Registered number: 08071406
OZO INNOVATIONS LIMITED
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
INFORMATION FOR FILING WITH THE REGISTRAR
FOR THE YEAR ENDED 31 DECEMBER 2023
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COMPANY INFORMATION
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Chancerygate Business Centre
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Chartered Accountants & Statutory Auditor
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CONTENTS
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Statement of financial position
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Notes to the financial statements
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OZO INNOVATIONS LIMITED
REGISTERED NUMBER:08071406
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STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Net current (liabilities)/assets
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Total assets less current liabilities
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Provisions for liabilities
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OZO INNOVATIONS LIMITED
REGISTERED NUMBER:08071406
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STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2023
The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The Company has opted not to file the statement of comprehensive income in accordance with provisions applicable to companies subject to the small companies' regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 28 August 2024.
The notes on pages 3 to 17 form part of these financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Ozo Innovations Limited is a private company limited by shares incorporated in England and Wales, United Kingdom.
The address of the registered office is; Unit 29, Chancerygate Business Centre, Langford Lane, Kidlington, Oxford, OX5 1FQ.
The principal activity of the company is to develop, manufacture and sell a range of highly innovative products offering improved cleaning and antimicrobial performance to the food production, processing and preparation sectors.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Section 1A of Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
These financial statements have been prepared based on the assumption that the Company will continue its operations in the foreseeable future on the going-concern basis. This assumption relies on the Company having sufficient funds to sustain its trading activities. Although the Company is still in the early stages of generating revenue, management has created financial forecasts that estimate the expected cash requirements over the next 12 months, starting from the authorization of these financial statements.
While the business continues to make progress in terms of product adoption and is engaged in commercial discussions with a major global food producer, Ozo still relies on funds from external investors. The company raised funding in mid-2024 which enables the business to continue trading as a going concern. The company will need to secure additional capital investment in early 2025 in order to execute its business plan and continue operating as a going concern. However, given the advancements in both the product and commercial aspects of the Company, Ozo is confident in its ability to raise the necessary funds.
It is important to note that if the Company fails to secure funds on favourable terms when needed, it could have a significant negative impact on its business, financial position, and operational results. This indicates the existence of a material uncertainty that may raise doubts about the Company's ability to continue as a going concern, which in turn affects its ability to realise assets and fulfil liabilities in the normal course of business.
In preparing these accounts on the going-concern basis, the directors have considered several indicators regarding the Company's ability to raise the required capital in the future. These indicators include the support and commitment of existing investors towards the future success of the business, the Board's experience in securing substantial investment capital, and a successful pilot programme with a major global food producer with anticipated revenue generation in late 2024.
It is important to note that these financial statements do not include any adjustments that would be
necessary if the Company were unable to continue as a going concern.
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
The company acts on its own account when contracting with its customers for the supply of goods and services. The selling processes are agreed directly with customers. The company has the ability to set their own margins and prices on the sale of products, services and solutions.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Intangible assets acquired separately from a business are capitalised at cost. Intangible assets acquired on business combinations are capitalised separately from goodwill if the fair value can be measured reliably on initial recognition.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
Intangible assets are amortised on a straight line basis over their useful lives. The useful lives of intangible assets are as follows:
Development expenditure - 3 year straight line
Computer software - 4 year straight line
Patents - 3 year straight line
Provision is made for any impairment.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is provided on the following basis:
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2 year straight line basis
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4 year straight line basis
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4 year straight line basis
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4 year straight line basis
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4 years straight line basis
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5 - 10 years straight line basis
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Investments in subsidiaries are measured at cost less accumulated impairment.
Investments in unlisted Company shares, whose market value can be reliably determined, are remeasured to market value at each Statement of financial position. Gains and losses on remeasurement are recognised in the Statement of comprehensive income for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.
Investments in listed company shares are remeasured to market value at each Statement of financial position. Gains and losses on remeasurement are recognised in profit or loss for the period.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in non-puttable ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate or in the case of an out-right short-term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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Financial instruments (continued)
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Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of comprehensive income.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the reporting date.
Financial assets and liabilities are offset and the net amount reported in the Statement of financial position when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Grant income is recognised in the profit and loss account in the same period as the expenditure, to which the grant relates.
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
The proceeds received on issue of the Company's convertible debt are allocated into their liability and equity components and presented separately in the Statement of financial position.
The amount initially attributed to the debt component equals the discounted cash flows using a market rate of interest that would be payable on a similar debt instrument that did not include an option to convert.
The difference between the net proceeds of the convertible debt and the amount allocated to the debt component is credited direct to equity and is not subsequently remeasured. On conversion, the debt and equity elements are credited to share capital and share premium as appropriate.
Transaction costs that relate to the issue of the instrument are allocated to the liability and equity components of the instrument in proportion to the allocation of proceeds.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
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Operating leases: the Company as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of financial position. The assets of the plan are held separately from the Company in independently administered funds.
A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the reporting date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the reporting date.
Interest income is recognised in profit or loss using the effective interest method.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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Provisions for liabilities
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Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Statement of financial position.
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
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 income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight-line basis over their useful economic lives, which range from 3 to 6 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Judgments in applying accounting policies and key sources of estimation uncertainty
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In preparing these financial statements, the directors have made the following judgments:
- Determine whether leases entered into by the company either as a lessor or a lessee are operating or finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease by lease basis.
- Determine whether there are indicators of impairment of the company’s tangible and intangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.
Other key sources of estimation uncertainty
Tangible fixed assets
Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
Intangible fixed assets
Intangible assets are amortised over the useful lives, based on the estimated period that the assets will have a value in use or generate revenues. The estimates are reviewed annually. Changes to the estimates could result in significant variations in the carrying value and amounts charged to the profit and loss. The carrying value of intangibles by class is included in note 9 and useful lives are included within the accounting policy.
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The average monthly number of employees, including directors, during the year was 17 (2022 - 17).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Charge for the year on owned assets
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Charge for the year on owned assets
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Investments in subsidiary companies
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At 1 January 2023
(As restated)
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Opening amount of unlisted investments was restated (see Note 19).
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The following were subsidiary undertakings of the Company:
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Ozone Purification Limited
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Unit 29 Chancerygate Business centre, Langford Lane, Kidlington, Oxford, OX5 1FG
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Ozo Innovations EBT Trustee Limited
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Prepayments and accrued income
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Cash and cash equivalents
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Creditors: Amounts falling due within one year
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Convertible loan notes - short term
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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The Company issued convertible loan notes to Farvatn Private Equity and several other investors. Interest on the principal amount outstanding is 4%. The total amount of loan notes issued is £2,349,669 (2022: £Nil). Equity part of convertible loan notes issued in the year was £133,947 (2022: £Nil).
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During the year the Company utilised its dilapidation provision.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Called up share capital
Called up share capital represents the nominal value of the shares issued.
Share premium account
The share premium account includes the premium on issue of equity shares, net of any issue costs.
Other reserves
The other reserve relates to the equity portion of the convertible loan note.
Profit and loss account
The profit and loss account represents cumulative profits or losses, net of dividends paid and other adjustments.
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During the year, a share based payment arrangement existed whereby share options have been granted to option holders in order to acquire shares in the company.
The nominal value and the exercise price payable per share is between 1p and 1500p. If the option holder is not in employment by the company on the date of the exit event or does not validly execute the agreement as a deed and return it to the company within 30 days after the date of the grant, the option shall lapse automatically at the end of the 30 day period.
The number and exercise prices of the share options are as follows:
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Weighted average exercise price (pence)
2023
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Weighted average exercise price
(pence)
2022
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Outstanding at the beginning of the year
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Forfeited during the year
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Outstanding at the end of the year
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The accounts have been restated to incorporate the impact of a prior period errors in respect of unlisted fixed assets investment recognition. The change has resulted in retained earnings at 31 December 2022 change of £46,727.
The accounts have been restated to incorporate the impact of a prior period errors in respect of share capital movement.
Please see the adjusted lines of Statement of Financial Position:
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Restated
31 December 2022
£
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Before restatement
31 December 2022
£
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Debtors: amounts falling due within one year
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The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £41,192 (2022: £39,750). Contributions totalling £7,542 (2022: £6,616) were payable to the fund at the reporting date and are included within creditors.
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Related party transactions
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During the year, the company paid Astia Angels Ozopure UK LLC, a shareholder, £2,500 (2022: £2,500) in respect of professional fees.
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Post balance sheet events
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T Howarth, a director, resigned from the role of the company's chair on 5 February 2024.
M H O'Neill, a director, resigned on 7 August 2024.
The Convertible Loan Notes were converted on July 11, 2024, into 123,237 A Ordinary shares at a conversion rate of £8.60 per share, amounting to a total value of £1,059,838.20.
New Convertible Loan Notes totalling £1,100,000 were issued on 21st June 2024.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The auditors' report on the financial statements for the year ended 31 December 2023 was unqualified.
We draw attention to note 2.2 in the financial statements which indicates that the Company’s business plan and cash flow forecasts show that the Company will need to raise additional capital investments in late 2024 to enable it to deliver on its business plan and continue as a going concern. As stated in note 2.2, these events or conditions, along with other matters as set out in note 2.2, indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
The audit report was signed on 28 August 2024 by Yasin Khandwalla FCCA (Senior statutory auditor) on behalf of Xeinadin Audit Limited.
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