8 Jun 2010 07:02
imJack plc
("imJack" or "the Company")
Financial results for the year ended 30 September 2009
imJack, the social networking business for the education sector, is pleased to announce its audited results for the year ended 30 September 2009 as set out below.
Restoration of Trading
Following publication of the Company's annual report and accounts for the year ended 30 September 2009, which have been posted to the Company's shareholders and which will be available on the Company's website shortly, together with completion of various proposals as announced, application has been made for the restoration of trading in the ordinary shares of the Company on AIM with effect from 7.30 a.m. on 8 June 2010.
Enquiries
imJack plc
Michael Abrahams (Chairman) 01653 618016
Daniel Stewart
Emma Earl / Simon Leathers 0207 776 6550
Rawlings Financial PR Ltd
Catriona Valentine 01653 618016
Chairman's Statement
I am pleased to announce the results for imJack plc (previously Amteus plc) for the year ended 30 September 2009.
Results
Revenue in the year ended 30 September 2009 amounted to £257,414 (2008: £198,282). The loss before taxation was £3,298,169 (2008: £3,539,038) and after taxation was £2,989,022 (2008: £3,539,038).
Business
The imJack product consists of a private platform for schools to communicate and collaborate in a secure, "invitation only" environment. The product enables students to communicate by instant messaging, video conferencing and real-time collaboration by way of secure file transfer or whiteboard. This technology means that homework can be received directly by children to their computer and that children, teachers and parents can all communicate in a secure environment. One of the major benefits of the system is the ability for careers advice to be accessed from major employers using the system in a totally secure environment. It also introduces students to the world of e-business and social networking in a responsible and secure manner.
The year under review was one of development both of the product and the ways by which the product could find routes to market in order to start achieving revenue streams. This has been a difficult process and involved two significant changes of management.
Inevitably this long period of product and strategic development has been difficult and costly. The Company therefore carried out share placings to raise £710,000 and £1.99m (net of issue costs) in December 2008 and June 2009 respectively. This however did not prove sufficient to take the Company through to the point of achieving significant revenues.
Post Year End
In the Autumn of 2009 the Company continued to explore ways both to get the product to market and to raise further funds. Dialogue continued with Education organisations which resulted in the signing of a Memorandum Of Understanding (MOU) in May 2010 to start to install the product in schools..
On 20 May 2010 the Company circulated to all shareholders the detail of this programme along with a proposal to raise £0.9m (net of issue costs) from certain placees to provide funding for the business plan. This placing of ordinary shares successfully completed yesterday. This document which describes in detail these proposals is now available on the Company website: www.imjack.com.
On 20 May 2010 the Company appointed Daniel Stewart as Nominated Advisor in place of Strand Hanson.
Board and Management
During the past year we appointed Len Sanderson and Richard Addis to the Board in January 2009 and Anthony Lilley in October 2009. These directors have all since left the Board. On 20 May 2010 we appointed Jeffrey Morris, the founder and a major shareholder in the business to the position of interim CEO. At the same time David Lynde resigned from the Board but continues as Company Secretary. The directors also plan to appoint an additional Non-Executive Director in the near future.
Outlook
The directors believe that with the proposed fund raising and the innate strength of its product that it now has the opportunity to start to achieve revenues from the schools as described in the circular dated 20 May 2010. Since the initial launch the Company has secured 7 orders.
Going Concern
The Directors acknowledge that in light of recent credit market conditions, additional diligence on the part of preparers of accounts and members of audit committees is required and, in particular, the need for clarity as to the basis on which judgements have been exercised.
The Directors have prepared a forecast to December 2011, which assumes certain service level agreement revenue being achieved. In preparing the forecasts the Directors have taken into account the dialogue to date and the memorandum of understanding with the Education Organisation in securing the forecast service level agreement revenues
The directors have concluded that there are the following material uncertainties being:
·; Securing the forecast service level agreement revenues from the participating schools and from the schools where the product is already installed and
·; The availability of funds to support the commitment to provide financial support of up to £500,000, by Jeffrey Morris, if required by the Company.
The existence of these material uncertainties cast significant doubt on the entity's ability to continue as a going concern and, therefore, it may be unable to realize its assets and discharge its liabilities in the normal course of business.
Nevertheless, having successfully completed the placing yesterday and after making enquiries and considering the uncertainties described above, the Directors have concluded that the going concern basis is appropriate and that the Company will continue in operational existence for the foreseeable future. The independent auditors' report has included an emphasis of matter in respect of the above going concern uncertainties. Further details are set out in note 1 to the financial information.
Michael D Abrahams CBE DL
Chairman
8 June 2010
CONSOLIDATED INCOME STATEMENT
For the year ended 30 September 2009
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| Note | 2009 £ | 2008 £ | |
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Continuing operations |
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Revenue |
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| 257,414 | 198,282 |
Cost of sales |
|
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| (445,184) | (313,087) |
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|
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Gross loss |
|
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| (187,770) | (114,805) |
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|
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Administrative expenses |
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| (3,048,703) | (3,366,830) |
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OPERATING LOSS |
|
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| (3,236,473) | (3,481,635) |
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|
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Investment revenue |
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| - | 10,421 |
Finance costs |
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| (61,696) | (67,824) |
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LOSS BEFORE TAXATION |
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| (3,298,169) | (3,539,038) | |
Tax on loss on ordinary activities |
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| 309,147 | - |
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LOSS FOR THE YEAR FROM CONTINUING OPERATIONS ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY |
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| (2,989,022) | (3,539,038) |
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Loss per share |
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- basic and diluted |
| 4 | (4.0p) | (7.6p) | |
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CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
There is no recognised income or expenses for the financial year other than as shown in the consolidated income statement above and consequently no separate statement of recognised income and expense has been presented.
CONSOLIDATED BALANCE SHEET
30 September 2009
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| Note |
| 2009 £ | 2008 £ |
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NON-CURRENT ASSETS |
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Intangible assets |
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| 288,804 | 51,232 |
Property, plant and equipment |
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| 68,567 | 62,308 |
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|
|
|
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|
|
|
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| 357,371 | 113,540 |
CURRENT ASSETS |
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|
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Inventories |
|
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| - | 189,600 |
Trade and other receivables |
|
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| 366,451 | 486,987 |
Cash and cash equivalents |
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| 122 | 4,250 |
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|
|
|
|
|
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| 366,573 | 680,837 |
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TOTAL ASSETS |
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| 723,944 | 794,377 | |
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CURRENT LIABILITIES |
|
|
|
| |
Trade and other payables | 5 |
| (1,224,156) | (1,967,368) | |
Obligations under finance leases | 5 |
| (10,147) | (10,468) | |
Bank overdraft | 6 |
| (66,766) | (14,473) | |
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| |
|
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| (1,301,069) | (1,992,309) | |
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NET CURRENT LIABILITIES |
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| (934,496) | (1,311,472) |
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NON-CURRENT LIABILITIES |
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| |
Obligations under finance leases | 7 |
| - | (10,291) | |
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TOTAL LIABILITIES |
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| (1,301,069) | (2,002,600) |
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NET LIABILITIES |
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| (577,125) | (1,208,223) |
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EQUITY |
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Ordinary share capital |
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| 1,099,636 | 5,376,333 |
Deferred shares |
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| 5,513,699 | - |
Share premium |
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| 8,071,152 | 6,320,186 |
Share based payment reserve |
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| 1,122,067 | 489,915 |
Retained earnings |
|
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| (16,383,679) | (13,394,657) |
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TOTAL EQUITY |
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| (577,125) | (1,208,223) | |
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CONSOLIDATED CASH FLOW STATEMENT |
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For the year ended 30 September 2009 |
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| Note |
| 2009 £ | 2008 £ | ||
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Net cash outflow from operating activities |
| 9 |
| (2,196,520) | (2,403,896) | |
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Investing activities |
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Interest received |
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| - | 10,421 | ||
Proceeds on disposal of property, plant and equipment |
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| - | 86,920 | ||
Purchase of property, plant and equipment and intangibles |
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| (353,303) | (75,480) | ||
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Net cash generated from investing activities |
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| (353,303) | 21,861 | ||
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Financing activities |
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Finance cost |
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| (61,696) | (67,824) | ||
Repayments of obligations under finance leases |
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| (10,612) | (61,106) | ||
Proceeds on issue of shares (net) |
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| 2,652,700 | 1,713,736 | ||
Receipt/(repayment) of related party loans |
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| (86,990) | 160,646 | ||
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Net cash generated from financing activities |
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| 2,493,402 | 1,745,452 | ||
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Net decrease in cash and cash equivalents |
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| (56,421) | (636,583) | |
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Cash and cash equivalents at beginning of year |
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| (10,223) | 626,360 | |
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Cash and cash equivalents at end of year |
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| (66,644) | (10,223) | |
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NOTES TO THE FINANCIAL INFORMATION
For the year ended 30 September 2009
1. PUBLICATION OF STATUTORY ACCOUNTS
The financial information set out above does not constitute the company's statutory accounts for the years ended 30 September 2009 or 2008, but is derived from those accounts. Statutory accounts for 2008 have been delivered to the Registrar of Companies and those for 2009 will be delivered following the company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under s498(2) or (3) Companies Act 2006. The audit report included an emphasis of matter in respect of going concern. The emphasis of matter included the material uncertainties in respect of (1) the dependency on the forecast service level agreement revenues being achieved and the continuing availability of matched funding for schools from the government; and (2) the availability of funds to support the commitment to provide financial support of up to £500,000, by JC Morris, if required by the Company.
Going concern
In June 2009, the group raised £1.99m (net of issue costs) through the issue of ordinary shares, which were admitted to trading on AIM on 8 June 2009. The proceeds of the placing allowed the group to settle certain trade creditors and provided additional working capital.
A further placing of ordinary shares was completed on 7 June 2010 when the parent company raised £0.9m (net of issue costs) which is forecast to provide working capital to pay off CVA creditors, and to enable the Company to trade until revenues are generated from the sale of the imJack product. This is dependent upon the Company achieving its forecasts. In addition, the Directors have capitalised loans owing to them from the Company of £1,066,000.
imJack Secure Communications Limited, the Company's trading subsidiary had significant liabilities which were greater than its assets and is therefore technically insolvent and has entered into a CVA. The Directors believe that the CVA is in the best interests of the Shareholders and creditors. A meeting of the imJack Secure Communications Limited's creditors was held on 27 May 2010 and approval was granted to extinguish debts of £653,000 for £100,000, which will be divided between creditors who make a claim within three months of the date of the CVA being approved.
Each qualifying school taking up the imJack platform will be entitled to a £15,000 credit towards £25,000 of matched funding from the government. The remaining £10,000 required from the school can be raised through the use of various modules on the imJack platform such as careers' advice or mentoring. Through an agreement with JD Connect, the Company have agreed a memorandum of understanding with an Education Organisation to start promoting this programme as soon as possible. The Directors believe there are 1,000 qualifying schools in 2010.
The participating schools installing the imJack platform are being offered service level agreements which include storage, support and maintenance thus creating recurring revenues for the Company. The Company is anticipating that revenues from this programme will start during the current schools' summer term. In addition the Company has installed the platform in 436 schools free of charge and has started discussions with those schools with a view to offering them a three year service agreement in due course. The Directors are confident that after a number of false starts that the Company has now reached a point where it has visibility of revenues and a clear understanding of the opportunities available to it.
On 17 May 2010 the Company has agreed with Jeffrey Morris that he will exchange up to £200,000 of loans made by him to the Company into convertible unsecured loan stock to provide longer term capital for the Company. The convertible loan stock is convertible at 1.5p into 13,333,333 ordinary shares of the Company. Under the terms of the convertible loan stock, repayment in cash will only be made prior to the first anniversary of 17 May 2010 in the event that the Board considers the Company to have sufficient working capital.
In addition, Jeffrey Morris has agreed to provide up to an additional £500,000 drawdown facility for the purposes of working capital if required by the Company in the future. The Company will be required to give one month's notice of its intention to drawdown sums under the facility. Interest will be charged on any sums drawn down on the facility at the Bank of England base rate plus 3 per cent.
The Directors have prepared a forecast to December 2011, which assumes certain service level agreement revenue being achieved. In preparing the forecasts the Directors have taken into account the dialogue to date and the memorandum of understanding with the Education Organisation in securing the service level agreement revenues and assumed the continuing availability of matched funding for schools from the government.
The directors have concluded that there are the following material uncertainties being:
·; Securing the forecast service level agreement revenues from the participating schools and from the schools where the product is already installed and the continuing availability of matched funding for schools from the government; and
·; The availability of funds to support the commitment to provide financial support of up to £500,000, by Jeffrey Morris, if required by the Company.
The existence of these material uncertainties cast significant doubt on the entity's ability to continue as a going concern and, therefore, it may be unable to realize its assets and discharge its liabilities in the normal course of business.
Nevertheless, having successfully completed the placing yesterday and after making enquiries and considering the uncertainties described above, the Directors have concluded that the going concern basis is appropriate and that the Company will continue in operational existence for the foreseeable future.
If the adoption of the going concern basis was inappropriate, adjustments, which it is not practicable to quantify, would be required, including those to write down assets to their recoverable value, to reclassify fixed assets as current assets and to provide for any further liabilities that may arise.
2. ACCOUNTING POLICIES
imJack plc is a company incorporated in the United Kingdom under the Companies Act 2006. This preliminary announcement is based on the company's financial statements which are prepared in accordance with International Financial Reporting Standards as adopted for use in the EU. The group's accounting policies have been published on the group's website www.imjack.com. During the year the company adopted IFRS8 Operating Segments but this had no impact on the financial statement disclosure.
3. DIVIDENDS
No dividends are proposed for the year ended 30 September 2009 (2008: nil).
4. LOSS PER SHARE
The calculations of loss per ordinary share are based on the loss for the financial year and the weighted average number of ordinary shares in issue during the year. Dilutive earnings per share is based on the weighted average number of ordinary shares in issue, adjusted to reflect conversion of all dilutive potential ordinary shares. Dilutive potential shares comprise share options granted to employees. For the years ended 30 September 2009 and 30 September 2008 the impact of share options is anti-dilutive and these have been excluded from the calculation of diluted weighted average share capital.
| 2009 £ | 2008 £ | ||
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Loss for the year |
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| (2,989,022) | (3,539,038) |
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| Number | Number | |
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Weighted average number of shares |
| 74,822,570 | 46,229,585 | |
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| Pence | Pence | |
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Basic and diluted loss per ordinary share |
| (4.0) | (7.6) | |
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Since the year end the Company has issued further ordinary shares that will impact the weighted average number of shares for the year ended 30 September 2010.
5. other financial liabilities
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| 2009 £ |
2008 £ | |||||
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Trade payables |
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| 753,289 | 745,555 | |||||
Amounts due to related parties |
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| 113,867 | 196,276 | |||||
Accruals and deferred income |
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| 337,880 | 481,686 | |||||
Other taxes and social security |
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| 4,771 | 512,486 | |||||
Other creditors |
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| 14,349 | 31,365 | |||||
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| 1,224,156 | 1,967,368 | |||||
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Obligations under finance leases |
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| 10,147 | 10,468 | ||||||
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6. borrowings
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| 2009 £ | 2008 £ |
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Unsecured borrowings at amortised cost |
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Bank overdraft |
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| 66,766 | 14,473 |
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All borrowings are due for settlement within 12 months and are in sterling. The bank overdraft is repayable on demand and is unsecured.
7. NON-CURRENT LIABILITIES
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| 2009 £ | 2008 £ |
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Obligations under finance leases |
| - | 10,291 | ||
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8. obligations under finance leases
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| 2009 £ |
2008 £ |
Finance leases are repayable as follows: |
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Between one and two years |
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| - | 10,291 |
Between two and five years |
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| - | - |
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| - | 10,291 |
Within one year |
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| 10,147 | 10,468 |
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| 10,147 | 20,759 |
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9. NET CASH FROM OPERATING ACTIVITIES
| 2009 £ | 2008 £ |
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Loss for the year | (2,989,022) | (3,539,038) |
Adjustments for: |
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Investment revenue | - | (10,421) |
Finance cost | 61,696 | 67,824 |
Tax credit | (309,147) | - |
Loss on disposal of property, plant and equipment | - | 2,502 |
Amortisation of intangible assets | 63,072 | 14,229 |
Impairment of goodwill | 125,000 | - |
Impairment of intangible fixed assets | 120,000 | - |
Depreciation of property, plant and equipment | 46,400 | 60,493 |
Share based payment | 722,420 | 189,691 |
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|
Operating cash outflows before movements in working capital |
(2,159,581) |
(3,214,720) |
Decrease in inventories | 189,600 | 290,496 |
Decrease/(Increase) in receivables | 125,117 | (209,079) |
(Decrease)/Increase in payables | (351,656) | 729,407 |
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| (2,196,520) | (2,403,896) |
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Cash and cash equivalents comprise cash at bank and other short term highly liquid investments with a maturity of three months or less.
10. related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the group and related parties, who are not subsidiaries, are disclosed below. All related party transactions have been completed on an arm's length basis.
Trading transactions with related parties
At the year end the group owed Hak Services Limited, HAK Developments Limited, The Media Buzz Limited and Wamey Ltd (companies owned by the majority shareholder and connected parties) £1,562, £nil, £2,233 and £48,296 respectively (2008: £389, £3,149, £99,915 and £nil respectively).
All amounts are repayable within one year and are interest free.
At the year end there is an amount owed from Countrylarge Limited (a company owned by the majority shareholder and connected parties) of £14,769 (2008: £10,188).
During the year the group incurred recharges of £nil (2008: £26,914) from Hak Services Limited.
During the year the group incurred recharges of £447 (2008: £7,473) from Countrylarge Limited and recharged costs of £8,432 (2008: £1,257) to Countrylarge Limited.
During the year the group incurred recharges of £474,050 (2008: £326,835) from The Media Buzz Limited and recharged costs of £54,829 (2008: £146,388) to The Media Buzz Limited.
During the year the group incurred recharges of £393,702 (2008: £nil) from Wamey Limited and recharged costs of £11,582 (2008: £nil) to Wamey Limited.
The group purchased a licence to provide the imJack platform to schools from Tellbrook Limited (a related party) for £300,000. Jeffrey Morris was a director of Tellbrook Ltd. At the year end £nil (2008: £nil) was owed to or from Tellbrook Ltd.
The group purchased The Day Ltd during the year, with the consideration being satisfied by the issue of ordinary shares. L Sanderson and R Addis were vendors of The Day Ltd and received 1,999,980 and 1,500,010 ordinary shares respectively in respect of this transaction.
Loans to related parties
Jeffrey Morris has provided financing to the group. At 30 September 2009 £4,712 was owed to Jeffrey Morris (2008: £92,823 owed to Jeffrey Morris). All amounts are repayable within one year and are interest free. During the year Jeffrey Morris provided funds of £30,807 and was repaid £8,919. On 5 June 2009 Jeffrey Morris capitalised £110,000 of loans outstanding to him by the placing of 1,571,428 ordinary shares and subscribed for 2,142,857 ordinary shares for £150,000 of which £55,000 was outstanding at the year end. This was settled in October 2009. The highest amount due to Jeffrey Morris during the year was £114,906. Jeffrey Morris has also provided a guarantee for £60,000 over certain creditors of the Company.
On 17 May 2010 Jeffrey Morris has agreed with the Company to exchange up to £200,000 of his loan to the Company at that date into convertible loan stock and to provide the Company with an additional £500,000 draw down facility. Further details are set out in the Chairman's statement.
M D Abrahams has provided financing to the group. At 30 September 2009 there are amounts of £57,023, owed to M D Abrahams (2008: £nil). All amounts are repayable within one year and are interest free. During the year M D Abrahams provided funds of £168,523 and was repaid £41,000. On 5 June 2009 M D Abrahams capitalised £58,000 of loans outstanding to him by the placing of 828,571 ordinary shares. On 7 September 2009 M D Abrahams capitalised £12,500 of loans outstanding to him by the placing of 178,571 ordinary shares. The highest amount due to M D Abrahams during the year was £93,000.
11. POST BALANCE SHEET EVENTS
On 7 June 2010, the Company raised £0.9m (after issue costs) through the placing of 60,113,330 shares, which are expected to be admitted to trading on AIM on 8 June 2010. In addition, the Company settled amounts due to certain 3rd party creditors of £30,000 by the issue of 2,000,000 new ordinary shares of 1p each.
The Company has agreed with Jeffrey Morris that the £200,000 due to him at the date of the placing has been settled for convertible, unsecured loan stock to provide longer term funding for the company. The convertible loan stock is convertible into 13,333,333 ordinary shares at any time.
On 7 June 2010 the Company acquired the entire issued share capital of JD Connect Ltd for consideration of £150,000 satisfied by the issue of 10,000,000 ordinary shares. JD Connect Ltd, the exclusive re-seller of the imJack technology platform, recorded a loss of £45,671 for the period to 31 December 2009.
On 7 June 2010 the Company acquired the entire issued share capital of Tellbrook Ltd, which owns the core underlying IP of the business, for consideration of £500,000 satisfied by the issue of 33,333,333 ordinary shares. Tellbrook Ltd recorded a profit of £3,362 in the accounts for the period to 30 April 2010.
On 7 June 2010 Jeffrey Morris and connected parties converted £1,065,000 of loans into equity through the issue of 71,000,000 shares.
On 7 June 2010 M D Abrahams converted £61,113 of loans into equity through the issue of 4,074,176 shares.
imJack Secure Communications Ltd, the main trading subsidiary of the company, had significant liabilities which are greater than its assets and was therefore technically insolvent. This subsidiary entered into a CVA to extinguish its debts. On 27 May 2010 imJack Secure Communications Ltd extinguished debts of £653,000 for payment of £100,000 which will result in a credit of £553,000 (net of issue costs) to the income statement.