DIRECT SOFTWARE LIMITED


Directors	K P A, BAKER
	R D P, BAKER


Company Secretary	SIVES, Deirdra Ann, Dr


Registered Address	53 Bothwell Street
	Glasgow
	G2 6TS


Registered Number	SC586179 (Scotland)

Notes to the Financial Statements
for the year ended 31 January 2026

1.	Accounting policies

	Statutory information
	The company is a private company limited by shares and registered in Scotland. The company's registered number and registered office address can be found on the Company Information page.

	Statement of compliance
	The financial statements have been prepared in compliance with FRS 102 Section 1A as it applies to the financial statements for the period and there were no material departures from the reporting standard.

	Basis of preparation
	The accounts have been prepared under the historical cost convention and in accordance with FRS 102, the financial reporting standard applicable in the UK and Republic of Ireland (as applied to small entities by section 1A of the standard).

	Functional and presentation currency
	The financial statements are presented in sterling and this is the functional currency of the company.

	Going concern
	The financial statements have been prepared on a going concern basis. In assessing whether this is appropriate, the directors have considered the Company's financial position for a period of at least 12 months from the date of approval of these financial statements. As set out in the judgements note above, the balance sheet reflects the assumption that two convertible loan notes converted to Preference Shares on 30 October 2025; on this basis the Company had net assets of £368,291 at the year end and cash reserves of £439,857. Were the supporting documentation for that conversion not to be obtained, the notes would instead remain financial liabilities of approximately £818,370, due on demand, which would result in the Company reporting net liabilities at the balance sheet date. Having regard to correspondence with the noteholder, the directors consider it appropriate to prepare the financial statements on a going concern basis.

Going concern

The financial statements have been prepared on a going concern basis. In assessing whether this is appropriate, the directors have considered the Company's financial position for a period of at least 12 months from the date of approval of these financial statements. As set out in the judgements note above, the balance sheet reflects the assumption that two convertible loan notes converted to Preference Shares on 30 October 2025; on this basis the Company had net assets of £368,291 at the year end and cash reserves of £439,857. Were the supporting documentation for that conversion not to be obtained, the notes would instead remain financial liabilities of approximately £818,370, due on demand, which would result in the Company reporting net liabilities at the balance sheet date. Having regard to correspondence with the noteholder, the directors consider it appropriate to prepare the financial statements on a going concern basis.

	Judgements and key sources of estimation uncertainty
	Two convertible loan notes issued to GSV Investors II, LP (October 2023 and December 2024, with a combined liability carrying value of £825,165 at 1 February 2025) reached their contractual Maturity Date of 30 October 2025 during the year. Under the terms of the loan instruments, the notes convert into a newly created class of Preference Shares in the Company at the Maturity Date only upon a written election given by the Holder before that date. As at the date these financial statements were approved, no such election had been made. The directors have instructed that these financial statements be prepared on the basis that the notes will nonetheless be treated as converted to Preference Shares on 30 October 2025, in anticipation of a formal election being made by the Holder in due course. This is a significant accounting judgement made in the absence of the underlying event having yet occurred: no Companies House filing evidencing a new share allotment has been made, and no supporting documentation (the Holder's written election, board resolution, or updated share register) is currently available. Were the election ultimately not to be made, both notes would instead remain financial liabilities, due on demand, carrying additional accrued interest and foreign exchange movement beyond what is reflected below, and the balance sheet position presented would need to be revised. On this basis, the liability component of the two notes (translated at the HMRC average exchange rate for October 2025 of $1.3647:£1) of £818,370 was transferred to other reserves as shares to be issued, pending completion of allotment. Interest of £50,043 was charged to profit or loss for the period to 30 October 2025, together with a foreign exchange gain of £56,837 arising on retranslation of the notes between 31 January 2025 and the Maturity Date. A third note, issued to Scout Fund VII (April 2024, sterling-denominated), remains outstanding and unconverted at 31 January 2026 and is not affected by this judgement.

Judgements and key sources of estimation uncertainty

Two convertible loan notes issued to GSV Investors II, LP (October 2023 and December 2024, with a combined liability carrying value of £825,165 at 1 February 2025) reached their contractual Maturity Date of 30 October 2025 during the year. Under the terms of the loan instruments, the notes convert into a newly created class of Preference Shares in the Company at the Maturity Date only upon a written election given by the Holder before that date.

As at the date these financial statements were approved, no such election had been made. The directors have instructed that these financial statements be prepared on the basis that the notes will nonetheless be treated as converted to Preference Shares on 30 October 2025, in anticipation of a formal election being made by the Holder in due course. This is a significant accounting judgement made in the absence of the underlying event having yet occurred: no Companies House filing evidencing a new share allotment has been made, and no supporting documentation (the Holder's written election, board resolution, or updated share register) is currently available. Were the election ultimately not to be made, both notes would instead remain financial liabilities, due on demand, carrying additional accrued interest and foreign exchange movement beyond what is reflected below, and the balance sheet position presented would need to be revised.

On this basis, the liability component of the two notes (translated at the HMRC average exchange rate for October 2025 of $1.3647:£1) of £818,370 was transferred to other reserves as shares to be issued, pending completion of allotment. Interest of £50,043 was charged to profit or loss for the period to 30 October 2025, together with a foreign exchange gain of £56,837 arising on retranslation of the notes between 31 January 2025 and the Maturity Date. A third note, issued to Scout Fund VII (April 2024, sterling-denominated), remains outstanding and unconverted at 31 January 2026 and is not affected by this judgement.

	Revenue from rendering of services
	Revenue from the rendering of services is recognised by reference to the stage of completion of the contract. The stage of completion of a contract is measured by comparing the costs incurred for work performed to date to the total estimated contract costs. Turnover is only recognised to the extent of recoverable expenses when the outcome of a contract cannot be estimated reliably.

	Employee benefits
	Contributions to defined contribution plans are expensed in the period to which they relate.

	Foreign currency translation
	Transactions in foreign currencies are initially recognised at the rate of exchange ruling at the date of the transaction. At the end of each reporting period foreign currency monetary items are translated at the closing rate of exchange. Non-monetary items that are measured at historical cost are translated at the rate ruling at the date of the transaction. All differences are charged to profit or loss.

Foreign currency translation

Transactions in foreign currencies are initially recognised at the rate of exchange ruling at the date of the transaction. At the end of each reporting period foreign currency monetary items are translated at the closing rate of exchange. Non-monetary items that are measured at historical cost are translated at the rate ruling at the date of the transaction. All differences are charged to profit or loss.

	Tangible fixed assets and depreciation
	Tangible fixed assets are stated at cost or valuation less depreciation. Depreciation is provided on all tangible fixed assets as follows:


		Straight line (years)
	Office Equipment	3

	Investments
	Investments in subsidiaries, associates and joint ventures are measured at cost less any accumulated impairment losses. Listed investments are measured at fair value where the difference between cost and fair value is material. Unlisted investments are measured at fair value unless the value cannot be measured reliably, in which case they are measured at cost less any accumulated impairment losses. Changes in fair value are included in the profit and loss account.

Investments

Investments in subsidiaries, associates and joint ventures are measured at cost less any accumulated impairment losses. Listed investments are measured at fair value where the difference between cost and fair value is material. Unlisted investments are measured at fair value unless the value cannot be measured reliably, in which case they are measured at cost less any accumulated impairment losses. Changes in fair value are included in the profit and loss account.

	Financial instruments
	Convertible loan notes are compound financial instruments comprising a liability component and an equity component. At the date of issue, the liability component is measured at the present value of the contractual cash flows discounted at the market rate of interest for an equivalent non-convertible instrument, and is subsequently carried at amortised cost using the effective interest method. The residual amount is recognised in equity and is not subsequently remeasured. Where a note is denominated in a currency other than sterling, the liability component is a monetary item and is retranslated at each reporting date, and at settlement or conversion, at the relevant closing rate of exchange, with the difference recognised in profit or loss. Where a compound instrument converts into equity instruments of the Company in accordance with its original contractual terms, the liability component is derecognised at its carrying amount at the date of conversion and recognised directly in equity; no gain or loss is recognised on the conversion itself.

Financial instruments

Convertible loan notes are compound financial instruments comprising a liability component and an equity component. At the date of issue, the liability component is measured at the present value of the contractual cash flows discounted at the market rate of interest for an equivalent non-convertible instrument, and is subsequently carried at amortised cost using the effective interest method. The residual amount is recognised in equity and is not subsequently remeasured. Where a note is denominated in a currency other than sterling, the liability component is a monetary item and is retranslated at each reporting date, and at settlement or conversion, at the relevant closing rate of exchange, with the difference recognised in profit or loss. Where a compound instrument converts into equity instruments of the Company in accordance with its original contractual terms, the liability component is derecognised at its carrying amount at the date of conversion and recognised directly in equity; no gain or loss is recognised on the conversion itself.

2.	Average number of employees


		2026		2025
	Average number of employees during the year	3		3

3.	Tangible fixed assets

	Office Equipment	Total
	£	£
Cost or valuation
At 01 February 25	20,201	20,201
Additions	1,970	1,970
At 31 January 26	22,171	22,171
Depreciation and impairment
At 01 February 25	14,605	14,605
Charge for year	3,414	3,414
At 31 January 26	18,019	18,019
Net book value
At 31 January 26	4,152	4,152
At 31 January 25	5,596	5,596

4.	Debtors: amounts due within one year

	2026	2025
	£	£
Trade debtors / trade receivables	133,543	4,705
Amounts owed by group undertakings	-	41,210
Other debtors	9,234	1,760
Prepayments and accrued income	25,757	23,814
Total	168,534	71,489

5.	Creditors: amounts due within one year

	2026	2025
	£	£
Trade creditors / trade payables	34,588	39,213
Bank borrowings and overdrafts	10,200	10,200
Amounts owed to related parties	49,365	-
Convertible loans	34,730	-
Taxation and social security	7,070	4,751
Other creditors	27,761	27,672
Accrued liabilities and deferred income	47,804	59,639
Total	211,518	141,475


	Short term creditors are measured at transaction price (which is usually the invoice price). Loans and other financial liabilities are initially recognised at transaction price net of any transaction costs and subsequently measured at amortised cost determined using the effective interest method.

6.	Creditors: amounts due after one year

	2026	2025
	£	£
Bank borrowings and overdrafts	1,481	11,227
Convertible loans	-	857,103
Total	1,481	868,330

7.	Provisions for liabilities
	The Company has recognised a provision for doubtful debts of £11,850, calculated at 1.5% of monthly sales revenue, net of bad debts recognised and written off during the year.

	2026	2025
	£	£
Other provisions	11,850	15,463
Total	11,850	15,463

8.	Related party transactions
	The Company transacts with Allegrow Inc, a company under common control. During the year, certain US sales income was received by the Company on behalf of Allegrow Inc; this income has been recognised in the books of Allegrow Inc, with a corresponding adjustment removing it from the Company's results, giving rise to an intercompany balance. At 31 January 2026, the Company owed £49,365 to Allegrow Inc (2025: the Company was owed £41,210 by Allegrow Inc) in respect of this and other intercompany transactions.

Related party transactions

The Company transacts with Allegrow Inc, a company under common control. During the year, certain US sales income was received by the Company on behalf of Allegrow Inc; this income has been recognised in the books of Allegrow Inc, with a corresponding adjustment removing it from the Company's results, giving rise to an intercompany balance. At 31 January 2026, the Company owed £49,365 to Allegrow Inc (2025: the Company was owed £41,210 by Allegrow Inc) in respect of this and other intercompany transactions.

	Notes	2026		2025
		£	£	£	£
Fixed assets
Tangible assets	3		4,152		5,596
			4,152		5,596
Current assets
Debtors	4	168,534		71,489
Cash at bank and on hand		439,857		653,759
		608,391		725,248
Creditors amounts falling due within one year	5	(211,518)		(141,475)
Net current assets (liabilities)			396,873		583,773
Total assets less current liabilities			401,025		589,369
Creditors amounts falling due after one year	6		(1,481)		(868,330)
Provisions for liabilities	7		(11,850)		(15,463)
Accruals and deferred income			(12,403)		(2,702)
Net assets			375,291		(297,126)
Capital and reserves
Called up share capital			204		204
Share premium			9,418		9,418
Other reserves			826,440		8,070
Profit and loss account			(460,771)		(314,818)
Shareholders' funds			375,291		(297,126)