The directors of the company have elected not to include a copy of the profit and loss account within the financial statements.true

For the financial Period ended 30 December 2024 the company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.

The directors acknowledge their responsibilities for complying with the requirements of the Companies Act 2006 with respect to accounting records and the preparation of financial statements.

The members have not required the company to obtain an audit of its financial statements for the Period in question in accordance with section 476.

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

Adarga Limited is a private company limited by shares incorporated in England and Wales. The registered office is C/O Azets, Third Floor, Gateway House, Tollgate, Chandlers Ford, Hampshire, SO53 3TG.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

Assessment Process

Management has undertaken a comprehensive review of the company’s financial position, performance, and cash flow forecasts. The forecasting period extends to December 2026 (15 months from the proposed signing date), and includes consideration of:

• The company’s ability to meet its liabilities as they fall due,

• Recent and forecast trading performance,

• Expected cash flows and available funding,

• Any known commitments and contingencies,

• Management’s intentions regarding future operations, including planned cost controls, investment, and business strategy.

Key Findings

Liquidity and Debt Settlement: Based on current cash flow projections and committed facilities, the company expects to be able to settle its debts as they fall due throughout the forecast period going forward and also cure the current liability position. This has been enabled by the 1 July 2025 closing of a £4.1m equity fundraising led by Charles Dickson, £2.5m conversion of shareholder loans and SAFE investments and £5m revolving credit facility provided by Tarncourt Properties Limited. There will be a further close of c. £2m equity once NSIA approval has been received by Charles Dickson. As shown in the cash flow forecast shared with Azets, the equity funding allows Adarga to fund its working capital needs into 1H 2026, when we expect the Company to turn cash flow break-even. The forecast shows, the Company is able to maintain a meaningful cash balance throughout the forecast despite significant payments to creditors to repair the liability backlog developed over the past 9 months.

Performance: Despite the headwinds of finalising the capital raise and repairing the current liabilities, the Company has continued to serve and maintain its existing contracts, while winning new contracts. The most material was signed in June 2025 with the MOD for over £1.5m in the next 12 months. Management see positive momentum with customers and expects to hit its 2025 revenue forecasts. There are no indications of significant adverse trends.

Future Operations: Management remains committed to building its business serving the Defence & National Security sector in the UK and US, while maintaining a strict cost discipline learned over the last 18 months to support ongoing viability.

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.

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.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with 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, which include debtors and cash and bank balances, 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.

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, bank loans, loans from fellow group companies and preference shares 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 the 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.

Debt instruments that do not meet the conditions in FRS 102 section 11 are non-basic financial instruments FRS102 section 12. The financial liability is initially recognised at fair value, which is normally the transaction price. At the end of each reporting period the debt instrument will be measured at fair value and recognise changes in value in profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

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

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The average monthly number of persons (including directors) employed by the company during the Period was:

The company is currently investigating a late filing penalty in relation to the Withholding Tax on the Future Fund conversion. It is not possible to quantify any potential financial impact with reasonable certainty. As such, no provision has been made in these financial statements.

The total amount of financial commitments not included in the balance sheet is £Nil (2023 - £640,485). These amounts consist of the total payable under operating lease commitments until the day they expire.

Share issues

On 1 July 2025, the company allotted 5,769,139,017 ordinary shares with a nominal value of £5,769,139, the total amount paid for these shares was £6,626,424.

Restructure

As a result of the business’s financial position, a restructuring exercise has taken place which has seen a significant reduction in employee costs.

Fundraising

After the balance sheet date, there was a further equity funding round where the company raised £620,146 from new and existing shareholders in addition to the share issue on 1 July 2025.

There have also been further debt notes issued totalling £965,000. Debt notes totalling £2,514,625 were converted into equity during the share issue on 1 July 2025.

The company has entered into a £5,000,000 revolving credit facility from a key investor during 2025, this is in addition to a term loan facility of £1,250,000. Interest is charged at 12% per annum, or 1% per month calculated on a daily basis.

The company obtained bridging loans of £1,500,000 in May 2025. The loans were provided by Tarncourt Properties Limited. The loans are secured with a fixed and floating charge over all the property or undertaking of the company. The loans have subsequently been reassigned against the revolving credit facility (from the same lender).