REGISTERED NUMBER: 12009187 (England and Wales)

Strategic Report,

Report of the Directors and

Financial Statements

for the Year Ended 31 December 2024

for

REM3DY HEALTH LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Income Statement

10

Other Comprehensive Income

11

Balance Sheet

12

Statement of Changes in Equity

13

Cash Flow Statement

14

Notes to the Cash Flow Statement

15

Notes to the Financial Statements

16

DIRECTORS:

Mikio Aoki

Martyn Catchpole

Bastian Xaver Maria Fassin

Melissa Snover Burton

John Gerard Rea

REGISTERED OFFICE:

Unit 2 Alpha Business Park

Bevan Way

Smethwick

United Kingdom

B66 1BZ

REGISTERED NUMBER:

12009187 (England and Wales)

AUDITORS:

Brindleys Limited

Statutory Auditors

2 Wheeleys Road

Edgbaston

Birmingham

West Midlands

B15 2LD

INTRODUCTION

The directors present their strategic report together with the audited financial statements for the year ended 31 December 2024.

The principal activities of Rem3dy Health Limited throughout the year were the manufacturing of homogenised food preparations and dietetic food, the manufacturing of pharmaceutical preparations and the manufacturing of medical and dental instruments and supplies.

REVIEW OF BUSINESS

The focus for 2024 was to improve the efficiency of the NVR line, a high-speed production line, developed and built by the Company's technology team, to deliver world-class advanced additive deposition technology at commercial scale.

The NVR line increase capacity and reduces unit costs significantly, opening up retail and distribution channels that will drive profitable growth in the coming years.

Rem3dy expected to face operational disruption during this phase as it sought to balance order fulfilment and revenue generation with continual optimisation of the operation and processes, alongside implementation of hardware upgrades.

Rem3dy also faced a significant unforeseen challenge, caused by the failure of a key supplier. This challenge has since been successfully overcome, by moving all business away from this supplier and implementing enhanced oversight measures for all contractors to ensure stricter quality control and service reliability.

However, this did impact revenues and margins for the year, with the supplier failures necessitating product rework and forcing the delay of retail account launches until 2025. As a result, revenue decreased from £7.63m in 2023 to £6.35m in 2024.

Despite these challenges, the primary objective of optimising the NVR line was achieved during the year, with Rem3dy implementing efficiency-focused initiatives within its manufacturing plant, significantly reducing costs and strengthening operational resilience.

As detailed below, yield grew by 12.5% during the year and efficiency increased by 26%.

Having overcome these challenges, Rem3dy is now well placed to deliver on its strong pipeline of retail and corporate orders, and to fulfil these orders at strong margins.

Rem3dy continues to invest in its technical capabilities to drive further growth, with significant investment in Research and Development during 2024 focused on the development and continuous optimisation of the NVR line. This has led to industry-leading wastage levels, further enhancing Rem3dy's world-class advanced additive manufacturing capabilities, and is expected to expand the company's patent portfolio, reinforcing its position as an industry leader in innovation.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks affecting Rem3dy relate to the ongoing demand for its products in the online business, the continuity of raw material supply, and the ability to secure high-volume contracts that align with target margins.

A significant portion of Rem3dy's direct-to-consumer sales operates on a subscription basis, presenting a risk of customer attrition upon renewal. This risk is mitigated through the company's commitment to product quality and the efforts of its Customer Service team, which has consistently achieved best-in-class retention rates and review ratings, the average churn rate across 2024 was only 11% vs industry average of 54%.

Raw material shortages or supply chain disruptions could impact production capabilities. To mitigate this risk, Rem3dy maintains a closely monitored buffer stock of key inputs and has secured alternative suppliers for all raw materials, with the exception of patented ingredients. However, in the event of a shortage, these ingredients could be substituted with more generic alternatives without a material impact on the business.

The expansion of the NVR line has significantly increased production capacity and facilitated entry into Retail and Distribution channels, which require the ability to manufacture at higher volumes and lower unit costs. The scale of these contracts, combined with continued strong revenue growth, underscores the importance of achieving manufacturing efficiencies.

As with any newly developed technology, NVR efficiency is continually improving. A structured programme of process optimisations and automation was implemented in 2024 and will continue into 2025, further enhancing margins, production output, and material efficiency.

FINANCIAL PERFORMANCE INDICATORS

Rem3dy uses a range of performance measures to monitor and manage the business effectively. The key financial performance indicators for the years ended 31 December 2023 and 2024 are set out below:

Gross Profit Margin

Margins declined by 9.8 percentage points during the year, from 58.6% for the year ended 31 December 2023 to 51.2% for the year ended 31 December 2024. This reduction in gross profit was primarily driven by a one-off, non-recurring event that resulted in the destruction of stock assets, necessitating their replacement at Rem3dy's expense. The incident was caused by a third-party contractor, with whom Rem3dy has since terminated all engagements. To mitigate future risks, the company has implemented enhanced oversight measures for all contractors to ensure stricter quality control and service reliability.

Yield from NVR production Line

Yield rate improved by 12.4% during the year, increasing from 81% in December 2023 to 91% in December 2024.

Efficiency of NVR production line

Efficiency increased by 26% during the year, from 68% in December 2023 to 86% in December 2024.

ON BEHALF OF THE BOARD:

Melissa Snover Burton - Director

1 April 2025

The directors present their report with the financial statements of the company for the year ended 31 December 2024.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2024.

FUTURE DEVELOPMENTS

Having successfully operated the NVR production line for over a year, Rem3dy is now focused on optimising efficiency to maximise the potential of this unique technology. Key initiatives include reducing wastage rates to industry-leading levels and integrating automation technology to minimise reliance on manual labour. With a strong pipeline of retail and distribution orders, the focus for 2025 will be on fulfilment and delivery of high volume orders whilst maintaining strong margins. Rem3dy is well-positioned for significant growth in 2025.

Rem3dy is considering a fundraise in 2025 to support additional capacity and team to capitalise on the increasing rate of demand for B2B opportunities.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2024 to the date of this report.

Mikio Aoki

Martyn Catchpole

Bastian Xaver Maria Fassin

Melissa Snover Burton

Other changes in directors holding office are as follows:

Richard Moore - resigned 13 June 2024

John Gerard Rea - appointed 18 September 2024

DISCLOSURE OF INFORMATION TO AUDITOR

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:

1.So far as the director is aware, there is no relevant audit information of which the company's auditor is

unaware, and

2.The director has taken all the steps that ought to have been taken as a director in order to be aware

POST BALANCE SHEET EVENTS

There have been no significant events affecting the company since the year end.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Brindleys Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

Melissa Snover Burton - Director

1 April 2025

Opinion

We have audited the financial statements of Rem3dy Health Limited (the 'company') for the year ended 31 December 2024 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2024 and of its loss for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. 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 opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on pages four and five, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We have considered the nature of the Company's industry and its control environment, and reviewed the company's documentation of their policies and procedures relating to fraud and compliance with laws and regulations. We also enquired of management about their own identification and assessment of the risks of irregularities.

We obtained an understanding of the legal and regulatory framework that the company operates in, and identified the key laws and regulations that:

(1) Had a direct effect on the determination of material amounts and disclosures in the financial statements. These included UK Companies Act, tax legislation etc; and

(2) Do not have a direct effect on the financial statements but compliance with which may be fundamental to the company's ability to operate or to avoid a material penalty

We discussed among the audit engagement team regarding the opportunities and incentives that may exist within organisation for fraud and how and where fraud might occur in the financial statements.

In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. In addressing the risk of fraud through management override of controls, we tested the appropriateness of journal entries and other adjustments; assessed whether the judgements made in making the accounting estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business.

In addition to the above, our procedures to respond to the risks identified included the following:

(1) Reviewing financial statement disclosures by testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;

(2) Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

(3) Enquiring of management and in-house legal counsel concerning actual and potential litigation and claims, and instances of non-compliance with laws and regulations; and

(4) Reading minutes of meetings of those charged with governance.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Mr Kulwinder Singh Chawla F.C.C.A. (Senior Statutory Auditor)

for and on behalf of Brindleys Limited

Statutory Auditors

2 Wheeleys Road

Edgbaston

Birmingham

West Midlands

B15 2LD

1 April 2025

TURNOVER

3

6,352,569

7,637,874

Cost of sales

3,098,816

3,163,347

GROSS PROFIT

3,253,753

4,474,527

Distribution costs

473,649

458,974

Administrative expenses

7,906,539

10,343,755

8,380,188

10,802,729

OPERATING LOSS

5

(5,126,435

)

(6,328,202

)

Interest payable and similar expenses

7

52,202

158,693

LOSS BEFORE TAXATION

(5,178,637

)

(6,486,895

)

Tax on loss

8

(567,003

)

(1,073,998

)

LOSS FOR THE FINANCIAL YEAR

(4,611,634

)

(5,412,897

)

LOSS FOR THE YEAR

(4,611,634

)

(5,412,897

)

OTHER COMPREHENSIVE INCOME

Safe investment & share options

2,152,283

4,023,333

Income tax relating to other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

2,152,283

4,023,333

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(2,459,351

)

(1,389,564

)

FIXED ASSETS

Intangible assets

9

55,162

61,673

Tangible assets

10

1,808,303

2,162,633

1,863,465

2,224,306

CURRENT ASSETS

Stocks

11

1,502,047

1,243,148

Debtors

12

1,586,633

2,758,332

Cash at bank

387,226

547,369

3,475,906

4,548,849

CREDITORS

Amounts falling due within one year

13

3,683,295

2,659,427

NET CURRENT (LIABILITIES)/ASSETS

(207,389

)

1,889,422

TOTAL ASSETS LESS CURRENT LIABILITIES

1,656,076

4,113,728

CREDITORS

Amounts falling due after more than one year

14

101,699

100,000

NET ASSETS

1,554,377

4,013,728

CAPITAL AND RESERVES

Called up share capital

15

143,038

143,038

Share premium

16

11,223,181

11,223,181

Other reserves

16

8,971,196

6,970,244

Retained earnings

16

(18,783,038

)

(14,322,735

)

1,554,377

4,013,728

The financial statements were approved by the Board of Directors and authorised for issue on 1 April 2025 and were signed on its behalf by:

Melissa Snover Burton - Director

Called up

share

Retained

Share

Other

Total

capital

earnings

premium

reserves

equity

£

£

£

£

£

Balance at 1 January 2023

143,038

(9,134,648

)

11,223,181

3,171,721

5,403,292

Changes in equity

Total comprehensive income

-

(5,188,087

)

-

3,798,523

(1,389,564

)

Balance at 31 December 2023

143,038

(14,322,735

)

11,223,181

6,970,244

4,013,728

Changes in equity

Total comprehensive income

-

(4,460,303

)

-

2,000,952

(2,459,351

)

Balance at 31 December 2024

143,038

(18,783,038

)

11,223,181

8,971,196

1,554,377

Cash flows from operating activities

Cash generated from operations

1

(2,167,248

)

(5,998,180

)

Interest paid

(52,202

)

(158,693

)

Tax paid

-

1,073,998

Net cash from operating activities

(2,219,450

)

(5,082,875

)

Cash flows from investing activities

Purchase of tangible fixed assets

(95,155

)

(1,171,100

)

Sale of tangible fixed assets

479

-

Net cash from investing activities

(94,676

)

(1,171,100

)

Cash flows from financing activities

Amount introduced by directors

1,699

100,000

Simple Agreement for Future Equity

2,000,953

3,798,521

Share Based Payments

151,331

224,810

Net cash from financing activities

2,153,983

4,123,331

Decrease in cash and cash equivalents

(160,143

)

(2,130,644

)

Cash and cash equivalents at beginning of year

2

547,369

2,678,013

Cash and cash equivalents at end of year

2

387,226

547,369

1.	RECONCILIATION OF LOSS BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2024

2023

£

£

Loss before taxation

(5,178,637

)

(6,486,895

)

Depreciation charges

455,996

439,543

(Profit)/loss on disposal of fixed assets

(480

)

56,256

Finance costs

52,202

158,693

(4,670,919

)

(5,832,403

)

Increase in stocks

(258,899

)

(750,650

)

Decrease/(increase) in trade and other debtors

1,171,699

(726,228

)

Increase in trade and other creditors

1,590,871

1,311,101

Cash generated from operations

(2,167,248

)

(5,998,180

)

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 December 2024

31.12.24

1.1.24

£

£

Cash and cash equivalents

387,226

547,369

Year ended 31 December 2023

31.12.23

1.1.23

£

£

Cash and cash equivalents

547,369

2,678,013

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.1.24

Cash flow

At 31.12.24

£

£

£

Net cash

Cash at bank

547,369

(160,143

)

387,226

547,369

(160,143

)

387,226

Total

547,369

(160,143

)

387,226

1.	STATUTORY INFORMATION

Rem3dy Health 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

2.1 Basis of preparing the financial statements

.

Rem3dy Health Limited is a private company limited by shares incorporated and domiciled in the United Kingdom. The registered office is disclosed on the company information page.

The financial statements are prepared in sterling (£), and are prepared for the year ended 31 December 2024 (2023: year ended 31 December 2023).

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The following principal accounting policies have been applied:

2.2 Going concern

The financial statements have been prepared on the going concern basis.

The directors have prepared projected cash flow information in excess of 12 months from the date of their approval of these financial statement. The detailed projections demonstrate the company is forecast to remain cash positive and accordingly the directors believe the company has adequate resources to continue in operational existence for the period of at least 12 months from the date of the approval of these financial statements.

2.3 Foreign currency translation

Functional and presentation currency

The company's functional and presentational currency is GBP. The level of rounding in the financial statements is to the nearest pound

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.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of income and retained earnings within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.

2.4 Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Sale of goods

Revenue from the sale of goods made directly to consumers is recognised net of discounts and when the goods are delivered to the customers following sales made via the online sales platform

.

Revenue from the sale of goods made directly to businesses is recognised net of discounts and when the goods have been delivered to the business location.

Business to business revenue

Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied.

Business to business revenue relates to contracts and co promotion agreements with the purpose to develop products to fulfil client needs. The contracts have specified stages of completion at which point revenue is recognised when these stages are met.

2.5 Operating leases: the company as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

2.6 Finance costs

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.

2.7 Pensions

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 Balance sheet. The assets of the plan are held separately from the company in independently administered funds.

2.8 Share-based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the company keeping the scheme open or the employee maintaining any contributions required by the scheme).

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.

Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.

2.9 Simple agreements for future equity

The legal substance of simple agreements for future equity (SAFEs) is that the investor contributes cash in exchange for the uncertain eventuality of receiving future equity, often at a discount.

SAFEs are not redeemable, do not have a backstop date for repayment and have no interest or coupon. Shares are automatically issued at the next priced fund raising round or upon a liquidity event.

Funds received under these agreements are therefore recognised in equity and transferred to issued share capital at the point the shares are legally issued and the agreement converts.

2.10 Taxation

Tax is recognised in profit or loss except that a charge attributable to an item of income and expenses 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 balance sheet date in the countries where the company operates and generates income.

2.11 Intangible assets

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.

2.12 Research and development

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.

2.13 Tangible fixed assets

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 charged so as to allocate the cost of assets less their residual value over their estimated useful lives.

Depreciation is provided on the following basis:

Long-term leasehold property - 15% Reducing balance

Plant and machinery - 10-15% Reducing balance

Motor vehicles - 25% Straight line

Office equipment - 33% Straight line

Computer equipment - 25% Reducing balance

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.

2.14 Stocks

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.

At each balance sheet 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.

2.15 Financial instruments

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 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 and subsequently, at the un discounted 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 in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.

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 income and retained earnings.

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 balance sheet date.

Financial assets and liabilities are offset and the net amount reported in the Balance sheet 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.

2.16 Judgement in applying accounting policies and key source of estimation

The directors make estimates and assumptions concerning the future. The directors are also required to exercise judgement in the process of applying the company's accounting policies. 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.

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 addressed below.

Revenue recognition - business to business sales

The directors assess the stage of completion of business to business contracts based on work performed towards key milestones set in the agreed contracts. If the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.

Impairment of fixed assets

The directors assesses the impairment of fixed assets subject to depreciation whenever events or

changes in circumstances indicate that the carrying value may not be recoverable.

Factors considered important that could trigger an impairment review include the following:

- Significant under performance relative to historical or projected future operating results;

- Significant changes in the use of the acquired assets or the business strategy; and

- Significant negative industry or economic trends.

Depreciation and residual values

The directors have reviewed the asset lives and associated residual values of all fixed asset classes and have concluded that asset lives and residual values are appropriate.

The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In 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.

Recoverability of trade debtors

Trade and other debtors are recognised to the extent that they are judged recoverable. The directors'

reviews are performed to estimate the level of reserves required for irrecoverable debt. Provisions are

made specifically against invoices where recoverability is uncertain. The directors make allowance for

doubtful debts based on an assessment of the recoverability of debtors.

Allowances are applied to debtors where events or changes in circumstances indicate that the carrying amounts may not be recoverable. The directors specifically analyse historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgement to evaluate the adequacy of the provision for doubtful debts. Where the expectation is different from the original estimate, such difference will impact the carrying value of debtors and the charge in the profit and loss account.

Leases

The directors determine whether leases entered into by the group either as a lessor or lessee are an