Preliminary Results

RNS Number : 1572S
Socialgo plc
06 September 2010
 

SocialGO plc

('SocialGO' or the 'Company')

 

PRELIMINARY RESULTS for the year ended 31st March 2010

 

SocialGO today announces today announces its full year results for the year ended 31 March 2010.

 

Financial Highlights:

·     Revenues up to £369,000 (2007 - £30,000). Revenue for the year consists of sales from SocialGO™ and ancillary products, such as widgets and themes.  Prior year sales of £30,000 included £9,000 relating to the first one and a half months trading of SocialGO™. Revenue for this sector has increased by £360,000 over the year.

·     March 2010 income is over a 1,000% increase on March 2009 and the number of paying subscribers increased by almost 900% from the beginning of April 2009 to the end of March 2010.

·     Cost of sales, £393,000 (2009 - £48,000). Cost of sales comprises £237,000 SocialGO™ server costs, £105,000 SocialGO™ sales and support staff, £35,000 transaction costs and £16,000 third party revenue share costs.

·     Loss per share fell to 0.6p (2009: 1.8p)

 

Operational Highlights

·     Completed the acquisition of Get On With It Limited in January 2010.

·     Continued to strictly monitor all costs in order to keep expenses to a minimum.

·     Begun work on SocialGO™ Version 2; there has been a continued investment in Research & Development costs into the development and improvement of SocialGO.

·     Completed fundraisings totalling £2,190,500 during the year (gross of £83,000 related expenses), in which 175,240,000 new ordinary shares were allotted at a price of 1.25p. In addition on 16 June 2010 the Company raised £500,000 from the issue of 40,000,000 new ordinary shares at 1.25p.

 

Annual Report and Accounts

 

The Annual Report and Accounts are available on the Company's website, www.SocialGOplc.com, and a hard copy will be despatched to Shareholders on 6 September 2010.

 

For further information please contact:

 

SocialGO PLC                                            0845 299 7289

Dominic Wheatley, CEO

 

Astaire Securities Plc                                  020 7492 4750

William Vandyk

 

 

Chairman's statement

 

Overview

 

During SocialGO plc's financial year ended 31 March 2010 we witnessed the concept of Social Networking becoming more pervasive and more refined and with that we saw an increase in interest in the market for creating niche social networks. These cater for privately managed special interest groups and communities.  Whilst most of our existing customers are hobbyists, niche market communities, and small to medium enterprises, larger corporate clients are becoming an increasing component of our customer base as the concept of social networking for business use, although still in the early adopter stage, is beginning to take hold.  Our ambition for the current financial year is to position ourselves as the social network creator of choice for privately controlled and managed social networking, and to develop the SocialGO™ brand with a professional but low cost product and service offering.

 

The past financial year presented SocialGO plc with a number of challenges as the company continued with the development of its SocialGO™ software as a service product for niche social networks.  Critical to the success of the product was the growth of the customer base, the increase in revenue generated by the product and continued improvement of the product offering.  In this regard the number of paying subscribers increased by almost 900% from the beginning of April 2009 to the end of March 2010 as sales and marketing initiatives improved the product profile and exposure.  The increase in customer numbers translated into revenues for the year ended 31 March 2010 of £369,000 against revenues of £30,000 for the prior year.  Product development focused on refining the platform to meet the needs of network owners. This included development of the software, moving hosting services to a new network service provider to improve the scalability of the platform, and an increased focus on support services for Network Owners.

 

These efforts have continued into the current financial year and post year end monthly income has increased to over £60,000 with sales generated largely from marketing efforts focused on online pay-per-click advertising (PPC), affiliate referrals and search traffic. Whilst we continue efforts in those areas, we plan to increase our reach by establishing key partnerships with other companies who could take us to new markets and help promote the product.  In this respect we have entered into agreements with Network Solutions, a premier domain registration provider based in Washington DC, and Encore Software, a utility software publisher based in Los Angeles, to market and promote the SocialGO™ product through their online distribution channels.  Encore, in an agreement which mirrors our existing relationship with PC World in the United Kingdom, will also be accessing the traditional retail store channel by publishing a box version of the product in the United States in the autumn and promoting SocialGO™ through their Broderbund.com website.  These are the first of what we hope are a good number of partnership agreements to help establish the product as a leading tool in the creation of social networks for individual communities and businesses.

 

In order to continue with the realisation of our ambitions we are planning further improvements to our offering with the introduction of SocialGO™ Version 2 during the current financial year.  This will see significant improvements to the product both in ease of use, scalability and features. It is being designed in the light of the experience we have gained with Version 1 and we expect to see a material take up in sales of SocialGO™ when it is launched.

 

During the year the Company acquired Get On With It Limited (GOWIT), an external partner to whom development of SocialGO™ software had been sub-contracted. The purpose of the acquisition was to bring the development and control of that development in-house and to create a group structure that reflected the way the business was already working. The consideration for this was shares and warrants with a fair value of £717,000.

 

Progress

 

The Group has made progress in a number of areas;

·     Completed fundraisings totalling £2,190,500 during the year (gross of £83,000 related expenses), in which 175,240,000 new ordinary shares were allotted at a price of 1.25p.

·     Completed the acquisition of Get On With It Limited in January 2010, as described above.

·     Continued to strictly monitor all costs in order to keep expenses to a minimum.

·     Begun work on SocialGO™ Version 2.

 

Results

 

The year has seen SocialGO plc focus on the sales, marketing and further development of its product SocialGO™, the social network maker, which was launched in February 2009.

 

Revenue of £369,000 (2009 - £30,000) consists of sales from SocialGO™, the internet based social networking service aimed at privately managed special interest groups and niche communities, and ancillary products, such as widgets and themes. The loss before and after tax decreased to £1,524,000 (2009 - £1,686,000).

 

While most administrative expenses are materially unchanged from last year, marketing expenditure incurred in the promotion of SocialGO™'s services and the amortisation of IP increased considerably. Research and development expenditure and the product improvements it brings are key to increasing sales and as such both expensed and capitalised research and development costs have remained a large portion of the expenditure in the year.  All expenditure continues to be closely monitored.

 

Prospects

 

Development work on improving the software component of the SocialGO™ service continues and has begun on SocialGO™ Version 2.

 

Sales to date have been generated primarily through the internet using a combination of strategies to generate interest in the product and to promote the product profile. The Company is planning to increase other methods of marketing including affiliate deals and in-store selling in order to broaden its market reach.

 

Subsequent to the financial year end, the company has raised, and is likely to continue to raise, what we believe to be sufficient funds to continue with our commercialisation of SocialGO™ for the foreseeable future.

 

Post Balance Sheet Events

 

On 16 June 2010 the Company raised £500,000 from the issue of 40,000,000 new Ordinary 1p Shares at 1.25p per share. The Directors anticipate requiring to raise additional financing or facilities of the order of £500,000 to facilitate the ongoing development of the product in the current financial year. This is underwritten by an agreement between the company and Bentworth Holdings Ltd, which trades as Veddis Ventures. Veddis Ventures has conditionally agreed to subscribe for up to a further 40,000,000 new Ordinary Shares at a subscription price of 1.25 pence per share, being a maximum subscription amount of £500,000, at any time between 16 September 2010 and 15 September 2011, should the Company request it to do so.

 

Summary

 

We appreciate that the journey to this point has been a long one, and whilst we are pleased with our progress, we have had the difficulties associated with any new product in a new market. The SocialGO product offering, being based around the concept of social networking, has little in the way of precedent and has been a voyage of discovery as a result.  Many people have assumed that we were attempting to rival general social networks such as Facebook, but in fact this is not the case. In many ways Facebook and others have paved the way in educating and introducing the benefits of social networking to a mass market, we are following on that idea by allowing people to easily form social networks away from the large, open networks, by creating smaller special interest networks that are not as open and fraught with privacy issues.  There are numerous associations, groups, clubs, hobbies and local communities including politics, religion and education that exist as "offline" networks. We believe that over time community leaders will want to use the benefits of taking their members online as a means of coordinating their activities, sharing information and communicating with them as a more efficient and dynamic method of organising such groups. We are seeing this every day as more and more people sign up to our service and there are many good examples in so many diverse areas that we are confident that once the idea becomes more widespread we will be able to build a very good business.

 

We refer the reader to the basis of preparation of these financial statements contained within note 1.

 

The Board remain excited about the prospects offered by SocialGO™. The growth of similar types of products is encouraging and the Board considers the product to be well positioned to take a stake in this market.

 

As always, there are many challenges ahead. However, we have successfully moved from concept to design to development to launch to revenue and we would like to thank our dedicated staff for their efforts in bringing us to this point and look forward to even greater progress in the year ahead.

 

Ian Livingstone

Chairman

2 September 2010

 

 

Operational and financial review

 

2010 financial year product portfolio

 

SocialGO plc had no product launches in the year. Post year end, the Group released SocialGO™ - Social Network Maker boxed version.

 

Development model

 

We continue to retain the core management and technical skills in house. Having acquired CommonWorld Ltd in December 2007 the Company acquired the core IP for SocialGO™. During the year the Company acquired Get On With It Limited, an external partner to whom development of SocialGO™ software had been sub-contracted.

 

Strategy for the future

 

As described in the Chairman's statement the Company at present is focusing its resources on further development of SocialGO™ and expanding the customer base through additional marketing with the aim of increasing sales. We also recognise that the Group's Patent and Intellectual Property portfolio presents opportunities to generate revenue from the use of the Group's technology in products outside of our initial target market.

 

Results from operations

 

The Group made a loss from operations of £1,525,000 (2009 - £1,696,000).

 

Research and development and other administrative expenses were the main components of the loss on ordinary activities during the year ended 31 March 2010. 

 

Revenue, £369,000 (2009 - £30,000) and cost of sales, £393,000 (2009 - £48,000)

 

Revenue for the year consists of sales from SocialGO™ and ancillary products, such as widgets and themes.  Prior year sales of £30,000 included £9,000 relating to the first one and a half months trading of SocialGO™. Revenue for this sector has increased by £360,000 over the year. March 2010 income is a 1,000% increase on March 2009 and the number of paying subscribers increased by almost 900% from the beginning of April 2009 to the end of March 2010.

 

Cost of sales comprises £237,000 SocialGO™ server costs, £105,000 SocialGO™ sales and support staff, £35,000 transaction costs and £16,000 third party revenue share costs.

 

Administrative expenses

 

Administrative expenses for the year ended 31 March 2010 are the main component of the loss on ordinary activities during the year. Administrative expenses are in line with expectation and are divided into two categories:

 

Research and Development, £260,000 (2009 - £838,000)

 

All research and development expenditure was charged to the statement of comprehensive income as incurred until the required criteria for capitalisation were met in February 2009 in accordance with the accounting policy in note 1 to the financial statements and note 2 to the financial statements, critical estimates and judgements.  From this point, development costs relating to the enhancement of SocialGO™ have been capitalised. Development costs include £185,000 of payments to Get On With It Limited, prior to their acquisition by SocialGO plc in January 2010.

 

Other administrative expenses, £1,241,000 (2009 - £840,000)

 

Other administrative costs comprise all the costs of running the Group's operating and corporate functions.  This includes the staff, contractors and agencies together with associated costs employed in sales, marketing, PR, design, project management, production, IT, quality assurance, finance and legal. There was no impairment of IP or of goodwill in the year (2009 - Nil).

 

The main component of administrative expenditure relates to marketing costs, totalling £531,000 (2009 - £275,000).  These costs primarily relate to PPC spend for SocialGO™. External agencies and contractors have been used to assist in marketing and PR roles.  

 

Human resource costs, totalling £367,000 (2009 - £275,000) includes a share based payment charge of £85,000 (2009 - £50,000).

 

Also included in other administrative expenses is depreciation and amortisation of £131,000 (2009 - £21,000), of this £83,000 (2009 - £13,000) related to the amortisation of IP and £45,000 (2009 - Nil) related to the amortisation of capitalised development costs.

 

Taxation

 

No tax charge arises on the loss for the financial year (2009 - Nil).  At 31 March 2010 the Group has approximately £15.3 million (2009 - £13.8 million) of losses available to carry forward to set against future taxable profits, subject to agreement with the UK and USA tax authorities.

      

Loss per share

 

Basic and diluted loss per share of 0.6p (2009 - 1.8p) has decreased principally due to the issuing of new shares in the year.

      

Acquired intangible assets and amortisation

 

Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives. The amortisation expense is included within the administrative expenses line in the consolidated statement of comprehensive income. The significant intangibles recognised by the group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are in note 1.

 

On 12 January 2010 the group acquired 100% of the voting equity instruments of Get On With It Limited, a company whose principal activity was the continuing development of SocialGO™.

 

Risks and uncertainties

 

The principal risks to the business are:

·     The Group's ability to market and sell SocialGO™.

·     Ensuring that products keep abreast of technological developments.

·     Ensuring the Group has adequate cash resources to enable it to build the SocialGO™ brand.

·     The retention of key staff members.

 

These risks are addressed by:

·     The Group has retained sales marketing and PR consultants to maximise opportunities for SocialGO™.

·     The Group monitors comparable products and attend conferences and workshops applicable to the sector to keep abreast of technological developments.

·     The Group intends to raise additional cash.

·     The Group offers share options to ensure that staff members are suitably incentivised.

 

The going concern basis of preparation has been applied in preparing these financial statements as disclosed in note 1.

 

Key performance indicators

 

The key current issues and key performance indicators for the continuing success of the development of the business revolve around three major factors.

 

These are:

·     The adequacy and availability of cash resources to fund the R&D and commercialisation of the product pipeline.

·     That all the intellectual property owned by the group is properly and thoroughly protected.

·     The Group's ability to increase new sign-ups to SocialGO™ and convert existing free networks to premium customers.

 

Key financial performance indicators are:

·     Sales revenue growth.

·     Number of new subscribed networks.

·     Number of new free networks.

·     Net working capital (measured against forecast).

 

Working Capital

 

The Group's operational cash position has been reduced by the continued investment in research and development during the year together with operational overheads.  At 31 March 2010, the Group had cash of £204,000 (2009 - £84,000).  At the end of the financial year the group had net current assets of £35,000 (2009 net current liabilities of £380,000). This is in line with Group forecasts.

 

During the year, the Company undertook fundraising exercises in which:

60,040,000 new ordinary shares at 1.25p raised £750,500 (before expenses) on 8 April 2009

75,200,000 new ordinary shares at 1.25p raised £940,000 (before expenses) on 2 September 2009

40,000,000 new ordinary shares at 1.25p raised £500,000 (before expenses) on 12 January 2010

 

Post the financial year-end 40,000,000 shares were issued at 1.25p on June 16 2010, raising £500,000 before expenses.

 

The Company is progressing well with plans to raise additional financing or facilities of the order of £500,000 during the current financial year to support its short term working capital requirements.

 

The board continues to closely monitor the organisation's general overheads making savings and seeking cost efficiencies as appropriate given the current level of cash resources.

 

Dominic Wheatley

CEO

2 September 2010



Consolidated statement of comprehensive income for the year ended 31 March 2010  

 

 

 

 

Note

 

 

2010

£'000

 

 

2009

£'000

 

 

 

 

 

 

Revenue                                                                             4

369

30

 

 

 

Cost of sales

(393)

(48)

 

               _______ 

               _______

 

 

 

Gross loss

(24)

(18)

 

 

 

Research and development costs                                             

(260)

(838)

Administrative expenses - other

(1,241)

(840)

 

 

 

Total administrative expenses

(1,501)

(1,678)

 

               _______ 

_______ 

 

 

 

Loss from operations                                                   5

(1,525)

(1,696)

 

 

 

Finance income

1

10

 

               _______ 

_______ 

Loss before and after tax and total comprehensive income for the year                                             

(1,524)

(1,686)

 

_______

_______

 

 

 

Loss per share

 

 

Basic and diluted                                                                 6

                (0.6)p

    (1.8)p

 

_______

_______

 

 

 

 

 

 

 

 

Consolidated statement of changes in equity

 

 

Share capital

Share premium

Merger reserve

Retained deficit

Shares to be issued

Total  equity

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

31 March 2008

3,359

10,170

(136)

(12,613)

-

780

 

 

 

 

 

 

 

Share based payment charge

-

-

-

50

-

50

 

 

 

 

 

 

 

Share based payment charge - included in research and development

-

-

-

53

-

53

 

 

 

 

 

 

 

Issue of shares - to Get On With It Limited

31

-

-

(31)

-

-

 

 

 

 

 

 

 

Issue of shares - private placing

628

1

-

156

-

785

 

 

 

 

 

 

 

Share issue costs

-

(34)

-

-

-

(34)

 

 

 

 

 

 

 

Issue of shares - to Get On With It Limited

80

-

-

20

-

100

 

 

 

 

 

 

 

Loss before and after tax and total comprehensive income

-

-

-

(1,686)

-

(1,686)

 

 

 

 

 

 

 

31 March 2009

4,098

10,137

(136)

(14,051)

-

48

 

 

 

 

 

 

 

 

 

 

Share capital

Share premium

Merger reserve

Retained deficit

Shares to be issued

Total equity

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

31 March 2009

4,098

10,137

(136)

(14,051)

-

48

 

 

 

 

 

 

 

Share based payment charge

-

-

-

85

-

85

 

 

 

 

 

 

 

Issue of shares and warrants - private placings

1,752

416

-

22

-

2,190

 

 

 

 

 

 

 

Share issue costs

-

(83)

-

-

-

(83)

 

 

 

 

 

 

 

Issue of shares and warrants - acquisition of Get On With It Ltd

117

-

18

314

268

717

 

 

 

 

 

 

 

Loss before and after tax and total comprehensive income

-

-

-

(1,524)

-

(1,524)

 

 

 

 

 

 

 

31 March 2010

5,967

10,470

(118)

(15,154)

268

1,433

 

 

 

 

 

 

 

 

 

Consolidated balance sheet at 31 March 2010

 

Company number 05066489

 

                                                        Note             31 March        31 March        31 March        31 March

                                                                                    2010                2010                2009                2009

                                                                                   £'000               £'000               £'000               £'000

Assets

Non-current assets

    Property, plant and equipment                                                                 24                                              4

    Intangible assets                                                                               1,375                                           424

                                                                                                    ________                                ________

 

Total non-current assets                                                                   1,399                                          428

 

Current assets

    Trade and other receivables                                            95                                            13

    Tax asset                                                                      82                                            31

    Cash and cash equivalents                                            204                                            84

                                                                            ________                               ________

 

Total current assets                                                                              381                                          128

                                                                                                    ________                               ________

 

Total assets                                                                                       1,780                                          556

 

Liabilities

Current Liabilities

    Trade and other payables                                            (197)                                       (214)

    Tax liabilities                                                                (38)                                         (12)

    Accruals                                                                    (112)                                       (282)

                                                                            ________                               ________

 

Total liabilities                                                                                    (347)                                        (508)

                                                                                                    ________                               ________

 

Total net assets                                                                                 1,433                                            48

                                                                                                    ________                               ________

Capital and reserves attributable to equity shareholders

    Share capital                                       7                                           5,967                                        4,098

    Share premium                                                                               10,470                                      10,137

    Merger reserve                                                                                  (118)                                        (136)

    Retained deficit                                                                             (15,154)                                   (14,051)

    Shares to be issued                                                                              268                                              -

                                                                                                    ________                               ________

 

Total equity                                                                                       1,433                                            48

                                                                                                    ________                               ________

 

 

 

 

 

Consolidated cash flow statement for the year ended 31 March 2010

                                                                                                                   

 

31 March

31 March

31 March

31 March

 

2010

2010

2009

2009


£'000

£'000

£'000

£'000

Cash flows from operating activities

 

 

 

 

Loss before tax

 

(1,524)

 

(1,686)

Share based payments

 

85

 

203

Depreciation on property plant and equipment

 

3

 

8

Amortisation of intangible assets

 

128

 

13

Finance income

 

(1)

 

(10)

 

 

_______

 

_______

Cash used in operating activities before

 

(1,309)

 

(1,472)

changes in working capital and provisions

 

 

 

 

(Increase)/decrease in trade and other         receivables

 

(133)

 

20

(Decrease)/increase in trade and other payables

 

(161)

 

200

 

 

_______

 

_______

Cash used in operations

 

(1,603)

 

(1,252)

 

 

 

 

 

Investing activities

 

 

 

 

Purchase of property, plant and equipment

(6)

 

(3)

 

Capitalised R&D expenditure

(382)

 

(23)

 

Cash acquired on business acquisition

3

 

10

 

Finance income

1

 

10

 

 

_______

 

_______

 

Net cash used in investing activities

 

(384)

 

(16)

 

 

 

 

 

Financing activities

 

 

 

 

Issue of new share capital and warrants

2,190

 

785

 

Costs of issue of new share capital

(83)

 

(34)

 

 

_______

 

_______

 

Net cash from financing activities

 

2,107

 

751

 

 

 

 

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

120

 

(517)

 

 

 

 

 

Cash and cash equivalents at beginning of the year

 

84

 

601

 

 

_______

 

_______

Cash and cash equivalents at end of the year                       

 

204

 

84

 

 

_______

 

_______

 

 

The financial statements were approved by the Board and authorised for issue on 2 September 2010.

 

Notes

 

1      Accounting policies

 

Principal accounting policies

 

The Company is a public company incorporated and domiciled in the United Kingdom. The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

 

Basis of preparation

 

The financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs") and those parts of the Companies Act 2006 which apply to companies preparing their financial statements under IFRSs, and are in accordance with IFRS as issued by the IASB.

 

The consolidated financial statements have been prepared under the historical cost basis.

 

The preparation of financial statements in compliance with IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in the most appropriate application of the Group's accounting policies. The areas where significant judgements and estimates have been made in preparing the financial statements and their effects are disclosed in note 2.

 

Changes in accounting policies

 

a)   New standards, interpretations and amendments effective from 1 January 2009

 

The following new standards, interpretations and amendments, applied for the first time from 1 January 2009, have had an effect on the financial statements:

 

·     Amendments to IAS 1 Presentation of Financial Statements: A Revised Presentation: As a result of the application of this Amendment the Group has elected to present a single statement of comprehensive income; previously it presented an income statement and the statement of recognised income and expense. The Amendment does not change the recognition or measurement of transactions and balances in the financial statements.

·     Adoption of IFRS 8 Operating Segments: The Group has adopted IFRS 8 as a mandatory requirement that requires the Group to adopt a 'management approach' in the identification of its operating segments and its reporting on their financial performance.

 

None of the other standards, interpretations or amendments effective in this financial year have a material impact on the financial statements.

 

The following new standards, interpretations and amendments, which have not been applied in these financial statements, will or may have an effect on the Group's future financial statements:

 

·     Revised IFRS 3 Business Combinations (effective for accounting periods beginning on or after 1 July 2009): This standard introduces, in particular, the requirement to write off all acquisition costs to profit or loss instead of including them in the cost of investment and the requirement to recognise an intangible asset even if it cannot be reliably measured. IFRS 3(R) is applicable prospectively; in consequence, its adoption will not require the restatement of previous business combinations.

 

None of the other standards, interpretations or amendments issued but not yet effective is expected to have a material effect on the financial statements.

 

Going concern

 

The Board continually monitors the financial position of the Group, taking into account the latest cash flow forecasts and the ability of the Group to generate cash.

 

Subsequent to the year end, the Company has raised additional funds through a private placing of £500,000 and expects to raise further working capital through debt or equity in the coming months. 

 

The Board has prepared the financial statements on a going concern basis having given consideration to forecast sales and the marketability of SocialGO™, together with the above fundraising activity, for the period to 30 September 2011.  

 

Given the level of paid subscription taken up since commercial launch, the Board believe it's most recent sales forecasts, which incorporate continued growth in paid subscriptions to SocialGO™, to be achievable.  However, given that SocialGO™ represents a new product in a relatively new market, there remains an inherent uncertainty in the level of growth that will actually be achieved.  The Board are confident that any shortfall in forecast growth in revenues, were this to happen, could be sufficiently mitigated by a reduction in the Group's cost base to ensure that the Group will have sufficient working capital to operate as a going concern for the foreseeable future.

 

The Board therefore believe that it is appropriate to draw up the financial statements on a going concern basis.

 

            Basis of Consolidation

 

The consolidated financial statements incorporate the results of SocialGO plc (formerly Bright Things plc) and its subsidiary undertaking, SocialGO Development Limited (formerly Bright Entertainment Limited), using the merger accounting method.

 

The results also include the results of its other subsidiaries, Bright Things International Limited, Bright Things Inc and PushPlay Interactive LLC (purchase date 28 June 2005) using the purchase accounting method. The acquisition of CommonWorld Limited was deemed to be a purchase of an asset rather than a business combination. On this basis, the acquisition of the SocialGO™ Intellectual Property has been recorded at cost.

 

On 12 January 2010 the Group acquired 100% of the voting equity instruments of Get On With It Limited, a company whose sole activity was the ongoing development of SocialGO™ on behalf of SocialGO plc. This transaction has been deemed to be a business combination and the company has been consolidated using the purchase accounting method.

 

Merger accounting

 

In the consolidated financial statements, applying the exemption from the requirement to restate pre-transition date acquisitions available under IFRS1, merged subsidiary undertakings are treated as if they had always been a member of the Group.  The results of such a subsidiary are included for the whole period in the year it joins the group.  The corresponding figures for the previous year include its results for that period, the assets and liabilities at the previous balance sheet date and the shares issued by the company as consideration as if they had always been in issue.  Any difference between the nominal value of the shares acquired by the company and those issued by the company to acquire them is taken to the merger reserve. Assets and liabilities are included at their merger date book values.

 

            Purchase accounting

 

In the consolidated financial statements, the results of acquired subsidiary undertakings are taken from the date on which control is obtained. For acquisitions qualifying as 'business combinations' any difference between the fair value of separately identifiable assets, liabilities and contingent liabilities acquired and the consideration paid is treated as goodwill in the consolidated balance sheet.

 

Revenue recognition

 

Revenue relates to subscription fees for SocialGO™ services and sales of ancillary products less value added tax and provision against any subsequent refunds. SocialGO™ subscription income is billed monthly in advance and revenue is deferred in the balance sheet until the service is provided.

 

Where SocialGO™ sales include goods with a revenue share agreement and SocialGO plc acts as the principal, the sale is recorded gross and the shared portion is recorded as a cost of sale.

 

In the prior years, revenue also included sales of software to retailers and external distributors at invoiced and accrued amounts less value added tax and provision against any subsequent returns. Revenue from sales of software is recognised at the point at which the product is delivered. Where advance payments against sales are received, in so far as the Group's obligations have been fulfilled, such advances are recognised at the point at which they become non-refundable and non-recoupable.  The Group makes provision against any subsequent returns or price protection.

 

Goodwill

 

Goodwill results from the acquisition of subsidiaries, associates and joint entities and corresponds to the difference between the fair value of the acquisition consideration and the fair value of the assets, liabilities and contingent liabilities identified at the date of acquisition.

 

Under IFRS 3 Business Combinations and IAS 38 Intangible Assets goodwill is not amortised, but it is subject to an annual impairment review.

 

The recoverable value of goodwill is then estimated on the basis value in use. Value in use is defined as the present value relating to the cash flow generating units with which the goodwill is associated. When value in use is less than the accounting value, impairment is recorded and is irreversible.

 

Foreign currency

 

Transactions entered into by group entities in a currency other than the currency of the primary economic environment in which they operate (their "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the balance sheet date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the consolidated statement of comprehensive income.

 

On consolidation, the results of overseas operations are translated into sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the balance sheet date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised directly in equity (the "foreign exchange reserve"). No material differences arise on translation.

 

Exchange differences recognised in the statement of comprehensive income of group entities' separate financial statements on the translation of long-term monetary items forming part of the group's net investment in the overseas operation concerned are reclassified to the foreign exchange reserve on consolidation. On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the consolidated statement of comprehensive income as part of the profit or loss on disposal.

 

Financial assets

 

The Group classifies its financial assets into one of the following categories, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:

 

Loans and receivables: These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (trade debtors), but also incorporate other types of contractual monetary asset. They are carried at amortised cost using effective rate method.

 

Cash and cash equivalents: Cash and cash equivalents include cash in hand and deposits held at call with banks.

 

Financial liabilities

 

The Group classifies its financial liabilities as other financial liabilities. The Group has no value through profit and loss financial liabilities. The Group's accounting policy is as follows:

 

Other financial liabilities: Other financial liabilities include the following items: Trade payables and other short-term monetary liabilities, which are recognised at fair value on initial recognition and subsequently carried at amortised cost using the effective interest method.

 

Share capital

 

Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial liability. The Groups ordinary shares are classified as equity instruments.

 

Share based payments

 

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the statement of comprehensive income on a straight line basis over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

 

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the statement of comprehensive income over the remaining vesting period.

 

Where equity instruments are granted to persons other than employees, the statement of comprehensive income is charged with the fair value of goods and services received.  If it is not possible to identify the fair value of these goods or services provided, the statement of comprehensive income is charged with the fair value of the options granted.

 

Fair value is calculated using the Black-Scholes model.

 

Externally acquired intangible assets

 

Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives. The amortisation expense is included within the administrative expenses line in the consolidated statement of comprehensive income.

 

Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. In accordance with IAS 38 "Intangible assets", only elements whose cost can be determined reliably and for which it is probable that future benefits exist are recorded as non current assets.

 

Where assets are acquired in transactions that do not meet the IFRS 3 definition of a 'business combination', the assets are treated as acquired at cost, being the fair value of consideration.

 

The significant intangibles recognised by the group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:

 

Intangible asset                                  Useful economic life                        

 

ASIC Intellectual property rights            3 years                                              

 

SocialGO™ Intellectual property rights  5 years                                              

 

Goodwill                                              Annual impairment reviews     

 

Internally generated intangible assets (research and development costs)

 

Expenditure on internally developed products is capitalised if it can be demonstrated that:

 

·     it is technically feasible to develop the product for it to be sold;

·     adequate resources are available to complete the development;

·     there is an intention to complete and sell the product;

·     the group is able to sell the product;

·     sale of the product will generate future economic benefits; and

·     expenditure on the project can be measured reliably.

 

Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the consolidated statement of comprehensive income as incurred.

 

Capitalised development costs are amortised on a straight-line basis. The amortisation expense is included within administrative expenses in the consolidated statement of comprehensive income.

 

Impairment of Intangible Assets

 

Impairment tests on goodwill and assets in the course of construction are undertaken annually at the financial year end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.  Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.  Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset's cash-generating unit (i.e. the lowest group of assets in which the asset belongs for which there are separately identifiable cash flows).

 

Impairment charges are included in the administrative expenses line item in the consolidated statement of comprehensive income.  

 

Property, plant and equipment

 

Property, plant and equipment are stated at cost net of accumulated depreciation and provision for impairment. Depreciation is provided on all property plant and equipment, at rates calculated to write off the cost less estimated residual value, of each asset on a straight-line basis over its expected useful life. The residual value is the estimated amount that would currently be obtained from disposal of the asset if the asset were already of the age and in the condition expected at the end of its useful economic life.

 

The method of depreciation for each class of depreciable asset is:

 

Computer equipment                             -   3 years straight line  

Office fixtures, fittings & equipment      -   3 years straight line

 

The carrying value of property, plant and equipment is assessed annually if there is an indication of impairment. Any impairment is charged to the statement of comprehensive income.

 

Deferred taxation

 

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its tax base, except for differences arising on:

 

·     the initial recognition of goodwill; and

·     the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit.


Recognition of deferred tax assets is restricted to those instances where it is probable that future taxable profit will be available against which the difference can be utilised.


The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

Deferred tax assets and liabilities are offset when the group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

 

·     the same taxable group company; or

·     different group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered. 

 

Taxation

 

            Corporation tax payable is provided on taxable profits at prevailing rates.

 

 

 



2      Critical accounting estimates and judgements

 

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. These judgements and estimates are based on managements' best knowledge of the relevant facts and circumstances, having regard to prior experience, but actual results may differ from the amounts included in the financial statements. Information about such judgements and estimations is contained below, as well as in the accounting policies and accompanying notes to the financial statements.

 

Impairment of goodwill

The group is required to test, on an annual basis, whether goodwill has suffered any impairment. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the choice of a discount rate in order to calculate the present value of the cash flows. Actual outcomes may vary.

 

Intangible assets arising on acquisition

To the extent that intangible assets arise on acquisition, the Group estimates the economic life of these assets and amortises them over the relevant period.

 

The Board has reviewed the Get On With It Limited acquisition and deemed it a business combination under the definition in IFRS3, it being a transaction where SocialGO plc obtained control of Get On With It Limited, which met the IFRS 3 definition of a business at the point of purchase.

 

Capitalisation of development costs

The Group capitalises expenditure on internally developed products in line with the accounting policy set out in note 1.

 

For the Board, the key estimates and judgements are with regard to assessing how the intangible asset under development will generate probable future economic benefits.  The Board considers this requirement to be fulfilled once it can demonstrate the existence of a market for the output of the intangible asset.

 

In the opinion of the Board, the assessment that development costs would generate probable future economic benefits was reached once the product demonstrated an ability to derive revenues.  This was determined to be when revenues were received shortly after commercial launch.  This was considered to be a critical factor as prior to this the Board had significant uncertainty around the transition from a free to a paid product.  No evidence has come to light subsequent to the year end, with reference to the realisation of forecast revenues, to suggest that that view, at that point in time, was inappropriate.

 

From the point that this, and all other, requirements were met, the Group capitalised development expenditure that (i) is considered to enhance the economic benefits that can be derived from the asset (ii) meets the definition of an asset and (iii) meets the general recognition criteria for intangible assets.

 

The Group has capitalised development costs in the amount of £382,000 in the year.

 

Useful lives of intangible assets

Intangible assets are amortised over their useful lives. Useful lives are based on the management's estimates of the period that the assets will generate revenue, which are periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the carrying value and amounts charged to the consolidated statement of comprehensive income in specific periods.

             

3      Segmental information

 

The Group's operations are structured to focus on the development and sale of SocialGOTM networks. The Group's activities are operated through a common infrastructure and support functions and therefore, in the opinion of the Directors, its activities constitute one operating segment through which it provides services.

 

The Group operates in four main geographic areas:

           

Revenue

                                                                                                                         Year ended     Year ended

                                                                                                                            31 March        31 March

                                                                                                                                    2010                2009

                                                                                                                                   £'000               £'000

   

United Kingdom                                                                                                    58                      3

United States of America                                                                                    207                     24

        EU                                                                                                                       32                      2

        Other                                                                                                                   72                      1

                                                                                                                            ________        ________

 

                                                                                                                                      369                    30 

                                                                                                                            ________        ________

 

All the Group's assets are UK based.

 

 

4      Revenue

                                                                                                                                           

                                                                                                                         Year ended     Year ended

                                                                                                                            31 March        31 March

                                                                                                                                    2010                2009

                                                                                                                                   £'000               £'000

            Revenue arises from:

 

            Sale of SocialGO™                                                                                             369                      9

            Sale of goods                                                                                                           -                      2

            Royalties                                                                                                                 -                     19

                                                                                                                            ________        ________

 

                                                                                                                                      369                    30

                                                                                                                            ________        ________

 

5      Loss from operations                                                                                                                         

                                                                                                                         Year ended     Year ended

                                                                                                                            31 March        31 March

                                                                                                                                    2010                2009

                                                                                                                                   £'000               £'000

            This is arrived at after charging;

 

            Staff costs                                                                                                          456                  330

            Depreciation                                                                                                           3                      8

            Amortisation of intellectual property                                                                      128                    13

            Exchange differences                                                                                            23                    33

            Development expenses                                                                                        260                  685

            Auditors' remuneration in respect of Company                                                        18                    23

            Audit of subsidiary undertakings pursuant to legislation                                            17                    22

           Auditors' remuneration        - non-audit services - other services                               22                     7

            Auditors' remuneration       - non-audit services - taxation                                        14                     6

            Share based payments - employee and contractor share options                               85                    50

            Share based payments - consultants' incentive and development fees                         -                   153

                                                                                                                            ________        ________

 

 

6      Loss per share

 

        Loss per share has been calculated using the following:

                                                                                                                                                       

                                                                                                                         Year ended     Year ended

                                                                                                                            31 March        31 March

                                                                                                                                    2010                2009

 

            Loss (£'000)                                                                                                   (1,524)             (1,686)

            Weighted average number of shares ('000s)                                                  249,219              92,108

                                                                                                                            ________        ________

 

            Basic and diluted loss per ordinary share                                                           (0.6)p               (1.8)p

                                                                                                                            ________        ________ 

 

Loss per ordinary share has been calculated using the weighted average number of shares in issue during the relevant financial periods.  The weighted average number of equity shares in issue, is 249,219,305 (2009 - 92,107,557) and the earnings, being loss after tax is £1,524,000 (2009 - £1,686,000 loss). There are no potentially dilutive shares in issue. Share options totalling 54,134,103 (2009 - 13,193,105) have not been included in the calculation of diluted loss per share because they are anti-dilutive for the periods presented.

 

     After the balance sheet date, on 16 June 2010 the Company raised £500,000 from the issue of 40,000,000 new Ordinary 1p shares at 1.25p per share. This issue would not significantly alter the basic and diluted EPS calculations if it had occurred before the year end.


The company has outstanding issued warrants to subscribe for 540,541 10p ordinary shares at £1.50 per share, 250,000 10p ordinary shares at £2.50 per share, 35,380,000 1p ordinary shares at 5p per share  and 44,515,873 1p ordinary shares at 1.25p per share (2009 - 540,541 10p ordinary shares at £1.50 per share and 250,000 10p ordinary shares at £2.50 per share and 35,380,000 1p ordinary shares at 5p per share). These outstanding warrants are considered to be anti-dilutive to a loss per share.

 

 

 7     Share capital

           

On 8 April 2009 the Company raised £750,500 from the issue of 60,040,000 new Ordinary 1p shares at 1.25p per share.

 

On 2 September 2009 the Company raised £940,000 from the issue of 75,200,000 new Ordinary 1p shares at 1.25p per share.

 

On 12 January 2010 the Company raised £500,000 from the issue of 40,000,000 new Ordinary 1p shares at 1.25p per share and 2,890,873 warrants exercisable at 1.25p.

 

On 12 January 2010, the Group acquired 100% of the voting equity instruments of Get On With It Limited, consideration for which was 11,666,667 new 1p Ordinary Shares and 11,666,667 warrants exercisable at 1.25p  issued to the vendors of Get On With It Limited. There are a further 23,333,332 1p Ordinary shares and 29,958,333 warrants exercisable at 1.25p to be issued to the vendors of Get On With It between January 2011 and January 2014.

 

After the balance sheet date, on 16 June 2010, the Company raised £500,000 from the issue of 40,000,000 new Ordinary 1p shares at 1.25p per share.

 

        Called up share capital

 

                                                                                                              Authorised

                                                                             31 March        31 March        31 March        31 March

                                                                                    2010                2009                2010                2009

                                                                               Number          Number               £'000               £'000

 

            Ordinary shares of 1p each                        500,000,000      500,000,000                5,000                5,000

            Deferred shares of 9p each                       274,050,702      274,050,702                2,741                2,741

                                                                                                                            ________        ________

 

                                                                                                                                    7,741                7,741

                                                                                                                            ________        ________

 

           

                                                                                            Allotted, called up and fully paid

                                                                             31 March        31 March        31 March        31 March

                                                                                    2010                2009                2010                2009

                                                                               Number          Number               £'000               £'000

 

 

            Ordinary shares of 1p each                        322,582,995      135,676,328                3,226                1,357

            Deferred shares of 9p each                       274,050,702      274,050,702                2,741                2,741

                                                                         __________    __________        ________        ________

 

                                                                                                                                    5,967                4,098

                                                                                                                            ________        ________

 

The share price ranged from a low of 1.0 pence to a high of 2.25 pence.

 

The movement in share capital was as follows:                                                                      

                                                                                                                       Ordinary shares of 1p each

                                                                                                                              Number               £'000

 

            In issue at 31 March 2009                                                                         135,676,328              1,357

            1p Ordinary Shares issued for 1.25p each - 8 April 2009                              60,040,000                  600

            1p Ordinary Shares issued for 1.25p each - 2 September 2009                     75,200,000                  752

            1p Ordinary Shares issued for 1.25p each - 12 January 2010                        40,000,000                  400

            1p Ordinary Shares issued as consideration - 12 January 2010                      11,666,667                  117

                                                                                                                        __________    __________  
             

            In issue at 31 March 2010                                                                         322,582,995                3,226

                                                                                                                         __________     __________

 

At 31 March 2010, options were outstanding over 54,134,103 shares, (2009 - 13,193,105), including options held by directors.

 

    Unapproved Share Options

 

At 31 March 2010 the following share options were outstanding in respect of the ordinary shares under option agreements entered into by the company:

 

            Number        Date of                                                                                               Exercise price

            of options      Grant                             Exercise period                                        pence per share

                       

             400,000         26 April 2004                  26 April 2004 to 26 April 2014                                          14.0

             155,050         26 April 2004                  26 April 2004 to 30 June 2012                                          10.0

              75,000         26 April 2004                  26 April 2004 to 30 June 2012                                           14.0

              49,055         26 April 2004                  30 April 2004 to 30 April 2011                                           90.0

             100,000         31 August 2004               31 August 2005 to 3 December 2014                                90.0

             100,000         31 August 2004               31 August 2005 to 1 October 2014                                    90.0

             185,000         1 October 2004               1 October 2005 to 1 October 2014                                    90.0

              24,000         30 November 2004          30 November 2004 to 30 November 2014                          90.0

              10,000         30 November 2004          30 November 2005 to 30 November 2014                          90.0

              25,000         1 December 2004            1 December 2005 to 1 December 2014                             90.0

              75,000         21 December 2004          1 January 2005 to 1 January 2015                                     90.0

              30,000         7 January 2005                7 January 2006 to 7 January 2015                                     90.0

             136,666         20 July 2005                    20 July 2006 to 20 July 2015                                           149.5

              91,667         20 July 2005                    20 July 2007 to 20 July 2015                                            149.5

              91,667         20 July 2005                    20 July 2008 to 20 July 2015                                            149.5

              45,000         20 September 2006          20 September 2007 to 20 September 2016                          13.5

             166,666         20 September 2006          20 September 2007 to 20 September 2016                         13.5

             166,667         20 September 2006          20 September 2008 to 20 September 2016                         13.5

             166,667         20 September 2006          20 September 2009 to 20 September 2016                         13.5

             100,000         21 September 2006          21 September 2007 to 21 September 2016                         11.3

             200,000         1 April 2007                    1 April 2008 to 1 April 2017                                              10.0

             650,000         1 May 2008                     1 May 2009 to 1 May 2018                                                4.0

             275,000         1 May 2008                     1 May 2010 to 1 May 2018                                                4.0

             275,000         1 May 2008                     1 May 2011 to 1 May 2018                                                4.0

          2,133,334         24 October 2008              24 October 2009 to 24 October 2018                                 1.25

          1,733,333         24 October 2008              24 October 2010 to 24 October 2018                                 1.25

          1,733,333         24 October 2008              24 October 2011 to 24 October 2018                                 1.25

          3,000,000         12 January 2010              12 January 2010 to 12 January 2016                                  1.25

          3,000,000         12 January 2010              12 January 2011 to 12 January 2016                                  1.25

          3,000,000         12 January 2010              12 January 2012 to 12 January 2016                                  1.25

          3,000,000         12 January 2010              12 January 2013 to 12 January 2016                                  1.25

          3,000,000         12 January 2010              12 January 2014 to 12 January 2016                                  1.25

        ________

 

        24,193,105

        ________

 

 

EMI Plan

 

At 31 March 2010 the following share options were outstanding in respect of the ordinary shares under the EMI plan:

 

            Number        Date of                                                                                               Exercise price

            of options      Grant                             Exercise period                                        pence per share

                       

          6,647,000         12 January 2010              12 January 2011 to 12 January 2020                                 1.25

          6,646,999         12 January 2010              12 January 2012 to 12 January 2020                                 1.25

          6,646,999         12 January 2010              12 January 2013 to 12 January 2020                                 1.25

          4,000,000         18 March 2010                18 September 2010 to 12 January 2020                             1.50

          2,000,000         18 March 2010                18 September 2011 to 12 January 2020                             1.50

          2,000,000         18 March 2010                18 September 2012 to 12 January 2020                             1.50

          2,000,000         18 March 2010                18 September 2013 to 12 January 2020                             1.50

        ________

 

        29,940,998

        ________

 

 

8      Related party transactions

 

Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are described below.

 

Matthew Tims was a non-executive director for part of the year.  A contract for his consultancy services with Creative Partners had been in place during the prior period.  £nil (2009 - £1,000) was due under this agreement in the period.  At 31 March 2010, £nil (2009 - Nil) was outstanding.

 

Alex Halliday and Steve Hardman are directors of SocialGO™ and were among the vendors of Get On With It Limited. Prior to the acquisition in January 2010, Get On With It Ltd had the contract to complete the development of SocialGO™ and provide ongoing development support. £726,722 (2009 - £576,822) was due under this agreement in the period.  At 31 March 2010, £nil (2009 - £126,674) was outstanding. Alex Halliday received 5,526,316 warrants and 14,190,789 deferred warrants and Steve Hardman received 4,912,281 warrants and 12,614,035 deferred warrants in the year as part of the consideration for GOWIT.

 

During the year the Company entered into a consultancy agreement with Bentworth Holdings Ltd, the consideration for which is 15,000,000 share options, exercisable between 1 and 5 years. The share based payment charge relating to these options was £12,943 (2009 - Nil). In a separate agreement, so long as it holds not less than 4 per cent of the issued share capital of the Company, Bentworth Holdings Ltd is entitles to appoint a non-executive director to the Board of SocialGO™, subject to approval by the Board and the Company's nominated adviser. The non-executive director appointed was Vikrant Bhargava. Vikrant Bhargava is the founder of and holds an indirect beneficial interest in Veddis Ventures, which is the trading name of Bentworth Holdings Ltd. As part of the fund raising on 12 January 2010, Veddis Ventures received 2,890,873 warrants.

 

Warrants, including those that are deferred, held by Directors at 31 March 2010, totalled 52,612,368 (2009 - 15,368,947), with Alex Halliday holding 22,559,841 (2009 - 2,842,736); Dominic Wheatley 8,000,000 (2009 - 8,000,000); Ian Livingstone 2,000,000 (2009 - 2,000,000); and Steve Hardman 20,052,527 (2009 - 2,526,211).

 

Some costs including US server fees are paid for by Directors, when this occurs Directors are reimbursed via expenses. At 31 March 2010, £19,288 (2009 - £3,872) was outstanding to Dominic Wheatley, £624 (2009 - Nil) to Brett Morris and £3,175 (2009 - Nil) to Steve Hardman.

 

9      Events after the balance sheet date

           

     After the balance sheet date, on 16 June 2010 the Company raised £500,000 from the issue of 40,000,000 new Ordinary 1p shares at 1.25p per share.

 

The financial statements were authorised for issue by the board as a whole following their approval on 2 September 2010.

 

10   The above financial information, which has been prepared in accordance with International Financial Reporting Standards as endorsed by the European Union, does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006.

           

The financial information for the year ended 31 March 2010 has been extracted from the statutory accounts which will be delivered to the Registrar of Companies following the company's annual general meeting. The Independent Auditors' Report on those financial statements was unqualified and did not contain a statement under Section 498(2) and Section 498(3) of the Companies Act 2006. The comparative financial information is based on the statutory accounts for the financial year ended 31 March 2009 which have been delivered to the Registrar of Companies.

 

11    Annual General Meeting

           

The Annual General Meeting of SocialGO plc will be held at 7 Pilgrim Street, London, EC4V 6LB, on 29 September 2010 at 11am.

 


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