TIDMIQAI
RNS Number : 4335V
IQ-AI Limited
07 August 2020
7 August 2020
IQ-AI Limited (the "Company" or the "Group")
Half Yearly Report for the Period Ended 30 June 2020
Chief Executive's Statement
I am pleased to announce IQ-AI Limited's unaudited financial
results for the six months ended 30 June 2020.
Highlights
-- IB CAD(TM) - Detecting the Undetectable
-- IB Stroke(TM)
-- Gad-Free Imaging
-- Awarded a five-year NIH grant in collaboration with Barrow Neurological institute
-- Teleradiology and expanding distribution
-- Revenue impacted by the Covid-19 Pandemic though recovery expected over the rest of the year
-- Maintained critical development momentum on current FDA cleared/CE marked products
For further information, please contact:
IQ-AI Limited
Trevor Brown/Dr Qu Li/Mr Vinod
Kaushal 0207 469 0930
Peterhouse Capital Limited
Lucy Williams/Heena Karani 0207 220 9797
Overview
Whilst the unprecedented shock of the Covid-19 pandemic has
understandably preoccupied and distracted our partners and
customers, treatment priorities are now beginning to return to
normal. Throughout the crisis the IB team have continued to develop
and pursue our ambition to be a world leader in neuro oncological
imaging.
Setting new standards in imaging technologies
IB CAD(TM) - Detecting the Undetectable
IB CAD is a unique Artificial Intelligence (AI) based solution
that aims to identify areas of cancer cells that current imaging
techniques cannot identify. CAD, which stands for "computer aided
detection", will leverage commonly acquired MRI data to
essentially, "detect the undetectable", by identifying where
infiltrating tumour cells are located. Knowing where residual
tumour cells exists has the potential to aide surgical resection,
direct the most appropriate treatment, help plan radiotherapy, and
monitor response to treatment. Thus, IB CAD has the potential to
disrupt current clinical paradigms at every stage of treatment,
ultimately helping brain tumour patients.
IB Stroke(TM)
The US Centre for Disease Control (CDC) reports that almost
800,000 people have a stroke each year, and it is one of the
leading causes of serious long-term disability. On target for
release in early Q4, IB Stroke provides an initial entry point to
this highly prevalent medical ailment. A key differentiator for IB
Stroke resides in the core Imaging Biometrics' ("IB") algorithms
that will be used to generate output commonly used for stroke
assessment. Specifically, the ability to automatically quantify
blood volume and other perfusion parameters is unique to IB. The
initial launch of IB Stroke will be within an IB Rad Tech workflow,
which is already installed at leading neurological centres. These
centres will be offered the opportunity to evaluate release
candidates in Q3 to ensure a smooth and successful launch of the
initial version.
Gad-Free Imaging
Another disruptive technology under development by the Company
is the ability to generate a contrast-free MRl image that is
equivalent to one acquired with contrast. AI networks have been
created and are being trained using only anatomical and functional
images free of any exogenous contrast material. The ability to
completely eliminate the administration of contrast material has
significant benefits on multiple levels. Along with substantial
financial savings that can be realised, the on-going concerns about
the long-term effects of gadolinium deposition throughout the body
can be avoided.
Awarded a five-year NIH grant in collaboration with Barrow
Neurological institute
During the review period, IQ-AI's subsidiary IB received a
five-year, $2.57 million, NIH grant award in collaboration with The
Barrow Neurological Institute (BNI), the Mayo Clinic in Arizona,
and the Medical College of Wisconsin (MCW). The scope of this grant
further builds upon IB's world-leading position in quantitative
assessment of brain tumour treatment. The NIH-funded effort also
includes a plan to harmonise MRI data acquisition across vendor
platforms including GE, Siemens, and Philips Medical. The Principal
Investigator, Chad Quarles, PhD, Professor and Chair of the
Division of Neuroimaging Research at BNI, is a current user of IB
Software and has a longstanding relationship with IB. This award
follows the previously announced five-year, $2.8 million award IB
received in late 2019. Together, these grants provide long-term
funding to execute the respective goals and, at current staffing
levels, subsidise over 60% of IB's development costs. Additional
grants have been submitted to the NIH and are due to be reviewed in
the second half of 2020. IB intends to remain active in submitting
grants to help fuel the translation of technologies deemed
innovative and impactful by the scientific community.
Teleradiology and Expanding Distribution
Since the inception of IQ-AI's subsidiary, Imaging
Biometrics(TM), LLC ("IB, the foundational architectural design
strategy of the products has been to build them as platform
independent plugins. Steadfast in this approach, IB has
successfully translated advanced technologies into portable
clinical solutions that readily extend the base functionality of
established workstations, medical viewing stations, PACS, and
servers. A logical application of the platform-independent design
of IB's products is in telehealth. With the onset of Covid-19,
healthcare providers had to find new ways to stay connected with
patients and administer care. The field of telehealth is exploding
and is, for all intents and purposes, and untapped market. During
the review period, three licenses of IB Neuro were deployed
specifically in teleradiology application. While IB's current
products readily lend themselves as natural value-add extensions to
established teleradiology platforms, the Company is exploring more
direct applications and platforms in the rapidly emerging
telehealth space.
In addition, IB entered into a new and enhanced partnership with
CorTechs Labs "CorTechs". CorTechs is a privately held company
which specialises in providing software to neuroradiologists to
monitor neuro degenerative diseases like Alzheimer's. In 2019, the
Company entered into a reseller agreement. As this relationship
matured, both companies recognised the complementary and natural
fit of IB products within the CorTechs platform. Thus, during the
review period, the IB product line was embedded within the CorTechs
application and now offers existing and new clients the distinct
advantage of immediate accessibility to IB products in a
streamlined and seamless workflow.
More recently, the IB product portfolio was made accessible via
the Arterys AI marketplace. Arterys is an international company
that offers a leading web-based (cloud), AI-powered platform on
which the entire IB product line is available for trial or
purchase. Training on the technology and clinical application for
US sales and marketing teams was recently completed, and Arterys
has started presenting IB solutions to prospective clients.
Actively Marketed the Sale of StoneChecker Software.
Post period end, the Company took a major step towards divesting
of its StoneChecker software by signing a Letter of Intent (LOI)
with a major international company interested in purchasing it, and
due diligence has commenced. This milestone represents the next
phase in the sales process which, if successful, will result in a
cash consideration plus ongoing royalty on future sales. The
ongoing royalty component offers IQ-AI a new potential revenue
stream whilst maintaining an open door for future collaborative
opportunities with this global medical group.
Maintained critical development momentum on current FDA
cleared/CE marked products
Despite the global economic challenges brought forth by the
Covid-19 pandemic, the Company maintained its momentum on
furthering its position as a leader in neuro imaging. Most notable
is the AI development work underway to fully automate the
processing and display of IB's quantitative biomarkers for brain
tumour assessment. In addition, the collaborative and longstanding
relationships with research labs at leading academic research
hospitals ensure a steady stream of innovative ideas and
enhancements. Integral to driving organic growth, IB Neuro(TM)
earned recognition as the recommended consensus standard for
dynamic susceptibility contrast (DSC) imaging. This announcement,
made by a team of distinguished researchers from multiple
institutions, was part of the Jumpstarting Brain Tumour Drug
Development Coalition. As published in Neuro Oncology, the findings
provide evidence-based best practices for the routine clinical use
for both acquiring and processing DSC data. IB Neuro's proprietary
and quantitative DSC approach has set the standard for the most
common perfusion technology used in the evaluation of brain tumour
patients.
Outlook
The Company has entered an exciting phase in its development,
and we look forward to updating shareholders as events unfold .
Trevor Brown
Chief Executive
Results for the 2020 interim financial period
A summary of the key financial results is set out in the table
below:
30 June 2020
GBP
-------------------------------------------------- -------------
Revenue 116,842
-------------------------------------------------- -------------
Gross Profit 112,161
-------------------------------------------------- -------------
Operating expenses (459,105)
-------------------------------------------------- -------------
Finance costs (16,585)
-------------------------------------------------- -------------
Loss for the period from discontinued operations (3,676)
-------------------------------------------------- -------------
Loss for the period (367,205)
-------------------------------------------------- -------------
Interest
The net interest cost for the Group for the period was GBP16,585
(2019: GBP10,274).
Loss before tax
Loss before tax for the period was GBP367,205 (2019:
GBP141,271).
Taxation
Taxation charge was GBPnil for the period (2019: GBPnil).
Earnings per share
Basic and diluted earnings per share for the period were 0.25p
loss (2019: 0.12p loss).
Financial position
The Group's balance sheet as at 30 June 2020 can be summarised
as set out in the table below:
Net assets
GBP'm
GBP
----------------------------- -----------
Non-current assets 545,175
----------------------------- -----------
Net current assets 799,870
Net assets and total equity 1,345,045
----------------------------- -----------
Cash flow
Net cash outflow for the period was GBP254,512 (2019: GBP210,299
inflow).
The net inflow in the prior year was due to the proceeds raised
on the convertible loan notes issued.
Consolidated Income Statement
For the six months ended 30 June 2020
Half year ended (Audited) Full year ended Half year
ended
30 Jun 2020 31 Dec 2019 30 Jun 2019
GBP GBP GBP
Continuing operations
Revenue 116,842 267,868 142,375
Cost of sales (4,681) (4,361) (1,843)
---------------------------------------------------------- ---------------- -------------------------- ------------
Gross profit 112,161 263,507 140,532
Administrative expenses (460,165) (859,171) (278,378)
Other income 1,060 7,572 6,399
---------------------------------------------------------- ---------------- -------------------------- ------------
Operating loss (346,944) (588,092) (131,447)
Finance costs (16,585) (28,975) (10,274)
Loss before income tax (363,529) (617,067) (141,721)
Income tax - - -
Loss for the year from continuing operations (363,529) (617,067) (141,721)
Discontinued operations
Loss for the period from discontinued operations (3,676) (21,587) -
Loss for the year attributable to owners of the Company (367,205) (638,654) (141,721)
Earnings per share attributable to owners of the Company
From continuing operations:
Basic & diluted (pence per share) (0.25) (0.48) (0.12)
From discontinued operations:
Basic & diluted (pence per share) (0.00) (0.02) -
Total earnings per share (pence per share) (0.25) (0.50) -
Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2020
Half year (Audited) Full year ended Half year
ended ended
30 Jun 2020 31 Dec 2019 30 Jun 2019
GBP GBP GBP
----------------------------------------------------------------- ----------- ------------------------- -----------
Loss for the period (367,205) (638,654) (141,721)
----------------------------------------------------------------- ----------- ------------------------- -----------
Other comprehensive income
----------------------------------------------------------------- ----------- ------------------------- -----------
Items that may be subsequently reclassified as profit or loss
Exchange differences on translation of foreign operations (3,204) 2,162 (1,549)
----------------------------------------------------------------- ----------- ------------------------- -----------
Total comprehensive loss for the year attributable to the owners
of the Company (370,409) (636,492) (143,270)
----------------------------------------------------------------- ----------- ------------------------- -----------
Total comprehensive loss for year arises from:
Continuing operations (366,733) (614,905) -
Discontinuing operations (3,676) (21,587) -
----------------------------------------------------------------- ----------- ------------------------- -----------
(370,409) (636,492) -
----------------------------------------------------------------- ----------- ------------------------- -----------
Consolidated Balance Sheet
As at 30 June 2020
(Audited)
30 Jun 2020 31 Dec 2019 30 Jun 2019
GBP GBP GBP
Non-current assets
------------------------------------------------------------------------- ------------- ------------- -------------
Property, plant and equipment 2,834 2,710 5,058
Goodwill 134,145 128,296 201,274
Intangible assets 408,196 439,100 721,269
------------------------------------------------------------------------- ------------- ------------- -------------
Total non-current assets 545,175 570,106 927,601
------------------------------------------------------------------------- ------------- ------------- -------------
Current assets
------------------------------------------------------------------------- ------------- ------------- -------------
Trade and other receivables 41,757 28,030 308,185
Cash 611,363 865,875 237,533
Assets classified as held for sale 404,348 404,504 -
------------------------------------------------------------------------- ------------- ------------- -------------
Total current assets 1,057,468 1,298,409 545,718
Current liabilities
------------------------------------------------------------------------- ------------- ------------- -------------
Trade and other payables 248,650 199,918 114,588
Liabilities directly associated with assets classified as held for sale 8,948 8,948 -
Total current liabilities 257,598 208,866 114,588
Net current assets 799,870 1,089,543 431,130
------------------------------------------------------------------------- ------------- ------------- -------------
NET ASSETS 1,345,045 1,659,649 1,358,731
Equity
Share capital 1,459,560 1,398,310 1,274,894
Share premium 19,835,759 19,812,071 19,159,037
Capital redemption reserve 23,616 23,616 23,616
Merger reserve 160,000 160,000 160,000
Convertible loan note reserve 626,092 668,278 673,711
Share based payment reserve 50,035 36,982 16,316
Foreign currency reserve 7,280 10,484 6,773
Retained losses (20,817,297) (20,450,092) (19,955,616)
------------------------------------------------------------------------- ------------- ------------- -------------
Equity attributable to owners of the Company 1,345,045 1,659,649 1,358,731
TOTAL EQUITY 1,345,045 1,659,649 1,358,731
------------------------------------------------------------------------- ------------- ------------- -------------
Consolidated statement of changes in equity
For the six months ended 30 June 2020
Share Share Capital Merger Convertible Share Foreign Retained TOTAL
Capital premium redemption reserve loan note based currency losses EQUITY
reserve reserve payment reserve
reserve
GBP GBP GBP GBP GBP GBP GBP GBP GBP
-------------- --------- ---------- ---------- -------- ----------- -------- --------- ------------ ---------
Balance at 1
January 2019 1,203,465 19,025,466 23,616 160,000 145,033 10,877 8,322 (19,813,895) 762,884
-------------- --------- ---------- ---------- -------- ----------- -------- --------- ------------ ---------
Loss for the
year - - - - - - - (638,654) (638,654)
Exchange
differences
on
translation
of foreign
operations - - - - - - 2,162 - 2,162
-------------- --------- ---------- ---------- -------- ----------- -------- --------- ------------ ---------
Total
comprehensive
loss for the
year - - - - - - 2,162 (638,654) (636,492)
-------------- --------- ---------- ---------- -------- ----------- -------- --------- ------------ ---------
Shares issued 194,845 854,385 - - - - - - 1,049,230
Cost of shares
issued - (67,780) - - - - - - (67,780)
Unclaimed
dividends - - - - - - - 2,457 2,457
Share based
payments - - - - - 26,105 - - 26,105
Movement in
the year - - - - 523,245 - - - 523,245
Balance at 31
December 2019 1,398,310 19,812,071 23,616 160,000 668,278 36,982 10,484 (20,450,092) 1,659,649
-------------- --------- ---------- ---------- -------- ----------- -------- --------- ------------ ---------
Loss for the
period - - - - - - - (367,205) (367,205)
Exchange
differences
on
translation
of foreign
operations - - - - - - (3,204) - (3,204)
-------------- --------- ---------- ---------- -------- ----------- -------- --------- ------------ ---------
Total
comprehensive
loss for the
period - - - - - - (3,204) (367,205) (370,409)
-------------- --------- ---------- ---------- -------- ----------- -------- --------- ------------ ---------
Shares issued 61,250 23,688 - - - - - - 84,938
Share based
payments - - - - - 13,053 - - 13,053
Movement in
the period - - - - (42,186) - - - (42,186)
-------------- --------- ---------- ---------- -------- ----------- -------- --------- ------------ ---------
Balance at 30
June 2020 1,459,560 19,835,759 23,616 160,000 626,092 50,035 7,280 (20,817,297) 1,345,045
-------------- --------- ---------- ---------- -------- ----------- -------- --------- ------------ ---------
Consolidated Cash Flow Statement
For the six months ended 30 June 2019
Half year (Audited) Half year
ended Full year ended
30 Jun 2020 ended 30 Jun 2019
31 Dec 2019
GBP GBP GBP
-------------------------------------- ------------ ------------ -------------
Cash flows from operating activities:
Operating loss (367,205) (638,654) (141,721)
Adjustment for:
Depreciation and amortisation 55,220 110,991 -
Share based payment expense 13,053 26,105 5,439
Foreign exchange loss - (5,580) -
Decrease/(increase) in receivables (13,727) 37,538 (242,617)
Increase/(decrease) in payables 48,732 (55,010) (140,340)
Net finance expenditure - - 10,274
Net cash used in operating activities (263,927) (524,610) (508,965)
-------------------------------------- ------------ ------------ -------------
Cash flows from investing activities
Purchase of subsidiaries - (4,065) -
Purchase of intangible assets - (112,115) -
Purchase of PPE - - (4,236)
Net cash used in investing activities - (116,180) (4,236)
-------------------------------------- ------------ ------------ -------------
Cash flows from financing activities
Shares issued 84,938 1,049,230 250,000
Cost of shares issued - (67,780) (45,000)
Less shares issued arising from
convertible loan notes (58,938)
Interest cost (16,585) (28,975) -
Proceeds from convertible loan
notes issued - 523,245 518,500
Net cash from financing activities 9,415 1,475,720 723,500
-------------------------------------- ------------ ------------ -------------
Net increase/(decrease) in cash
and cash equivalents (254,512) 834,930 210,299
-------------------------------------- ------------ ------------ -------------
Cash and cash equivalents brought
forward 865,875 28,783 28,783
Effects of exchange rate changes
on cash and cash equivalents - 2,162 (1,549)
-------------------------------------- ------------ ------------ -------------
Cash and cash equivalents carried
forward 611,363 865,875 237,533
-------------------------------------- ------------ ------------ -------------
Summary of significant accounting policies
IQ-AI Limited (the "Company") is a limited liability company
incorporated and domiciled in Jersey.
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, as modified for the assets held for sale measured
at fair value less costs to sell.
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 under the heading 'Critical accounting estimates and
judgements' below.
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 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 and Company
The Group and Company have applied the following new and amended
standards for the first time for its annual reporting period
commencing 1 January 2019:
-- IFRS 16 Leases
-- Annual improvements to IFRS Standards 2015-2017 Cycle
-- Interpretation 23 'Uncertainty over Income Tax Treatments'
These new and amended standards have not had a material effect
on the Group and Company financial statements.
New standards, amendments 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.
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.
Intangible Assets - Intellectual property and internally
generated software
Separately acquired intellectual property is shown at historic
cost. Intellectual property acquired in a business combination is
recognised at fair value at the acquisition date. Amortisation is
calculated using the straight-line method over the estimated useful
life of up to 5 years.
Development costs that are directly attributable to the design
and testing of identifiable and unique software products controlled
by the Group are recognised as intangible assets when the following
criteria are met:
-- it is technically feasible to complete the software product
so that it will be available for use;
-- management intends to complete the software product and use or sell it;
-- there is an ability to use or sell the software product;
-- it can be demonstrated how the software product will generate
probable future economic benefits;
-- adequate technical, financial and other resources to complete
the development and use or sell the software product are available;
and
-- the expenditure attributable to the software product during
its development can be reliably measured.
Directly attributable costs that are capitalised as part of the
software product include the software development employee costs
and an appropriate portion of relevant overheads.
Other development expenditure that does not meet these criteria
is recognised as an expense as incurred.
Development costs previously recognised as an expense are not
recognised as an asset in a subsequent period.
Software development costs recognised as assets are amortised
over their estimated useful lives, which do not exceed 5 years.
Amortisation commences when regulatory approval is obtained, and
the product is commercially available.
Impairment of Non-Financial Assets
Intangible assets that have an indefinite useful life or
intangible assets not ready to use are not subject to amortisation
and are tested annually for impairment. Assets that are subject to
amortisation are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less
costs of disposal and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are largely independent cash inflows (cash-generating units). Prior
impairments of non-financial assets (other than goodwill) are
reviewed for possible reversal at each reporting date.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets
The Group classifies its financial assets in the following
categories financial assets as "at fair value through profit and
loss" and "loans and receivables". The classification depends on
the nature and purpose of the financial assets and is determined at
the time of initial recognition. Management determines the
classification of its financial assets at initial recognition.
Loans and receivables
Trade receivables are amounts due from customers for merchandise
sold or services performed in the ordinary course of business.
Trade receivables are held with the objective of collecting the
contractual cash flows. If collection is expected in one year or
less (or in the normal operating cycle of the business if longer),
they are classified as current assets. If not, they are presented
as non-current assets.
Trade receivables are recognised initially at fair value, and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment. The Group applies
the IFRS 9 simplified approach to measuring expected credit losses
which uses a lifetime expected loss allowance for all trade
receivables and contract assets.
Due to the short-term nature of the other current receivables,
their carrying amount is considered to be the same as their fair
value.
A financial asset is assessed at each reporting date to
determine whether there is any evidence that it is impaired. A
financial asset is considered impaired if objective evidence
indicates that one or more events have had a negative effect on the
estimated future cash flows of that asset. Individual significant
financial assets are tested for impairment on an individual basis.
The remaining financial assets are assessed collectively in groups
that share similar credit risk characteristics. All impairment
losses are recognised in the consolidated income statement.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at
call with banks and other short-term highly liquid investments with
maturities of three months or less. In the consolidated Statement
of Financial Position, bank overdrafts are shown within borrowings
in current liabilities.
Financial liabilities and equity instruments issued by the
group
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Group after deducting all of
its liabilities. Equity instruments issued by the Group are
recorded at the proceeds received, net of direct issued costs.
Non-Current Assets (or Disposal Groups) Held-for-Sale and
discontinued operations
Non-current assets (or disposal groups) are classified as assets
held for sale when their carrying amount is to be recovered
principally through a sale transaction and a sale is considered
highly probable. They are stated at the lower of carrying amount
and fair value less costs to sell. A discontinued operation is a
component of the Group that is classified as held for sale and that
represents a separate line of business or geographical area of
operations. The results of discontinued operations are presented
separately in the Consolidated Income Statement.
Convertible loan notes
The convertible loan note ("CLN") is a compound financial
instrument that can be converted to share capital at the option of
the holder. As the CLN, and the accrued interest, can only be
repaid by the issue of shares, it has been recognised in equity
only, with no liability component. Interest is accounted for on an
accruals basis and charged to the Consolidated Income Statement and
added to the carrying amount of the equity component of the
CLN.
Trade and other payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they are
presented as non-current liabilities.
Trade and other payables are recognised initially at fair value,
and subsequently measured at amortised cost using the effective
interest method. The carrying amounts of trade and other payables
are considered to be the same as their fair values.
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of ordinary shares and share
options are recognised as a deduction from equity, net of any tax
effects, from the proceeds.
Share-Based Payments
The Company operates an equity-settled, share-based compensation
plan, under which the entity receives services from employees as
consideration for equity instruments (options) of the Company. The
fair value of the employee services received in exchange for the
grant of the options is recognised as an expense. The total amount
to be expensed is determined by reference to the fair value of the
options granted:
-- including any market performance conditions (for example, an entity's share price);
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability or sales
growth targets, or remaining an employee of the entity over a
specified time period); and
-- including the impact of any non-vesting conditions (for
example, the requirement for employees to save or holding shares
for a specific period of time).
At the end of each reporting period, the group revises its
estimates of the number of options that are expected to vest based
on the non-market vesting conditions and service conditions. It
recognises the impact of the revision to original estimates, if
any, in the income statement, with a corresponding adjustment to
equity.
In addition, in some circumstances employees may provide
services in advance of the grant date and therefore the grant date
fair value is estimated for the purposes of recognising the expense
during the period between service commencement period and grant
date.
When the options are exercised, the company issues new shares.
The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium.
The grant by the Company of options over its equity instruments
to the employees of subsidiary undertakings in the Group is treated
as a capital contribution. The fair value of employee services
received, measured by reference to the grant date fair value, is
recognised over the vesting period as an increase in investment in
subsidiary undertakings, with a corresponding credit to equity in
the parent entity accounts.
The social security contributions payable in connection with the
grant of the share options is considered an integral part of the
grant itself, and the charge will be treated as a cash-settled
transaction.
Revenue recognition
The group derives revenue from the transfer of goods and
services at a point in time and over time. Revenue from external
customers arise on the sales of software licences, including
associated maintenance, and consultancy services.
Revenue from licence sales is measured at the agreed transaction
price at a point in time. A receivable is recognised when access to
the software is granted, since this is the point in time that the
consideration is unconditional because only the passage of time is
required before the payment is due. Support and maintenance
services are provided on the product supplied; this is deemed to be
a separately identifiable product and is recognised over time.
Revenue from consulting services are recognised in the accounting
period in which the services are rendered.
Taxation
The Company is registered in Jersey, Channel Islands and is
taxed at the Jersey Company standard rate of 0%. However, the
Company's subsidiaries are situated in jurisdictions where taxation
may become applicable to local operations.
The major components of income tax on profit or loss include
current and deferred tax.
The tax currently payable is based on the taxable profit for the
period using the tax rates that have been enacted or substantially
enacted by the balance sheet date. Taxable profit differs from the
net profit as reported in the income statement because it excludes
items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or
deductible.
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the Group financial
statements. Deferred tax is determined using tax rates that have
been enacted or substantially enacted at the balance sheet date and
are expected to apply when the related deferred income tax asset is
realised of the deferred tax liability is settled.
Deferred tax assets are only recognised to the extent that it is
probable that future taxable profit will be available against which
the asset can be utilised. Deferred tax is charged or credited in
the income statement, except when it relates to items charged or
credited to equity, in which case the deferred tax is also dealt
with in equity.
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
Critical Accounting Estimates and Assumptions
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year are discussed below.
Fair value measurement
Management uses valuation techniques to determine the fair value
of assets held for sale. This involves developing estimates and
assumptions consistent with how market participants would price the
instrument. Management bases its assumptions on best observable
data available as far as possible. Estimated fair values may vary
from the actual prices that would be achieved in an arm's length
transaction at the reporting date.
Critical judgments in applying the entity's accounting
policies
The following are the critical judgements that the Directors
have made in the process of applying the Group's accounting
policies and that have the most significant effect on the amounts
recognised in the financial statements.
Capitalisation of internally developed software
Distinguishing the research and development phases of the
software suites and determining whether the recognition
requirements for the capitalisation of development costs are met
requires judgement. After capitalisation, management monitors
whether the recognition requirements continue to be met and whether
there are any indicators that capitalised costs may be
impaired.
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.
Audited
Half year Full year Half year
ended ended ended
30 Jun 2020 31 Dec 2019 30 Jun 2019
------------------------------------------ ----------- ----------- -----------
Loss attributable to equity holders
of the Company (GBP) (363,529) (617,067) (141,721)
Loss from discontinued operation
attributable to equity holders
of the parent (GBP) (3,676) (21,587) -
Weighted average number of shares
in issue (number) 144,898,662 128,197,043 120,543,811
Loss per share (pence)
-From continuing operations (0.25) (0.48) (0.12)
-From discontinued operations (0.00) (0.02) -
------------------------------------------ ----------- ----------- -----------
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
IR EAFPKESEEEAA
(END) Dow Jones Newswires
August 07, 2020 02:00 ET (06:00 GMT)
Iq-ai (LSE:IQAI)
Historical Stock Chart
From Apr 2024 to May 2024
Iq-ai (LSE:IQAI)
Historical Stock Chart
From May 2023 to May 2024