TIDMAIQ

RNS Number : 1670U

AIQ Limited

29 July 2022

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 2022

For Immediate Release

AIQ Limited

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

Interim Results

The Board of AIQ (LSE: AIQ) announces the Company's unaudited consolidated interim results for the six months ended 30 April 2022.

Summary

-- Progressed delivery of a contract to supply a decentralised finance ("DeFi") exchange ("DEX") to a customer based in Australia, which was completed post period

-- Awarded a contract to supply a non-fungible token ("NFT") marketplace for education applications in Hong Kong

   --      Revenue for the six months ended 30 April 2022 increased to GBP361k (H1 2021: GBP12k) 
   --      Net loss for the period was reduced to GBP202k (H1 2021: GBP915k loss) 

-- Cash and cash equivalents of GBP852k at 30 April 2022 (31 October 2021: GBP581k), having r aised GBP500k through the issue of unsecured convertible loan notes

Graham Duncan, Chairman of AIQ, said: " We delivered a strong increase in revenue for the first half of our 2022 financial year, albeit from a very low base and still a relatively small amount, and, thanks to the action we took last year to substantially cut costs, we reduced our losses significantly. During the period, we focused on delivering the DeFi DEX project and seeking to win new business, which resulted in us securing a contract to supply an NFT platform for educational applications. However, it is still early days for the new strategy. The Board continues to closely monitor the progress of the Group and evaluate opportunities for generating value for shareholders."

Enquiries

 
 AIQ Limited                           c/o +44 (0)20 7618 9100 
 Graham Duncan, Chairman 
 
 Luther Pendragon (Media Relations) 
  Claire Norbury                           +44 (0)20 7618 9100 
 

Operational Review

During the first half of the 2022 financial year, the Group focused on the delivery of a contract, secured at the end of the previous year, to supply a DeFi DEX to a customer based in Australia. For the project, the Group performs the role of project manager and subcontracts the technical delivery (such that the net benefit to the Group is the margin earned on the contract). The majority of the project was delivered during the first half, with completion occurring since period end.

Also during the period the Group was awarded a contract to supply an NFT platform designed to enable art schools and education centres in Hong Kong to assist their students in publishing NFTs and developing their creative talent under Web3 technology. The Group will oversee and manage the project, with the development of the marketplace being provided by Accubits Technologies Inc., a full-service software provider, and digiXnode Technology Ltd., which specialises in blockchain development. Work on the platform is underway and the beta version is expected to be ready for testing in the coming months.

Financial Review

Revenue for the six months to 30 April 2022 was GBP361k compared with GBP12k for the first half of the previous year. The revenue was predominantly based on the delivery of the DeFi DEX contract (GBP331k), with GBP10k from the NFT contract and a GBP19k contribution from IT projects in Hong Kong.

The Group recognised a gross profit of GBP115k compared with a gross loss of GBP197k for the first six months of the previous year. This was as a result of the higher revenue.

Administrative expenses were reduced to GBP392k (H1 2021: GBP573k) reflecting a reduction in personnel costs of GBP43k, Directors' fees of GBP28k, and consultancy and other overhead savings of GBP110k.

In Malaysia, the Group was able to sublet around half of its office space during the period, which has been substantially increased post period, thereby serving to further reduce the Group's outgoings.

The Group recognised a net gain on foreign exchange of GBP70k compared with a net loss of GBP138k for the same period of the prior year.

The lower expenses combined with the higher revenue enabled a significant reduction in operating loss for the period to GBP207k (H1 2021: GBP908k loss).

Net finance costs were GBP5k compared with GBP7k for the first half of the previous year.

As a result, loss before tax for the period was reduced to GBP202k (H1 2021: GBP915k loss) and the loss per share to 0.3 pence (H1 2021: 1.4 pence loss per share).

During the period, as announced on 25 January 2022, the Group raised GBP500k from the issue of convertible loan notes.

At 30 April 2022, the Group had cash and cash equivalents of GBP852k (31 October 2021: GBP582k).

Outlook

In the second half of the year, the Group has continued to deliver its IT consultancy projects and maintain tight control over costs. The Group expects revenue for the full year to be significantly higher than for the year to 31 October 2021 and anticipates a substantial reduction in net loss. However, the Group expects revenue for the second half of the year to be lower than that generated in the first half as the majority of the DeFi DEX contract was delivered during the first six-month period. The Board continues to closely monitor the progress of the Group and evaluate opportunities for generating value for shareholders.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 April 2022

 
 
 
                                          Six months      Six months 
                                Note           ended           ended      Year ended 
                                         30 Apr 2022     30 Apr 2021     31 Oct 2021 
                                           Unaudited       Unaudited         Audited 
                                                 GBP             GBP             GBP 
 Revenue                        7            361,061          12,079          61,863 
 Cost of sales                             (246,097)       (208,880)       (250,670) 
                                      --------------  --------------  -------------- 
 Gross profit/(loss)                         114,964       (196,801)       (188,807) 
 
   Administrative expenses                 (391,791)       (573,030)       (864,601) 
 Gain/(loss) on foreign 
  exchange                                    69,985       (138,498)       (126,708) 
 Operating loss                            (206,842)       (908,329)     (1,180,116) 
 
 Finance income                                9,184             263             447 
 Finance costs                               (4,563)         (7,359)        (13,151) 
 Loss before taxation                      (202,221)       (915,425)     (1,192,820) 
 Taxation                                          -               -         (2,109) 
                                      --------------  --------------  -------------- 
 Loss attributable 
  to equity holders 
  of the Company for 
  the period                               (202,221)       (915,425)     (1,194,929) 
                                      ==============  ==============  ============== 
 
 Other comprehensive 
  income ( as may 
  be reclassified 
  to profit 
  and loss in subsequent 
  periods, net of 
  taxes): 
 Exchange difference 
  on translating foreign 
  operations                                (21,110)          30,223        (16,949) 
                                      --------------  --------------  -------------- 
 Comprehensive income 
  attributable to 
  equity holders of 
  the Company for 
  the period                               (223,331)       (885,202)     (1,177,980) 
                                      ==============  ==============  ============== 
 
 Loss per share - 
  basic (GBP per share)          8           (0.003)         (0.014)         (0.018) 
 Loss per share - 
  fully diluted (GBP 
  per share)                     8           (0.003)         (0.014)         (0.018) 
 

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

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 April 2022

 
                                  Note        30 Apr        31 Oct 
                                                2022          2021 
                                           Unaudited       Audited 
                                                 GBP           GBP 
 Assets 
 
   Non-current assets 
 Property, plant and equipment               111,272       175,207 
 Right-of-use assets                          60,417       163,410 
 Intangible assets                 6               -             - 
 Rental deposits                              30,886        29,834 
                                        ------------  ------------ 
 Total non-current assets                    202,575       368,451 
                                        ------------  ------------ 
 
 Current assets 
 Investment in leases                         60,417             - 
 Trade and other receivables                 162,300       127,414 
 Tax receivable                               24,317        23,489 
 Cash and cash equivalents                   851,639       581,618 
                                        ------------  ------------ 
 Total current assets                      1,098,673       732,521 
                                        ------------  ------------ 
 Total assets                              1,301,248     1,100,972 
                                        ------------  ------------ 
 
   Equity and liabilities 
 Capital and reserves 
 Ordinary shares                   9         647,607       647,607 
 Share premium                             6,019,207     6,019,207 
 Foreign currency translation 
  reserve                                   (11,780)         9,330 
 Accumulated losses                      (6,192,621)   (5,990,400) 
                                        ------------  ------------ 
 Total equity                                462,413       685,744 
                                        ------------  ------------ 
 
 Liabilities 
 Current liabilities 
 Trade payables                                8,210         1,075 
 Accruals and other payables                 203,436       244,664 
 Lease liabilities                           100,985        94,672 
 Total current liabilities                   312,631       340,411 
                                        ------------  ------------ 
 
 Non-current liabilities 
 Lease liabilities                            26,204        74,817 
 Convertible loan notes            10        500,000             - 
 Total non-current liabilities               526,204        74,817 
                                        ------------  ------------ 
 
 Total equity and liabilities              1,301,248     1,100,972 
                                        ------------  ------------ 
 

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 2022

 
                                                                Foreign 
                                                               currency 
                                      Share       Share     translation     Accumulated            Total 
                                    capital     premium         reserve          losses           equity 
                                        GBP         GBP             GBP             GBP              GBP 
 
 
 Balance as at 31 
  October 2020 (Audited)            647,607   6,019,207         (7,619)     (4,795,471)        1,863,724 
 Total comprehensive 
  loss for the 
  period                                  -           -          30,223       (915,425)          (885,202) 
 Balance at 30 April 
  2021 (Unaudited )                 647,607   6,019,207         (6,682)     (1,770,877)        4,889,255 
                                 ----------  ----------   -------------  --------------   -------------- 
 
 Total comprehensive 
  loss for the 
  period                                  -           -           (937)     (3,024,594)        (3,025,531) 
 Balance at 31 October 
  2021 (Audited )                   647,607   6,019,207           9,330     (5,990,400)          685,744 
                                 ----------  ----------   -------------  --------------   -------------- 
 Total comprehensive 
  (loss) for the 
  financial period                                             (21,110)       (202,221)          (223,331) 
 Balance at 30 April 
  2022 (Unaudited )                 647,607   6,019,207        (11,780)     (6,192,621)          462,413 
                                 ----------  ----------   -------------  --------------   -------------- 
 
 

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 2022

 
                                            Six months    Six months 
                                                 ended         ended     Year ended 
                                                30 Apr        30 Apr         31 Oct 
                                                  2022          2021           2021 
                                             Unaudited     Unaudited        Audited 
                                                   GBP           GBP            GBP 
 Cash flows from operating activities 
 Loss before taxation                        (202,221)     (915,425)    (1,192,820) 
 Adjustment for:- 
 Depreciation charges                          117,383        60,137        119,328 
 Interest income                               (9,184)         (263)          (447) 
 Loss/(gain) on foreign exchange              (57,595)      (61,843)        116,106 
                                          ------------  ------------  ------------- 
 Operating loss before working 
  capital changes                            (151,617)     (709,451)      (957,833) 
 (Increase)/ decrease in receivables          (34,886)        13,916       (56,318) 
 (Decrease)/ increase in payables             (15,840)        47,602       (48,854) 
 (Decrease)/ increase in amount 
  owing to directors                           (9,116)             -          2,533 
 Tax paid                                            -             -        (2,109) 
                                          ------------  ------------  ------------- 
 Cash used in operations                     (211,459)     (647,933)    (1,062,581) 
 Interest received                               9,184           263            447 
                                          ------------  ------------  ------------- 
 Net cash used in operating activities       (202,275)     (646,670)    (1,062,134) 
                                          ------------  ------------  ------------- 
 
 Cash flows from investing activities 
 Acquisition of plant and equipment                  -       (4,975)        (6,540) 
 Net cash used in investing activities               -       (4,975)        (6,540) 
                                          ------------  ------------  ------------- 
 
 Cash flows from financing activities 
 Repayment of lease liabilities               (55,862)      (44,803)       (82,512) 
 Issue of convertible loan notes               500,000             -              - 
 Net cash from / (used in) financing 
  activities                                   444,138      (44,803)       (82,512) 
                                          ------------  ------------  ------------- 
 
 Net increase / (decrease) in 
  cash and cash equivalents                    241,863     (697,448)    (1,151,186) 
 Cash and cash equivalents at 
  beginning of the period                      581,618     1,827,379      1,827,379 
 Effect of exchange rates on cash 
  and cash equivalents                          28,158     (107,346)       (94,575) 
 
   Cash and cash equivalents at 
   end of the period                           851,639     1,022,585        581,618 
                                          ------------  ------------  ------------- 
 

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 activity of the Company is to seek acquisition opportunities and to act as a holding company for a group of subsidiaries that are involved in the technology sector.

The Group is an information technology (IT) solutions provider, currently focused on the delivery of blockchain platforms in Asia 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 2021. These financial statements have been prepared under the historical cost convention and cover the six-month period to 30 April 2022.

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 2021.

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 2022.

The financial information is presented in Pounds Sterling (GBP), 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.

c) Going concern

The financial statements are required to be prepared on the going concern basis unless it is inappropriate to do so.

The Group incurred losses of GBP0.2 million during the period and cash outflows from operating activities of GBP0.2 million. As at 30 April 2022, the Group had net current liabilities of GBP0.1 million and cash of GBP0.9 million. The Group's cash position was approximately GBP800,000 at the date of this report.

The Group meets its day-to-day working capital requirements through cash generated from the capital it raised on admission to the London Stock Exchange, the issue of the convertible loan notes in the period (see note 10) and from the operations of its subsidiaries.

Notwithstanding these actions, a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern with the uncertainty of future trading performance giving rise to a material uncertainty over the going concern status of the Group. The Directors consider the Group to be a going concern but have identified a material uncertainty in this regard.

   4.   SUBSIDIARIES 
 
          Name                  Place             Registered             Principal           Effective interest 
                           of incorporation         address               activity 
                                                                                           30.04.2022   31.10.2021 
                         -------------------  ------------------  ----------------------  -----------  ----------- 
                                               2-9, Jalan 
                                                Puteri 4/8, 
                                                Bandar Puteri, 
                                                47100 Puchong, 
 Alchemist                                      Selangor Darul     Design and 
  Codes Sdn                                     Ehsan               development 
  Bhd                     Malaysia              Malaysia            of software               100%         100% 
                         -------------------  ------------------  ----------------------  -----------  ----------- 
                                               Cyberport 3, 
                                                3 Cyberport 
 Alcodes International                          Road, Telegraph    Software 
  Limited*                Hong Kong             Bay, Hong Kong      and app development       100%         100% 
                         -------------------  ------------------  ----------------------  -----------  ----------- 
 

* Held by Alchemist Codes Sdn Bhd

   5.   INTANGIBLE ASSETS 

Goodwill and acquisition related intangible assets arising from the acquisition of Alchemist Codes were fully impaired in the year ended 31 October 2020. The OctaPLUS Platform and Messenger App were also fully impaired in the year ended 31 October 2021.

No research and development costs were capitalised in the period ended 30 April 2022.

   6.   REVENUE 
 
 
                                                    Six months      Six months 
                                                         ended           ended      Year ended 
                                                   30 Apr 2022     30 Apr 2021     31 Oct 2021 
                                                     Unaudited       Unaudited         Audited 
                                                           GBP             GBP             GBP 
          Sale of software products                     19,052          10,635          37,639 
          Project management and coordination 
           income                                      341,263               -          19,415 
          Cashback income                                  746           1,332           4,628 
          Other                                              -             112             181 
          Total                                        361,061          12,079          61,863 
                                                --------------  --------------  -------------- 
 

All revenues were generated in Asia.

During the period ended 30 April 2022, one customer accounted for GBP331,619 (92%) of revenues. No other customers accounted for more than 10%.

An analysis of revenue by the timing of the delivery of goods and services to customers for the period ended 30 April 2022 and the year ended 31 October 2021 is as follows:

 
                                                                                                              Services 
                                                                    Goods transferred at a point           transferred 
                                                                                         in time             over time 
                                                                                      Six months            Six months 
                                                                                           ended                 ended 
                                                                                     30 Apr 2022           30 Apr 2022 
                                                                                       Unaudited             Unaudited 
                                                                                             GBP                   GBP 
       Sale of software products                                                               -                     - 
       Project management                                                                      -               360,315 
       Cashback income                                                                       746                     - 
       Other                                                                                   -                     - 
       Total                                                                                 746               360,315 
                                                                                  --------------  -------------------- 
 
                                                                                                              Services 
                                                                    Goods transferred at a point           transferred 
                                                                                         in time             over time 
                                                                                      Six months            Six months 
                                                                                           ended                 ended 
                                                                                     30 Apr 2021           30 Apr 2021 
                                                                                       Unaudited             Unaudited 
                                                                                             GBP                   GBP 
       Sale of software products                                                               -                10,635 
       Project management                                                                      -                     - 
       Cashback income                                                                     1,332                     - 
       Other                                                                                 112                     - 
       Total                                                                               1,444                10,635 
                                                                                  --------------  -------------------- 
 
 
 
                                                                                                             Services 
                                                                          Goods transferred at a point    transferred 
                                                                                               in time      over time 
                                                                                            Year ended     Year ended 
                                                                                           31 Oct 2021    31 Oct 2021 
                                                                                               Audited        Audited 
                                                                                                   GBP            GBP 
       Sale of software products                                                                35,424          2,215 
       Project management                                                                       12,822          6,593 
       Cashback income                                                                               -          4,628 
       Other                                                                                         -            181 
       Total                                                                                    48,246         13,617 
                                                                                      ----------------  ------------- 
 
 
   7.   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, the sale of software and ancillary 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.

   8.   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 earnings per share are 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.

 
 
                                          Six months     Six months 
                                            ended 30       ended 30      Year ended 
                                            Apr 2022       Apr 2021     31 Oct 2021 
                                           Unaudited      Unaudited         Audited 
                                                 GBP            GBP             GBP 
  Loss after tax attributable to 
   owners of the Company                   (202,221)      (885,202)     (1,177,980) 
  Weighted average number of shares: 
 
   *    Basic                             64,760,721     64,760,721      64,760,721 
  Conversion of loan note at period 
   end share price                         5,555,556              -               - 
  Fully diluted                           70,316,277     64,760,721      64,760,721 
  Loss per share (expressed as GBP 
   per share) 
 
   *    Basic                                (0.003)        (0.014)         (0.018) 
 
   *    Fully diluted                        (0.003)        (0.014)         (0.018) 
 
   9.   SHARE CAPITAL 
 
                                                 Six months    Six months                Year 
                                                      ended         ended               ended 
                                                30 Apr 2022   30 Apr 2021              31 Oct 
                                                                                         2021 
                                                  Unaudited     Unaudited             Audited 
                                                        GBP           GBP                 GBP 
          As at beginning of period                 647,607       647,607             647,607 
          As at end of period                       647,607       647,607             647,607 
                                                  ---------  ------------  ------------------ 
 
 
 
                                                      Nominal 
                                                        value 
                                           Number         GBP 
  Authorised 
  Ordinary shares of GBP0.01 each     800,000,000   8,000,000 
 
  Issued and fully paid: 
 
    As at 1 November 2021              64,760,721     647,607 
  Issue of shares in the period                 -           - 
  At 30 April 2022                     64,760,721     647,607 
                                    -------------  ---------- 
 
   10.     CONVERTIBLE LOAN NOTES 

On 24 January 2022, the Company entered into an unsecured convertible loan note agreement for a total subscription of GBP500,000 (the "Loan Notes").

The Loan Notes have an expiration date of 24 January 2024 ("Expiration Date") and 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 (24 January 2022) to the date of repayment or conversion.

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.

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END

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