AIQ Limited

Interim / Quarterly Report • Jul 29, 2024

National Storage Mechanism | Additional information

RNS Number : 1121Y

AIQ Limited

29 July 2024

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014, WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.

29 July 2024

For Immediate Release

AIQ Limited

("AIQ" or the "Company" or, together with Alcodes International, the "Group")

Interim Results

The Board of AIQ (LSE: AIQ) announces the Group's interim results for the six months ended 30 April 2024.

Summary*

·      Revenue of £153k (H1 2023: £73k) from delivery of a project to develop a gaming application

·      Loss before tax for the period reduced to £189k (H1 2023: £339k loss)

·      Cash and cash equivalents of £30k at 30 April 2024 (31 October 2023: £135k); as at 26 July 2024, cash and cash equivalents were £72k following securing, post period, a non-interest bearing loan

·      Post period, the Group undertook a consulting project, for which it received HK$200k, regarding the launch of an e-commerce platform in Hong Kong

·      The Board continues to closely monitor the cash position and keep all of its strategic options open in assessing how best to deliver value to shareholders

* The comparative figures for H1 2023 are for continuing operations only (see the financial statements for further detail on discontinued operations)

Enquiries

AIQ Limited	c/o +44 (0)20 4 582 3500
Harry Chathli, Chairman
Guild Financial Advisory Limited (Financial Adviser)	+44 (0) 7973839767
Ross Andrews
Gracechurch Group (Financial PR)	+44 (0)20 4582 3500
Claire Norbury

Operational & Strategic Review

As noted in the Group's FY 2023 results announcement, the environment for non-fungible tokens and other blockchain-based projects has become challenging. Accordingly, the Group has shifted its focus to sourcing IT services projects in alternative sectors.

During the six months to 30 April 2024, the Group completed the delivery of a project, which commenced in the previous year, to develop a gaming application. The Group assisted the customer with the concept for the video game app and its technical development. In this project, the Group performed the role of project manager and subcontracted the technical delivery (such that the net benefit to the Group is the margin earned on the contract).

Post period, the Group undertook a consulting project, for which it received HK$200k, whereby it advised a customer in Hong Kong on the feasibility of operating an e-commerce platform, based on a mass affiliate programme, focusing on the food & beverage industry. If the customer decides to launch the platform, the Group expects to be appointed to assist with building the platform engine. The Group is delivering this project directly (as opposed to performing the role of project manager), leveraging its previous experience with its OctaPLUS platform, and, accordingly, it carries a higher gross margin than the other projects recently undertaken.  

With revenue generation remaining subdued , the Board continues to closely monitor the cash position and is keeping all its strategic options open in assessing how best to deliver shareholder value. The Board is grateful for the ongoing support of its major shareholders.

Financial Review*

Revenue for the six months ended 30 April 2024 was £153k (H1 2023: £73k). The revenue was generated from the delivery of a project to develop a gaming application.

The Group recognised a gross profit of £79k (H1 2023: £71k).

Administrative expenses were slightly reduced to £245k (H1 2023: £278k) as the Group continued to implement cost reduction measures. There was a net loss on foreign exchange of £8k (H1 2023: £115k loss) due to the continued weakness of the Pound against the Hong Kong Dollar. Accordingly, operating loss was £175k (H1 2023: £323k loss).

Net finance costs were £15k compared with £16k for the first half of the previous year.

Loss before tax for the period was £189k (H1 2023: £339k loss).

The Group had cash and cash equivalents of £30k at 30 April 2024 (31 October 2023: £ 135k). Post period, as announced on 5 July 2024, the Group entered a non-interest bearing loan agreement with Li Chun Chung, an Executive Director of the Company, to raise US$100k (see Note 11 to the financial statements). As at 26 July 2024, the Group had cash and cash equivalents of £72k.

* The comparative figures for H1 2023 are for continuing operations only (see the financial statements for further detail on discontinued operations)

Going Concern

The Group incurred losses of £189k during the period and cash outflows from operating activities of £94k. As at 30 April 2024, the Group had net current liabilities of £160k and cash and cash equivalents of £30k. The Group's cash position was approximately £72k as at 26 July 2024, being the last practicable date prior to the date of this report.

In assessing whether the going concern assumption is appropriate, the Directors take into account all available information for the foreseeable future, in particular for the 12 months from the date of approval of the financial statements. This information includes management prepared cash flows forecasts for the Group.

The Directors have assessed that to meet its forecasted cash requirements, the Group is dependent on cash generated from the new revenue contracts, continued support from its loan holders and/or obtaining further funding in the form of debt/equity. As discussed in Note 11, post period, the Company raised USD100,000 from an Executive Director. The significant shareholders of the Company have also indicated their intention to provide further support. The Directors are confident that the actions required to maintain the going concern position of the Group can be achieved as successfully demonstrated in the past. As a result, the Board continues to adopt the going concern basis of accounting in preparing the financial statements.

The uncertainty around management estimation of winning new revenue contracts and/or obtaining additional funding gives rise to a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern. Therefore, the Directors consider the Group to be a going concern but have identified a material uncertainty in this regard.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 APRIL 2024

				Note		Six months ended 30 April 2024 Unaudited £	Six months ended 30 April 2023 Unaudited £		Year ended 31 October 2023 Audited £
Revenue from continuing operations				5		153,228	72,960		207,209
Cost of sales from continuing operations						(74,489)	(2,238)		(73,700)
Gross profit from continuing operations						78,739	70,722		133,509
Other income						-	-		(234)
Administrative expenses						(245,063)	(278,487)		(580,246)
Loss on foreign exchange						(8,344)	(114,939)		(31,230)
Operating loss from continuing operations						(174,668)	(322,704)		(478,201)
Finance income						-	102		-
Finance costs						(14,707)	(16,399)		(24,997)
Loss before taxation from continuing operations						(189,375)	(339,001)		(503,198)
Taxation						-	-		-
Loss for the year from continuing operations						(189,375)	(339,001)		(503,198)
Loss on discontinued operations net of tax						-	(13,847)		(23,079)
Loss attributable to equity holders of the Company from continuing and discontinued operations						(189,375)	(352,848)		(526,277)
Other comprehensive income (as may be reclassified to profit and loss in subsequent periods, net of taxes):
Exchange difference on translating foreign operations						2,639		80,045		(430)
Comprehensive income attributable to equity holders of the Company						( 186,736)		( 272,803)		( 526,707)
Loss per share basic and diluted (£)				7		(0.003)		(0.005)		(0.008)

The accompanying notes form an integral part of these consolidated financial statements

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 APRIL 2024
	Note				As at 30 Apr 2024 Unaudited £	As at 31 Oct 2023 Audited £
Assets
Non-current assets
Property, plant and equipment					5,553	6,884
					5,553	6,884
Current assets
Trade and other receivables					16,677	41,718
Cash and cash equivalents					29,688	135,445
Total current assets					46,365	177,163
Total assets					51,918	184,047
Equity and liabilities
Capital and reserves
Share capital	8				647,607	647,607
Share premium					6,019,207	6,019,207
Share warrant reserve	9				12,000	12,000
Foreign currency translation reserve					8,637	5,998
Accumulated losses					(7,346,958)	(7,157,583)
Total equity					(659,507)	(472,771)
Liabilities
Current liabilities
Trade payables					849	-
Accruals and other payables					90,837	105,078
Customer deposits					119,739	51,740
Total current liabilities					211,425	156,818
Non-current liabilities
Convertible loan notes	10				500,000	500,000
Total non-current liabilities					500,000	500,000
Total equity and liabilities					51,918	184,087

The accompanying notes form an integral part of these consolidated financial statements

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 APRIL 2024

				Share capital	Share premium	Share warrant reserve	Foreign currency translation reserve	Accumulated losses		Total equity
				£	£	£	£	£		£
Balance as at 31 October 2022 (Audited)				647,607	6,019,207	12,000	6,428	(6,631,306)		53,936
Total comprehensive loss for the period				-	-	-	80,045	( 352,848 )		(272,803)
Balance at 30 April 2023 (Unaudited)				647,607	6,019,207	-	86,473	(6,984,154)		(218,867)
Balance as at 31 October 2023 (Audited)				647,607	6,019,207	12,000	5,998	(7,157,583)		(472,771)
Total comprehensive loss for the period				-	-	-	2,639	( 189,375 )		(186,736)
Share warrant reserve				-	-	-	-	-		-
Balance at 30 April 2024				647,607	6,019,207	12,000	8,637	(7,346,958)		(659,507)

Share premium - Represents amounts received in excess of the nominal value on the issue of share capital less any costs associated with the issue of shares.

Accumulated losses - The accumulated losses reserve includes all current and prior periods retained profits and losses.

Share warrant reserve - Amount arising on the issue of warrants during the period.

Translation reserve - The translation reserve includes foreign exchange movements on translating the overseas subsidiaries records, denominated MYR and HK$, to the presentational currency, GBP.

The accompanying notes form an integral part of these consolidated financial statements

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 APRIL 2024

		Six months ended 30 April 2024 Unaudited £		Six months ended 30 April 2023 Unaudited £	Year ended 31 October 2023 Audited £
Cash flows from operating activities
Loss before taxation from continuing operations		(189,375)		(339,001)	(503,198)
Loss before taxation from discontinued operations		-		(13,847)	(23,079)
Loss before taxation		(189,375)		(352,848)	(526,277)
Adjustments for:-
Depreciation		1,194		50,218	69,920
Loss on disposal of fixed assets		-		-	2,981
Share-based payment charge		-		(6,000)	11,000
Lease restoration cost		-		9,250	-
Interest income		-		(102)	-
Interest expense		14,707		16,399	26,924
Foreign exchange		137		1,482	7,162
Operating loss before working capital changes		(173,337)		(281,601)	(408,290)
Decrease/(increase) in receivables		25,041		(33,957)	13,690
Increase/(decrease) in payables		54,607		(2,892)	(24,395)
Net cash used in operating activities from continued and discontinued operations		(93,689)		(318,450)	(418,995)
Cash flows from investing activities
Acquisition of plant and equipment		-		-	(1,651)
Proceeds from sale of fixed assets		-		-	-
Interest received		-		102	-
Net cash used in investing activities from continued and discontinued operations		-		-	(1,651)
Cash flows from financing activities
Proceeds from issue of convertible loan notes		-		-	-
Interest on lease liability		(14,707)		(14,995)	(1,924)
Repayment of lease liabilities		-		(52,393)	(78,013)
Net cash used in financing activities from continued and discontinued operations		(14,707)		(67,388)	(79,937)
Net decrease in cash and cash equivalents from continued and discontinued operations		(108,396)		(385,736)	(500,583)
Cash and cash equivalents at beginning of the period		135,445		636,459	636,459
Effect of exchange rates on cash and cash equivalents		2,639		78,641	(431)
Cash and cash equivalents at end of the period  from continued and discontinued operations		29,688		329,364	135,445

The non-cash movement from financing activities was £12,500 (H1 2023: £18,500) on account of the accrual of interest on loan notes (refer to Note 10). The first half of 2023 also included a share-based payment charge of £6,000.  

The accompanying notes form an integral part of these consolidated financial statements

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. GENERAL INFORMATION

AIQ Limited ("the Company") was incorporated and registered in The Cayman Islands as a private company limited by shares on 11 October 2017 under the Companies Law (as revised) of The Cayman Islands, with the name AIQ Limited, and registered number 327983.

The Company's registered office is located at 5th Floor Genesis Building, Genesis Close, PO Box 446, Cayman Islands, KY1-1106.

The Company has a standard listing on the London Stock Exchange.

The consolidated financial statements include the financial statements of the Company and its controlled subsidiaries (the "Group").

2. PRINCIPAL ACTIVITIES

The principal activities of the Group currently comprise the delivery of information technology (IT) solutions for clients through the provision of IT consultancy.

3. ACCOUNTING POLICIES

a) Basis of preparation

The condensed consolidated interim financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and International Accounting Standard 34 "Interim Financial Reporting" (IAS 34). Other than as noted below, the accounting policies applied by the Group in these condensed interim financial statements are the same as those set out in the Group's audited financial statements for the year ended 31 October 2023. These financial statements have been prepared under the historical cost convention and cover the six-month period to 30 April 2024.

These condensed financial statements do not include all of the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the audited financial statements for the year ended 31 October 2023.

The condensed interim financial statements are unaudited and have not been reviewed by the auditors and were approved by the Board of Directors on 28 July 2024.

The financial information is presented in Pounds Sterling (£), which is the presentational currency of the Company.

A summary of the principal accounting policies of the Group are set out below.

b) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to the end of the reporting period. Subsidiaries are entities over which the Group has control. The Group controls an investee if the Group has power over the investee, exposure to variable returns from the investee, and the ability to use its power to affect those variable returns.

The consolidated financial statements present the results of the Company and its subsidiaries as if they formed a single entity. Inter-company balances and transactions between Group companies are therefore eliminated in full. The financial information of subsidiaries is included in the Group's financial statements from the date that control commences until the date that control ceases.

During the year to 31 October 2023, the Group discontinued its operation in Malaysia as part of its consolidation strategy to save cost and focus on operations in Hong Kong and therefore the comparatives in the consolidated statement of comprehensive income pertaining to discontinued operations were restated in line with IFRS 5- Non-current assets held for sale sand discontinued operations.

c) Going concern

The Group incurred losses of £189k during the period and cash outflows from operating activities of £94k. As at 30 April 2024, the Group had net current liabilities of £160k and cash and cash equivalents of £30k. The Group's cash position was approximately £72 as at 26 July 2024, being the last practicable date prior to the date of this report.

In assessing whether the going concern assumption is appropriate, the Directors take into account all available information for the foreseeable future, in particular for the 12 months from the date of approval of the financial statements. This information includes management prepared cash flows forecasts for the Group.

The Directors have assessed that to meet its forecasted cash requirements, the Group is dependent on cash generated from the new revenue contracts, continued support from its loan holders and/or obtaining further funding in the form of debt/equity. As discussed in Note 11, post period, the Company raised USD100,000 from an Executive Director. The significant shareholders of the Company have also indicated their intention to provide further support. The Directors are confident that the actions required to maintain the going concern position of the Group can be achieved as successfully demonstrated in the past. As a result, the Board continues to adopt the going concern basis of accounting in preparing the financial statements.

The uncertainty around management estimation of winning new revenue contracts and/or obtaining additional funding gives rise to a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern. Therefore, the Directors consider the Group to be a going concern but have identified a material uncertainty in this regard.

4. SUBSIDIARIES

The consolidated financial statements include the financial statements of the Company and its controlled subsidiaries (the "Group") as follows:

Name	Place of incorporation	Registered address	Principal activity	Effective interest
				30.04.2024	31.10.2023
Alchemist Codes Sdn Bhd*	Malaysia	2-9, Jalan Puteri 4/8, Bandar Puteri, 47100 Puchong, Selangor Darul Ehsan Malaysia	Design and development of software	100%	1 00%
Alcodes International Limited	Hong Kong	Room 47, Smart-Space FinTech, Level 4, Core E, Cyberport 3, 100 Cyberport Road, Hong Kong	Software and app development	100%	1 00%

* During the year to 31 October 2023, the Company discontinued the operations of Alchemist Codes Sdn Bhd and on 31 October 2023, commenced the strike off process to dispose of the subsidiary. Accordingly, Alchemist Codes was a discontinued operation for the period under review.

5.       REVENUE

			Six months ended 30 April 2024		Six months ended 30 April 2023		Year ended 31 October 2023
		£				£		£
Software development income		149,422				72,960		207,209
Other		3,806				-		-
Total				153,228	72,960		207,209

All revenues were generated in Asia. An analysis of revenue by the timing of the delivery of goods and services to customers for the periods ended 30 April 2024, 30 April 2023 and the year ended 31 October 2023 is as follows:

	30 April 2024	30 April 2024
	Goods transferred at a point in time	Services transferred over time
	£	£
Software development income	-	149,422
Other	3,806	-
Total	3,806	149,422

	30 April 2023	30 April 2023
	Goods transferred at a point in time	Services transferred over time
	£	£
Software development income	-	72,960
Total	-	72,960

	31 October 2023	31 October 2023
	Goods transferred at a point in time	Services transferred over time
	£	£
Software development income	-	207,209
Total	-	207,209

6. SEGMENT REPORTING

IFRS 8 defines operating segments as those activities of an entity about which separate financial information is available and which are evaluated by the Board of Directors to assess performance and determine the allocation of resources. The Board of Directors is of the opinion that under IFRS 8 the Group has only one operating segment, information technology product and services . The Board of Directors assesses the performance of the operating segment using financial information that is measured and presented in a manner consistent with that in the Financial Statements.

All revenues were derived from Asia.

7. LOSS PER SHARE

The Company presents basic and diluted earnings per share information for its ordinary shares. Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares in issue during the reporting period. Diluted loss per share is determined by adjusting the loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares .

There is no difference between the basic and diluted loss per share, as the Company's warrants and loan notes are anti-dilutive in nature and therefore the diluted loss per share has not been presented.

			Six months ended 30 April 2024	Six months ended 30 April 2023	Year ended 31 October 2023
Loss attributable to ordinary shareholders (£)			(189,375)	(352,848)
Continuing operations			(189,375)	(339,001)	(503,198)
Discontinued operations			-	(13,847)	(23,079)
Basic - Weighted average number of shares			64,760,721	64,760,721	64,760,721
Basic loss per share (expressed as £ per share)
from continuing operations			(0.003)	(0.005)	(0.008)
from discontinued operations			-	(0.0002)	(0.0004)

8.       SHARE CAPITAL

			Number		Nominal value      £
	Authorised
	Ordinary shares of £0.01 each		800,000,000		8,000,000
	Issued and fully paid:
	As at 30 April 2024		64,760,721		647,607
		Six months ended		Year ended
		30 April 2024		31 Oct 2023
		£		£
As at beginning of the period		647,607		647,607
Issued during the period		-		-
As at end of the period			647,607	647,607

9.       SHARE WARRANT RESERVE

On 3 October 2022, the Company granted 300,000 warrants to Guild Financial Advisory ("GFA"), the Company's corporate adviser, exercisable at a price of £0.01 for a period of up to ten years. The warrants were granted in return in part for their corporate financial services carried out for a period of 12 months whereby it was agreed that GFA would provide services for an amount of £24,000 with £12,000 being settled in cash and the balance of £12,000 represented by the issue of the warrants As a result of this the fair value of the warrants was deemed to be £12,000 spread evenly over the 12-month period of the contract, £1,000 was expensed in October 2022 and £11,000 was expensed during the year to October 2023 and £12,000 was taken to a warrant reserve.

10.     CONVERTIBLE LOAN NOTES

On 24 January 2022, the Company entered into an unsecured convertible loan note agreement (the "Convertible Loan Note Facility") for a total subscription of £500,000 (the "Loan Notes").

On 31 July 2023, the Company came to an agreement to amend certain terms of the convertible loan note instrument whereby the expiration date of the convertible loan notes was extended by a period of 12 months from 24 January 2024 to 24 January 2025 (the "Expiration Date"). All other details of the Convertible Loan Note Facility remained unchanged, namely that the loan notes can be repaid, in part or in full, by the Company on 31 December in any year prior to the Expiration Date by giving not less than 14 days' written notice to the noteholders. All outstanding Loan Notes attract interest at a rate of 5% per annum from the date of issue (25 January 2022) to the date of repayment or conversion and is payable on the anniversary of the issue of the Loan Notes.

The Loan Notes shall be convertible into new ordinary shares of the Company at the lesser of 11 pence per ordinary share or the volume weighted average price of the Company's ordinary shares on the London Stock Exchange in the seven-day period prior to the date on which the Loan Note is converted into ordinary shares. The Loan Notes shall be convertible, in part or in full, at any time from the date of issue until the Expiration Date by the noteholder giving to the Company at least one week's written notice.

11.     POST BALANCE SHEET EVENTS

As announced on 5 July 2024, post period end the Company entered into an agreement with Li Chun Chung, an Executive Director of the Company, for an interest-free, unsecured loan of USD100,000 (the "Loan Agreement"). Mr. Chung has informed the Company that he does not intend to request any repayment of the loan, which is re-payable upon demand, before 31 March 2025.

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