - - - - - - 936,255
Cost of shares
issued - (53,170) - - - - - - - - (53,170)
Movement in
the year - - - - - - (41,418) - - - (41,418)
-------------- --------- ---------- ---------- ------- --------- -------- ----------- ------- -------- ------------ ---------
Balance at 31
December 2017 675,594 18,418,674 23,616 160,000 - - 368,933 - - (19,056,978) 589,839
-------------- --------- ---------- ---------- ------- --------- -------- ----------- ------- -------- ------------ ---------
Loss for the
year - - - - - - - - - (764,080) (764,080)
Exchange
differences
on
translation
of foreign
operations - - - - - - - - 8,322 - 8,322
-------------- --------- ---------- ---------- ------- --------- -------- ----------- ------- -------- ------------ ---------
Total
comprehensive
loss for the
year - - - - - - - - 8,322 (764,080) (755,758)
-------------- --------- ---------- ---------- ------- --------- -------- ----------- ------- -------- ------------ ---------
Shares issued 527,871 651,792 - - - - - - - - 1,179,663
Cost of shares
issued - (45,000) - - - - - - - - (45,000)
Unclaimed
dividends - - - - - - - - - 7,163 7,163
Share based
payments - - - - - - - 10,877 - - 10,877
Movement in
the year - - - - - - (223,900) - - - (223,900)
-------------- --------- ---------- ---------- ------- --------- -------- ----------- ------- -------- ------------ ---------
Balance at 31
December 2018 1,203,465 19,025,466 23,616 160,000 - - 145,033 10,877 8,322 (19,813,895) 762,884
-------------- --------- ---------- ---------- ------- --------- -------- ----------- ------- -------- ------------ ---------
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 2018
Share Share Capital Merger Treasury Warrant Convertible Share Retained TOTAL
capital premium Redemption Reserve shares reserve Loan Note based losses EQUITY
reserve Reserve payment
reserve
GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
-------------- --------- ---------- ---------- ------- --------- -------- ----------- ------- ------------ -----------
Balance at 1
January 2017 310,213 18,062,374 22,212 - (840,000) 12,977 410,351 - (17,949,143) 28,984
Loss for the
year - - - - - - - - (220,857) (220,857)
Sale of
treasury
shares - - - - 840,000 - - - (840,000) -
-------------- --------- ---------- ---------- ------- --------- -------- ----------- ------- ------------ -----------
Total
comprehensive
loss for the
year - - - - - - - - (1,060,857) (1,060,857)
-------------- --------- ---------- ---------- ------- --------- -------- ----------- ------- ------------ -----------
Shares
redeemed (1,404) - 1,404 - - - - - - -
Warrants
exercised - - - - - (12,977) - - 12,977 -
Shares issued 366,785 409,470 - 160,000 - - - - - 936,255
Cost of shares
issued - (53,170) - - - - - - - (53,170)
Movement in
the year - - - - - - (41,418) - - (41,418)
-------------- --------- ---------- ---------- ------- --------- -------- ----------- ------- ------------ -----------
Balance at 31
December 2017 675,594 18,418,674 23,616 160,000 - - 368,933 - (18,997,023) 649,794
-------------- --------- ---------- ---------- ------- --------- -------- ----------- ------- ------------ -----------
Total
comprehensive
loss for the
year - - - - - - - - (430,426) (430,426)
-------------- --------- ---------- ---------- ------- --------- -------- ----------- ------- ------------ -----------
Shares issued 527,871 651,792 - - - - - - - 1,179,663
Cost of shares
issued - (45,000) - - - - - - (45,000)
Unclaimed
dividends - - - - - - - 7,163 7,163
Share based
payments - - - - - - - 10,877 - 10,877
Movement in
the year - - - - - - (223,900) - - (223,900)
-------------- --------- ---------- ---------- ------- --------- -------- ----------- ------- ------------ -----------
Balance at 31
December 2018 1,203,465 19,025,466 23,616 160,000 - - 145,033 10,877 (19,420,432) 1,148,025
-------------- --------- ---------- ---------- ------- --------- -------- ----------- ------- ------------ -----------
The accompanying accounting policies and notes are an integral
part of these financial statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2018
2018 2017
GBP GBP
Operating loss (764,080) (257,725)
Adjustment for:
Depreciation and amortisation 33,499 -
Share based payment expense 10,877 -
Decrease/(increase) in receivables (65,070) 3,029
Increase/(decrease) in payables 101,101 44,017
Net cash used in operating activities (683,673) (210,679)
---------------------------------------- ---------- ----------
Cash flows from investing activities:
Purchase of intangible assets (32,877) (46,716)
Purchase of subsidiary (104,366) -
Net cash from investing activities (137,243) (46,716)
---------------------------------------- ---------- ----------
Cash flows from financing activities
Shares issued 515,085 580,499
Costs of shares issued (45,000) (1,974)
Interest paid (15,662) -
Net cash from financing activities 454,423 578,525
---------------------------------------- ---------- ----------
Net (decrease)/increase in cash and
cash equivalents (366,493) 321,130
Cash and cash equivalents brought
forward 386,954 65,824
Effects of exchange rate changes
on cash and cash equivalents 8,322 -
--------------------------------------- ---------- ----------
Cash and cash equivalents carried
forward 28,783 386,954
---------------------------------------- ---------- ----------
The accompanying accounting policies and notes are an integral
part of these financial statements.
Notes to the financial statements
Annual Report and Financial Statements
For the year ended 31 December 2018
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 International Financial Reporting
Standards (IFRS) and IFRIC interpretations (IFRS IC) as adopted by
the European Union.
The financial statements have been prepared under the historical
cost convention.
The preparation of financial statements in conformity with 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 22 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 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
group's forecasts and projections, taking account of reasonably
possible changes in trading performance, show that additional
funding will be required either via an issue of equity or through
the issuance of convertible loan notes. The Directors are
reasonably confident that funds will be forthcoming if and when
they are required. The Chief Executive Officer has provided a
letter of financial support to the Group to make sufficient funds
available, if required, to ensure the Group can meet its
obligations over the going concern period.
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
The group and company have applied the following new and amended
standards for the first time for its annual reporting period
commencing 1 January 2018:
-- IFRS 9 Financial Instruments;
-- IFRS 15 Revenue from contracts with customers;
-- Amendment to IFRS 2 Classification and measurement of Share-based Payment Transactions
-- Annual improvements to IFRS Standards 2014-2016 Cycle
IFRS 15 establishes a single comprehensive model for entities to
use in accounting for revenue arising from contracts with
customers. IFRS 15 has superseded the previous revenue recognition
guidance including IAS 18 Revenue. The group has adopted IFRS 15
for the year ended 31 December 2018. There has been no material
impact to the recognition of revenue relating to the adoption of
IFRS 15.
1. Summary of significant accounting policies (continued)
New standards, amendments and interpretations adopted by the
Group (continued)
The Group has applied IFRS 9 from 1 January 2018. The Group has
elected not to restate comparatives on initial application of IFRS
9 as there is no impact on the opening balances.
With respect to the classification and measurement of financial
assets, the number of categories of financial assets under IFRS 9
has been reduced compared to IAS 39. Under IFRS 9 the
classification of financial assets is based both on the business
model within which the asset is held and the contractual cash flow
characteristics of the asset. There will be no change in the
accounting for any other financial liabilities.
The impairment model under IFRS 9 reflects expected credit
losses, as opposed to only incurred credit losses under IFRS 9.
Under the impairment approach in IFRS 9, it is not necessary for a
credit event to have occurred before credit losses are recognised.
Instead, an entity always accounts for expected credit losses and
changes in those expected credit losses. The amount of expected
credit losses should be updated at each reporting date.
The new impairment model applies to the Group's financial assets
that are debt instruments measured at amortised costs or
FVTOCI.
The Group has applied the simplified approach to recognise
lifetime expected credit losses for its trade receivables, as
required or permitted by IFRS 9. The impact is immaterial to the
Group.
New standards and interpretations not yet adopted
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Group or Company.
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.
1. Summary of significant accounting policies (continued)
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. As a result of the acquisition
during the year, the Group reports on a two-segment basis - holding
company expenses and medical software.
Foreign Currency Translation
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income
statement. Foreign exchange gains and losses are presented in the
income statement within 'finance income or costs'.
The results and financial position of Group entities that have a
functional currency different from the presentation currency are
translated into the presentation currency as follows:
-- assets and liabilities for each Statement of Financial
Position presented are translated at the closing rate at the date
of that Statement of Financial Position;
-- income and expenses for each Income Statement presented are
translated at average exchange rates (unless this average is not a
reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and
expenses are translated at the rate on the dates of the
transactions); and
-- all resulting exchange differences are recognised in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate. Exchange
differences arising are recognised in other comprehensive
income.
Property, Plant and Equipment
Property, plant and equipment is stated at historical cost less
depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the group and the cost of the item can be measured
reliably. The carrying amount of the replaced part is derecognised.
All other repairs and maintenance are charged to the income
statement during the financial period in which they are
incurred.
Depreciation on other assets is calculated using the
straight-line method to allocate their cost or revalued amounts to
their residual values over their estimated useful lives, as
follows:
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.
1. Summary of significant accounting policies (continued)
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. 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.
1. Summary of significant accounting policies (continued)
Loans and receivables (continued)
Trade receivables are recognised initially at fair value, and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment.
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 includes 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 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 payables are recognised initially at fair value, and
subsequently measured at amortised cost using the effective
interest method.
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.
Repurchase of share capital (treasury shares)
When share capital recognised as equity is repurchased, the
amount of the consideration paid, including directly attributable
costs, net of any tax effects, is recognised as a deduction from
equity. Repurchased shares are classified as treasury shares and
are presented as a deduction from total equity. When treasury
shares are sold or reissued subsequently, the amount received is
recognised as an increase in equity, and the resulting surplus or
deficit on the transaction is transferred to/from retained
earnings.
1. Summary of significant accounting policies (continued)
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. Revenue from external customers arise
on the sales of software licences and consultancy thereon.
Software licences
The revenue is measured at the agreed transaction price. 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 services are provided on the product
supplied; this is not deemed to be a separately identifiable
product.
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 the profit or loss include
current and deferred tax.
1. Summary of significant accounting policies (continued)
Taxation (continued)
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 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.
Classification of the excess of consideration over net asset
value acquired
Separately identifiable intangible assets recognised in a
business combination, comprising intellectual property and
internally generated software is based upon the Directors
knowledge, experience and judgement regarding the attribution of
value to the acquired entity. These allocations require the use of
judgements and estimates.
Useful lives of intangible assets are based on historical
experience and market knowledge, and subject to yearly evaluation.
As the assumptions used may change, the useful life and therefore
annual amortisation charge may change.
3. Segmental analysis
The Directors are of the opinion that under IAS 14 - "Segmental
Information" the Group operated in two primary business segments in
2018; 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
2018 2017
GBP GBP
Loss before income tax
------------------------ ---------- ----------------
Holding company (430,426) (220,857)
Medical software (333,654) (59,954)
(764,080) (280,811)
------------------------ ---------- ----------------
2018 2017
GBP GBP
Net assets
------------------------------------ ---------- ---------
Holding company 1,148,025 649,794
Medical software - net liabilities (448,617) (69,834)
Segmentation by geographical area:
2018 2017
GBP GBP
Revenue to external customers
------------------------------ -------- ----------------
Jersey - -
United Kingdom - -
United States of America 164,971 -
164,971 -
------------------------------ -------- ----------------
2018 2017
GBP GBP
Loss before income tax
-------------------------- ---------- ----------------
Jersey (430,426) (220,857)
United Kingdom (168,876) (59,954)
United States of America (164,778) -
(764,080) (280,811)
-------------------------- ---------- ----------------
2018 2017
GBP GBP
Net assets
-------------------------- ---------- ----------------
Jersey 1,148,025 649,794
United Kingdom (237,656) (69,834)
United States of America (210,961) -
----------------------------- ---------- ----------------
4. Finance costs
2018 2017
GBP GBP
Interest payable on unsecured convertible
loan notes 15,662 23,087
------------------------------------------ ------ ------
5. Operating loss
2018 2017
GBP GBP
The following items have been included in
arriving at operating loss
Staff costs 348,294 83,357
Amortisation of internally generated intangible
assets 33,187 -
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 20,000 15,000
Non-audit services - 25,000
------------------------------------------------ ------- ------
Total audit fees payable to the Group auditors 20,000 40,000
6. Employee information
The average monthly number of employees (including Executive
Directors) was:
2018 2017
Number Number
Administration 7 6
GBP GBP
------------------------------------------------ ------- ------
Staff costs (for the above employees)
Wages and salaries 346,572 82,544
Social security costs and pension contributions 1,722 813
348,294 83,357
------------------------------------------------ ------- ------
Directors' remuneration and transactions
2018 2017
GBP GBP
Directors' remuneration
Emoluments and fees 125,000 50,500
GBP GBP
------------------------------------------- ------- ------
Remuneration of the highest paid director:
Emoluments and fees 65,000 22,500
Benefits and other fees - -
------------------------------------------- ------- ------
65,000 22,500
------------------------------------------- ------- ------
7. Income tax expense
2018 2017
The tax assessed for the period is different
from the standard rate of income tax, as GBP GBP
explained below:
Loss before tax on continuing operations (764,080) (280,812)
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.
2018 2017
Continuing operations:
------------------------------------------- ---------- ----------
Loss attributable to equity holders of the
Company (GBP) (764,080) (280,812)
Weighted average number of shares in issue
(Number) 93,644,402 49,859,810
Loss per share (pence) (0.82) (0.56)
------------------------------------------- ---------- ----------
9. Property, plant and equipment
Equipment Total
GBP GBP
Cost
At 1 January 2018 4,931 4,931
Additions 1,249 1,249
--------------------- --------- -------
At 31 December
2018 6,180 6,180
Depreciation
At 1 January 2018 (4,931) (4,931)
Charge for the
year (331) (331)
--------------------- --------- -------
At 31 December
2018 (5,262) (5,262)
Carrying amount
At 31 December
2018 918 918
--------------------- --------- -------
At 31 December
2017 - -
--------------------- --------- -------
10. Business combination
On 13 March 2018, the Company acquired 100% of the issued share
capital of Imaging Biometrics LLC ("Imaging Biometrics") for a
consideration of US$750,000.
In accordance with IFRS 3 'Business Combinations', this
transaction has been accounted for using the acquisition method of
accounting. The consolidated income statement for the year ended 31
December 2018 includes the results of Imaging Biometrics from 13
March 2018, the date of the acquisition. The assets and liabilities
of Imaging Biometrics have been consolidated from the date of the
acquisition using the fair value of their assets and liabilities at
that date.
10. Business combination (continued)
The recognised value of assets purchased were as follows.
GBP
Consideration - equity
instruments 543,823
Total consideration 543,823
Recognised amounts of identifiable assets acquired, and liabilities
assumed
Intellectual property and internally
generated software 480,339
Cash and cash equivalents 2,029
Trade and other receivables 29,736
Trade and other payables (86,928)
----------------------------------------------------------- -------------
Total identifiable net assets 425,176
Goodwill 118,647
----------------------------------------------------------- -------------
Total 543,823
----------------------------------------------------------- -------------
The excess of the consideration over the net assets is
classified as an intangible asset at acquisition.
The Directors conclude that the intangible asset comprises two
parts, namely goodwill and software intellectual property ("IP").
By completing the purchase, the group now has control over the IP
produced, Imaging Biometrics' expertise, as well as access to the
US medical market.
The revenue included in the consolidated income statement since
13 March 2018 contributed by Imaging Biometrics was GBP164,971.
Imaging Biometrics also reported a loss of GBP165,291 over the same
period.
11. Goodwill
Group GBP
Cost
At 1 January 2017 -
Recognised on acquisition of subsidiary 247,880
----------------------------------------------------------------- --------------------------
At 31 December 2017 247,880
------------------------------------------------------------- --------------------------
Reclassification to Intangible asset -
intellectual property, imaging and diagnostic
software (see Note 12) (165,253)
At 1 January 2018 (as restated) 82,627
------------------------------------------------------------- --------------------------
Recognised on acquisition of subsidiary
(see Note 10) 118,647
Net book value
------------------------------------------------ ---- ---- ----------------------------
At 31 December 2018 201,274
------------------------------------------------------------- ----------------------------
At 31 December 2017 (as
restated) 82,627
------------------------------------------------------------- ----------------------------
The goodwill arising on the purchase of Stone Checker and
Imaging Biometrics is not being amortised but will be 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).
12. Intangible assets - intellectual property, imaging and
diagnostic software
Group GBP
Cost
At 1 January 2017 -
Additions from internal development 46,716
----------------------------------------------------------- ----------------------
At 31 December 2017 46,716
------------------------------------------------------- ----------------------
Reclassification from Goodwill (see Note
11) 165,253
At 1 January 2018 (as restated) 211,969
------------------------------------------------------- ----------------------
Acquisition of a subsidiary (see Note
10) 480,340
Additions from internal development 62,147
At 31 December 2018 754,456
------------------------------------------------------- ------------------------
Accumulated Amortisation
At 1 January 2018 -
Charge for the year 33,187
At 31 December 2018 33,187
------------------------------------------------------- ------------------------
Net book value
At 31 December 2018 721,269
------------------------------------------------------- ------------------------
At 31 December 2017 (as
restated) 211,969
------------------------------------------------------- ------------------------
13. Investments
Shares in
Company group undertakings
GBP
Cost
At 1 January 2018 240,000
Acquisition of Imaging Biometrics
LLC (see Note 10) 543,823
-------------------------------------- -------------------------
At 31 December 2018 783,823
--------------------------------------- -------------------------
Net book value
At 31 December 2018 783,823
--------------------------------------- -------------------------
At 31 December 2017 240,000
--------------------------------------- -------------------------
At 31 December 2018, the Group consisted of a parent company,
IQ-AI Limited, registered in Jersey and its two wholly owned
subsidiaries:
Subsidiaries:
Stone Checker Software Limited
Registered Office: Norton Hall Cottage, The Street, Chilcompton,
Radstock, BA3 4HB 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. Investments (continued)
Imaging Biometrics LLC
Registered Office: 13406 Watertown Plank Road,
Elm Grove, WI 53122, United States
Nature of business: develops ready-to-use software applications
for the healthcare industry.
%
Class of share Holding
------------------------------------------------ ------------------
Ordinary shares 100
------------------------------------------------ ------------------
14. Trade and other receivables
Group Company
------------------------------- ---------------------------
2018 2017 2018 2017
GBP GBP GBP GBP
Amounts owed by group undertakings - - 434,461 101,000
Trade receivables 27,797 - - -
Other receivables 16,254 - - -
Prepayments 21,517 11,161 15,157 11,161
65,568 11,161 449,618 112,161
------------------------------------ ------- ---------------------- -------- -----------------
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 2018 (2017: none).
15. Trade and other payables
Group Company
------------------------------ ----------------------------
2018 2017 2018 2017
GBP GBP GBP GBP
Trade payables 11,768 31,346 - -
Social security and other
taxes - 918 - -
Loans 62,890 4,000 - -
Other creditors 6,976 - - -
Accruals and deferred income 167,352 53,578 106,448 47,305
Dividends payable 5,942 13,105 5,942 13,105
254,928 102,947 112,390 60,410
------------------------------ -------- -------------------- -------- ------------------
In the Directors' opinion, the carrying amount of payable is
considered a reasonable approximation of fair value.
16. Share capital
2018 2017 2018 2017
Number Number GBP GBP
Allotted, called up and
fully paid
Ordinary shares of 1p each 120,346,495 67,559,434 1,203,465 675,594
---------------------------- ------------ ----------- ---------- --------
120,346,495 67,559,434 1,203,465 675,594
---------------------------- ------------ ----------- ---------- --------
16. Share capital (continued)
The movement in share capital is detailed below:
Number of
shares issued
---------------------------------------------------------- ---------------
In March 2018, shares were issued to acquire the
whole of the issued share capital of Imaging Biometrics
LLC, at a price of 4p per ordinary share. 4,800,000
In July 2018, the Company raised GBP500,000, before
expenses, by issuing shares at a price of 2.5p per
share. The proceeds were used to provide working
capital to the enlarged Group and to assist Stone
Checker and Imaging Biometrics to continue developing
its products. 20,000,000
In July 2018, further shares were issued to satisfy
the remaining consideration shares due under the
Share Purchase Agreement between Imaging Biometrics
LLC and the Company, at a price of 2.5p per ordinary
share. 6,200,000
In July 2018, the Company issued shares in respect
of the conversion of GBP195,050 of Convertible Loan
Notes, plus accrued interest, at a price of 1.1p
per ordinary share. 21,787,061
---------------------------------------------------------- ---------------
17. 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.
Retained earnings: Represents accumulated comprehensive income
for the year and prior periods.
18. 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 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 (%) 523
Expected life in years 3
The total charge for the year relating to this scheme was
GBP10,877.
19. Convertible loan note reserve
2018 2017
GBP GBP
At the beginning of the year 368,933 410,350
Interest charge for the year 15,662 23,087
Loan notes converted (239,562) (64,504)
------------------------------ ---------- ---------
145,033 368,933
------------------------------ ---------- ---------
The above reserve was created on the issue 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.
On 11 March 2015, the Company raised GBP300,000 by the way of
the issue of unsecured CLNs. The CLNs are convertible into Ordinary
Shares at a price of 1.1p per Share. The CLNs accrue interest at a
rate of 6.75% against the balance outstanding. On 31 July 2018,
GBP281,250 of these notes were settled by the issue of ordinary
shares.
On 18 November 2015, the Company raised GBP100,000 by the way of
the issue of unsecured CLNs. The CLNs are convertible into Ordinary
Shares at a price of 1.5p per Share. The CLNs accrue interest at a
rate of 6.75% against the balance outstanding. These notes were due
to be repaid by 18 November 2018. However, the Holders of the CLNs
and the Company have agreed to extend the repayment date to 18
November 2020.
20. Warrant reserve
On 11 March 2015, the Company issued warrants to Peterhouse
Capital Limited exercisable at 1.1p per Unit anytime during the
three years from the date of issue. The warrant was exercisable
over 3% of the Company's fully enlarged unit capital from time to
time.
The remaining warrants issued were exercised in 2017.
The total expense recognised in the income statement for the
year ended 31 December 2018 in respect of the warrants issued was
GBPnil (2017: GBPnil).
2018 2018 2017 2017
Weighted Weighted
average average
exercise exercise
price price
(pence) Number (pence) Number
------------------------------- ----------- -------- ---------- ------------
Outstanding at the beginning
of the year - - 1.1 842,212
Expired during the year - - - -
Granted during the year - - 1.1 1,930,501
Exercised during the year - - 1.1 (2,772,713)
------------------------------- ----------- -------- ---------- ------------
Outstanding at the end of the
year - - - -
------------------------------- ----------- -------- ---------- ------------
21. 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.
22. 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 2018. The Group considers
its maximum exposure to be:
2018 2017
GBP GBP
Financial instrument
Cash and cash equivalents 28,783 386,954
Loans and receivables, net of impairment 62,890 6,000
----------------------------------------- ------ -------
91,673 392,954
----------------------------------------- ------ -------
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.
22. Financial instruments (continued)
(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 2018 GBP GBP GBP GBP GBP GBP
Non-derivative financial
liabilities
Trade and other payables 225,047 - 225,047 - - -
Borrowings - - - - - -
225,047 - 225,047 - - -
1 to
Carrying Contractual 6 months 6 to 12 2 2 to 5
Amount cash flows or less months years years
31 December 2017 GBP GBP GBP GBP GBP GBP
Non-derivative financial
liabilities
Trade and other payables 95,000 - 95,000 - - -
Borrowings - - - - - -
95,000 - 95,000 - - -
------------------------- -------- ----------- -------- ------- ----- ------
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 2018, the net foreign liabilities were GBP300,728
(2017: GBPnil). 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.
22. Financial instruments (continued)
Fair value of financial assets and liabilities
Book value Fair value Book value Fair value
2018 2018 2017 2017
GBP GBP GBP GBP
Financial assets
Cash and cash equivalents 28,783 28,783 386,954 386,954
Loans and receivables, net
of impairment 62,890 62,890 6,000 6,000
Total at amortised cost 91,673 91,673 392,954 392,954
Financial liabilities
Trade and other payables 162,157 162,157 112,000 112,000
Borrowings and provisions - - - -
Total at amortised cost 162,157 162,157 112,000 112,000
---------------------------- ---------- ---------- ---------- ----------
23. Related party transactions
During the year the Company was charged GBP60,000 (2017:
GBP51,250) by Peterhouse Capital Limited ("Peterhouse") for the
provision of corporate advisory services. The Company is connected
to Peterhouse in that both Trevor Brown and Qu Li were both
directors and shareholders of Peterhouse during the year.
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 GBP30,000 (2017:
GBP15,342) in respect of services provided by Dr Li. The balance
outstanding at year end was GBP3,468 (2017: GBP15,000).
During 2017, the Company acquired the whole of the issued share
capital of Stone Checker Software Limited, a company in which Free
Association Books Limited ("FAB"), in which Trevor Brown was also a
Director during the period and is interested in 100 per cent of the
shares by way of his immediate family, owned 50% of the issued
shares. As a result of the acquisition, 4,000,000 ordinary shares
in the Company were issued to FAB at a price of 3p in consideration
for its shares held in Stone Checker.
At the year end, FAB held GBP100,000 (2017: GBP100,000) of
Convertible Loan Notes plus accrued interest (note 18).
At the year end, T Brown held Convertible Loan Notes totalling
GBP88,800 (2017: GBP71,926) plus accrued interest.
24. Events after the reporting period
In March 2019, the Company issued GBP268,500 in nominal amounts
of 6% unsecured convertible loan notes, convertible into 13,425,000
ordinary shares of 0.1p each in the Company ("Ordinary Shares") at
a price of 2 pence per share ("CLNs"). The funds raised as a result
of the issue of the CLNs will be used to provide additional working
capital for the Company.
25. Prior year adjustment
As permitted by IFRS 3 "Business Combinations", the Directors
have in 2018 assessed the amounts recognised on acquisition of
Stone Checker during the measurement period of one year from the
acquisition date of June 2017. Following that assessment, the
Directors have concluded that an amount totalling GBP165,253
represents a separately identifiable intangible asset comprising
imaging and diagnostic software. The amount was previously included
within goodwill.
As disclosed in Notes 11 and 12, the comparative financial
statements for the year ended 31 December 2017 have been restated.
The restatement has no effect on the loss after tax, earnings per
share, net assets or cash and cash equivalents for the 2017 period
and as at 31 December 2017.
DIRECTORS: Trevor Brown (Chief Executive
Officer)
Dr Qu Li (Non-Executive Chairman)
Vinod Kaushal (Non-Executive
Director)
SECRETARY: Donald Reid
c/o Anglo Saxon Trust
Forum 4
Grenville Street
St Helier
Jersey
Channel Islands
JE4 8TQ
REGISTERED OFFICE: P. O. Box 264
Forum 4
Grenville Street
St Helier
Jersey
Channel Islands
JE4 8TQ
COMPANY REGISTRATION NUMBER: 2044
REGISTRAR AND TRANSFER OFFICE: Share Registrars Limited
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
INDEPENDENT AUDITORS: PKF Littlejohn LLP
Statutory Auditor
1 Westferry Circus
Canary Wharf
London
E14 4HD
FINANCIAL ADVISER AND CORPORATE Peterhouse Capital Limited
BROKER: New Liverpool House
15 Eldon Street
London
EC2M 7LD
BANKERS: Barclays Bank
39/41 Broad Street
St. Helier
JERSEY
JE4 8PU
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR CKKDQKBKDDQN
(END) Dow Jones Newswires
April 30, 2019 07:00 ET (11:00 GMT)
Iq-ai (LSE:IQAI)
Historical Stock Chart
From Oct 2024 to Nov 2024
Iq-ai (LSE:IQAI)
Historical Stock Chart
From Nov 2023 to Nov 2024
