31 October 2023

Iconic Labs PLC

("Iconic" or the "Company") 

Full Year Results for the Year ended 30 June 2023

Iconic Labs PLC (LSE: ICON), today announces its audited financial results for the year ended 30 June 2023.

Copies of the Annual Report and Accounts for the year ended 30 June 2023 will shortly be sent to shareholders and available on the Company's website: https://www.iconiclabs.co.uk/documents/.

Period Highlights

·   Finalised terms with the European High Growth Opportunities Securitisation Fund ("EHGOSF") and Linton under the Settlement Deed

·    Finalised terms of Creditors Voluntary Arrangement ("CVA") with Joint Administrators

·    Finalised terms with EHGOSF of the Financing Facility

·    Suspension of the listing in the Company's Ordinary Shares lifted by the FCA

Post-Period Highlights

·    August 2023, Prospectus published to provide the Company with the ability to issue further Ordinary Shares under the Prospectus Regulation Rules

·    September 2023, 83,256 Ordinary Shares issued to all creditors under the CVA

·    October 2023, Iconic successfully completed and satisfied all conditions of, and consequently exited, the CVA

Financial Highlights

·    Profit of £4,680,143 (FY 22: loss of £762,107) although attributable to the writing back of the creditor balance

·    Revenue of £Nil (FY 22: £26,823)

·    Total assets held as of 30 June 2023 £50,244 (FY 22: £6)

·    Group liabilities of £3,778,621 (FY 22: £8,938,526)

·   Iconic maintains a limited amount of cash on its account as it relies entirely at this time on the EHGOSF financing facility to meet its operational expenditures

Brad Taylor, Chief Executive Officer of Iconic Labs, commented:

"For Iconic, 2023 has been a transformational year. We have successfully steered the Company through administration and financial restructuring, positioning ourselves for future growth. As we stand at this pivotal juncture, I wish to highlight our commitment to advancing our strategic objectives and seizing growth opportunities.

"We look forward to this next year with confidence as we focus on generating shareholder value."

For any further information or enquiries please contact:

CHIEF EXECUTIVE OFFICER'S REPORT

I am pleased to present the audited accounts of Iconic Labs PLC and its subsidiaries (together, "Iconic" or the "Company") for the twelve months ended 30 June 2023. A significant amount of the information contained in these audited accounts can be found in the Company's Prospectus published on 8 August 2023, but several updates are also included.

Over the past twelve months, we have made strong progress in restructuring and stabilising the Company amid challenging circumstances, including:  

(i)            Negotiated settlements of all outstanding disputes;

(ii)           Finalised and satisfied all conditions of the Company Voluntary Arrangement ("CVA") which was approved with the Joint Administrators at a creditors' meeting on 22 September 2022;

(iii)      Agreed financing terms with European High Growth Opportunities Securitization Fund ("EHGOSF") and Linton Capital LLP ("Linton"), requiring the Company to issue £750,000 in convertible notes to EHGOSF and £750,000 to Linton pursuant to the terms of the Deed of Issuance and Subscription dated 23 August 2022 (the "Settlement Deed");

(iv)        Finalised the terms of a new financing facility on 28 September 2022 with EHGOSF pursuant to which EHGOSF would provide Iconic with up to £3 million by subscribing for up to 3,000 Loan Notes each with a par value of £1,000 (the "Financing Facility"), convertible into Ordinary Shares in the Company with Warrants attached; and

(v)           Lifted the suspension of the listing of the Company's ordinary shares ("Ordinary Shares") and as a result shareholders were able to trade the Company's shares on the London Stock Exchange from 24 January 2023.

As part of the requirements for the Company's successful exit from administration and lifting the suspension of the Company's listing, the Company published a Prospectus on 8 August 2023 to provide the Company with the ability to issue further Ordinary Shares under the Prospectus Regulation Rules as follows:

(i)            Up to 1,674,130,609 Ordinary Shares to be issued to unsecured creditors under the CVA;

(ii)        Up to 45,045,045,045 Ordinary Shares to be issued to EHGOSF to convert £750,000 in convertible notes, and to Linton Capital to convert £750,000 in convertible notes under the Settlement Deed;

(iii)       Up to 80,180,180,180 Ordinary Shares to be issued to EHGOSF to satisfy £2,670,000 in unconverted drawdowns and certain fees pursuant to the Financing Facility;

(iv)      Up to 36,038,525,658 Ordinary Shares to be issued to EHGOSF to satisfy the exercise of its Warrants under the Financing Facility; and

(vi)       Up to 22,027,027,027 Ordinary Shares to be issued to Ott Ventures s.r.o and/or Ott Ventures USA, Inc. under the Management Services Agreement for outstanding fees as set out in the 2022 Accounts totalling, to date, £690,000 and a further £125,000 in part lieu of fees for the balance of the calendar year, being in aggregate £815,000.

Since the suspension of the listing was lifted, EHGOSF has converted £530,000, at the year end, of convertibles notes under the Financing Facility resulting in the Company issuing a total of 8,901,668,621 Ordinary Shares of £0.00001 each and 2,236,616 Ordinary Shares of £0.1 each, post consolidation, to EHGOSF. In addition, the Company has also issued 6,458,946,078 Warrants to EHGOSF.

The Company held its Annual General Meeting ("AGM") on 25 August 2023 at which all resolutions were duly passed, including a resolution for the consolidation of the Company's Ordinary Shares on a 10,000 for 1 basis, such that every 10,000 Ordinary Shares of £0.00001 each were consolidated into 1 Ordinary Share of £0.1 each in nominal value.  The primary objective of the consolidation was to reduce the number of Ordinary Shares, with the intention of creating a higher share price per Ordinary Share in the capital of the Company, which we believe will make the Company and the Ordinary Shares more attractive to a broader range of investors.

Since the publication of the Prospectus and the AGM, the Company was pleased to announce that it had satisfied the final condition to bring the CVA to a successful conclusion when it issued 83,256 Ordinary Shares of £0.1 each to the creditors under the CVA. As of 21 September 2023, all documents concluding the CVA had been filed with, and accepted by, Companies House.

Emergence and Growth Vision

We are proud to report that the Company has successfully navigated the challenges of administration and financial restructuring and is now poised to seek revenue-generating advisory services as it continues to search for a suitable acquisition target that will most likely take the form of a reverse takeover. As digital evolution shapes our future, the Company is eyeing opportunities in online media, artificial intelligence, big data gathering, processing and analysis sectors with which it can enter into advisory services contracts. Our intent is to support companies, especially in their infancy, that have crafted innovative products and captured markets but are inhibited by various growth constraints. We possess the executive acumen to steer these entities, building robust systems and strategies that propel them towards long-term success.

Gay Star News ("GSN"): A Promising Asset

Our immediate objectives centre around GSN, which we acquired in 2019 for £33,000 through our subsidiary Nuuco Media Limited. GSN's potential continues to be evident from its strong foothold in the LGBTQ+ media realm. Despite past fiscal adversities, the resilience and promise of GSN's brand have always shone through. Our goal is to amplify this potential and fortify GSN's position in the market, with Greencastle MM LLP's expertise. The partnership terms with Greencastle ensure a balanced growth trajectory, keeping the best interests of both parties in mind.

We aim to position GSN as a leading LGBTQ+ hub for diverse content. The future growth of GSN lies in our ability to produce and curate valuable content. By doing so, we expect to see a steady rise in engagements and subscriptions.  Our primary competition comprises renowned publications like Pink News, Gay Times, and Attitude. The expansion of GSN's operations into Europe is also on the horizon, as we target a growth of 50,000 subscribers by the end of 2023 and a long-term vision of 1 million subscribers by 2024.

M&A and Funding

We are actively exploring acquisition opportunities to further enhance shareholder value. It is worth noting that the consideration for any such moves would primarily be in the form of company equity. Our management, spearheaded by me, is actively overseeing this initiative.

In conclusion, while the path ahead is competitive, I am confident that with the administration and financial restructuring behind us, we can now turn the page and begin a new chapter for the Company as we continue to implement our plan towards generating shareholder value.

Bradley Taylor

Chief Executive Officer

30 October 2023

STRATEGIC REPORT

INTRODUCTION

This is the sixth set of financial statements prepared by Iconic. This Strategic Report should also be read in conjunction with the Chief Executive Officer's statement together with the Prospectus published on 8 August 2023.

Principal Activities and Business Review

Iconic is a media and technology business focused on the identification, acquisition and growth of technology-driven companies in the online media, artificial intelligence, and big data gathering, processing and analysis sectors. 

Iconic's sole asset is Gay Star News ("GSN"), an online media platform dedicated to the LGBTQ+ community, which Iconic intends to continue developing with strategic partners. 

PRINCIPAL RISKS AND UNCERTAINTIES

The following risks are considered by the Board to be the most significant to the business:

Revenue, Profitability and Funding Risk

Iconic currently only has one asset, GSN, which is not cash-generative and otherwise currently generates no revenues including from consultancy. The Company is therefore reliant upon the Financing Facility with EHGOSF for its sole source of working capital.

The Financing Facility is subject to a number of conditions ("Conditions") including in particular:

·          The shares of Iconic trade on the Main Market of the London Stock Exchange;

·          The closing market price of the Shares for each of the ten consecutive trading days falling immediately prior to the relevant closing date must be at least higher than 150% of the nominal value of Iconic's shares;

·          The average daily value traded of Iconic's shares (excluding 5% of the data points from the top and excluding 5% of the data points from the bottom of the data set) for the 20 trading days immediately prior to the applicable closing date must be at least £10,000;

·          From the fifth drawdown tranche onwards, Iconic having published a Prospectus;

·         No binding commitment has been entered into by Iconic pursuant to which a change of control in Iconic would occur;

·          No occurrence that constitutes an event of default having occurred and is continuing;

·          The Board having the required authority;

(1) For the allotment and issue of at least 200% of such number of Shares as would be required upon conversion of all outstanding Notes together with the Notes to be issued pursuant to the relevant drawdown notice calculated by dividing the aggregate principal amount of all such Notes by the Closing VWAP as of the date of such drawdown notice; and

(2) To deviate from the Shareholders' pre-emption and/or preferential subscription right (as applicable) with respect to such number of Shares; and

·          No payment is due by the Company to EHGOSF (or any of its Affiliates) and no delivery of Shares (or certificates evidencing such Shares) resulting from a conversion of Notes or exercise of any Warrants by EHGOSF (or any of its Affiliates) is outstanding.

Iconic maintains a limited amount of cash on its account as it relies entirely at this time on the EHGOSF financing facility to meet its operational expenditures. There currently remains approximately £1.75 million available for drawdown under the Financing Facility. The expected ordinary course cash burn of the business is approximately £100,000 per month for the next 12 months.

However, it is possible that in the future certain of these conditions may not be met, some of which are outside the control of the Company, although it is not currently known when this may happen. As a result, in the event any such condition is not met, the Company may not be in a position to further drawdown on the Financing Facility. Although the Directors would endeavour to pursue certain options to mitigate the consequence of such breach there is no certainty that any such options could be achieved either in part or at all. In such an event the Company would need to wind down its operations, realise any assets and may enter administration, if and to the extent there are creditors of the Company who cannot be paid. In such an event, the Company would no longer manage the affairs of the Company or the realisation of its assets. As a result of either winding down the business or entering into administration, the Ordinary Shares would be cancelled from the Official List and Shareholders may receive little or no value for their Ordinary Shares.

Dilution and Pricing Risk

If EHGOSF exercises its full rights under the Financing Facility for conversion of Loan Notes and Warrants into Shares, this could result in a significant holding in the Company by EHGOSF. However, EHGOSF's strategy is generally to sell shares in the market as soon as practicable following the exercise of such rights and in any event under the Financing Facility, inter alia, EHGOSF cannot hold more than 29.9% of the Company. Accordingly, there is a risk that should the Company seek to drawdown under the Loan Notes and EHGOSF thereafter exercise and sell Shares in significant amounts over a lengthy period, this could have a material negative impact on the price of the Shares.  

Key Executive Risk

Given the wholesale change in the Board of Directors and executive team in February and March of 2021, coupled with the complexity of the restructuring, administration, CVA, and lifting of the trading suspension, there is a risk of Iconic not being able to retain key executives, which could adversely affect Iconic's operating and financial performance. Retaining and motivating Bradley Taylor (Chief Executive Officer) and David Štýbr (Executive Director) is a critical component of the future success of the business. Without the participation of these key executives, it is unlikely that the execution of the CVA, continued trading of the Company, and financing with EHGOSF can continue.

Copycat Website

A copycat website, www.gaystarnews.co.uk ("Copycat Website") was registered on 19 October 2022. Whilst it is not currently seeking to compete with the 'Gay Star News' brand created more than a decade ago, the operator of the Copycat Website has refused to deliver up the website. The Company has alerted the operators that any use of the Gay Star News brand will constitute passing off and breach of copyright but there is no certainty of a positive resolution to this dispute. If this dispute is not resolved, and the Copycat Website is not delivered up, it could result in lost website traffic and therefore a loss of revenue to the Company.

The Company is dependent upon advertising agencies to implement its growth strategy

The Company seeks to access a number of advertising agencies to implement its growth strategies. In the event that these do not wish to engage with the Company this could significantly impact the Company's ability to implement its growth strategies and/or could adversely impact profits.

Regulation of the internet and e-commerce is rapidly evolving and changes could adversely affect the Company's business

Regulation of the internet and e-commerce is rapidly evolving and there are an increasing number of directly applicable laws and regulations. It is possible that additional laws and regulations may be enacted with respect to the internet, covering issues such as user privacy, law enforcement, pricing, taxation, content liability, copyright protection and quality of products and services. The adoption of new laws and regulations could have a material adverse effect on the Company's business, results of operations and financial condition. In particular, digital advertising is subject to complex regulation. The regulations vary by jurisdiction of operation and are subject to continuous change, and compliance with such regulations and other legal requirements may be burdensome and costly. Changes to existing regulations could lead to increased costs or otherwise affect the Company's ability to generate revenues in a jurisdiction, for example, if a distribution channel ceases operations due to a change in existing regulation. In addition, the Company may face increased compliance costs and regulatory scrutiny each time it expands its operations into a new jurisdiction. In addition, any enquiries made, or proceedings initiated, by individuals or any regulator may lead to negative publicity and potential liability for the Company, which could have a material adverse effect on the business, results of operations and financial condition of the Company.

Global Economic Risk

The online media and publishing, technology, artificial intelligence, and data gathering, processing, and analytics sectors are susceptible to adverse developments in the global economy and particularly the UK economy where Iconic is located. The continual uncertainty over the war in Ukraine, the high inflationary environment and the threat of global recession, for example, may continue to delay spending by potential clients which may have a negative effect on the demand for services which could affect Iconic's revenues.

Potential Unrecorded Legacy Liabilities

As evidenced by the administration and disputes involving various key parties, there were significant legacy issues that predated management's arrival. Following the exit from administration and the entering into of confidential settlement agreements with various parties, the Directors consider that it is unlikely that there are any material unknown liabilities of Iconic, however there is the potential for unknown creditors to emerge which would increase the liabilities of the Company.

The Company will be dependent on the strength of its brand and its reputation and on developing these further and would suffer if this were not possible for any reason

A strong brand and reputation are vital to the Company's growth strategies. Brand strength and awareness is important to generate new and subsequently retain custom. The management team are in the process of developing the brand and reputation but there can be no assurances that this will be successful. The actions of competitors, negative publicity involving the Company's management or any of its employees, a lack of sufficient funds or other factors may all adversely impact the brand or reputation. These in turn may have a materially adverse effect on the Company's business, prospects for growth and/or financial position.

Inability to contract with customers on the most favourable terms

The Company enters into contracts with a wide variety of companies, many of whom possess greater negotiating leverage than is currently available to the Company. The Company may be required to tolerate terms which are less favourable than might be anticipated, and which may also be governed by the laws of other jurisdictions, and this could intensify if the number of competitors increases, thereby potentially giving existing or prospective customers more options. Furthermore, if the Company enters into more onerous terms than it would ideally enter into, it may risk not being able to satisfy those terms. Breaching onerous terms or failing to secure the best commercial terms possible could have a material impact on the Company's business revenue, financial condition and profitability.

Access to further capital

Part of the Company's growth strategy is to identify and acquire similar businesses that are of a smaller scale and which are well-priced. In the longer term, the Company is intending to grow the business organically and continue to identify and acquire similar businesses, albeit the Company anticipates such future acquisitions to be of a larger scale than those the Company is looking to make in the near term. The Company's longer term growth strategy may require additional funds in order to respond to business challenges, enhance existing services and complete any future acquisitions.

Accordingly, the Company may need to engage in equity or debt financings to secure additional funds. If the Company raises additional funds through further issues of equity or convertible debt securities, existing shareholders could suffer significant dilution, and any new equity securities could have rights, preferences, and privileges superior to those of current shareholders. Any debt financing secured by the Company in the future could involve restrictive covenants relating to its capital raising activities and other financial and operational matters, which may make it more difficult for the Company to obtain additional capital and to pursue business opportunities, including potential acquisitions. In addition, the Company may not be able to obtain additional financing on terms favourable to it, if at all. If the Company is unable to obtain adequate financing or financing on terms satisfactory to it, when required, its ability to continue to support its business growth and to respond to business challenges could be significantly limited or could affect its financial viability.

Financial Risk Management

The Board monitors the internal risk management function across Iconic and advises on all relevant risk issues. There is regular communication with internal departments, external advisors and regulators. Iconic's policies on financial instruments and the risks pertaining to those instruments are set out in the accounting policies in note 1 of the financial statements.

Financial Review

Iconic made a profit in the 2023 financial year of £4,768,623 (2022 - loss of £762,107), which is  attributable to the writing back of creditor balances previously mentioned in the Chief Executive Officer's Report.

The revenue of the Group in the year was £Nil (2022 - £26,823). Administrative expenses decreased by £4,972,509 in the year, mainly due to the writing back of creditors balances which are no longer due.

At 30 June 2023, Iconic held total assets of £50,244 (2022 - £6), this is relating to the amounts held as cash at bank. The Group had liabilities of £3,690,141 at the balance sheet date (2022 - £8,938,526), a decrease of £5,248,385.

Key Performance Indicators

The business is focused on the areas of cash management and operating results.

Iconic has identified the following key performance indicators which the Directors will use to measure success against the business plan:

·    Gross revenue growth

·    EBITDA growth

·    Market value

BOARD COMPOSITION

As at the 30 June 2023, the Board was comprised as follows:

FUTURE DEVELOPMENT AND STRATEGY

Market Trends

The Directors closely follow the trends and developments in the online media and publishing, technology, artificial intelligence, and big data gathering, processing, and analytics sectors. We see the shift continuing towards leaner online companies that can scale rapidly, operate internationally with an inexpensive footprint, and provide a broad array of services across various sectors through the effective use of information and video gathering, data mining, just-in-time processing, and online collaboration technology.

While the administration paused Iconic's ability to conduct transactions in these sectors, the Directors nevertheless continue to follow these market trends and are well positioned now that Iconic has exited administration to take advantage of opportunities in these areas.

Company Strategy

We aim to position Gay Star News as a leading LGBTQ+ hub for diverse content. The future growth of GSN lies in our ability to produce and curate valuable content.

In addition, the Directors have identified numerous players in the sectors of interest, many of which have technological or operational advantages, but are unable to grow and scale rapidly or internationally for various reasons including the fragmented, localised, and isolated nature of their business models. We believe there is a significant opportunity to support, acquire, and integrate these companies into Iconic given the Directors' international capabilities and strategic growth expertise.   

Going concern

The Board's assessment of going concern and the key considerations thereto are set out in our Corporate Governance Report.

Capital Structure

Details of the Ordinary Shares of the Company are shown in note 10. The Company has a class of Ordinary Shares with a nominal value of £0.00001 per share, which were consolidated and divided into Ordinary Shares of £0.1 each on 25 August 2023, and a class of Deferred Shares of £0.00249 per share, both of which carry no fixed income. Each holder of Ordinary Shares is entitled to receive Iconic's Annual Report and audited financial statements, to attend and speak or appoint proxies and to exercise voting rights at Iconic's general meetings.

The Company's Articles of Association (the "Articles") do not have any specific restrictions on the transfer of shares or restrictions on voting rights, and there are no limitations on holding such shares. Other than the obligations contained in the Financing Facility, the Settlement Deed, and the CVA, the Directors are not aware of any agreement between Iconic shareholders that may result in restrictions on the transfer of securities or on voting rights.

No person has any special rights of control over Iconic's share capital and all issued shares are fully paid.

The appointment and replacement of Directors and the powers of the Directors are governed by the Articles, the Quoted Companies Alliance Corporate Governance Code, the Companies Act 2006 and related legislation. The powers of the Directors are described in the Corporate Governance Report.

Environmental Issues

As far as the Directors are aware, Iconic's business activities do not cause a direct and disproportionate adverse effect on the environment.

Employee Matters

As of 30 June 2023, and continuing through the fourth quarter of 2023, Iconic does not have any employees and its management is being conducted primarily by Bradley Taylor and David Štýbr who have worked with the Joint Administrators and creditors to restructure the Company and exit administration, resolve all outstanding disputes, and get the trading suspension on Iconic's shares lifted. 

Social, Community and Human Rights Issues

Iconic seeks to achieve the highest ethical standards and behaviours in conducting its business, with integrity, openness, diversity and inclusiveness being a priority.

We have adopted a formal equal opportunities policy which is contained in our employee handbook. The aim of the policy is to ensure no job applicant, employee or worker is discriminated against either directly or indirectly on the grounds of race, sex, disability, sexual orientation, gender reassignment; marriage or civil partnership; pregnancy or maternity; religion or belief or age.

SECTION 172 STATEMENT

Section 172 of the Companies Act 2006 requires directors to take into consideration the interests of stakeholders and other matters in their decision making. The directors continue to have regard to the interests of Iconic's personnel and other stakeholders, the impact of its activities on the community, the environment and its reputation for good business conduct, when making decisions. In this context, acting in good faith and fairly, the directors consider what is most likely to promote the success of Iconic for its members in the long term. We explain in this annual report, and below, how the board engages with stakeholders.

Relations with key stakeholders such as employees, shareholders and suppliers are considered in more detail in our Corporate Governance Report.

The Directors are aware of their responsibilities to promote the success of Iconic in accordance with section 172 of the Companies Act 2006. To ensure Iconic was operating in line with good corporate practice, all Directors received refresher training on the scope and application of section 172 in writing. This encouraged the Board to reflect on how Iconic engages with its stakeholders and opportunities for enhancement in the future. A section 172 notice has been included with the Board papers since this date. As required, Iconic's Company Secretary will provide support to the Board to help ensure that sufficient consideration is given to issues relating to the matters set out in s172(1)(a)-(f).

The Board regularly reviews Iconic's principal stakeholders and how It engages with them. This is achieved through information provided by management and by direct engagement with stakeholders themselves. We aim to work responsibly with our stakeholders, including suppliers. The Board has recently reviewed its anti-corruption and anti-bribery, equal opportunities and whistleblowing policies.

The key events and Board decisions made in the year are set out below:

23 August 2022 - Finalised terms with EHGOSF and Linton under the Settlement Deed.

22 September 2022 - Finalised terms of CVA with Joint Administrators.

28 September 2022 - Finalised the terms with EHGOSF of the Financing Facility.

14 December 2022 - Confirmation of Marija Hrebac to the Board of Directors following regulatory checks.

22 December 2022 - Publication of Annual Financial Report 2021.

3 January 2023 - Publication of Annual Financial Report 2022.

25 January 2023 - FCA lifted the suspension of the listing in the Company's Ordinary Shares.

20 February 2023 - Confirmation of Emmanuel Blouin to the Board of Directors following regulatory checks.

23 February 2023 - Approval for the conversion of the Ott Companies' outstanding £365,000 success fee plus £125,000 in monthly management fees and any further outstanding monthly management fees following the publication of the Prospectus into new Ordinary Shares.

31 March 2023 - Approval of Interim Accounts for the six months ended 31 December 2022.

8 August 2023 - Publication of Prospectus.

25 August 2023 - AGM held and Ordinary Shares Consolidated.

15 September 2023 - 83,256 Ordinary Shares issued to all creditors under the CVA.

12 October 2023 - Documents terminating CVA filed with and accepted by Companies House.

Bradley Taylor

Director

30 October 2023

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2023

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2023

The financial statements of Iconic Labs plc were approved by the Board and authorised for issue on 30 October 2023. They were signed on its behalf by: 

Bradley Taylor 

Director 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2023

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2023

COMPANY STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2023

The Company's profit and total comprehensive profit for the year ended 30 June 2023 was £4,768,163 (30 June 2022: £1,403,138 loss). 

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2023

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2023

1.   Accounting Policies

Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("adopted IFRS") and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under adopted IFRS. 

These consolidated financial statements are presented in Pounds Sterling ('GBP'), which is considered by the directors to be the functional and presentation currency.

The Company's individual statement of comprehensive income has been omitted from the Group's annual financial statements having taken advantage of the exemption not to disclose under Section 408(3) of the Companies Act 2006.

Going concern

The Directors consider it is appropriate to prepare the Iconic financial statements on the basis that that they are able to continue to operate for a period of at least 12 months from the date of approving these financial statements.

As noted in the Strategic Report when making this assessment the Directors have prepared forecasts which consider the expected level of expenditure over the course of the review period together with the anticipated revenues arising from the new business and acquisitions completed shortly after the period end. Key to the compilation of the forecasts central to the Directors' assessment of going concern are the following factors:

·   The Group is at an early stage of development and is not currently profitable. Despite strong confidence in its business plan and forecasts, the Directors recognise there is a risk that it may require more funding but not be able to find agreement with a funding partner.

·   The Group has only recently exited administration and the Board is working diligently to ensure compliance with the terms of the CVA and also to get the Group relisted as soon as possible.

Basis of consolidation

The Group financial statements consolidate those of the parent company and all of its subsidiaries. Subsidiaries are entities controlled by the Group.  The parent company controls a subsidiary if it has power over the investee to significantly direct the activities, exposure, or rights, to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect the amount of the investors' returns. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The results of subsidiaries acquired or disposed in the period are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

The results and net assets of subsidiaries whose accounts are denominated in foreign currencies are retranslated into Sterling at average rates and year-end rates respectively.

Where the Group has the power to participate in (but not control) the financial and operating policy decisions of another entity, it is classified as an associate. Associates are initially recognised in the consolidated statement of financial position at cost. Subsequently associates are accounted for using the equity method, where the Group's share of post-acquisition profits and losses and other comprehensive income is recognised in the consolidated statement of profit and loss and other comprehensive income (except for losses in excess of the Group's investment in the associate unless there is an obligation to make good those losses).

Business combinations

The Group applies the acquisition method of accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition date fair values of assets transferred, liabilities incurred and equity interests issued by the Group. Acquisition costs are expensed as incurred.

Revenue recognition

Revenue represents the amount of consideration to which the Group expects to be entitled in exchange for the provision of its services to the client, net of discounts and sales taxes.

The Group uses the five-step model as prescribed under IFRS15 on the Group's revenue transaction. This included the identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations and recognition of revenue. The point of recognition arises when the Group satisfies the performance obligation by transferring control of a promised service to the customer which could occur over time or at a point in time. Provision is made for all foreseeable losses where the Company believes that a contract will deem to be unprofitable, or a client fails to remunerate the Company for services provided.

Sale of Services

Revenue that has been billed to the client, but which is yet to be paid is accrued within trade receivables.

Foreign currency

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. 

Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Foreign currency differences arising on retranslation are recognised in the statement of comprehensive income.

             Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.  The tax currently payable is based on taxable profit for the year.  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.  

Deferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying amounts 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 generally 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 goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. 

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, 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.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is measured on an undiscounted basis using the tax rates that are expected to apply in the period when the liability is settled or the asset is realised.  Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Intangible fixed assets

Intangible assets comprise capitalised computer software which are initially recognised at cost.

Amortisation is provided so as to write off their carrying value over their expected useful economic lives. It is provided at the following rates:

Intangible assets also comprise intellectual property which is initially measured at cost. The useful economic life of the asset is considered to be such that any amortisation charge would be immaterial to the financial statements. The directors have therefore decided that an annual impairment review rather than an systematic amortisation is more appropriate for this asset.

Impairment of non-current assets

At each reporting date the Group reviews the carrying amounts of its property, plant and equipment and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss.  If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). 

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount.  An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Financial assets

Financial assets are recognised when the Group becomes a party to the contractual provisions of the financial asset.

Financial assets are derecognised when the contractual rights to the cash flows from the financial assets expire, or when the financial asset and substantially all of the risks and rewards are transferred.

The financial assets of the Group are initially measured at fair value adjusted for transaction costs (where applicable).

Financial assets are classified into the following categories:

-     Amortised cost

-     Fair value through profit or loss (FVTPL)

-     Fair value through other comprehensive income (FVOCI)

The classification is determined by both:

-     The Group's business model for managing the financial asset

-     The contractual cash flow characteristics of the financial asset

All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs and finance income.

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):

-     They are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows

-     The contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding

After initial recognition, these are measured at amortised cost using the effective interest method.  Discounting is omitted where its effect is immaterial.  The Group's cash and cash equivalents, trade and other receivables fall into this category. 

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate.  Losses are recognised in profit or loss and reflected in an allowance against trade and other receivables.  When an event occurring after the impairment was recognised causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

Trade and other receivables

The group makes use of a simplified approach in accounting for trade and other receivables and records the loss allowance as lifetime expected credit losses.  These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument.  In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.

The Group assesses impairment of trade and other receivables on a collective basis.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits. These are initially and subsequently recorded at fair value.

Financial liabilities

The Group's principal financial liabilities include trade and other payables, leases and convertible debt none of which would be classified as fair value through profit or loss.

Therefore, these financial liabilities are classified as financial liabilities at amortised cost, as defined below:

Other financial liabilities include the following items:

·    Borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the statement of financial position. Interest expense in this context includes initial transaction costs and premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

·    Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

Convertible loan notes

Convertible loan notes issued by the Group comprise loan notes that can be converted to ordinary shares at the option of the holder.

The liability component of the convertible loan notes is recognised on the date of inception and is determined using a market interest rate for an equivalent non-convertible instrument. The equity element is recognised as the difference between the value of the financial instrument as a whole and the value of the liability component. Any directly attributable transaction costs are allocated to the equity and liability components in proportion to their initial carrying amounts.

Subsequently, the liability component of a compound financial instrument is measured at amortised cost using the effective interest rate method.

Leased assets

The company applies IFRS 16 Leases. Accordingly leases are all accounted for in the same manner:

·    A right of use asset and lease liability is recognised on the statement of financial position, initially measured at the present value of future lease payments;

·    Depreciation of right-of-use assets and interest on lease liabilities are recognised in the statement of comprehensive income;

·    The total amount of cash paid is recognised in the statement of cash flows, split between payments of principal (within financing activities) and interest (also within financing activities)

The initial measurement of the right of use asset and lease liability takes into account the value of lease incentives such as rent free periods.

The costs of leases of low value items and those with a short term at inception are recognised as incurred.

Share capital

The Group's ordinary shares are classified as equity instruments.

Changes in accounting standards, amendments and interpretations

At the date of authorisation of the financial statements, the following amendments to Standards and Interpretations issued by the IASB that are effective for an annual period that begins on or after 1 January 2022. These have not had any material impact on the amounts reported for the current and prior periods.

New and revised Standards and Interpretations in issue but not yet effective

At the date of authorisation of these financial statements, the Company has not early adopted any of the following amendments to Standards and Interpretations that have been issued but are not yet effective:

As yet, none of these have been endorsed for use in the UK and will not be adopted until such time as endorsement is confirmed. The Directors do not expect any material impact as a result of adopting standards and amendments listed above in the financial year they become effective.

2.   Critical Accounting Estimates and Judgements

The group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. Significant management judgements are as follows:

Legacy Issues

·    Due to the change in the Board, key management and operations of the Group that took place in March 2021, it is possible that there are unrecorded liabilities relating to discontinued activities about which the Board are unaware. The Board have undertaken, to the extent possible, a thorough review of the creditor position of the Parent Company and the Group, with a core focus on the legacy business operations. Notwithstanding the Board's assessment, there is a residual risk unforeseen liabilities may arise. However, due to the publicity around the new business, shutting down the old one and drawing down on the EHGOSF facility, a number of claims were made against the company. Since the period end, no additional creditors have made a claim against the Group or the Parent Company. While it is important to consider these liabilities in these accounts the Board have however made a judgment that the risk of unrecorded actual or contingent liabilities is now low.

·    The Group's former Board under through its Cellplan subsidiary was promoting bespoke stem cell medical insurance and launched a website to market the product. After due enquiry, the new Board is not aware that any such policies were issued. There does however remain a residual risk that policies may have been issued. The board consider that the incidence and financial impact is now low.

3.   Profit/(Loss) from Operations

4.         Staff Costs

Key management personnel compensation

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities, and are the directors of the company.

Remuneration of the directors and highest paid director is shown in the Remuneration Committee Report.

5.         Taxation

The reason for the difference between the actual tax charge for the period and the standard rate of corporation tax in the United Kingdom applied to losses for the period are as follows:

The deferred taxation attributable to losses arising in the year and for losses carried forward has not been recognised in these accounts due to the uncertainty over whether this will be recovered.

6.         Loss per share

7.         Intangible Assets

8.            Investments

Company

Subsidiaries as at 30 June 2023:

Notes:      (a) 100% owned by WideCells International Limited         (b) 100% owned by CellPlan Limited

                                   (c) 100% owned by Iconic Labs plc                                            (d) Ordinary Shares Held

9.         Cash and cash equivalents

             Group

Company

10.       Company Share Capital

At 30 June 2023, the Company had 46,306,916,660 Ordinary shares of £0.00001 in issue.

As at 30 June 2023 the Company had 1,637,129,905 Deferred Shares of £0.00249 each.

In accordance with the Companies Act 2006, the company has no limit on its authorised share capital.

The holders of Ordinary shares have full voting, dividend and capital distribution rights. The Ordinary shares do not confer any rights of redemption.

On or following the occurrence of a change of control the receipts from the acquirer shall be applied to the holders of the Ordinary shares pro rata to their respective holdings.

Ordinary shares and Deferred Shares are recorded as equity.

At 30 June 2023 the Company had issued 6,125,000,000 warrants to EHGOSF at a strike price of £0.00003 per share. All warrants remain outstanding at the year end date.

11.       Reserves

The following describes the nature and purpose of each reserve within equity:

12.       Trade and other payables

Group

Company

Book values approximate to fair values at 30 June 2023 and 30 June 2022.

13.       Loans and borrowings

Group

Book values approximate to fair values at 30 June 2023 and 30 June 2022.

During the year, as part of the settlement agreements, EHGOSF agreed to cancel the outstanding convertible loan agreements and warrants in exchange for new convertible loan notes of £750,000, and in addition, £750,000 in new convertible loan notes were issued to Linton Capital. These remain unconverted at the end of the year. These convertible loan notes are secured by relevant legal charges over the assets of the Company.

Also during the year, the Company entered into a financing facility with EHGOSF for the issue of up to £3m of further convertible loan notes. At the year end the Company had drawn down £1,030,000 of the facility of which £530,000 had been converted into shares and fees of £60,000 had been deducted. This facility is unsecured.

Company

14.  Provisions

15.       Financial Instruments - Risk Management

The Group is exposed through its operations to the following financial risks:

·    Credit risk

·    Market risk

·    Liquidity risk

In common with other businesses, the group is exposed to risks that arise from use of financial instruments. This note describes the group's objectives, policies and processes for managing those risks and the methods used to measure them.

The principal financial instruments used by the group, from which the financial instrument risks arise, are as follows:

·    Cash and cash equivalents

·    Trade and other payables

·    Loans and borrowings

A summary of the financial instruments held by category is provided below:

·    Financial assets - amortised cost

·    Financial liabilities - amortised cost

Group:

The Board has overall responsibility for the determination of the Group's risk management objectives and policies.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Groups' competitiveness and flexibility. Further details regarding these policies are set out below:

Credit risk

Credit risk is the risk of financial loss to the Group if a counterparty to the financial instrument fails to meet its contractual obligations. It is Group policy to assess the credit risk of new customers before entering into contracts.

Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with high credit status are accepted.

The Group does not enter into derivatives to manage credit risk.

Cash in bank

Group

Company

Market risk

Foreign exchange risk

Foreign exchange risk arises because the Group has operations in Portugal and Spain, whose functional currency is not the same as the functional currency of the Group. The Group's net assets arising from such overseas operations are exposed to currency risk resulting in gains or losses on retranslation into sterling.

As of 30 June 2023, the Group's exposure to foreign exchange risk was not material as the overseas operations had been discontinued.

Liquidity risk

Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.

The Board will continue to monitor long term cash projections and will consider raising funds as required.

The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities:

Group:

More details in regard to the line items are included in the respective notes:

·    Trade and other payables - note 12

·    Loan and borrowings - note 13

At the balance sheet date, the Group had liabilities due for settlement within 3 months of £3,690,141, compared to a cash balance of £50,243. Since the year end, the Group has negotiated settlements on all outstanding disputes, finalised a CVA with the Joint Administrators and the critical, preferential, secured, and unsecured creditors and agreed to financing terms with EHGOSF to support the Company.

£1,940,000 of borrowings re convertible loan notes which are to be settled by way of an issue of share capital.

The Group monitors capital which comprises all components of equity (i.e. share capital, share premium and accumulated deficit).

The directors are aware of the need for the Group to obtain capital in order to fund the growth of the business and are in continual discussions with providers of both debt and equity capital.  The directors regularly review the status of such discussions and aim at all times to have offers of capital funding available to the Company which more than exceed the needs of the Company over the coming period.

In the medium term and in addition to the need to safeguard the entity's ability to continue as a going concern, the directors are aware of the views of members on certain financing structures and therefore have set an objective to move towards a conventional, simplified capital structure based on equity capital.

Further details about the directors' assessment of the Group's ability to continue as a going concern and the key considerations there to are set out in the Corporate Governance Report. 

At present the directors do not intend to pay dividends but will reconsider the position in future periods, as the Group becomes profitable.

16.       Capital commitments

Iconic had no capital commitments at 30 June 2023 or 30 June 2022.

17.       Related party Transactions

Details of Directors' remuneration are given in the Remuneration Report.

18.       Contingent Liabilities

Iconic had no contingent liabilities at 30 June 2023 or 30 June 2022.

19.       Ultimate Controlling Party

The Directors do not consider that there is an ultimate controlling party of Iconic.

20.  Reconciliation of movement in net (debt)/cash

21.  Post Balance Sheet Events

As part of the requirements for the Company's successful exit from administration and renewed trading on the London Stock Exchange, the Company published a Prospectus on 8 August 2023 to provide the Company with the ability to issue further Ordinary Shares under the Prospectus Regulation Rules as follows:

(i)               Up to 1,674,130,609 Ordinary Shares to be issued to unsecured creditors under the CVA;

(ii)           Up to 45,045,045,045 Ordinary Shares to be issued to EHGOSF to convert £750,000 in convertible notes, and to Linton Capital to convert £750,000 in convertible notes under the Settlement Deed;

(iii)       Up to 80,180,180,180 Ordinary Shares to be issued to EHGOSF to satisfy £2,670,000 in unconverted drawdowns and certain fees pursuant to the Financing Facility;

(iv)            Up to 36,038,525,658 Ordinary Shares to be issued to EHGOSF to satisfy the exercise of its Warrants under the Financing Facility; and

(vii)            Up to 22,027,027,027 Ordinary Shares to be issued to Ott Ventures s.r.o and/or Ott Ventures USA, Inc. under the Management Services Agreement for outstanding fees as set out in the 2022 Accounts totalling, to date, £690,000 and a further £125,000 in part lieu of fees for the balance of the calendar year, being in aggregate £815,000.

The Company held its Annual General Meeting ("AGM") on 25 August 2023 at which all resolutions were duly passed, including a resolution for the consolidation of the Company's Ordinary Shares on a 10,000 for 1 basis, such that every 10,000 Ordinary Shares of £0.00001 each were consolidated into 1 Ordinary Share of £0.1 each in nominal value.  The primary objective of the consolidation was to reduce the number of Ordinary Shares, with the intention of creating a higher share price per Ordinary Share in the capital of the Company, which we believe will make the Company and the Ordinary Shares more attractive to a broader range of investors.

Since the publication of the Prospectus and the AGM, the Company was pleased to announce that it had satisfied the final condition to bring the CVA to a successful conclusion when it issued 83,256 Ordinary Shares of £0.1 each  to the creditors under the CVA. As of 21 September 2023, all documents concluding the CVA had been filed with, and accepted by, Companies House.