Interim Results

Narf Industries PLC

27 September 2023

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED.  ON PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

27 September 2023

NARF INDUSTRIES PLC

INTERIM RESULTS

Narf Industries plc ("Narf", the "Company", or the "Group"), (LSE: NARF) (OTCQB: NFIN.F) the cybersecurity group specializing in high-end threat intelligence and critical infrastructure security, today announces its unaudited results for the six months ended 30 June 2023 ("HY2023").

HY 2023 Highlights

·    Record revenue growth increasing by 125% to $3.26m (HY2022: $1.45m)

·    Management maintains full year guidance of at least $5.8 million revenue

·    EBITDA moves into positive territory of $190,000 (HY2022: loss $1.28m)

·    Operating expenses reduced by 11% to $2.39m (HY2022: $2.69m)

·    Cash and receivables at period end of $1.85m (HY2022: $2.04m)

Post Period End

·    Suspension lifted and trading of the Company's shares recommenced on 14 July

·    Awarded new Task Orders of $1.2 million under US Government "Omnibus Contract" announced on 4 September

·    Adoption of employee share option plan to reward and incentivize employees and directors announced on 11 September

·    Financial organization has matured with changes to accounting systems providing prompt financial reporting and ongoing strengthening of corporate governance

·    Challenges experienced in the 2022 audit have been addressed, most significantly enabling auditor's access to all Company contracts

·    Confident that full year revenue will be at least $5.8 million

Executive Chairman John Herring said: "Since assuming the role of Executive Chairman earlier this year, I have worked to establish clear financial expectations that are both realistic and aligned to reflect the progress and milestone successes of our business strategy.

"In my annual report statement in July, I set out specific objectives we had set ourselves regarding revenue growth, expense reduction and EBITDA performance. I am pleased to report that, at the half-year point, our financial performance has met or exceeded these targets resulting in the Company reporting record revenue growth, reduced expenses, and positive EBITDA performance. We therefore remain confident in our 2023 guidance of at least $5.8 million in revenue. This will be achieved through the growth we are experiencing in both our Government Solutions and Services (GS&S) and Government Research & Development (GR&D) business.

"This performance and growth are driven and sustained responsibly through internal cash generation and current credit facilities and is being achieved, in part, by our CEO Steve Bassi working to instill a culture of accountability, ambition and diligence throughout the organization, and through the dedication of our team of cybersecurity professionals working hard to deliver cutting-edge capabilities and products that continue to gain traction across an expanding customer base. I extend my thanks to them all.

"Accompanying this growth, we have advanced the organization's financial policies and processes to achieve consistent and comprehensive record keeping that enables prompt financial reporting.  These actions, alongside enabling auditors' access to all Company contracts, overcome the key challenges we faced in timely completion of our 2022 audit.

"Looking ahead, we will uphold our dedication to responsible growth and continue to share our progress and challenges openly with our shareholders, who I thank for their continued support."

ENDS

For further information on the Group please visit www.narfgroup.com or contact:

John Herring	NARF	[e-mail]
Catherine Leftley/Paul Dulieu /Isabel de Salis	St Brides Partners	[e-mail]
Peter Krens	Tennyson Securities	Tel: [phone]

About NARF Industries plc

Narf Industries (LSE: NARF)(OTCQB: NFIN.F) is a US based cyber security group specialising in high-end threat intelligence and is commercialising a portfolio of products.  The Group aims to further strengthen its portfolio organically and via acquisition; its team of highly qualified cyber security experts is well placed to identify opportunities.

DIRECTORS REPORT AND STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE CONDENSED INTERIM REPORT AND CONDENSED FINANCIAL STATEMENTS

The results of the Group have been addressed above in the Chairman's statement. The total comprehensive loss for the six-month period was $156,200 (interim period to 30 June 2022 : restated loss of $16,661,899) and the Group's unaudited net assets as at 30 June 2023 were $1,830,678 (30 June 2022: $3,584,056).

Directors

The following directors held office during the period:

Steven Bassi                       Chief Executive Officer

John Herring                      Executive Chairman

Rory Heier                           Non-Executive Director
Robert Mitchell                 Non-Executive Director (resigned 23 April 2023)

Responsibility Statement

The Directors confirm that to the best of their knowledge:

a)    the condensed set of financial statements has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting';

b)    the interim management report includes a fair review of the information required by DTR 4.2.7R - namely an indication of important events that have occurred during the first six months and their impact on the condensed interim financial information, and a description of principal risks and uncertainties for the remaining six months of the financial year; and

c)    the interim management report includes a fair review of the information required by DTR 4.2.8R - disclosure of material related parties' transactions in the first six months and any material changes therein).

Cautionary Statement

This Interim Management Report (IMR) has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose.

Going Concern

The Directors' assessment of going concern is detailed in Note 2.

Principal Risks and Uncertainties

The principal risks and uncertainties affecting the business activities of the Group remain those detailed in the annual report and accounts 2022, a copy of which is available on the Company website at https://narfgroup.com/investor-relations/corporate-documents .  By order of the Board

Steve Bassi

Chief Executive

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		Six months	Six months	Year
		Ended	Ended	Ended
		30.6.2023	30.6.2022	31.12.2022
		(Unaudited)	(Unaudited and restated)	(Unaudited)
	Notes	US$	US$	US$
Continuing operations
Contract revenue		3,261,179	1,446,032	2,547,125
Sub-contractors		(685,087)	(39,676)	(126,199)
Operating expenses		(2,386,994)	(2,687,650)	(5,006,271)
Profit/(loss) before depreciation and software licence amortisation, share based payments, interest and taxes		189,098	(1,281,294)	(2,585,345)
Depreciation and software license amortisation		(329,735)	-	(329,999)
Other share based payment expense		-	-	(147,580)
Operating loss		(140,637)	(1,281,294)	(3,062,924)
RTO share based payment expense		-	(15,355,123)	(15,355,123)
Interest receivable and other finance income		299	-	3,376
Finance costs		(3,862)	(274)	(3,197)
Loss before taxation		(144,200)	(16,636,691)	(18,417,868)
Taxation		(12,000)	(7,839)	(7,839)
Loss for the period		(156,200)	(16,644,530)	(18,425,707)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange differences on foreign operations		306,915	-	-
Total comprehensive income/(loss) for the period attributable to the owners of the company		150,715	(16,644,530)	(18,425,707)
Earnings per share
Earnings per share (basic and diluted) attributable to the equity holders (cents)	3	(0.01)	(1.3)	(1.2)

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

		As at	As at	As at
		30.6.2023	30.6.2022	31.12.2022
		(Unaudited)	(Unaudited and restated)	(Unaudited)
	Note	US$	US$	US$
NON-CURRENT ASSETS
Intangible assets		2,465,009	3,001,212	2,697,076
Tangible assets		-	32,755	15,990
Investments		-	-	-
		2,465,009	3,033,967	2,713,066
CURRENT ASSETS
Trade and other receivables		1,486,482	557,751	756,481
Cash and cash equivalents		361,045	1,477,764	442,751
		1,847,527	2,035,515	1,199,232
TOTAL ASSETS		4,312,536	5,069,482	3,912,298
CURRENT LIABILITIES
Trade and other payables		1,229,859	382,726	595,962
NON-CURRENT LIABILITIES
Loans from directors		1,252,000	1,102,700	1,513,727
TOTAL LIABILITIES		2,481,859	1,485,426	2,109,689
NET ASSETS		1,830,678	3,584,056	1,802,609
EQUITY
Share capital	4	204,012	204,012	204,012
Share premium	4	34,951,415	35,074,061	35,074,061
Reverse acquisition reserve		(16,747,959)	(16,747,959)	(16,747,959)
Foreign exchange reserve		263,504	(43,411)	(43,411)
Share based payment reserve		229,185	229,185	229,185
Retained deficit		(17,069,479)	(15,131,832)	(16,913,279)
TOTAL EQUITY		1,830,678	3,584,056	1,802,609

Company number: 11701224

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Share		Share		FX		Share-based		Reverse		Retained		Total
	Capital		Premium		Reserve		Payment		Acquisition		Deficit
							Reserve		Reserve
	US$		US$		US$		US$		US$		US$		US$
AS AT 1 JULY 2022 (Unaudited and restated)	204,012		35,074,061		(43,411)		229,185		(16,747,959)		(15,131,832)		3,584,056
Loss for the period	-		-		-		-		-		(1,781,447)		(1,781,447)
Total comprehensive loss for the period	-		-		-		-		-		(1,781,447)		(1,781,447)
AS AT 31 DECEMBER 2022 (Unaudited)	204,012		35,074,061		(43,411)		229,185		(16,747,959)		(16,913,279)		1,802,609
Loss for the period	-		-		-		-		-		(156,200)		(156,200)
Foreign exchange gain on conversion of subsidiary	-		-		306,915		-		-		-		306,915
Total comprehensive income for the period	-		-		306,915		-		-		(156,200)		150,715
Shares issue costs	-		(122,646)		-		-		-		-		(122,646)
AS AT 30 JUNE 2023 (Unaudited)	204,012		34,951,415		263,504		229,185		(16,747,959)		(17,069,479)		1,830,678

CONSOLIDATED STATEMENT OF CASH FLOWS

	Six months	Six months	Year
	Ended	Ended	Ended
	30.6.2023	30.6.2022	31.12.2022
	(Unaudited)	(Unaudited and restated)	(Unaudited)
	US$	US$	US$
OPERATING ACTIVITIES
Loss for the period before taxation	(144,200)	(16,636,691)	(18,417,868)
Adjusted for:
Depreciation and software license amortisation	216,266	16,765	329,999
Software development amortisation	113,469	216,021	226,938
Unrealised foreign exchange adjustment	225,237	(4,864)	-
RTO and other share based payment expenses	-	15,355,123	15,502,703
Operating cash inflow/(outflow) before movements in working capital:	410,772	(1,053,646)	(2,358,228)
Decrease in trade and other receivables	(730,001)	(509,677)	(701,723)
Increase in trade and other payables	633,897	188,742	67,140
Net cash generated from/(used in) operating activities	314,668	(1,374,581)	(2,992,811)
INVESTING ACTIVITIES
Net amounts paid to former members to acquire control	-	(3,615,433)	(3,615,433)
Licence fee expenditure	-	(500,000)	(500,000)
Net cash outflow from investing activities	-	(4,115,433)	(4,115,433)
FINANCING ACTIVITIES
Proceeds on the issue of shares	-	7,650,881	7,650,881
Costs related to share issues	(122,646)	(1,145,814)	(1,145,814)
Loan from former member	-	270,388	702,000
Loan repayment	(261,727)	-	(20,292)
Drawings by former members	-	(75,000)	(75,000)
Net interest received	-	180	180
Net cash (outflow)/inflow  from financing activities	(384,373)	6,700,635	7,111,955
Taxation paid	(12,000)	(7,839)	(7,839)
Net (decrease)/increase in cash and cash equivalents	(81,705)	1,202,782	(4,128)
Cash and cash equivalents at beginning of period	442,751	274,982	446,879
Cash and cash equivalents at end of period	361,045	1,477,764	442,751

Notes to the CONSOLIDATED Financial Statements

interim results to 30 june 2023

1.   Organisation and Trading Activities

The principal activity of Narf Industries plc (the "Company'') together with its operating subsidiaries (together, the "Group") is high-end threat intelligence. Its strategy is focussed on building a group capable of offering cybersecurity solutions in the US and beyond. The Company is domiciled in the United Kingdom and incorporated and registered in England and Wales as a public limited company. The Company's registered office is 5 Fleet Place, London EC4M 7RD. The Company's registered number is 11701224.

2.   Summary of Significant Accounting Policies

The principal accounting policies adopted and applied in the preparation of these interim Group Financial statements are set out below.

These have been consistently applied to all the periods presented unless otherwise stated:

Basis of accounting

These interim financial statements of Narf Industries plc (the "Group") have been prepared in accordance with UK adopted international accounting standards ("UK-adopted IAS") applied in accordance with the provisions of the Companies Act 2006.

The interim financial statements have been prepared under the historical cost convention on the basis of the accounting policies as set out in the Group's audited annual financial statements and are presented in US Dollars the presentational and functional currency of the Group. The Group has applied IAS 34 in the preparation of these interim financial statements.

The interim financial statements have been prepared to reflect the acquisition of Narf Industries LLC and Narf Industries PR LLC via a reverse takeover on 15 March 2022, which resulted in the Company becoming the ultimate holding company of the Group. The prior year interim numbers have been restated to reflect the treatment as a reverse takeover whereas previously the numbers had been reported under the acquisition method.

This announcement was approved and authorised by the Board of directors on 27 September 2023. Copies of this interim report can be found on the Company's website at https://narfgroup.com/investor-relations/corporate-documents.

These condensed interim financial statements for the six months ended 30 June 2023 are unaudited and do not constitute fully prepared statutory accounts. The comparative figures for the year ended 31 December 2022 are extracted from the 2022 consolidated financial statements of the Company. The independent auditor's report on the 2022 financial statements disclaimed opinion due to the inability to gain sufficient and appropriate audit evidence in respect of a number of areas and accordingly those numbers are stated as being unaudited.

Going concern

Any consideration of the foreseeable future involves making a judgement, at a particular point in time, about future events which are inherently uncertain. The Directors have prepared cash flow forecasts covering the period to 31 December 2024 and those forecasts indicate that the Group will have sufficient cash resources to meet all foreseeable liabilities through to a period which is at least twelve months after the issue of these condensed interim financial statements.

Accordingly, the Directors have a reasonable expectation that the Group will be able to achieve the above in order to meet any future obligations and thus to continue operating for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the interim financial statements.  

2.    Summary of Significant Accounting Policies (contiNUED)

Basis of consolidation

The Financial Statements consolidate the financial information of the Company and companies controlled by the Group (its subsidiaries) at each reporting date following the acquisition in March 2022.

Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity, has the rights to variable returns from its involvement with the investee and has the ability to use its power to affect its returns. The results of subsidiaries acquired or sold are included in the financial information from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the results of acquired subsidiaries to bring their accounting policies into line with those used by the Group. All intra-Group transactions, balances, income and expenses are eliminated on consolidation. The financial statements of all Group companies are adjusted, where necessary, to ensure the use of consistent accounting policies.

The Financial Statements consolidate the financial information of the Company and companies controlled by the Group (its subsidiaries) at each reporting date. For commentary on how the acquisitions of Narf Industries US LLC and Narf Industries PR LLC, which falls outside the scope of IFRS 3, was accounted for, see note 8 to the consolidated financial statements for the year to 31 December 2022.

3.   EARNINGS per Share

The basic earnings per share is based on the loss for the period divided by the weighted average number of shares in issue during the period. The weighted average number of ordinary shares for the Company the period ended 30 June 2022 assumes that all shares have been included in the computation based on the weighted average number of days since issue. Since the Group has made a loss in the current and each of the prior periods, the warrants in issue are not dilutive. 

	Six months to 30 June 2023 US$	Six months to 30 June 2022 US$	Year to 31 Dec 2022 US$
Loss attributable to owners of the Group :	(156,200)	(16,644,530)	(18,425,707)
Weighted average number of ordinary shares in issue for basic earnings	1,697,381,100	1,243,631,762	1,475,948,904
Weighted average number of shares in issue for fully diluted earnings	1,697,381,100	1,243,631,762	1,475,948,904
LOSS PER SHARE (CENTS PER SHARE)	(0.01)	(1.3)	(1.2)
BASIC AND FULLY DILUTED:
- from continuing and total operations (cents)	(0.01)	(1.3)	(1.2)

4.   Share capital AND SHARE PREMIUM

The following table is presented in US Dollar equivalents:

	Ordinary shares of £0.0001 each Number	Share Capital $	Share Premium $
At 1 July 2022	1,697,381,000	204,012	35,074,061
At 31 December 2022	1,697,381,000	204,012	35,074,061
At 30 June 2023	1,697,381,000	204,012	34,951,415

5.   Post period end events

There were no significant events subsequent to the balance sheet date which have any bearing on these interim financial statements but readers of these accounts should be aware that the Company announced it had granted 391,214,900 employee share options in September 2023 and this will impact on losses as well as the share based payment reserve in the 2023 accounts.

ENDS

For further information on the Group please visit www.narfgroup.com or contact:

John Herring	NARF	Tel: [phone]
Catherine Leftley/Charlotte Page/Isabel de Salis	St Brides Partners	[e-mail]
Peter Krens	Tennyson Securities	Tel: [phone]

About NARF Industries plc

Narf Industries (LSE: NARF)(OTCQB: NFIN.F) is a US based cyber security group specialising in high-end threat intelligence with a focus on critical infrastructure. The Group leads commissioned cyber security R&D and is commercialising a portfolio of products including a DARPA-backed product (an agency within the US Department of Defence) that can be used by utilities and cyber first responders to restore power to electric grids and protecting other key infrastructure that have suffered a cyber-attack.  The Group aims to further strengthen its portfolio organically and via acquisition; its team of highly qualified cyber security experts is well placed to identify opportunities.

Important notice

The content of this announcement has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 (FSMA). This announcement has been issued by and is the sole responsibility of the Company. The information in this announcement is subject to change. This announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act), and may not be offered or sold, directly or indirectly, in or into the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States. This announcement is not for release, publication or distribution, directly or indirectly, in or into Australia, the Republic of South Africa, Japan or any jurisdiction where to do so might constitute a violation of local securities laws or regulations (a Prohibited Jurisdiction). This announcement and the information contained herein are not for release, publication or distribution, directly or indirectly, to persons in a Prohibited Jurisdiction unless permitted pursuant to an exemption under the relevant local law or regulation in any such jurisdiction.

 

END