The directors present the strategic report for the year ended 31 December 2024.

Colorifix Limited was launched in 2016 and set primarily as a biotechnology company to develop a biological process to produce, deposit and fix coloured pigments onto textiles made by genetically engineered microorganisms.

Colorifix aim to reduce water use, chemical use and energy consumption. These metrics are also significant for Colorifix’s customers as this is where they will save money and make products that meet the rising demand for increased sustainability.

The upfront investment on R&D is high and with it comes a risk of R&D technical attrition. However, our approach is design, build, test and learn with automated pathway design and assembly. We focus on target colours, target materials and overall yield optimisation.

Whilst our core product is colour, we also have an opportunity to diversify our product range and by harnessing the diversity of chemical structures that result in a variety of biological properties, including potential anticancer, antibacterial, antifungal and antiviral bioactivity. This means we can potentially create a broad product portfolio and therefore diversify risk.

At Colorifix, we understand that the textile dyeing industry is massive and steeped in historical methods and practices. Tradition and innovation are both highly valued. We consider the environmental impact but also take in consideration social and economic risk. Integration with current dye house machinery and being cost competitive are important considerations to consider as well as supply chain mechanics.

To this end, we have developed a machine-operator friendly and cost-competitive bioreactor with some modifications to improve yield and maintain sterility in a very non-sterile environment. They are built as “plug-and-play” units that can be easily hooked up with steam, water, electricity and natural gas found in all dye houses. This has started in Europe using using both 300L and 3000L models

Although our direct customers are manufacturers, it is widely acknowledged that fashion brands have the most significant influence in driving the adoption of innovative technologies within the supply chain through their demand. Therefore, we have an opportunity to diversify our customer portfolio and from that manage risk by engaging with a target audience that ranges from textile mills and dye houses to fashion brands and policy makers.

We have set up a hybrid revenue model – part licensing and part product, which is currently split across three revenue streams. Two direct product revenue streams where our customer is the dye house: a bioreactor sale and recurring consumables sale (media) - like the printer/cartridge model. Our third revenue stream comes from the licensing of our IP to the mill which then sells the fabric on. Essentially, we form a partnership with mills to supply the product and production assistance and take a % of revenue from products sold with the technology or a fixed fee per weight of fabric dyed.

Our strategy is built around a) impact, b) regulatory requirements, c) IP considerations and d) scalability. By having roughly half the revenue come through the mill partnership, we can keep the cost of dyeing with the technology by the dye house low and signal to the market strong unit economics.

The regulatory risk for our business is high, but we strive to overcome that in various ways. We have a testing regime which includes lightfastness, wash fastness, wet/dry rubbing and perspiration for quality purposes, ensuring products we release are capable of replacing existing products on quality - if a product is greener but less durable, it is often less sustainable. Beyond this, we test for cytotoxicity, skin contact dermatitis and allergenicity of the dye liquor, fabric and waste to ensure safety to human health and the environment.

We strive to navigate around different government agencies and their regulations throughout the world. This involves gaining licences for Genetic Modification and ensuring that our media formulations comply with EU REACH regulations and ensuring conformance with OEKO-TEX Eco Passport standard for both our media and strains.

As we grow – we seek to form strategic alliances across the world. These partnerships are designed to enable us to take advantage of current supply chain networks but also allows our partners to meet their own sustainability targets. These partners or distributors will have the capability, operational scale and cash reserves to enable Colorifix to prosper.

Metres of fabric dyed via yield improvement (g/L of pigment in fermentation). Target is 4x yield improvement across our colour portfolio.

In 2024, we continued to expand our colour portfolio including dilutions and colour mixing. Dilutions enables yield improvement and we have achieved a 10 x yield improvement on blue.

Operations (before Investing Activities) Cashflow Forecast Accuracy against our business model is positive at 37% over budget.

Turnover for the year started in earnest and £785,383 was recorded primarily from the sale of bioreactors within our subsidiary in Portugal.

The bulk of our administrative expenses relates to Research & Development. This occurs significantly in the UK, with Portugal and India being our manufacturing entities. This continues to grow (16% increase from 2023).

Cash at bank and in hand at group level has increased (2024: £5,357,635 2023: £4,832,774) largely due to £9.0 million funds being received by investors by the end of December 2024 relating to Series B2. There was an equally large outflow related to the scale up of our manufacturing subsidiary in Portugal and at a smaller scale (circular £0.5 million in India). Research & Development also absorbs large amounts of cash.

The convertible note round which commenced in 2023 ended with a first close in December 2024.

On behalf of the board

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

The principal activity of the company and group continued to be that of a biotechnology company that explains an interface between materials and living organisms. Colorifix engineers microbes that produce, deposit and fix biomolecules onto surfaces. Colorifix focuses on pigment-producing microbes for the textiles industry as an alternative mechanism to chemical dyeing.

No ordinary dividends were paid. The directors do not recommend payment of a further dividend.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Details of Options held by Directors are disclosed within the Related Party note 30.

The company has a risk management plan which helps identify potential risks, evaluate and ensure it develops strategies to manage them. This would include diversifying the risk by different approaches to markets by setting direct or indirect customer relationships. The company successfully achieved ISO 9001 accreditation in the year 2024 and part of this ensures compliance and quality record keeping.

The company has a hybrid revenue model - part licensing and part product, which is currently split across three revenue streams. This enables the company to build half the revenue through the mill partnership and at the same time, keep the cost of dyeing with the technology by the dye house low and signal to the market strong unit economics. 

Cash flow risk analysed via a five year plan which is continually monitored and updated.  This ensures short term financial liquidity as well as ensuring we optimise the expected level of cash flows and risk. The company is looking towards it's next funding round to reduce cashflow risk.

Research and development activities continue to unlock new colours in the company's palette.

SRG (Audit) LLP were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

The directors are responsible for preparing the Annual Report 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 group and company, and of the profit or loss of the group 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;

• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

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

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

We have audited the financial statements of Colorifix Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement of cash flows and notes to the financial statements, including 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 group's and the parent company's affairs as at 31 December 2024 and of the group's 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 Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent 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.

Material uncertainty related to going concern

We draw attention to Notes 1.3 and 29 in the financial statements, which indicates that the company requires the continued support of the investors. As stated in Note 29, events or conditions do exist that 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.

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

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 other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. 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. 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 course of 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 our audit:

• The information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• The strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

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

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

• the parent company 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.

As explained more fully in the directors' responsibilities statement, 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 is 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 parent 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 parent company or to cease operations, or have no realistic alternative but to do so.

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 an auditor's report 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.

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 .

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 .

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

• the engagement partner ensured that the engagement team - collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;

• we identified the laws and regulations applicable to the company through discussions with members and other management, and from our commercial knowledge;

• we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company , including the Companies Act 2006, taxation legislation, data protection, anti-bribery, employment, environmental and health and safety legislation;

• we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management; and

• identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

• making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and

• considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

To address the risk of fraud through management bias and override of controls, we:

• performed analytical procedures to identify any unusual or unexpected relationships;

• tested journal entries to identify unusual transactions;

• assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and

• investigated the rationale behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

• agreeing financial statement disclosures to underlying supporting documentation;

• reading the minutes of meetings of those charged with governance; and

• enquiring of management as to actual and potential litigation and claims.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the parent 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 parent company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

The notes on pages 18 to 34 form part of these financial statements.

The notes on pages 18 to 34 form part of these financial statements.

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £9,576,784 (2023 - £7,469,701 loss)

The notes on pages 18 to 34 form part of these financial statements.

The notes on pages 18 to 34 form part of these financial statements.

Colorifix Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Innovation Centre Colney Lane, Colney, Norwich, NR4 7GJ.

The group consists of Colorifix Limited and all of its subsidiaries.

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.

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.

The consolidated group financial statements consist of the financial statements of the parent company Colorifix Limited together with all entities controlled by the parent company (its subsidiaries).

All financial statements are made up to 31 December 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

The financial statements have been prepared on a going concern basis, which assumes the company will continue in the foreseeable future. In order to do so, the company will require the continued support of the investors, Please refer to Note 29 to the financial statements.

The directors continue to adopt the going concern basis in preparing the financial statements.

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.

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Amortisation 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:

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 recognised in the profit and loss account.

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

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

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The group 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 group's balance sheet when the group 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, 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.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Financial assets, other than those held at fair value through profit and 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 flows 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.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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 entirety to an unrelated third party.

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 group 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 paragraph 11.9 are subsequently measured at fair value through 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.

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

The component parts of compound instruments issued by the group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. This amount is recorded as a liability on an amortised cost basis using the effective interest method until extinguished upon conversion or at the instrument's maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognised and included in equity net of income tax effects and is not subsequently remeasured.

Warrants issued in connection with shares or loan notes that give the holder the right to subscribe for a fixed number of the Company’s equity shares at a fixed price are classified as equity instruments. The fair value attributable to warrants is recorded in a separate warrant reserve within equity. This reserve is not subsequently remeasured. On exercise, proceeds received together with the amount in the warrant reserve are credited to share capital and share premium as appropriate. On expiry, any balance in the warrant reserve is transferred to retained earnings.

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 group’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 if, and only if, there is 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.

The costs of short-term employee 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 fixed 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.

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

The expense in relation to options over the parent company’s shares granted to employees of a subsidiary is recognised by the company as a capital contribution, and presented as an increase in the company’s investment in that subsidiary.

When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.

Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.

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 leased 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 group’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 group and company during the year was:

Their aggregate remuneration comprised:

The actual credit for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:

Details of the company's subsidiaries at 31 December 2024 are as follows:

The net proceeds received from the issue of the convertible loan notes have been split between the financial liability element and an equity component, representing the fair value of the embedded option to convert the financial liability into equity.

The liability component is measured at amortised cost, and the difference between the carrying amount of the liability at the date of issue and the amount reported in the Balance Sheet represents the effective interest rate less interest paid to that date.

The effective rate of interest is 8% per annum.

The equity component of the convertible loan notes has been credited to the equity reserve. The equity component in the current year is £6,114,502 (2023: £nil), see note 29.

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

Included in creditors at the year end is £20,778 (2023: £nil) in respect of pension contributions.

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

Ordinary shares rank pari passu with other equity shares (as defined in the articles of association adopted on 31 December 2024) in respect of voting and dividends and last in participation on a distribution of assets, including on a winding up. Ordinary shares are not redeemable.

Series A shares rank pari passu with other classes of equity shares (as defined in the articles of association adopted on 31 December 2024) in respect of voting and dividends and second most senior in participation on a distribution of assets, including on a winding up. Series A shares are not redeemable.

Series B shares rank pari passu to other classes of equity shares (as defined in the articles of association adopted on 31 December 2024) in respect of voting and dividends and most senior in participation on a distribution of assets, including on a winding up. Series B shares are not redeemable.

Series B2 shares rank pari passu to other classes of equity shares (as defined in the articles of association adopted on 31 December 2024) in respect of voting and dividends and most senior in participation on a distribution of assets, including on a winding up. Series B shares are not redeemable.

Deferred shares (as defined in the articles of association adopted on 31 December 2024) do not have any rights in respect to voting or dividend and the entire class of shares will receive £1 on a distributions of assets, including on a winding up. Deferred shares are not redeemable.

During the year, 120,876 Ordinary 0.03p shares were issued for total consideration of £36 and £193,646 Series B2 0.03p shares were issued for a total consideration of £1,370,000.

The Company had 532,467 warrants outstanding, each entitling the holder to subscribe for one ordinary share of 0.03p nominal value at an exercise price of £8.84 per share.

The warrants have been classified as equity instruments under FRS 102 as they entitle the holder to subscribe for a fixed number of the Company’s equity shares at a fixed price.

The reserve represents the cumulative amounts charged to profit in respect of employee share option arrangements where the scheme has not yet been settled by means of an award of shares to an individual. Awards are made annually under the plan. In accordance with the scheme rules, options are exercisable at the option price of the shares subject to all vesting conditions being met.

The share-based payment charge has been disclosed in note 4.

The company vacated a former leasehold premise after the year end. The landlord has raised a dilapidation claim which the company is disputing. The financial effect cannot be reliably estimated, no provision has been recognised.

Of the commitments, £348,399(2023: £357,569) are payable within one year and £131,496 (2023: £358,333) are payable between two and five years. The lease payments are recognised as an expense when payable.

At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Between the year-end and the date of signing the financial statement, the company's equity reserve of £15,594,502 transferred into share capital, representing the Second Completion Subscription of 1,071,988 0.03p shares issued for a total consideration of £9,479,981; and the 2023 and 2024 Convertible Loan Notes were automatically converted into Conversion Shares (Series B2 Shares) note 20, all as detailed within the Subscription Agreement dated 31 December 2024.

Management evaluated the Company as of 31 December 2024, and updated its evaluation through to the date the financial statements were available to be issued, whether there is uncertainty about the Company’s ability to continue as a going concern through 2025.

The Company has evaluated its cash projections for 2025 beyond to 2028. and determined there are conditions present that create some uncertainty about the Company’s ability to continue operations through one year from the date the financial statements were available to be issued. The Company has determined that the continued support of the investors will be required, through the exercise of the warrants detailed within the Subscription Agreement dated 31 Dec 2024 or through a Second Close of Series B2.

Transactions between group companies, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

At 31 December 2024, two directors held options over ordinary shares totalling 317,709 (2023: 281,011) at exercise prices of £0.003, £1.14 and £9.77 per share, all with no expiry. These options were issued under the Company’s share option scheme.