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REGISTERED NUMBER: 11329861 (England and Wales)















Financial statements for the year ended 31 December 2023

For

QRails Limited

QRails Limited (Registered number: 11329861)

Contents of the financial statements
for the Year Ended 31 December 2023










Page

Company Information 1

Balance Sheet 2

Notes to the Financial Statements 3


QRails Limited

Company information
for the Year Ended 31 December 2023







DIRECTORS: Nancy Emma Sophia Lester
Brian Keith Brinkley
Cary Hendrix Strange





REGISTERED OFFICE: Thomas House
84 Eccleston Square
London
SW1V 1PX





REGISTERED NUMBER: 11329861 (England and Wales)





AUDITORS: Parker Russell UK LLP
Chartered Accountants and
Statutory Auditor
Level 30
The Leadenhall Building
122 Leadenhall Street
City of London
EC3V 4AB

QRails Limited (Registered number: 11329861)

Balance sheet
31 December 2023

31.12.23 31.12.22
Notes £    £    £    £   
Fixed assets
Investments 4 38,429 39,499

Current assets
Stocks 30,750 35,265
Debtors 5 - 9,192
Prepayments and accrued income 2,347 9,300
33,097 53,757
Creditors
Amounts falling due within one year 6 4,750,028 3,676,591
Net current liabilities (4,716,931 ) (3,622,834 )
Total assets less current liabilities (4,678,502 ) (3,583,335 )

Capital and reserves
Called up share capital 7 1 1
Retained earnings (4,678,503 ) (3,583,336 )
Shareholders' funds (4,678,502 ) (3,583,335 )

The financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

In accordance with Section 444 of the Companies Act 2006, the Income Statement has not been delivered.

The financial statements were approved by the Board of Directors and authorised for issue on 7 February 2025 and were signed on its behalf by:





Nancy Emma Sophia Lester - Director


QRails Limited (Registered number: 11329861)

Notes to the financial statements
for the Year Ended 31 December 2023


1. STATUTORY INFORMATION

QRails Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

2. ACCOUNTING POLICIES

BASIS OF PREPARING THE FINANCIAL STATEMENTS
These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" including the provisions of Section 1A "Small Entities" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

The financial statements are prepared in sterling, which is the functional and presentation currency of the Company and all values are rounded to the nearest £, except when otherwise indicated.

The Company has prepared the financial statements on the basis that it will continue to operate as a going concern.

GOING CONCERN
The financial statements have been prepared on a going concern basis which assumes the Company will continue in operational existence for at least 12 months from the date of approval of the financial statements.

The Company has made a loss in the current year amounting to £1,095,167 and accumulated loss as of 31 December 2023 amounts to £4,678,503. As of 31 December 2023, the Company's current liabilities exceed current assets by £4,716,931. However, the major portion of these liabilities amounting to £4,566,718 relate to liabilities towards the Parent Company and the Ultimate Parent Company that will not impose the settlement. Furthermore, the Ultimate Parent Company confirmed to the Company its readiness to continue to provide it with the financial support during the period of at least one year from the date of approval of the financial statements. Moreover, the Company expects to start with providing services in 2025, which is expected to considerably improve its financial position.

On this basis, the Company's directors consider it appropriate to prepare the financial statements on a going concern basis.

QRails Limited (Registered number: 11329861)

Notes to the financial statements - continued
for the Year Ended 31 December 2023


2. ACCOUNTING POLICIES - continued

CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
Estimates and judgement are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under certain circumstances.

The Company thus makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results.

There were no major estimates and assumptions made during the year that have a significant risk of causing material adjustments to the carrying amount of the Company's assets and liabilities within the next financial year.

TURNOVER
Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

STOCKS
Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

QRails Limited (Registered number: 11329861)

Notes to the financial statements - continued
for the Year Ended 31 December 2023


2. ACCOUNTING POLICIES - continued

FINANCIAL INSTRUMENTS
The Company has elected to apply the provisions of section 11 'Basic Financial instruments' and Section 12 'Other Financial Instruments Issues' FRS 102 to all of its financial instruments.

Financial Instruments are recognised in the Company's statement of financial position when the Company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally 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.

Basic financial assets
Basic financial assets, which include debtors and cash and bank balance, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Impairment of financial assets
Financial assets, other than those held at fair value through profit or loss, are assessed for indicators of impairment at each reporting end date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flow, discounted at the asset's original effective interest rate. The impairment loss is recognised in profit or loss. If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the Company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirely to an unrelated third party.

Classification of financial liabilities

QRails Limited (Registered number: 11329861)

Notes to the financial statements - continued
for the Year Ended 31 December 2023


2. ACCOUNTING POLICIES - continued
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 Company after deducting all of its liabilities.

Basic financial liabilities, including creditors and loans from fellow group companies that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Derecognition of financial liabilities
Financial liabilities are derecognised when the Company's obligations expire or are discharged or cancelled.

TAXATION
Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.


QRails Limited (Registered number: 11329861)

Notes to the financial statements - continued
for the Year Ended 31 December 2023


2. ACCOUNTING POLICIES - continued
DEFERRED TAX
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

FOREIGN CURRENCIES
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

HIRE PURCHASE AND LEASING COMMITMENTS
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

PENSION COSTS AND OTHER POST-RETIREMENT BENEFITS
The costs of short-term employe benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or non-current assets.

The Cost of any unused holiday entitlement is recognised in the period in which the employee's services are received.

Termination benefits are recognised immediately as an expense when the Company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

3. EMPLOYEES AND DIRECTORS

The average number of employees during the year was 5 (2022 - 7 ) .

QRails Limited (Registered number: 11329861)

Notes to the financial statements - continued
for the Year Ended 31 December 2023


4. FIXED ASSET INVESTMENTS

Restricted cash relates to cash that is controlled by a licenced e-money institution i.e. a payment card issuing institution and serves to safeguard payment institution funds.

5. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE
YEAR
31.12.23 31.12.22
£    £   
Trade debtors - 5,000
Other debtors - 4,192
- 9,192

6. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE
YEAR
31.12.23 31.12.22
£    £   
Trade creditors 156,319 71,807
Amounts owed to group undertakings 4,566,718 3,556,832
Other creditors 26,991 47,952
4,750,028 3,676,591

7. CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:
Number: Class: Nominal 31.12.23 31.12.22
value: £    £   
1 Ordinary shares 1 1 1

QRails Limited (Registered number: 11329861)

Notes to the financial statements - continued
for the Year Ended 31 December 2023


8. DISCLOSURE UNDER SECTION 444(5B) OF THE COMPANIES ACT 2006

The Report of the Auditors was qualified on the following basis:

Basis for opinion
We were not appointed as auditor of the Company until after 31 December 2023 and thus did not observe the counting of physical inventories at the beginning and the end of the year. We were unable to satisfy ourselves by alternative means concerning the inventory quantities held at 31 December 2023 and 31 December 2022, which are included in the balance sheet at £30,750 and £35,265, respectively. Consequently, we were unable to determine whether any adjustments to these amounts, and, consequently, the result for the year ended 31 December 2023, were necessary.

We have not obtained directly from a bank the confirmation of restricted cash balance carried on balance sheet at £38,429 as of 31 December 2023, but only from a payment institution that has control over the restricted cash. Consequently, we were unable to determine whether any adjustment to this amount was necessary.

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report below. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.

Jason Parker MA, FCA (Senior Statutory Auditor)
for and on behalf of Parker Russell UK LLP

9. RELATED PARTY DISCLOSURES

As of 31 December 2023 the Company has loans payable to the Parent Company and interest accrued on loans amounting to £4,357,834 (£3,517,218 as of 31 December 2022). Interest expenses on these loans amounted to £271,289 and £231,668 during the years ended 31 December 2023 and 31 December 2022, respectively. Loans are short-term and interest rate is Federal Fund Rate + 2%. Interest is calculated daily.

As of 31 December 2023 the Company has loans payables to the Ultimate Parent Company amounting to £208,884 (£ 0 as of 31 December 2022). The loans are short-term and non-interest bearing.

QRails Limited (Registered number: 11329861)

Notes to the financial statements - continued
for the Year Ended 31 December 2023


10. ULTIMATE CONTROLLING PARTY

The controlling party is QRails Inc..

The ultimate controlling party is XTM Inc., Canada.