Interim Results

About this update from Narf Industries Plc

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED.  ON PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.   30 December 2024   NARF INDUSTRIES PLC   INTERIM RESULTS   Narf Industries plc (" Narf ", the " Company ", or the " Group ") ( LSE: NARF ), the cybersecurity group specializing in high-end threat intelligence and critical infrastructure security, today announces its unaudited results for the six months ended 30 September 2024 ("HY20 24 ").   HY2024 Overview ·     As previously outlined (see RNS dated 7 November 2024), the Company experienced a decline in revenues, reflecting temporary U.S. government budget delays and a strategic focus on accelerating the development and commercialization of the innovative SocialCyber platform. ·    Revenue for the period was $1.18 million (HY2023: $3.11 million) representing a shift in focus toward long-term growth initiatives. ·      Proactive measures were implemented to optimize costs and ensure financial flexibility: o  A restructured team achieved annual base salary savings of $900k, aligning resources to drive SocialCyber business growth. o  Senior management contributed to $500,000 in cash flow savings through salary waivers and cost deferrals. ·      Financial stability was maintained, with cash at period end totalling $135,725 (HY2023: $341,543). ·      Secured a significant $1.3 million DARPA SocialCyber contract (see RNS dated 27 August 2024).   Post-period highlights ·    Notified by current government customer of selection for $5+ million multi-year contract award, negotiations pending, with award anticipated in Q1 2025. ·      Strengthened liquidity by agreeing to increase the CEO's working capital loan facility from $2.5 million to $3 million, ensuring continued operational support.   Executive Chairman John Herring said: " Despite the challenges, we successfully transitioned to a higher-value business model centred around our SocialCyber platform with recurring revenue potential. With significant contract wins and promising opportunities ahead, the Company is well-positioned to deliver exceptional value through this innovative approach while maintaining disciplined financial management."   ENDS   For further information visit www.narfgroup.com or contact:                                 Narf Industries plc John Herring [email protected] Joint Broker Canaccord Genuity Limited Simon Bridges Harry Rees Tel: +44 (0) 207 523 8000 Joint Broker Tennyson Securities plc Peter Krens Tel: +44 (0)207 186 9030 Financial PR, UK St Brides Partners Paul Dulieu Isabel de Salis [email protected]   About NARF Industries plc Narf Industries (LSE: NARF) is a U.S. based leading provider of cybersecurity research, solutions, and services to government entities. With a steadfast commitment to protecting national security and critical infrastructure, it offers comprehensive expertise in addressing the evolving cyber threats faced by its clients.     DIRECTORS REPORT AND STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE CONDENSED INTERIM REPORT AND CONDENSED FINANCIAL STATEMENTS The results of the Group have been addressed above in the C hairman 's statement. The total comprehensive loss for the six-month period was $1,831,773 (interim period to 30 September 2023:  loss of $376,815) and the Group's unaudited net liabilities as at 30 September 2024 were $1,508,974 (30 September 2023: $61,126).   Directors The following directors held office during the period: Steven Bassi                       Chief Executive Officer John Herring                      Executive Chairman Albert Hawk                       Non-Executive Director   Responsibility Statement The Directors confirm that to the best of their knowledge: a)    the condensed set of financial statements has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'; b)    the interim management report includes a fair review of the information required by DTR 4.2.7R - namely an indication of important events that have occurred during the first six months and their impact on the condensed interim financial information, and a description of principal risks and uncertainties for the remaining six months of the financial year; and c)    the interim management report includes a fair review of the information required by DTR 4.2.8R - disclosure of material related parties' transactions in the first six months and any material changes therein).   Cautionary Statement This Interim Management Report (IMR) has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose.   Going Concern The Directors' assessment of going concern is detailed in Note 2.   Principal Risks and Uncertainties The principal risks and uncertainties affecting the business activities of the Group remain those detailed in the consolidated report and accounts for the fifteen month period ended 31 March 2024, a copy of which is available on the Company website at https://narfgroup.com/investor-relations/corporate-document . The Board considers that these remain a current reflection of the risks and uncertainties facing the business for the remaining six months of the financial year. By order of the Board   Steve Bassi Chief Executive   CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 6 months 6 months 15 months ended ended ended 30 September 30 September 31 March 2024 2023 2024 Note US$ US$ US$ Continuing operations   GR &D Revenue 1,131,926 2,092,552 4,509,908 GS & S Revenue 50,000 1,016,748 3,012,545 Commercial Revenue - - 49,000 Total revenue 1,181,926 3,109,300 7,571,453 Sub-contractors (193,454) (485,089) (1,092,696) Operating expenses (2,363,470) (2,494,885) (6,313,660) (Loss)/profit before depreciation and software licence amortisation, share based payments, interest and taxes (1,374,998) 129,325 165,097 Depreciation and software license amortisation (197,842) (297,750) (509,756) Other share based payment expense (250,136) (837,931) (1,023,074) Operating loss (1,822,976) (1,006,356) (1,367,733) Interest receivable and other finance income - - 13 Finance costs (45,940) (4,189) (71,258) Loss before taxation (1,868,916) (1,010,545) (1,438,979) Corporate tax - (12,000) (15,248) Loss for the period (1,868,916) (1,022,545) (1,454,227)   Other comprehensive income   Items that may be reclassified subsequently to profit or loss: Exchange differences on parent company operations 37,143 645,730 54,756     Total comprehensive loss for the period attributable to the owners of the company   (1,831,773) (376,815) (1,399,471) Earnings per share   Earnings per share (basic and diluted) attributable to the equity holders (cents) 3 (0.11) (0.06) (0.09)   CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As at As at As at 30 September 30 September 31 March 2024 2023 2024 Note US$ US$ US$ NON-CURRENT ASSETS   Intangible assets 1,058,752 1,353,023 1,198,096 Right of use asset 16,819 91,155 42,981 Tangible assets - - - 1,075,571 1,444,178 1,241,077 CURRENT ASSETS   Trade and other receivables 443,944 408,186 605,544 Cash and cash equivalents 135,725 341,543 654,365 579,669 749,729 1,259,909 TOTAL ASSETS   1,655,240 2,193,907 2,500,986   CURRENT LIABILITIES     Trade and other payables 3,164,216 2,255,033 2,739,573 TOTAL LIABILITIES 3,164,216 2,255,033 2,739,573     NET LIABILITIES (1,508,974) (61,126) (238,587) EQUITY   Share capital 4 204,012 204,012 204,012 Share premium 4 35,454,122 35,180,223 35,294,816 Reverse acquisition reserve (16,747,959) (16,747,959) (16,747,959) Foreign exchange reserve 48,488 (634,385) 11,345 Share based payment reserve 1,885,715 1,398,874 1,483,635 Retained deficit (22,353,352) (19,461,891) (20,484,436)   TOTAL EQUITY (1,508,974) (61,126) (238,587)   CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Share   Share   FX   Share-based   Reverse   Retained   Total   Capital    Premium   Reserve   Payment   Acquisition   Deficit   Reserve   Reserve   US$   US$   US$   US$   US$   US$   US$ AS AT 1 OCTOBER 2023 204,012   35,180,223   (634,385)   1,398,874   (16,747,959)   (19,461,891)   (61,126)   Loss for the period - - - - - (1,022,545) (1,022,545) Foreign exchange loss on conversion of subsidiary - - 645,730 - - - 645,730 Total comprehensive loss for the year - - 645,730 - - (1,022,545) (376,815) Share based payments - 199,354 - - 199,354 Cancellation of warrants - 114,593 - (114,593) - - - AS AT 31 MARCH 2024 204,012   35,294,816   11,345   1,483,635   (16,747,959)   (20,484,436)   (238,587)   Loss for the period - - - - - (1,868,916) (1,868,916) Foreign exchange gain on conversion of subsidiary - - 37,143 - - - 37,143 Total comprehensive loss for the period - - 37,143 - - (1,868,916) (1,831,773) Shares issue costs recovered - - - - - - - Options expired - 159,306 - (159,306) - Share based payments - - - 561,386 - - 561,386 AS AT 30 SEPTEMBER 2024 204,012   35,454,122   48,488   1,885,715   (16,747,959)   (22,353,352)   (1,508,974)   CONSOLIDATED STATEMENT OF CASH FLOWS 6 months 6 months 15 months ended ended ended 30 September 30 September 31 March 2024 2023 2024 US$ US$ US$   OPERATING ACTIVITIES   Loss for the period before interest and taxation (1,822,976) (1,006,356) (1,367,733) Adjusted for: Depreciation - 10,660 15,990 Amortisation of intangibles 197,842 197,842 493,766 Amortisation of right of use asset 26,162 - 48,173 Unrealised foreign exchange adjustment 289,895 301,586 (16,408) RTO and other share-based payment expenses 250,136 - 1,023,074 Operating cash flow before movements in working capital: (1,058,941) (496,268) 196,862 Decrease in trade and other receivables 161,600 676,418 129,699 (Decrease)/Increase in trade and other payables (439,580) 208,012 (153,502) Net cash generated from/(used in) operating activities (1,336,920) 388,162 173,059   FINANCING ACTIVITIES   Costs recovered/(paid) related to share issues - 106,162 106,162 Amounts (repaid to)/received from Director 864,221 (176,856) (22,500) Decrease in vehicle financing loan - (22,312) (22,312) Net interest (paid)/received (45,940) (4,189) (7,547)   Net cash (outflow)/inflow from financing activities 818,281 (97,195) 53,803 Taxation paid - - (15,248) Net increase/(decrease) in cash and cash equivalents (518,640) 290,967 211,614 Cash and cash equivalents at beginning of the period 654,365 50,576 442,751     Cash and cash equivalents at end of the period 135,725 341,543 654,365   Notes to the CONSOLIDATED Financial Statements interim results to 30 SEPTEMBER 2024   1.     Organisation and Trading Activities The principal activity of Narf Industries plc (the "Company'') together with its operating subsidiaries (together, the "Group") is high-end threat intelligence. Its strategy is focussed on building a group capable of offering cybersecurity solutions in the US and beyond. The Company is domiciled in the United Kingdom and incorporated and registered in England and Wales as a public limited company. The Company's registered office is 5 Fleet Place, London EC4M 7RD. The Company's registered number is 11701224.   Summary of Significant Accounting Policies The principal accounting policies adopted and applied in the preparation of these interim Group Financial statements are set out below. These have been consistently applied to all the periods presented unless otherwise stated:   B asis of accounting These interim financial statements of Narf Industries plc (the "Group") have been prepared in accordance with UK adopted international accounting standards ("UK-adopted IAS") applied in accordance with the provisions of the Companies Act 2006.   The interim financial statements have been prepared under the historical cost convention on the basis of the accounting policies as set out in the Group's audited annual financial statements and are presented in US Dollars, the presentational and functional currency of the Group. The Group has applied IAS 34 in the preparation of these interim financial statements.   This announcement was approved and authorised by the Board of directors on 18 December 2024. Copies of this interim report can be found on the Company's website at https://narfgroup.com/investor-relations/corporate-document   These condensed interim financial statements for the six months ended 30 September 2024 are unaudited and do not constitute fully prepared statutory accounts. The comparative figures for the fifteen-month period ended 31 March 2024 are extracted from the 2024 consolidated financial statements of the Company. The independent auditor's report on the 2024 financial statements  opinion was qualified principally due to the inability to gain sufficient and appropriate audit evidence in respect of the opening balances at 1 January 2023.   G oing concern Any consideration of the foreseeable future involves making a judgement, at a particular point in time, about future events which are inherently uncertain. The Directors have prepared cash flow forecasts covering the period to 31 December 2025. The Chief Executive has agreed not to demand repayment of his loan until the Group has sufficient cash resources to repay it, whilst those members of senior management who have accepted salary deferrals have agreed to defer until revenues are sufficient for the Group to settle the outstanding amounts. The forecasts, accordingly, indicate that the Group will have sufficient cash resources to meet all foreseeable liabilities, other than those relating to the loan to the Chief Executive and salary deferrals, through to a period which is at least twelve months after the issue of these condensed interim financial statements.   Accordingly, the Directors have a reasonable expectation that the Group will be able to meet any future obligations and thus to continue operating for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the interim financial statements.     Basis of consolidation The Financial Statements consolidate the financial information of the Company and companies controlled by the Group (its subsidiaries) at each reporting date following the acquisition in March 2022.   Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity, has the rights to variable returns from its involvement with the investee and has the ability to use its power to affect its returns. The results of subsidiaries acquired or sold are included in the financial information from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the results of acquired subsidiaries to bring their accounting policies into line with those used by the Group. All intra-Group transactions, balances, income and expenses are eliminated on consolidation. The financial statements of all Group companies are adjusted, where necessary, to ensure the use of consistent accounting policies.   The Financial Statements consolidate the financial information of the Company and companies controlled by the Group (its subsidiaries) at each reporting date.   2.     EARNINGS PER SHARE The basic earnings per share is based on the loss for the period divided by the weighted average number of shares in issue during the period. The weighted average number of ordinary shares for the Company the period ended 30 September 2024 assumes that all shares have been included in the computation based on the weighted average number of days since issue. Since the Group has made a loss in the current and each of the prior periods, the options in issue are not dilutive.    Six months to 30 Sept 2024 US$ Six months to 30 Sept 2023 US$ 15 months to 31 Mar 2024 US$ Loss attributable to owners of the Group : (1,831,773) (1,022,545) (1,454,227) Weighted average number of ordinary shares in issue for basic earnings 1,697,381,100 1,697,381,100 1,697,381,100 Weighted average number of shares in issue for fully diluted earnings 1,697,381,100 1,697,381,100 1,697,381,100 LOSS PER SHARE (CENTS PER SHARE) (0.11) (0.06) (0.09) BASIC AND FULLY DILUTED:   - from continuing and total operations (cents) (0.11) (0.06) (0.09)   3.     SHARE CAPITAL AND SHARE PREMIUM The following table is presented in US Dollar equivalents:   Ordinary shares of £0.0001 each Number Share Capital $ Share Premium $ At 1 October 2023   1,697,381,000 204,012 35,180,223 At 31 March 2024   1,697,381,000 204,012 35,294,816 At 30 September 2024   1,697,381,000 204,012 35,454,122     4.     P OST PERIOD END EVENTS There were no significant events subsequent to the balance sheet date which have any bearing on these interim financial statements.   Important notice The content of this announcement has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 (FSMA). This announcement has been issued by and is the sole responsibility of the Company. The information in this announcement is subject to change. This announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act), and may not be offered or sold, directly or indirectly, in or into the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States. This announcement is not for release, publication or distribution, directly or indirectly, in or into Australia, the Republic of South Africa, Japan or any jurisdiction where to do so might constitute a violation of local securities laws or regulations (a Prohibited Jurisdiction). This announcement and the information contained herein are not for release, publication or distribution, directly or indirectly, to persons in a Prohibited Jurisdiction unless permitted pursuant to an exemption under the relevant local law or regulation in any such jurisdiction.

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