For the financial 18 month period ended 30 June 2025 the company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.

The members have not required the company to obtain an audit of its financial statements for the 18 month period in question in accordance with section 476.

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.

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

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

Merchr Limited is a private company limited by shares incorporated in England and Wales. The registered office is Riley Studios, 724 Holloway Road, London, N19 3JD.

The financial statements cover the 18 month period from 1 January 2024 to 30 June 2025. The comparative figures cover the year ended 31 December 2023.

The accounting reference date was changed during the period, resulting in an extended accounting period of 18 months. Accordingly, the comparative amounts are not entirely comparative.

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.

Business combinations are accounted for using the purchase method in accordance with FRS 102 Section 19. Under the purchase method, the cost of a business combination is measured as the fair value of the consideration transferred at the acquisition date, which comprises cash paid and any other assets given, liabilities incurred or assumed, and equity instruments issued by the acquirer.

At the acquisition date, the directors are required to identify and measure at fair value all identifiable assets acquired and liabilities assumed. An identifiable asset or liability must be recognised if it is probable that any associated economic benefit will flow to or from the company and the fair value can be measured reliably. This obligation applies equally to intangible assets and to liabilities that were not previously recognised in the financial statements of the acquired entity.

The directors apply appropriate valuation methodologies in assessing fair value. For intangible assets arising from business combinations, the directors apply the income approach where market-based evidence is not available, using probability-weighted discounted cash flow analysis applied to independently evidenced revenue streams. The assumptions underlying such valuations are reviewed for consistency with information available at the acquisition date and, where applicable, with information obtained during the measurement period permitted by FRS 102 Section 19.13, being a period of up to twelve months from the acquisition date.

Where the fair value of identifiable net assets acquired exceeds the cost of the combination, the resulting gain on bargain purchase is recognised immediately in profit or loss in accordance with FRS 102 Section 19.24, after reassessment of the identification and measurement of the identifiable assets and liabilities assumed.

Liabilities assumed as part of a business combination are recognised at fair value at the acquisition date and are classified as liabilities assumed rather than as consideration where they remain payable to the original creditors and do not form part of the purchase price agreed with the vendor or administrator.

Costs directly attributable to the business combination are expensed as incurred.

Revenue comprises sales of goods or services provided to customers net of value added tax and other sales taxes, less an appropriate deduction for actual and expected returns and discounts. Revenue is recognised when performance obligations are satisfied and the control of goods or services is transferred to the buyer. Where the performance obligation is satisfied over time, revenue is recognised in accordance with its progress towards complete satisfaction of that performance obligation.

When cash inflows are deferred and represent a financing arrangement, the promised consideration is adjusted for the effects of the time value of money, which is recognised as interest income.

The nature, timing of satisfaction of performance obligations and significant payment terms of the company's major sources of revenue are as follows:

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 are recoverable.

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.

Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is ten years.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

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 credited or charged to profit or loss.

At each reporting period end date, the company 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.

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 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.

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 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.

Where the company grants options or other equity instruments to employees, directors or contractors as part of their remuneration, the fair value of those instruments at the date of grant is recognised as an expense over the vesting period, with a corresponding credit to a share-based payment reserve within equity.

The fair value of options is determined by reference to the price per share at which equity has most recently been subscribed by third party investors, adjusted where appropriate to reflect the terms of the options. Where the exercise price is nil or nominal, the fair value is taken to be the full market value of the underlying share at the grant date.

The charge is recognised on a straight-line basis over the vesting period. Where options vest immediately on grant, the full fair value is recognised in the period of grant. Vesting conditions are taken into account by adjusting the number of instruments expected to vest. The cumulative charge is not reversed if options are forfeited or lapse unexercised after the vesting date.

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 leases asset are consumed.

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 18 month period was:

During the 18 month period directors have received remuneration as follows:

Remuneration for qualifying services £22,500 (2023:£19,558)
Company pension contributions to defined contribution schemes £97 (2023:£349)
Other long term benefits £2,616(2023: nil)

During the period, the company made contributions to a defined contribution pension scheme on behalf of its directors. The number of directors to whom retirement benefits were accruing under defined contribution schemes was 1 (2023: 0).

For the purposes of subsequent impairment testing under FRS 102 Section 27, the directors consider the acquired IP and technology platform and the company's internally developed software to constitute a single cash-generating unit. Although recognised separately on initial recognition in accordance with the measurement requirements of FRS 102 — the acquired IP and technology platform at fair value on the business combination date, and the internally developed software at accumulated cost — the two assets do not generate cash inflows independently of one another. The commercial revenue streams underlying the platform, including the enterprise SaaS pipeline and QR merchandise revenue referred to in Note 10, are generated by the combined platform as a whole rather than by either component in isolation. Accordingly, the directors assess impairment indicators and, where necessary, recoverable amount by reference to the combined carrying value of the cash-generating unit, being £2,426,953 at 30 June 2025 (acquired IP and technology platform £1,633,177 plus internally developed software £793,776), rather than by reference to either asset individually

Other debtors contains an amount which relates to VAT recoverable (£131,275) which was repaid by HMRC in December 2025.

The company has entered into non-cancellable operating lease arrangements in respect of office and operational premises used in the ordinary course of business.

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

Included in Other creditors is an amount of £210,668 (2023: nil) representing amounts due to M R Varley and Mrs J Varley. Further details can be found in note 9.

Included within other borrowings is £1,025,670 (2023: nil) representing amounts due to Mr M R Varley and Mrs J Varley (together, the Shareholder Creditors) in respect of loan balances assumed by the company as part of the acquisition of certain assets and the business undertaking of The Souvenir Collection from Product Source Group Limited (PSG), as described in Note 11.

The shareholder loan balances carry PIK Notes accruing simple interest at 10% per annum commencing from 14th April 2025, added to the principal balance annually rather than payable in cash. The Shareholder Creditors may elect, in respect of any financial year, one of the following two mutually exclusive repayment mechanisms:

Option 1 (Issue Equity): Repayment by the issue of new ordinary shares at a price per share determined by reference to the most recent valuation event, being the most recent third party share subscription, disposal of shares, sale of the company or independent valuation of the company. This option may only be exercised in a financial year in which the implied enterprise value of the company equals or exceeds the Minimum Conversion Threshold. The Minimum Conversion Threshold is £35,000,000, representing a premium of approximately one third above the enterprise value implied by the most recently completed equity fundraising round at the date of these financial statements. This threshold has been set by the independent director having regard to the age and significance of the original loan funding, the need to provide meaningful protection against dilution for existing equity shareholders, and the importance of ensuring the repayment terms are equitable to all parties.

Option 2 (Cash Repayment): Cash repayment in any financial year shall not exceed 20% of the average cash at bank and in hand over the preceding completed financial year. This option is only available where the company's net working capital (being trade debtors less trade and other creditors excluding these loan balances) is positive at the point of repayment, and where net operating cashflow for the preceding completed financial year was positive. The independent director retains a discretion to waive these conditions where demonstrably in the interests of all shareholders.

The two options are mutually exclusive in any given financial year.

The directors have confirmed that they do not intend to seek repayment of the long-term balance of £1,025,670 for a period of at least 12 months from the date of approval of these financial statements.

It is anticipated that, from the balance classified within current liabilities, withdrawals will be limited to a fixed monthly amount in lieu of salary and benefits, amounting to £158,125 over the next 12 months, together with a small amount relating to disallowed expenses.

On 14 April 2025, the company acquired certain assets and the business undertaking of The Souvenir Collection from Product Source Group Limited. The acquisition has been accounted for as a business combination under FRS 102 Section 19 using the purchase method. The fair value exercise has been completed within the measurement period permitted by FRS 102 Section 19.13.

[A]   Fair Value of Assets Acquired and Liabilities Assumed

FAIR VALUE OF IDENTIFIABLE ASSETS ACQUIRED                       £

─────────────────────────────────────────────────────────────

Plant and machinery                                                     50,000

Fixtures and fittings                                                        2,600

Inventory                                                                  357,656

Customer relationships                                                 200,000

Software, IP and technology platform                              1,723,291

                                                                           ─────────

Total identifiable assets                                              2,333,547

Liabilities assumed on acquisition                                (1,272,671)

                                                                           ─────────

Net identifiable assets acquired                                   1,060,876

CONSIDERATION                                                               £

─────────────────────────────────────────────────────────────

Cash paid to joint administrators                                     65,000

Intercompany receivable written off                                  843,217

                                                                           ─────────

Total consideration                                                      908,217

                                                                           ─────────

Gain on bargain purchase                                             152,659

                                                                           =========

[B]   Fixed Assets and Inventory

Fixed assets have been recognised at fair value of £52,600 (plant and machinery £50,000; fixtures and fittings £2,600), representing the directors' assessment of open market value at the acquisition date. Inventory has been recognised at £357,656, being the lower of cost and net realisable value, uplifted to reflect duty and freight costs not included in the book value at the acquisition date.

[C]   Customer Relationships

The customer relationships of The Souvenir Collection have been recognised as a separately identifiable intangible asset at a fair value of £200,000, assessed by the directors using a discounted cash flow on the acquired customer book at conservative revenue assumptions.

[D]   Software, IP and Technology Platform

The software, intellectual property and technology platform have been recognised as a separately identifiable intangible asset at a fair value of £1,723,291. The platform is a proprietary enterprise-grade personalisation and print-on-demand ecosystem, the development of which was funded over several years through the investment of Merchr shareholders through TSC and Product Source Group Limited. The acquisition secured Merchr's complete and unencumbered ownership of the platform, including all residual IP within Product Source Group Limited that arose from the closeness of the historic development relationship between the two companies.

The fair value has been assessed by the directors using a probability-weighted discounted cash flow methodology applied to two independently evidenced revenue streams: a recurring SaaS subscription from enterprise clients, and revenue from personalised QR merchandise sold through the platform. The commercial assumptions are grounded in discussions with an enterprise client that predated the acquisition and were ongoing at the acquisition date. Negotiations progressed significantly within the twelve-month post-acquisition period, further supporting the directors' assessment of fair value. The detailed basis of the valuation is set out in a separate directors' assessment held by the company.

The directors draw attention to the impairment provisions of FRS 102 Section 27. If the current enterprise client engagement does not convert to a full commercial arrangement, this would constitute an impairment indicator at the relevant future reporting date, at which point the directors would conduct a formal impairment review. Any such review would consider both the enterprise client pipeline and the company's Altitude product as alternative commercial pathways before any write-down could be concluded.

As set out in Note 4, the directors consider the acquired IP and technology platform and the company's internally developed software to form a single cash-generating unit for impairment testing purposes, given that neither component generates cash inflows independently of the other. Any future impairment review would accordingly be performed on the combined carrying value of that cash-generating unit

[E]   Liabilities Assumed: Shareholder Loans

Liabilities assumed of £1,272,671 represent shareholder loan balances previously advanced to Product Source Group Limited that were assumed by Merchr as part of the acquisition. By 30th June 2025 these balances had reduced to £1,236,338 after monthly withdrawals and adding PIK interest (see note 9). These loans also funded the development of the software, IP and technology platform now recognised on the Merchr balance sheet. The loans are classified as liabilities assumed rather than consideration, in accordance with FRS 102 Section 19. The assumption was approved by Mr S H Elliott as independent director; Mr M R Varley did not participate in the decision. The repayment terms set out in Note 9 were formalised at the time of the acquisition. Prior to the acquisition, the methodology by which the assets and business undertaking of Product Source Group Limited would be combined with Merchr remained under consideration, as did the fair value of those assets. The terms have now been determined by the independent director having regard to the interests of all shareholders.

 The independent director considered the assumption appropriate and equitable for the following reasons:

• The loans represent the accumulated personal investment of the shareholders in the development of the platform and POD know-how now recognised as the principal intangible asset at £1,723,291. To recognise the full intangible fair value whilst leaving behind the personal investment that was significant in creating it would not have been equitable.

• The intention was always to combine Product Source Group Limited as part of Merchr Limited. With the passage of time it became clear that it was in the best interests of shareholders to acquire the required assets and business undertaking and put Product Source Group Limited into voluntary administration. The equitable solution was to also assume the shareholder loans that were always intended to transfer to Merchr and retain the goodwill of the majority shareholders of Merchr Limited.

• The platform fair value of £1,723,291 is the product of two streams of investment working in combination: the shareholder loans advanced through Product Source Group Limited, which funded the development activity on that side, and the equity investment made by Merchr shareholders, which funded the commercial development and deployment of the platform. It would not be appropriate to attribute the full benefit of that combined investment to Merchr equity alone whilst leaving the loan contribution unrecognised.

 The repayment terms for the assumed loans are set out in Note 9.

[F]   Consideration

Total consideration of £908,217 comprises cash of £65,000 paid to Product Source Group Limited comprising £25,000 on completion and deferred payments of £20,000 on 30 September 2025 and 31 March 2026 respectively, and £843,217 representing the write-off of an intercompany receivable previously advanced by Merchr to Product Source Group Limited in connection with the development of the technology platform. In economic substance the receivable represented a capital contribution to the development of IP that Merchr has now acquired and is correctly treated as part of the consideration paid in accordance with FRS 102 Section 19.

PSG went into voluntary liquidation on 6 June 2025.

[G]   Gain on Bargain Purchase

The acquisition has given rise to a gain on bargain purchase of £152,659, being the excess of the fair value of net identifiable assets acquired (£1,060,876) over total consideration paid (£908,217). This is recognised immediately in profit or loss in accordance with FRS 102 Section 19.24 and reflects the fact that the acquisition completed ahead of, and in anticipation of, the voluntary administration of Product Source Group Limited, the decision to pursue which had been taken in principle prior to completion. The independent valuation was accordingly prepared on a realisable value basis reflecting that anticipated insolvency context, rather than at the strategic value those assets represented to Merchr as a strategic acquirer.

[H]   Post-Acquisition Contribution

From the date of acquisition on 14 April 2025 to 30 June 2025, the acquired business contributed revenue of £432,555 and a profit before taxation of £252,826 to the company's results for the period. This performance is consistent with the assumptions applied in the acquisition-date valuation

During the period ended 30 June 2025, the Company allotted additional ordinary shares for cash consideration. The allotments comprised 96,646 ordinary shares, 8,218 ordinary shares, 53,022 ordinary shares and 13,755 ordinary shares.

The aggregate nominal value of shares allotted during the period was £0.17 and the aggregate consideration received was approximately £1.26 million. The excess of consideration over nominal value was credited to the share premium account.

At 30 June 2025, the Company’s allotted, called up and fully paid share capital amounted to £1.38 (31 December 2023: £1.20).

The share premium account comprises amounts subscribed for shares in excess of their nominal value.

During the period, the Company issued ordinary shares for cash consideration at a premium to nominal value. The resulting premium on issue, together with other equity transactions recognised in accordance with applicable accounting standards, increased the share premium account from £1,859,924 at 31 December 2023 to £3,359,473 at 30 June 2025.

The share premium account is a non-distributable reserve and may only be utilised in accordance with the provisions of the Companies Act 2006.

Since the balance sheet date, the company has entered into advanced commercial discussions with a multinational quick service restaurant operator in relation to a potential enterprise licence for the Merchr personalisation platform.

The proposed arrangement, which remains subject to the execution of binding agreements, relates to a regional pilot programme involving personalised allergen management and digital wallet functionality delivered through the company’s QR code platform technology.

The pilot programme has been developed in association with a nationally recognised allergy awareness organisation.

No binding agreement had been entered into at the date of approval of these financial statements and accordingly no adjustment has been made to the financial statements in respect of this matter.

Further equity raises totalling approximately £0.5 million, for the issue of 26,510 ordinary shares, were undertaken after the balance sheet date of 30 June 2025. This is a non-adjusting post balance sheet event under FRS102.

The directors are not aware of any other material post balance sheet events requiring disclosure.

During the period the company acquired certain assets and the business undertaking of The Souvenir Collection from Product Source Group Limited. The acquisition constitutes a related party transaction: Product Source Group Limited was wholly owned by Mrs J Varley, a major shareholder of Merchr Limited; and Mr M R Varley, a director and major shareholder of Merchr Limited, served as a director of Product Source Group Limited throughout the relevant period. The acquisition was conducted on terms independently assessed by Middleton Barton Valuation Limited and agreed in the context of PSG's financial difficulties at the time.

Mr M R Varley did not participate in the board's deliberations or approval of the acquisition terms.

The transaction was approved by Mr S H Elliott as independent director. Full details of the acquisition are set out in Note 11. The director loan balances outstanding at the year end are set out in Note 10.

During the year, the Company received accountancy and advisory services from Rational Numbers Limited, a company controlled by Steven Elliott, who is also a director of the Company.

Fees charged for these services during the 18 months to 30 June 2025 amounted to £42,650 (12 months to 31 Dec 2023: £1,590). The transactions were undertaken on normal commercial terms and were approved by the Board.

At 30 June 2025, amounts owing to Rational Numbers Limited were £10,860 (31 December 2023: £1,590) which were unsecured, interest-free and repayable on normal commercial terms.

During the 18-month period ended 30 June 2025, the company had two share option arrangements in issue under unapproved share option schemes. All options are over B ordinary shares of £0.000001 nominal value. Income tax and National Insurance contributions will be due on exercise by all holders.

Grant 1

On 23 July 2024, the company granted 15,488 options to a contractor under an unapproved share option scheme. The options have an exercise price of £0.000001 per share and vest in three equal annual tranches over 36 months, with the first tranche (5,157 options, being 33.3% of the total) vesting immediately on the date of grant. The remaining tranches vest at months 24 and 36 from grant. The fair value of the options at grant date was assessed at £9.87 per option, being the price per share at which third party equity was most recently subscribed. The total fair value of the grant is £152,866. A charge of £93,401 has been recognised in administrative expenses in respect of this grant for the period ended 30 June 2025.

Grant 2

On 23 September 2024, the company granted 2,736 options to an employee under an unapproved share option scheme. The options have an exercise price of £0.000001 per share and vest monthly over 36 months. The fair value of the options at grant date was assessed at £9.87 per option. The total fair value of the grant is £27,002. A charge of £7,500 has been recognised in administrative expenses in respect of this grant for the period ended 30 June 2025.

Summary

The total share-based payment charge recognised in administrative expenses for the 18 months to 30 June 2025 is £100,901 (year ended 31 December 2023: £nil). A corresponding credit of £100,901 has been recognised in the share-based payment reserve within equity. Options held by all other former option holders lapsed on cessation of their engagement with the company.

The fair value of the options has been determined by the directors by reference to the price per share at which third party equity was most recently subscribed, discounted by 40% to reflect the minority, non-voting and illiquid nature of the underlying shares in the absence of a monetising event.