Feedback Regulatory News (FDBK)

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement, this information is now considered to be in the public domain.

Feedback plc

Full Year Results to 31 May 2020

Bleepa™ drives Feedback's strategy in dynamic year of development

London, UK, 13 October 2020 - Feedback plc (AIM: FDBK, "Feedback" or the "Company"), the specialist medical imaging technology company, announces its audited results for the 12 months to 31 May 2020.

Operational highlights (including post period-end)

· Flagship product, Bleepa, achieves CE Mark in less than a year and used by frontline NHS clinicians within two months of launch

- September 2019 launched at NHS Expo to strong interest from healthcare professionals

- First pilot study with Pennine Acute Hospitals NHS Trust (PAT) with positive early indications that average time to inpatient referral can be halved due to Bleepa

- Subsequent adoption of Bleepa by PAT as COVID-19 management tool to support care delivery and COVID-19 inpatient referral pathways

- Post year end, appointment to NHSx National Communications Framework, Bleepa is unique in being the only product on the framework with a CE mark for medical image display

· Contract renewal in May 2020 of Cadran with upgrade to Bleepa by the Royal Papworth Hospital

· New Cadran application, Fluorocapture software, being offered under licence in the US

· Strengthened Board, with Prof. Rory Shaw appointed Chairman and new NED, Adam Denning as Non-Executive Director, and post year end appointed Philipp Prince as Non-Executive Director

Financial summary

· Full year revenue of £450k down 20% (2019: £563k) as strategic focus shifts away from TexRAD product

· Operating loss increased 25% to £1.4m (2019: 1.1m loss) following increased investment in resources to deliver Bleepa strategy

· Loss after tax of £1.1m (2019: 0.97m)

· Cash at 31 May 2020 was £0.7m (May 2019: £0.54m)

· Equity fundraising in August 2019, raising £2m (before expenses), and post year end, in June 2020, a fundraising of £5.3 million (before expenses), to support scalability and commercial strategy for Bleepa, resulting in unaudited cash at 30 September 2020 of £4.4m

Dr Tom Oakley, CEO of Feedback, commented:

"This has been a transformational year as we transitioned the Company away from older products and towards the emerging mobile medical market which has significant potential for growth. We are now creating a very different company through our flagship product, Bleepa, our proprietary medical imaging communications platform.

"Our fast delivery on development, launch and roll-out of Bleepa has exceeded our expectations this year. We have delivered on the key milestones for Bleepa in a remarkably quick timeframe - from regulatory approval (CE Mark), launch and start of commercialisation. Covid-19 may have brought many challenges to the NHS healthcare and clinical staff, however, through our work with the Pennine Acute Hospitals Trust, the pandemic has catapulted Bleepa to the mainstream NHS and NHSx, as it has demonstrated how remote working capabilities can transform care delivery.

"We have been fortunate to have the support of our shareholders through two fundraisings, one during the financial year and one in post period, which will help us to drive Bleepa forward. Our aim for the new year is to scale the product, at pace, in order to acquire as large a userbase as possible. Longer term, our vision is that Bleepa will become the platform that all frontline clinicians use to access information about their patients and confer with their peers to reach collective, informed treatment decisions."

-Ends-

Enquiries:

About Feedback plc - www.fbk.com

Feedback plc (AIM: FDBK) is a specialist medical imaging technology company providing innovative software and systems, through its fully-owned trading subsidiary, Feedback Medical Limited. Its products advance the work of radiologists, clinicians and medical researchers by improving workflows and giving unique insights into diseases, particularly cancer.

Feedback has launched BleepaTM, a new secure, encrypted medical communication app for clinicians accessible through smartphones, tablets and desktops that facilitates rapid clinical messaging and review of medical grade imaging for all members of a clinical team, directly from a hospital Picture Archiving and Communications System (PACS). For more information on BleepaTM, see www.bleepa.com.

CHAIRMAN'S STATEMENT 2019-20 AND POST PERIOD

The 2019/2020 financial year has been an incredibly dynamic period for the Company. The Group has accomplished a great deal during testing times and has initiated a number of major changes.

Bleepa

Our flagship product Bleepa, has been developed from a concept to a fully certified, CE marked medical device in less than a year. By any industry standard this is a staggering achievement, even more so within healthcare. Bleepa was launched at NHS Expo in September 2019 and was in use by frontline NHS clinicians at Pennine Acute Hospitals Trust within 2 months of launch.

Bleepa is our proprietary communication platform which combines access to clinical grade medical imaging, with instant messaging-based communication. It allows frontline clinical teams to discuss patient cases and make management decisions remotely using any internet connected device from phones to tablets and desktops.

The Company initially raised £2 million, before expenses, in August 2019 in order to develop the product, achieve the CE mark and launch Bleepa into the NHS; targets that were all achieved by June 2020 despite the global pandemic arising from COVID-19.

Bleepa has been manufactured in accordance with our corporate quality management system which was successfully re-accredited as meeting the ISO 13485 standard in July 2020 by our notified body SGS UK Ltd. As well as achieving compliance with the NHS Data Protection and Security Toolkit in March 2020, the Company also successfully accredited Bleepa with the Cyber Essentials certification relating to cyber security standards in September 2019 and is currently undertaking an application for ISO 27001 accreditation.

The onset of COVID-19 saw Bleepa deployed at scale across Pennine Acute Hospitals Trust in order to support care delivery and COVID-19 inpatient referral pathways. What had started as a product pilot and clinical evaluation was rapidly converted into a frontline deployment and catapulted Bleepa into the attention of the NHS mainstream, culminating ultimately in the appointment of Bleepa onto the NHSx Clinical Communications Framework in July 2020.

Bleepa is uniquely placed as a communication platform and has been endorsed by NHSx through its appointment to the NHSx National Communications Framework. This framework provides centralised funding up to a total value of £3 million to support NHS Trusts to procure solutions for up to a two year period and forms part of the Secretary of State's policy around pager removal from the NHS by 2021. Bleepa is the only product on the framework that has achieved a CE mark for medical imaging and is therefore able to display digital patient images for diagnostic purposes as part of clinical case discussion. This unique position enables our technology to be used by clinicians to review safely patient medical images "on the go", as part of wider team discussions, and as part of formal multidisciplinary team meetings.

Given Bleepa's initial success and evident market opportunities, the Company completed an equity fundraise in order to secure £5.3 million (before expenses) in June 2020. This funding is being used to help the Company achieve the scale required to drive sales and develop further opportunities for the Bleepa product line. As you will read in our strategic report, we believe that this is just the beginning of the journey for this exciting product as the Company now looks to grow.

Other products

Sales of TexRAD, which had grown since 2014, have now slowed. When he joined the Company, Tom initiated a strategic review into the Company's then products. The review revealed that TexRAD revenues were flattening despite escalating cost of sales. The Company was largely dependent on expensive direct sales routes which were not easily scalable. The routes represented a rising marginal cost as new sales became more difficult to secure and were often linked to bespoke new software development, such as GLCM (Gray Level Cooccurrence Matrix). Furthermore, the installation and maintenance contracts for TexRAD were requiring ever more costly scientific support from the team without any substantial repeat revenues from individual customers.

TexRAD remains an exciting imaging tool, based on exceptional technology. The evidence base for the product is encouraging but needs further studies in order to prove its clinical case with sufficient confidence. Currently the Company does not have sufficient funding to commission and finance the necessary research and is therefore dependent on the academic outputs of existing TexRAD customers, which the Company is unable to influence or coordinate. Without this degree of oversight, it is difficult to know when a sufficient evidence base will materialise in order to take the product forward into the clinical setting where its true potential could be realised.

The board has therefore taken the decision to reduce the costs associated with TexRAD sales by leveraging the Company's existing distribution partner GE Healthcare and reseller agreements with third parties in Korea, both on a commission only basis. The Company also stopped providing scientific support to customers and made certain personnel changes greatly reducing the costs associated with this product line.

The strategic review also touched the Company's other product, Cadran. Cadran has been a longstanding workhorse for the Company, delivering Picture Archiving and Communications System (PACS) services to four NHS Trusts since 2001. May 2020 saw the contract renewal of Cadran's service contract by its main customer, the Royal Papworth Hospital, showing the ongoing value of this core technology to its customers. Bleepa is based largely on Cadran's technology and was itself an output of Tom's initial strategic review when he joined the Company in February 2019.

In addition to Bleepa, the Company has already spun out a further application of the Cadran technology in the form of its Fluorocapture software which is being offered under licence to Imaging Engineering, LLC in the USA. Imaging Engineering is using the Fluorocapture software to update fluoroscopy equipment across the USA. Approximately 2,000 providers across the US will need to update or replace their fluoroscopy equipment in the next few years. Updating the equipment is considerably more cost effective than replacing it, and the board believes that this will create a sizable opportunity for the licencing of the Fluorocapture software.

With the appointment of Dr Tom Oakley as CEO and wider team members from the London area it became clear that the Company's office in Bourn was no longer the optimal location for the Company's operations. Tom initiated a culture of remote working and eventually closed the Bourn office in December 2019. The Company opened new offices in Peterborough for its technical and support staff in November 2019, this represented a more cost-effective office solution which was more easily accessible for all personnel. The Company's head office moved to the Health Foundry in January 2020, a dynamic co-working space established by St Thomas' Hospital in London which provided cost effective, scalable working space and benefited from close proximity to the frontline clinicians at St Thomas' Hospital. The prior development of a home working policy stood the Company in good stead when COVID-19 forced many organisations to close their offices in March 2020, as Feedback staff were already well versed in this way of working and were able to continue delivery without breaking step.

Feedback is a very different company today to the one it was even a year ago. The Company has had to come to terms with difficulties in its other product lines whilst simultaneously recognising the huge latent potential within them and aggressively leveraging that potential through its new products Bleepa and Fluorocapture. COVID-19 has presented many challenges but also provided an opportunity for Bleepa to demonstrate how its remote working capabilities can transform care delivery. The Company, already being familiar with remote working, has been able to rise to deliver on the opportunities presented and the team has moved at pace to deliver a truly transformative product to the market. It is a year that we are all very proud of.

I am extremely grateful for the hard work and support of my Board colleagues, and in particular for the efforts of the operational management team and their staff who have worked so effectively together during the past year and the Covid Pandemic. This has been an extraordinarily difficult time, and everyone has worked exceptionally well to bring our new products to the point where they are actually helping deliver better patient care. This progress constitutes a major strategic development for the Company. I would also like to thank shareholders for their continued support in the Company, our vision and strategic direction. We share a common aim of producing the best technology to meet the market need, and thus grow the company and increase shareholder value.

OPERATIONAL REVIEW

Feedback Medical

Feedback Medical Limited (FM Ltd) develops and sells the Group's proprietary technologies - Bleepa, the image- based communication platform for frontline clinicians, Cadran PACS, our longstanding Picture Archiving and Communication System and TexRAD, the quantitative texture analysis platform.

A shift in focus

Over the last year the Company has pivoted to embrace a change in the healthcare sector, as detailed below. The shift in strategic focus sees targeted investment in Bleepa with a deliberate move away from our legacy product lines.

As part of concentrating the Company's focus, the board has also considered ways of driving efficiencies in the business and reducing the associated cost base of maintaining existing product lines. This year saw the closure of the Bourn office as this location no longer suited the wider business needs of the Company and management were spending large amounts of time inefficiently commuting to this location. New offices were sourced in Peterborough as a regional centre for the support team and a head office was opened in London which provided easier access to customers and investors. Dr Balaji Ganeshan left the Group as part of the restructuring of the TexRAD division, driven by the need to reduce the costs associated with sales through focusing on indirect market opportunities through third party distributors.

Bleepa addresses a widespread change in the medical imaging market and leverages the Company's experience in the field of medical imaging to great effect.

Heritage

Feedback Medical has supplied medical imaging products since 2001, starting with Cadran PACS, then TexRAD and now Bleepa. The Company has pioneered its imaging technology over years of frontline delivery experience, building expertise in the form of its technological capabilities, integration capabilities with other technology platforms and regulatory expertise relevant to the field of medical imaging. This deep-seated heritage has enabled the rapid transformation of the Company in response to a dynamic and shifting market.

Market

The world of medical imaging is changing. With increasing workload and medical sub-specialisation, not only do specialist radiologists need to review all the medical images, but their front-line patient facing clinician colleagues now need immediate access to all the imaging data in order to rapidly make the correct clinical management decisions, often through discussion with colleagues. Medical imaging is core to almost all clinical decision making processes and the dependence on medical imaging is increasing(1) whilst at the same time there is a growing shortage of radiologists(2) The deficit has worsened the backlogs of imaging studies and delays in image reporting. Out of necessity, frontline clinicians are having to increasingly review their own patient's images, often ahead of the Radiologist reports being made available. The impacts are wide reaching with surgical specialties reviewing imaging directly in order to plan operations and the demand for timely access to medical imaging spreading to medical specialty areas such as stroke.

This is not the only change, however. Clinical practice is becoming more mobile. In a study by the British Medical Journal it was found that 97% of clinicians were using WhatsApp for routine clinical communication(3) Clinicians want to access information flexibly on the go whilst simultaneously being connected to colleagues, who may or may not be at the same physical site. COVID-19 has further driven this need for remote access, creating a number of situations where clinical staff need access to colleagues and patient imaging from home, such as when clinicians have to self-isolate.

Traditional providers of medical imaging solutions are struggling to keep pace with this change. PACS vendors have traditionally sold to Radiologists and understand the needs of this customer group. However, as the users of medical imaging grows beyond the traditional user base, providers need to adapt to service this broader range of customers.

This has created an opportunity for the Company. As a small PACS company, Feedback was perfectly placed and dynamic enough to evolve its product offering. We have leveraged our heritage of medical imaging expertise and repurposed them to meet the needs of a new and evolving market. We are now a PACS company that does not only sell to Radiologists, we also sell to everyone else. We have produced Bleepa.

(1) https://www.england.nhs.uk/statistics/wp-content/uploads/sites/2/2018/11/Annual-Statistical-Release-2017-18-PDF-1.6MB-1.pdf

(2) https://www.rcr.ac.uk/posts/nhs-does-not-have-enough-radiologists-keep-patients-safe-say-three-four-hospital-imaging

(3) O'Sullivan DM, O'Sullivan E, O'Connor M, et al WhatsApp Doc? BMJ Innovations 2017;238-239

Bleepa

Bleepa is our flagship product, the culmination of nearly two decades of imaging experience and our answer to the rapidly changing medical imaging market.

Bleepa is a secure communication platform that combines remote access to clinical grade medical imaging with team based instant messaging. It allows clinicians to review patient imaging and discuss cases collaboratively with colleagues on the go using any internet connected device such as laptops, desktops, tablets and smartphones.

Bleepa is a zero footprint application meaning that no patient data is stored locally on the device used to access the service. If a clinician loses their phone there is no data on the device that can be hacked, access to that device is simply shut off and the clinician can access the service immediately from another device.

The key differentiator of Bleepa is the quality of the imaging provided by the platform. Bleepa uses DICOM formatted imaging, extracted directly from the client's PACS and renders the image at a quality that is certified as being suitable for clinical review. Bleepa conforms with the provisions of the Medical Device Directive(4), which considers any product that displays digital patient images for the purpose of diagnosis to constitute a medical device. As a medical device Bleepa has been developed according to an ISO 13485 certified quality management system and holds a CE mark.

In August 2019, the Company raised £2 million to develop Bleepa and take it to market within the NHS and the company has delivered what it set out to achieve in this period. The Company has taken Bleepa from a concept to fully certified medical device in under a year and seen it adopted at two NHS sites. The product was successfully launched at NHS Expo in September 2019 and subsequently piloted at Pennine Acute Hospitals NHS Trust in December 2019. The pilot at Pennine was used to provide the clinical evaluation component required as part of the CE marking process and was undertaken using a CE mark waiver for this reason.

Unfortunately, the pilot was interrupted by Covid-19. However the Trust had seen enough of the product to realise the potential it held in assisting with their response to the pandemic. As a result the pilot evaluation was paused and Bleepa was rolled out across the Trust as a tool to support internal Covid-19 referrals and facilitate referral to the RECOVERY Trial, which aimed to assess the impact of patient comorbidities on outcome following infection with the virus. After the initial rollout of Bleepa, work on the CE mark recommenced and was completed on 1 June 2020.

The pilot at Pennine Acute Hospitals Trust concluded with a benefits analysis from the Respiratory and Gastroenterology teams' usage of Bleepa, performed by the Trust. This analysis found that:

· The average time from point of referral to clinician review was reduced from 2.1 days to 0.4 days by Bleepa

· The referral process was able to be completely automated by Bleepa, having previously required administrative time to process each referral and the referral process was both digitally stored and auditable.

· Bleepa reduced the time taken, on average, for clinicians to access the clinical information that they needed about a patient from 5.47 minutes to 1.04 minutes, saving on average 4.43 minutes of clinician time per referral.

· Bleepa reduced the process of replying to referrals by an average of 7.5 minutes per clinical referral over traditional communication processes, such as pagers and telephones.

· Based on the nearly 7,000 referrals performed last year at the Royal Oldham Hospital, it is predicted that Bleepa could save up to 36.3 weeks of clinical time per annum.

Bleepa was included as a product upgrade to Cadran Web Viewer as part of the Cadran contract with Royal Papworth Hospital on 21 May 2020, to be deployed at the Trust once the CE mark was achieved.

More broadly, Bleepa operates a SaaS model of recurring monthly revenue. Prices vary between NHS and private sector offerings but follow a fixed price per user per month on a recurring annual contract basis. The model used is comparable to a sim only mobile phone contract.

In August 2020, Bleepa was successfully appointed onto the NHSx Clinical Communication Framework. This framework was established to deliver the Secretary of State's mandate to remove pagers and fax machines from NHS communications by 2021. The framework enables NHS Trusts to select communication tools from a list of approved suppliers and NHSx then pay the contract on behalf of that Trust for up to two years, drawing down from a £3 million central pot of NHS funding. Appointment to the framework acts both as an endorsement of the product but also provides a mechanism for reimbursement. Bleepa is the only product on the framework that is certified to display medical images at a quality sufficient for clinical review and is therefore the only product to hold a CE mark for this purpose. This gives Bleepa a strong competitive advantage over other providers who are unable to display digital patient images for diagnostic purposes alongside chat and video calling. Our imaging USP makes us an attractive partner for other organisations who are looking to partner in the market and the company are currently evaluating a number of commercial partnership opportunities with large and small companies.

Following our initial success Feedback raised £5.27 million, before expenses, in July 2020 in order to drive Bleepa sales and further develop the product. The fundraise attracted a number of institutional investors including Unicorn Asset Management Limited, Octopus Investments, Premier Miton Investors and Tyndall Investment Management along with renewed support from many of our existing shareholders. The Company now stands ready to deliver the exciting potential of our flagship product.

(4) https://ec.europa.eu/docsroom/documents/17921/attachments/1/translations/en/renditions/native

Cadran

Cadran was where it all started. This PACS product has been in use in the NHS since 2001 and forms the base technology for both Bleepa and TexRAD. For those who are unfamiliar with medical imaging, PACS is essentially a digital library of medical images which radiologists use to store, locate and review medical imaging studies.

Despite a number of incredible technical features, Cadran has never realised its full potential. The traditional PACS market is dominated by large providers who compete on technical features, driven by the needs of an ever sub- specialising user base of Clinical Radiologists; customers are sticky which, combined with convoluted procurement processes, results in limited provider turnover. In this environment, growing a market share is challenging and relies on implementing costly product features more quickly than your competitors. For a company of Feedback's size this was never going to be achievable when compared with large providers. However, the loyalty of Cadran's customer base is testament to the quality of the product - despite very few technical modifications, Feedback has managed to fend off the incursions of much larger providers for many years.

Now the imaging market is changing, and changing quickly, with the demand for imaging extending far past the specialist field of Radiology. There is now a growing opportunity for smaller, dynamic providers who can move at pace. Now the very factors that worked against Feedback, most noticeably its small size, are the very factors that the Directors believe will enable Feedback to capitalise on this renaissance of medical imaging. As a small company, Feedback is agile and we are not starting from scratch but from an established market position. Leveraging the foundation of Cadran has allowed Bleepa to meet the needs of the emerging market at a pace larger providers cannot match whilst simultaneously giving a vastly superior product to new market entrants that are having to start their product development from scratch.

On 21 May 2020, the Company announced that Royal Papworth Hospital NHS Foundation Trust, Cadran's largest customer, had renewed its support contract for Cadran for another year.

Fluorocapture

Fluoroscopy is the use of high frame rate X-ray capture to generate cinematic views of patients allowing clinicians to examine the patient in real time. It is typically used in the field of Gastroenterology for swallowing assessments, Orthopaedics for dynamic joint imaging and during surgical procedures, and in Cardiology and Radiology for interventional procedures.

As fluoroscopy uses ionising radiation in the form of X-Rays there is an incentive to reduce the amount of radiation required to generate images. The majority of fluoroscopy equipment is old and in need of replacement or updating in order to improve the rate of image capture and achieve the desired reduction in radiation dose. Replacing the equipment can be extremely costly, in some cases over $1 million, therefore updating the equipment is preferred.

Imaging Engineering, LLC, our US partner organisation, has longstanding expertise in installing and updating fluoroscopy equipment. A version of our Cadran software is a core element of updating the fluoroscopy equipment and Feedback has licenced the software to Imaging Engineering in order to enable it to update fluoroscopy equipment across the USA. Our software is offered under licence per installation. Beyond maintaining the source code, Feedback has no obligations under this licencing agreement and there is no ongoing requirement for internal resource in order to deliver the product. Revenue generated from this licensing agreement is therefore considered to be additional revenue leveraged from an existing technology which is already maintained under our existing NHS contracts.

Imaging Engineering estimates that there are approximately 2,000 fluoroscopy centres in the USA that will need to update their equipment in the next few years and is aiming to update 200 centres within the next 18 months, though this has been impacted by COVID-19 and the inability of external companies to physically enter hospital premises during the pandemic.

Fluorocapture represents another example of how the Company is seeking to efficiently leverage its existing products to generate additional, low resource revenue opportunities.

TexRAD

TexRAD sales have traditionally accounted for approximately half of the Company's revenue but owing to market saturation the cost of sales has increased and revenues are now declining. In anticipation of this, management took pre-emptive action earlier in the year to drive down the internal cost of sales whilst continuing to drive revenue through third party distributors.

When a clinician reviews a medical imaging study, he/she typically produces a report which gives a qualitative analysis of the imaging study. TexRAD is a proprietary technology which measures areas of a scan to give a quantitative output, a texture feature, typically displayed as a histogram plot. The shape of the histogram plot changes according to the composition of the area of the scan that has been analysed. The aim of TexRAD has been to prove a link between the quantitative changes seen and underlying pathological changes in the patient's tissue. If a link between a texture feature and an underlying change in tissue can be proven then TexRAD could be used to monitor disease states in a quantitative way, in theory supporting clinical diagnosis and measuring treatment response. The goal is to move TexRAD from an academic research tool into a clinical tool that can inform treatment, however this requires a suitable body of evidence.

To date TexRAD has been deployed in more than 60 research centres around the world, each one looking to find a link between texture changes and disease. Without paying for these studies the Company is unable to coordinate the texture features being evaluated or the disease states that the studies are being conducted in. Without coordination, the evidence base is sporadic with insufficient depth in any one disease or texture feature to justify the transition to a clinical application. Given this, the strategy has been to continue selling TexRAD to academic centres to try to grow the evidence base organically until a texture feature is consistently demonstrated to be linked to a disease state and can be used to support clinical delivery.

The Company had been deploying an internal sales resource to drive direct sales of TexRAD to academic centres, however this direct sales approach was not cost effective. In May 2019, management reviewed the TexRAD pipeline and noted that the customer acquisition cost for new customers was rising and that the rate of new customer acquisition was declining, in part due to saturation of the available market. In response to customer feedback the board made a small investment to upgrade the TexRAD software and delivered the Grey Level Co-occurrence Matrix (GLCM) product feature in July 2019 with a view to re-energising the TexRAD sales pipeline. This upgrade had a moderate, but short term, impact on sales leading to a 14% increase in revenue as reported in the Company's interim results on 18 February 2020. Despite this momentary boost, sales of TexRAD continued to decline whilst at the same time the cost of sales were increasing, owing in part to the associated development costs. In light of this, management took the decision to reduce the cost base associated with research sales by removing our direct to market sales function, instead focusing on indirect sales through third party distributors on a commission only basis. The volume of sales has continued to decline, as expected, in the second half of the year which has impacted the overall revenue of the Company, however the reduced cost base associated with this business unit has resulted in a smaller net loss for this part of the business.

The Company believes that it remains viable to continue selling TexRAD through third party distributors, owing to the lower cost base, with a view that this may afford an opportunity for the evidence base associated with the product to grow. The opportunity for TexRAD still lies in the transition to the clinical setting once a sufficient evidence base is available, however the Company is not in control of this timeline. On this basis, the focus has now shifted to cost reduction associated with this product rather than driving new sales at a growing acquisitional cost.

R&D progress

Feedback recognises the potential in developing new products from its existing technologies. It is working closely with existing customers to identify unmet needs. To increase its software development capabilities the Group is continuing and expanding its collaboration with Future Processing to develop new imaging software products.

Feedback capitalises external development costs for writing off against income generated in future accounting periods. The Directors carefully consider what elements of this development expenditure will generate future economic benefits. This is based upon customer feedback on Bleepa, product enhancements and assessing the potential of Bleepa in non-medical markets and overseas requirements.

Current trading and future developments

The Group continues to focus on growing the opportunity of its flagship product Bleepa. Bleepa is currently installed in two NHS Trusts and the Company is seeking to grow the product's UK footprint through its recent appointment to the NHSx Communication Tool framework. This framework represents a key opportunity for the Company, it both validates Bleepa as a product, giving it NHS endorsement, but it additionally provides a route to revenue, allowing NHS Trusts to procure Bleepa for up to two years whilst NHSx pays for it on their behalf.

Beyond the NHS market the Company is pursuing opportunities for the CE marked version of Bleepa in adjacent market segments, such as the UK private healthcare sector, veterinary services and international healthcare setting. The Company is currently evaluating the relevant regulatory aspects of international expansion and are considering partnership opportunities to help scale the product more cost effectively to a wider market audience.

We have a big vision for Bleepa. Bleepa is about more than just bringing frontline clinicians together digitally and giving them access to imaging. In our advertising materials we coined the phrase 'Bleep-Share the whole picture'. Although this neatly covers imaging, it also encompasses our much larger vision to bring together all the information that clinicians need when making decisions about patients.

Our vision is that Bleepa will become the platform that all frontline clinicians use to access information about their patients and to speak with colleagues to reach collective and informed management decisions.

To progress this strategy, we need to scale the product, at pace, in order to acquire as large a userbase as possible.

Inherent to the value proposition of Bleepa is the requirement for Bleepa to be integrated into hospital systems and to be able to present patient data securely to clinical users. This requirement for integration means that market growth must be achieved on an institutional basis rather than directly to users; a freemium model, directly to clinical users, will therefore not work in this market. Selling to institutions requires multi-stakeholder engagement and is both time and resource intensive. The requirement to deploy on an institutional basis stands to slow down the rate of deployment but it does create a barrier to entry for competitors and a stickiness from customers that will ultimately result in a higher lifetime value of each customer site.

However, there are options to achieving rapid growth despite the institutional integration requirements. The Company is evaluating a number of relationships with third parties that can help to achieve this scale at a greater pace and more cost effectively than if we were to undertake that growth alone. The Company intends to help others grow the value proposition and scale the product, wherever possible leveraging its network of third parties to distribute the product cost effectively. However, firstly we have to initiate the market traction, grow the product footprint and get as many clinicians as possible using the platform. Our recent funding positions us well to deliver on this potential.

Financial summary

In the year to 31 May 2020, the recognised turnover of £449,983 decreased by 20% compared with the previous financial year. 35% of the turnover is attributable to one customer (compared with 40% in the previous financial year). Overheads, especially employment costs, have increased in the year to 31 May 2020, due to gearing up to deliver the new strategic direction as outlined above. The operating cash useage reduced mainly due to the research and development tax credit. The Company continued to invest shareholder funds in Bleepa development which resulted in a large increase in intangible assets. The net assets reflected the fund raise of £2m. The loss per share has decreased from 29p to 22p per share primarily due to increase in number of issued shares.

In line with International Financial Reporting Standards, Feedback's accounting policy is to spread the income from its software licence and support sales over the duration of the contract, usually one to two years. The Group's balance sheet contains a significant deferred revenue liability to reflect this. Only external development costs are capitalised. All internal research and development costs are written off in the year in which they are incurred. All development costs relating to TexRAD have been fully impaired.

In August 2019, the Company raised £2 million, before expenses, by way of a placing and subscription of 166,666,667 new Ordinary Shares at a price of 1.2 pence per share with new and existing investors. The proceeds from this fundraise were deployed to develop the innovative Bleepa product for UK and Worldwide usage.

Operational cash flows have been satisfactory and reflect customer payments for new purchases and contracts before the periods in which the revenue is recognised. The August 2019 equity fundraise supported a healthy cash balance at the financial year end and has financed an acceleration in product development expenditure leading to increased intangible assets.

Principal risks and uncertainties

Economic and market risks

Feedback Medical is in the medical imaging market. The market is fragmented and the future success of the business is dependent on the ability of Feedback Medical to secure new and renew current contracts. These contracts are often with Government supported organisations and the timing of these can be dependent on market conditions. The Group's dependence on the award or renewal of contracts means that its revenue stream is not constant and has the potential to be particularly irregular. The outcome of Brexit is unlikely to affect existing trading arrangements so is anticipated to have little impact on the Group. The impact of Covid-19 has been both positive and negative for the future prospects of the Company. A number of potential customers delayed any further discussions due to their focus on COVID-19 management. However Pennine Acute Trust recognised the value of Bleepa in helping them to effectively manage the impact of COVID-19 and as a result are now rolling Bleepa out as a mainstream solution to more efficient patient care. COVID-19 was also a key driver to the creation of the NHSx Clinical Communication Framework which has both endorsed the product and created a vehicle for reimbursement.

Regulatory approval

The development, evaluation and marketing of the Company's products and ongoing research and development activities are subject to regulation by governments and regulatory agencies in all territories within which the Company intends to market its products (whether itself or through a partner). There can be no assurance that any of the Company's products will successfully complete the trial process or that regulatory approvals to market these products will ultimately be obtained. Failure to obtain regulatory approvals for its products could threaten the Company's ability to trade in the long term.

The time taken to obtain regulatory approval varies between territories and there can be no assurance that any of the Company's products will be approved in any territory within the timescale envisaged by the Board, or at all, and this may result in a delay, or make impossible, the commercial exploitation of the Company's products. Furthermore, each regulatory authority may impose its own requirements and may refuse to grant, or may require additional data before granting an approval, even though the relevant product may have been approved by another country's authority.

If regulatory approval is obtained, products will be subject to continual review and there can be no assurance that such approvals will not be withdrawn or restricted. Changes in applicable legislation or regulatory policies, or discovery of problems with products may result in the imposition of restrictions on sale, including withdrawal of the product from the market, or may otherwise have an adverse effect on the Company's business and/or revenue streams. FM Ltd first obtained certification to ISO 13485 in 2014 and continues to maintain compliance with the current version of this Medical Device manufacturing standard.

Product Development Risk

The Group capitalises development costs where there is an expectation that commercially successful products will be developed. The products in development may cost more and/or take longer to develop than the current estimates. It is possible that commercially successful products may not be developed. The Board monitors progress on product development on a regular basis and discusses with potential customers their requirements to mitigate this risk. The new Bleepa is both innovative and unique but further iterations will be required to be produced quickly to ensure that Bleepa retains this position.

Liquidity

Management of liquidity risk has concentrated on the maintenance of appropriate credit lines and funding sources to ensure adequate cash resources for the Company's operations. The Group was successful in raising additional cash through equity fundraises in both 2019 and 2020 to enable it to implement its strategy. The Board regularly monitors the cash position of the Group and ongoing cash requirements. The Board believes the Group is likely to have access to adequate cash resources from a combination of operational cash generation and, if necessary, obtaining further equity finance from the capital markets to support its strategy.

Credit Risk

The Group's credit risk is primarily attributable to its cash and cash equivalents and trade receivables. The credit risk on other classes of financial assets is considered insignificant. Credit risk is managed through credit review and approval processes for new customers and ongoing review of each customer's credit history.

Other Risks

There is a risk that existing and new customer relationships will not lead to the income currently forecast (especially, as noted above, from new products currently in development). As with other technology businesses, the Group is reliant on a small number of highly skilled staff.

Post Balance Sheet Events

In July 2020, the Company raised £5.27 million, before expenses, by way of a placing and subscription of 505,000,000 new Ordinary Shares at a price of 1 pence per share with new and existing investors and 21,981,769 new Ordinary Shares at a price of 1 pence per share via an Open Offer to existing shareholders. The proceeds will be invested in developing the Bleepa product.

Key Performance Indicators

The Company monitors the following: its cash position, its investment in Bleepa development, Bleepa enquiries and feedback from pilot studies. The Board is developing key performance indicators to assess performance based on user acquisition, utilisation rates and revenue which will be necessary as Bleepa sales are made. These KPIs will be deployed across industry segments and by country.

By Order of the Board on 12 October 2020 and signed on its behalf

Prof R Shaw

Statement of Comprehensive Income

Consolidated Statement of Changes in Equity

FOR THE YEAR ENDED 31 MAY 2020

Consolidated Balance Sheet

Company Balance Sheet

Company Cash Flow Statement

Notes to the Accounts

1. General information

The Company is a public limited company domiciled in the United Kingdom and incorporated under registered number 00598696 in England and Wales. The Company's registered office is Health Foundry, Canterbury House, I Royal Street, London SE1 7LL.

The Company is quoted on AIM, a market operated by the London Stock Exchange. These Financial Statements were authorised for issue by the Board of Directors on the 12 October 2020.

2. Adoption of the new and revised International Financial Reporting Standards

The Company has adopted all of the new or amended Accounting Standards and Interpretations issued by the International Accounting Standards Board (IASB) that are mandatory for the current reporting period.

The following new and revised Standards and Interpretations are relevant to the company, but the Company has not early adopted this new standard. The Directors do not anticipate that the adoption of this standard will have a material impact on the reported results of the Company:

• Annual Improvements to IFRSs 2015-2017 Cycle (IFRS 3 Business Combinations and IFRS 11 Joint Arrangements, IAS 12 Income Taxes, and IAS 23 Borrowing Costs)

The following new and revised Standards and Interpretations are relevant to the Company but not yet effective for the year commencing 1 April 2019 and have not been applied in preparing the financial statements:

• IAS 1 Presentation of Financial Statements - classification of liabilities as current and non-current

• IAS8 1 and IAS 8 Accounting Policies-definition of materiality

The following Accounting Standards and Interpretations are most relevant to the Company:

IFRS16 - Leases

The Company transitioned to IFRS 16 in accordance with the modified retrospective approach. The prior year figures were not adjusted. The Company has decided not to apply the new guidance to leases whose term will end within twelve months of the date of initial application. In such cases, the leases are accounted for as short term leases and the lease payments associated with them are recognised as an expense from short-term leases through the statement of comprehensive income.

3. Significant accounting policies

(a) Basis of preparation

These financial statements have been prepared in accordance with those IFRS standards and IFRIC interpretations issued and effective or issued and early adopted as at the time of preparing these statements. The policies set out below have been consistently applied to all the years presented.

No separate income statement is presented for the parent Company as provided by Section 408, Companies Act 2006.

(b) Basis of consolidation

The Group financial statements consolidate the financial statements of Feedback plc and its subsidiaries (the "Group") for the years ended 31 May 2020 and 2019 using the acquisition method.

The financial statements of subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. All inter-company balances and transactions, including unrealised profits arising from them, are eliminated. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.

(c) Going Concern

The Group incurred a net loss of £1,087,457 and had a net cash outflow of £786,647 from operating activities for the year which are matters which may indicate a material uncertainty about the Group's ability to continue as a going concern. However, on 1 July 2020, the Company raised £5.27m before expenses by the issue of 505,000,000 new ordinary shares at a price of 1 pence per share to new and existing shareholders and 21,981,769 new ordinary shares at a price of 1 pence per share via an Open Offer to existing shareholders. Following this fundraise the directors updated and reviewed the Group's business plan and cash flow forecasts and consider that the Group and the Company will have adequate cash resources for at least the next twelve months to October 2021, from existing cash balances. These cash balances will be used to provide working capital, enable continued product development and international expansion. If further resources are required, the directors consider, that although future equity fundraising can never be guaranteed, the group's recent history of successful fundraising means it likely that the group will be able to raise further finance through future equity issues. Accordingly, the Directors believe that the Group and Company are a going concern and have therefore prepared the financial statements on a going concern basis.

(d) Intangible assets

Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses. An intangible asset acquired as part of a business combination is recognised outside goodwill if the asset is separable or arises from contractual or other legal rights and its fair value can be reliably measured.

The significant intangible asset cost related to external software development of products which are integral to the trade of the Group's medical imaging products. Amortisation and impairment charges are recognised in other operating expenses in the income and expenditure account. Internal development costs are not capitalised but written off during the year in which the expenditure is incurred.

The carrying value of intangible assets is reviewed for impairment whenever events or changes in circumstance indicate that the carrying value may not be recoverable. Impairment losses are recognised in other operating expenses in the income and expenditure account. Impairment reviews are carried out annually.

Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when it is probable that the project will be a success, considering its commercial and technological feasibility, and costs can be measured reliably. Only external research expenditure is capitalised. Internal research expenditure is written off in the year in which it is incurred. Other development expenditure is recognised as an expense as incurred. Development costs that have a finite useful life and that have been capitalised are amortised from the commencement of the commercial production of the product on a straight line basis as follows:

Software development costs capitalised in the year relate to products and product improvements which are yet to be ready for use. They are not yet amortised.

(e) Valuation of Investments

Investments held as non-current assets are stated at cost less provision for impairment.

(f) Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. When used, bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

(g) Goodwill

Business combinations on or after 1 April 2006 are accounted for under IFRS 3 using the acquisition method. Any excess of the cost of business combinations over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised in the balance sheet as goodwill and is not amortised.

After initial recognition, goodwill is not amortised but is stated at cost less accumulated impairment loss, with the carrying value being reviewed for impairment, at least annually and whenever events or changes in circumstance indicate that the carrying value may be impaired.

For the purposes of impairment testing, goodwill is allocated to the related cash generating units monitored by management. Where the recoverable amount of the cash generating unit is less than its carrying amount, including goodwill, an impairment loss is recognised in the statement of comprehensive income.

(h) Property, plant and equipment

All property, plant and equipment is stated at historical cost less depreciation. Depreciation on other assets is provided on cost or valuation less estimated residual value in equal annual instalments over the estimated lives of the assets. The rates of depreciation are as follows:

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the income statement.

(i) Foreign currency

Transactions denominated in foreign currencies are translated into sterling at the rates ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the rates ruling at that date. These translation differences are dealt with in the income statement.

(j) Revenue recognition

Sales transactions include software installation, software licenses, scientific and software support and consultancy. Revenue is measured at the fair value of the contractually agreed consideration received or receivable and represents amounts receivable for services provided in the normal course of business, net of VAT. The Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the company's activities, as described below. The sales invoice is raised when the customer's purchase order is received and the debt is payable within 60 days of the invoice date. In practice the debt is paid when the software installation has been completed. There are no obligations for returns, refunds or warranties.

Revenue relating to software consultancy and similar services is recognised as the services are performed and completed. The invoice is recognised on a linear basis over the duration of the contract.

Revenue relating to the sale of software licences or associated support services is recognised over the contractual period to which the licence relates or the duration of the support contract.

Revenue recognised from the sale of TexRAD software and related scientific support services are recognised over the estimated duration of the Group's involvement in a customer's project which is considered to represent its performance obligation. There are no explicit performance obligations as such but a clear understanding that the Group will provide the support required as agreed when the sale was made.

(l) Pension Costs

The Group operated a defined contribution pension scheme during the year. The pension charge represents the amounts payable by the Group to the scheme in respect of that year.

(m) Taxation

The tax credit represents the sum of the current tax credit and deferred tax credit.

The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.

(n) Financial instruments

In relation to the disclosures made in note 17:

• the Group does not hold or issue derivative financial instruments for trading purposes.

(o) Employee share options and warrants

The Group has applied the requirements of IFRS 2 Share-based Payment.

The Group has issued equity-settled share-based payment transactions to certain employees and previously issued warrants to the vendors of the acquired subsidiary, TexRAD Limited. Equity-settled share-based payment transactions are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share- based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. Fair value is measured by use of the Black Scholes option pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations.

(p) Key sources of estimation uncertainty

The preparation of financial statements requires the Board of Directors to make estimates and judgments that affect reported amounts of assets, liabilities, revenues and expenses. These estimates are based on historical experience and various other assumptions that management and the Board of Directors believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. The key areas of estimation uncertainty are:

· Intangible assets - Patents are included at cost less amortisation and impairment. Other intangible assets including development costs are recognised only when it is probable that a project will be a success. There is a risk therefore that a project previously assessed as likely to be successful fails to reach the desired level of commercial or technological feasibility. Where there is no probable income to be generated from these assets an estimation of the carrying value and the impairment of the intangible assets and development costs, including goodwill, has been made.

· Fair value measurement - share options and warrants issued included in the Group's and Company's financial statements require measurement at fair value. The calculation of fair values requires the use of estimates and judgements.

· Revenue recognition-revenue on the sale of TexRAD software and provision of related scientific support services is recognised over the expected duration of the group's involvement in customer's projects as the group's staff contribute significant support, analysis and input to those customers using TexRAD software for research purposes. Judgement based on past experience is used to determine the expected duration of involvement over which income should be deferred and recognised however the duration of the group's involvement may vary from expectations.

4. Segmental reporting

The Directors have determined that the operating segments based on the management reports which are used to make strategic decisions are medical imaging and head office. The trading activities of the Company solely relate to Medical Imaging and the Head Office covers the costs of running the parent company, Feedback PLC.

Reported segments' assets are reconciled to total assets as follows:

Major customers

During the year ended 31 May 2020, the Group generated £172,000 (2019: £222,000) of revenue from one customer in the United Kingdom, which is equal to 35% (2019: 40%) of total Group revenues in the year.

The value of all elements of remuneration received by each Director in the year was as follows: