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Registration number: 10651273

ARC Aerosystems Limited

Annual Report and Unaudited Financial Statements

for the Year Ended 31 March 2023

image-name
 

ARC Aerosystems Limited

Contents

Company Information

1

Director's Report

2

Accountants' Report

3

Profit and Loss Account

4

Balance Sheet

5 to 6

Statement of Changes in Equity

7

Notes to the Unaudited Financial Statements

8 to 15

 

ARC Aerosystems Limited

Company Information

Director

Dr SM Mohseni

Registered office

Suite 6
Trent House
Cranfield Technology Park
Cranfield
Bedfordshire
MK43 0AN

Accountants

Michael J Emery & Co Limited
Chartered Accountants
22 St John Street
Newport Pagnell
Buckinghamshire
MK16 8HJ

 

ARC Aerosystems Limited

Director's Report for the Year Ended 31 March 2023

The director presents his report and the financial statements for the year ended 31 March 2023.

Director of the company

The director who held office during the year was as follows:

Dr SM Mohseni

Principal activity

The principal activity of the company is the design and engineering of electronic and hybrid powered air transportation.

During the 2022-2023 financial year ARC Aerosystems has been involved in various research and development projects focussed on designing ARC’s hybrid electric vertical take off and landing technologies. Different feasibility studies on market viability, demand analysis tools, technical viability and modernisation of existing designs as well as development of new solutions were covered. ARC has worked in areas of fully electric and hybrid electric propulsion systems and new configuration of new aircraft types. This includes building and testing various prototypes. ARC has completed concept design cycles of 4 vertical take off and landing aircraft types, and has progressed to TRL 5 with 3 of them.

The balance sheet contains capitalised development costs of £8,225,000. These relate to the intellectual property associated with the aircraft technology that has been internally developed by the company. The director is satisfied that the development costs meet the criteria for capitalisation laid down in FRS 102, as various stages of the development project have been completed resulting in fully functioning prototypes. However, the director does not consider that the intangible asset will be ready for its intended use until the entire project is completed, and therefore the development costs are not yet being amortised.

Small companies provision statement

This report has been prepared in accordance with the special provisions relating to companies subject to the small companies regime within Part 15 of the Companies Act 2006.

Approved and authorised by the director on 3 August 2023
 

.........................................
Dr SM Mohseni
Director

 

Chartered Accountants' Report to the Director on the Preparation of the Unaudited Statutory Accounts of
ARC Aerosystems Limited
for the Year Ended 31 March 2023

In order to assist you to fulfil your duties under the Companies Act 2006, we have prepared for your approval the accounts of ARC Aerosystems Limited for the year ended 31 March 2023 as set out on pages 4 to 15 from the company's accounting records and from information and explanations you have given us.

As a practising member firm of the Institute of Chartered Accountants in England and Wales (ICAEW), we are subject to its ethical and other professional requirements which are detailed at
http://www.icaew.com/regulation.

This report is made solely to the Board of Directors of ARC Aerosystems Limited, as a body, in accordance with the terms of our instructions. Our work has been undertaken solely to prepare for your approval the accounts of ARC Aerosystems Limited and state those matters that we have agreed to state to the Board of Directors of ARC Aerosystems Limited, as a body, in this report in accordance with ICAEW Technical Release 07/16 AAF. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than ARC Aerosystems Limited and its Board of Directors as a body for our work or for this report.

It is your duty to ensure that ARC Aerosystems Limited has kept adequate accounting records and to prepare statutory accounts that give a true and fair view of the assets, liabilities, financial position and loss of ARC Aerosystems Limited. You consider that ARC Aerosystems Limited is exempt from the statutory audit requirement for the year.

We have not been instructed to carry out an audit or a review of the accounts of ARC Aerosystems Limited. For this reason, we have not verified the accuracy or completeness of the accounting records or information and explanations you have given to us and we do not, therefore, express any opinion on the statutory accounts.

......................................

Michael J Emery & Co Limited
Chartered Accountants
22 St John Street
Newport Pagnell
Buckinghamshire
MK16 8HJ

Date:.............................

 

ARC Aerosystems Limited

Profit and Loss Account for the Year Ended 31 March 2023

Note

2023
£

2022
£

Turnover

 

668,999

-

Administrative expenses

 

1,879,413

1,986,092

Other operating income

 

-

306,970

Operating loss

 

(1,210,414)

(1,679,122)

Other interest receivable and similar income

 

1,935

591

Interest payable and similar expenses

 

(597,493)

(567,559)

 

(595,558)

(566,968)

Loss before tax

(1,805,972)

(2,246,090)

Taxation

 

125,675

315,407

Loss for the financial year

 

(1,680,297)

(1,930,683)

The above results were derived from continuing operations.

 

ARC Aerosystems Limited

(Registration number: 10651273)
Balance Sheet as at 31 March 2023

Note

2023
£

2022
£

Fixed assets

 

Intangible assets

4

8,244,429

5,150,546

Tangible assets

5

1,441,652

106,415

Investments

6

855,073

-

 

10,541,154

5,256,961

Current assets

 

Debtors

7

816,899

332,336

Cash at bank and in hand

 

51,649

2,361,285

 

868,548

2,693,621

Creditors: Amounts falling due within one year

8

(3,446,532)

(1,306,515)

Net current (liabilities)/assets

 

(2,577,984)

1,387,106

Total assets less current liabilities

 

7,963,170

6,644,067

Creditors: Amounts falling due after more than one year

8

(5,794,745)

(5,675,345)

Provisions for liabilities

(761,765)

(264,842)

Net assets

 

1,406,660

703,880

Capital and reserves

 

Called up share capital

365

365

Share premium reserve

1,719,484

1,719,484

Revaluation reserve

7,128,235

4,745,158

Other reserves

408,167

408,167

Retained earnings

(7,849,591)

(6,169,294)

Shareholders' funds

 

1,406,660

703,880

For the financial year ending 31 March 2023 the company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.

Director's responsibilities:

The members have not required the company to obtain an audit of its accounts for the year in question in accordance with section 476; and

The director acknowledges his responsibilities for complying with the requirements of the Act with respect to accounting records and the preparation of accounts.

 

ARC Aerosystems Limited

(Registration number: 10651273)
Balance Sheet as at 31 March 2023

These financial statements have been prepared in accordance with the special provisions relating to companies subject to the small companies regime within Part 15 of the Companies Act 2006.

Approved and authorised by the director on 3 August 2023
 

.........................................
Dr SM Mohseni
Director

 

ARC Aerosystems Limited

Statement of Changes in Equity for the Year Ended 31 March 2023

Share capital
£

Share premium
£

Revaluation reserve
£

Non-distributable reserve
£

Retained earnings
£

Total
£

At 1 April 2022

365

1,719,484

4,745,158

408,167

(6,169,294)

703,880

Loss for the year

-

-

-

-

(1,680,297)

(1,680,297)

Other comprehensive income

-

-

2,383,077

-

-

2,383,077

Total comprehensive income

-

-

2,383,077

-

(1,680,297)

702,780

At 31 March 2023

365

1,719,484

7,128,235

408,167

(7,849,591)

1,406,660

Share capital
£

Share premium
£

Revaluation reserve
£

Non-distributable reserve
£

Retained earnings
£

Total
£

At 1 April 2021

367

1,869,482

4,505,472

-

(4,238,611)

2,136,710

Loss for the year

-

-

-

-

(1,930,683)

(1,930,683)

Other comprehensive income

-

-

239,686

408,167

-

647,853

Total comprehensive income

-

-

239,686

408,167

(1,930,683)

(1,282,830)

Purchase of own share capital

(2)

-

-

-

-

(2)

Other share premium reserve movements

-

(149,998)

-

-

-

(149,998)

At 31 March 2022

365

1,719,484

4,745,158

408,167

(6,169,294)

703,880

 

ARC Aerosystems Limited

Notes to the Unaudited Financial Statements for the Year Ended 31 March 2023

1

General information

The company is a private company limited by share capital, incorporated in England and Wales.

The address of its registered office is:
Suite 6
Trent House
Cranfield Technology Park
Cranfield
Bedfordshire
MK43 0AN

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

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.

Statement of compliance

These financial statements have been prepared in accordance with Financial Reporting Standard 102 Section 1A smaller entities - 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland' and the Companies Act 2006 (as applicable to companies subject to the small companies' regime).

Basis of preparation

These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the company’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts.

The company recognises revenue when:
The amount of revenue can be reliably measured;
it is probable that future economic benefits will flow to the entity;
and specific criteria have been met for each of the company's activities.

Tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.

 

ARC Aerosystems Limited

Notes to the Unaudited Financial Statements for the Year Ended 31 March 2023

Deferred tax is provided in respect of temporary timing differences and is calculated on the basis of tax rates and laws that are expected to be in force when the timing difference is reversed (and that have been enacted by the reporting date).

Tangible assets

Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Asset class

Depreciation method and rate

Plant and machinery

25% straight line

Motor vehicles

25% straight line

Business combinations

Business combinations are accounted for using the purchase method. The consideration for each acquisition is measured at the aggregate of the fair values at acquisition date of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquired, plus any costs directly attributable to the business combination. When a business combination agreement provides for an adjustment to the cost of the combination contingent on future events, the group includes the estimated amount of that adjustment in the cost of the combination at the acquisition date if the adjustment is probable and can be measured reliably.

Intangible assets

Separately acquired trademarks and licences are shown at historical cost.

Trademarks, licences (including software) and customer-related intangible assets acquired in a business combination are recognised at fair value at the acquisition date.

Trademarks, licences and customer-related intangible assets have a finite useful life and are carried at cost less accumulated amortisation and any accumulated impairment losses.

 

ARC Aerosystems Limited

Notes to the Unaudited Financial Statements for the Year Ended 31 March 2023

Development costs

Expenditure on research is expensed as incurred.

Development costs are expensed as incurred unless all of the following can be demonstrated about the project:

- Completion of the intangible asset is technically feasible so that it will be available for future use or sale

- The entity has an intention to complete the development and use or sell the intangible asset

- The entity has the ability to use or sell the intangible asset

- The intangible asset will generate probable future economic benefits that will flow to the entity, either through sale or use

- The entity has adequate technical and financial resources to complete the development and to use or sell the intangible asset

- The entity is able to measure reliably the costs attributable to the development of the intangible asset

If all of these criterion are met then development costs are recognised as an intangible asset.

Amortisation

Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:

Asset class

Amortisation method and rate

Patents and trademarks

20% straight line

Development costs

Not currently being amortised as project is still ongoing and asset is not ready for the use intended by management

Investments

Investments in equity shares which are publicly traded or where the fair value can be measured reliably are initially measured at fair value, with changes in fair value recognised in profit or loss. Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.


Interest income on debt securities, where applicable, is recognised in income using the effective interest method. Dividends on equity securities are recognised in income when receivable.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

 

ARC Aerosystems Limited

Notes to the Unaudited Financial Statements for the Year Ended 31 March 2023

Trade debtors

Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.

Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.

Trade creditors

Trade creditors 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 the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the profit and loss account over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

 

ARC Aerosystems Limited

Notes to the Unaudited Financial Statements for the Year Ended 31 March 2023

3

Staff numbers

The average number of persons employed by the company during the year, including the director, was 14 (2022 - 9).

4

Intangible assets

Trademarks, patents and licenses
 £

Other intangible assets
 £

Total
£

Cost or valuation

At 1 April 2022

15,410

5,145,000

5,160,410

Revaluations

-

2,880,000

2,880,000

Additions internally developed

-

200,000

200,000

Additions acquired separately

17,610

-

17,610

At 31 March 2023

33,020

8,225,000

8,258,020

Amortisation

At 1 April 2022

9,864

-

9,864

Amortisation charge

3,727

-

3,727

At 31 March 2023

13,591

-

13,591

Carrying amount

At 31 March 2023

19,429

8,225,000

8,244,429

At 31 March 2022

5,546

5,145,000

5,150,546

Intangible assets carried at revalued amounts

The fair value of the company's development costs was revalued on 31 March 2023. An independent valuer was not involved.

During the year ended 31 March 2023 the company undertook considerable research and development activities relating to an electric powered aeroplane with vertical takeoff capability. The directors consider that this project was complete at 31 March 2023 to the point where the company had a commercially viable product. The revaluation reflects the director’s assessment of this project at the balance sheet date.
.
Had this class of asset been measured on a historical cost basis, their carrying amount would have been £335,000 (2022 - £135,000).

 

ARC Aerosystems Limited

Notes to the Unaudited Financial Statements for the Year Ended 31 March 2023

5

Tangible assets

Land and buildings
£

Furniture, fittings and equipment
 £

Motor vehicles
 £

Total
£

Cost or valuation

At 1 April 2022

72,720

37,750

44,650

155,120

Additions

234,606

1,054,529

60,980

1,350,115

At 31 March 2023

307,326

1,092,279

105,630

1,505,235

Depreciation

At 1 April 2022

-

6,217

42,488

48,705

Charge for the year

-

10,175

4,703

14,878

At 31 March 2023

-

16,392

47,191

63,583

Carrying amount

At 31 March 2023

307,326

1,075,887

58,439

1,441,652

At 31 March 2022

72,720

31,533

2,162

106,415

Included within the net book value of land and buildings above is £307,326 (2022 - £72,720) in respect of freehold land and buildings.
 

6

Investments

2023
£

2022
£

Investments in subsidiaries

855,073

-

Subsidiaries

£

Cost or valuation

At 1 April 2022

-

Additions

855,073

At 31 March 2023

855,073

Carrying amount

At 31 March 2023

855,073

At 31 March 2022

-

 

ARC Aerosystems Limited

Notes to the Unaudited Financial Statements for the Year Ended 31 March 2023

7

Debtors

2023
£

2022
£

Trade debtors

586

-

Prepayments

32,972

-

Corporation tax control

175,041

315,407

VAT

74,519

3,519

Other debtors

533,781

13,410

Total current trade and other debtors

816,899

332,336

8

Creditors

Creditors: amounts falling due within one year

Note

2023
£

2022
£

Due within one year

 

Trade creditors

 

816,797

-

Wages and salaries

 

3,939

10,385

Other creditors

 

6,643

7,670

Accruals

 

2,549,253

1,256,784

PAYE and NIC

 

53,900

12,676

Director's current account

 

16,000

19,000

 

3,446,532

1,306,515

Due after one year

 

Loans and borrowings

9

5,794,745

5,675,345

Creditors: amounts falling due after more than one year

Note

2023
£

2022
£

Due after one year

 

Loans and borrowings

9

5,794,745

5,675,345

 

ARC Aerosystems Limited

Notes to the Unaudited Financial Statements for the Year Ended 31 March 2023

9

Loans and borrowings

2023
£

2022
£

Non-current loans and borrowings

Other borrowings

5,794,745

5,675,345

10

Related party transactions

Expenditure with and payables to related parties

2023

Subsidiary
£

Associates
£

Rendering of services

40,000

43,100

Amounts payable to related party

-

5,610

2022

Associates
£

Rendering of services

56,215

Amounts payable to related party

8,640