QUALITY_CLOUDS_LTD - Accounts

The directors present their annual report and financial statements for the year ended 31 December 2022.

The principal activity of the group continued to be that of computer software support and development.

The results for the year are set out on page 7.

No ordinary dividends were paid. The directors do not recommend payment of a further dividend.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

The group and its subsidiary company continue to undertake research and development activities to further assist in enhancing the wider software market.

Information relating to events since the end of the year is given in the notes to the financial statements.

In accordance with the company's articles, a resolution proposing that EK Williams Accountants Limited be reappointed as auditor of the company and group will be put at a General Meeting.

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the group and parent company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.

In preparing these financial statements, International Accounting Standard 1 requires that directors:

•     properly select and apply accounting policies;

•     present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

•     provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

•     make an assessment of the company's ability to continue as a going concern.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Each director in office at the date of approval of this annual report confirms that:

•     so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware, and

•     the director has taken all the steps that he / she ought to have taken as a director in order to make himself / herself aware of any relevant audit information and to establish that the company's auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

The directors have carefully assessed the appropriateness of the going concern concept in relation to these financial statements and believe that the accounts should be prepared on a going concern basis.

The directors have made enquiries and assessed the continuing impact of Covid-19 on the company and the group. Whilst the impact of Covid-19 is likely to be long lasting and will affect the global economy for the foreseeable future, the directors believe that the company and the group have more than enough financial resources to continue operating for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the company’s financial statements.

The directors continue to monitor the impact of Brexit and the geographical situation in Ukraine on the company and the group but, in their opinion, it has been minimal so far. The directors believe the going concern assumption to be appropriate given the company and group’s working capital position post year end.

Losses in 2022 resulted in the company having negative equity of £382,645 and net current liabilities of £124,957 at 31st December 2022 and the group having negative equity of £47,805. 83% of the group's total liabilities are deferred income, and for the company, deferred income and group creditors are 83% of the company's total liabilities. This, and further equity funding after the year end, have enabled the directors to conclude that going concern assumption remains appropriate.

We have audited the financial statements of Quality Clouds Ltd (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2022 which comprise the group income statement, the group statement of comprehensive income, the group and parent company statement of financial position, the group and parent company statement of changes in equity, the group statement of cash flows and the group and parent company notes to the financial statements, including significant accounting policies.

The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and UK adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).

In our opinion:

•     the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 31 December 2022 and of the group's loss for the year then ended;

•     the group financial statements have been properly prepared in accordance with UK adopted international accounting standards and the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

•     the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

• the information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the directors' report has been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent company financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit; or

• the directors were not entitled to take advantage of the small companies exemption from the requirement to prepare a strategic report.

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

As part of our planning of the audit work required, we obtained an understanding of the legal and regulatory frameworks that are applicable to the entity via enquiries of the company’s management, carried out analytical procedures, held discussions amongst the management team and using knowledge of the sector determined that the most significant laws and regulations are those that relate to:

• Health and safety regulations.

• Employment law.

• General Data Protection Regulations.

• UK Tax legislation.

We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as International Financial Reporting Standards and the Companies Act 2006.

Based on the results of our risk assessment we designed our audit procedures to identify non-compliance with the laws and regulations and the fraud risks identified. This included enquiries with management to understand their policies and procedures for compliance with those regulations and we completed the following tests:

• Revenue fraud.

• Unauthorised expenditure and/or payments.

• Management override of controls.

• Related party fraud.

Based on the results of our risk assessment we designed our audit procedures to identify and to address material misstatements in relation to fraud. This included the risk of management bias and the risk of making inappropriate accounting entries, no significant issues were identified during our testing.

There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there maintained a risk of non-detection of irregularities, as these may involve collusions, forgery, intentional omissions, misrepresentations or the override of internal controls.

A further description of our responsibilities is available on the Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

The income statement has been prepared on the basis that all operations are continuing operations.

The notes on pages 13 to 30 form part of these group financial statements.

The notes on pages 13 to 30 form part of these group financial statements.

The notes on pages 13 to 30 form part of these group financial statements.

The notes on pages 13 to 30 form part of these group financial statements.

The notes on pages 13 to 30 form part of these group financial statements.

Quality Clouds Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 20-22 Wenlock Road, London, N1 7GU. The company's principal activities and nature of its operations are disclosed in the directors' report.

The group consists of Quality Clouds Ltd and all of its subsidiaries.

The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.

The financial statements are prepared in sterling, which is the functional currency of the group. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.

As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the requirements of IFRS

• •    presentation of the parent company's statement of cash flows and related notes;

• •    disclosure of key management personnel compensation; and

• •    disclosure of the categories of financial instrument and the nature and extent of risks arising on these financial instruments;

The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.

The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date.

Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date.

The consolidated group financial statements consist of the financial statements of the parent company Quality Clouds Ltd together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

All financial statements are made up to 31 December 2022. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

The directors have carefully assessed the appropriateness of the going concern concept in relation to these financial statements and believe that the accounts should be prepared on a going concern basis.true

The directors have made enquiries and assessed the continuing impact of Covid-19 on the company and the group. Whilst the impact of Covid-19 is likely to be long lasting and will affect the global economy for the foreseeable future, the directors believe that the company and the group have more than enough financial resources to continue operating for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the company’s financial statements.

The directors continue to monitor the impact of Brexit and the geographical situation in Ukraine on the company and the group but, in their opinion, it has been minimal so far. The directors believe the going concern assumption to be appropriate given the company and group’s working capital position post year end.

Losses in 2022 resulted in the company having negative equity of £382,645 and net current liabilities of £124,957 at 31st December 2022 and the group having negative equity of £47,805. 83% of the group's total liabilities are deferred income, and for the company, deferred income and group creditors are 83% of the company's total liabilities. This, and further equity funding after the year end, have enabled the directors to conclude that going concern assumption remains appropriate.

Revenue represents amounts receivable in respect of services provided during the year, excluding value added tax ("VAT"). In accordance with IFRS 15 (“Revenue from Contracts with Customers”), revenue is measured by reference to the fair value of the consideration received or receivable by the company for the services provided, excluding VAT. For contracts with customers that stipulate the service will be provided over a period of time, the fair value of the contract is assessed and split equally over the term of the contract. Revenue is recognised when the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and when the costs incurred or to be incurred can be measured reliably.

Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the parent company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

At each reporting end date, the group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

Financial assets are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.

Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.

The group recognises financial debt when the group becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.

Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Equity instruments issued by the parent company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer payable at the discretion of the company.

The tax expense represents the sum of the tax currently payable and deferred tax.

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

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

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of inventories or non-current assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Government grants are recognised when there is reasonable assurance that the grant conditions will be met and the grants will be received.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

Product development

Expenditure on product development is written off in the period in which it is incurred.

Share-based payments

The group operates an equity-settled share-based remuneration plans for its employees. All goods and services received in exchange for the grant of any share-based payment are measured at their fair values.

Where employees are rewarded using share-based payments, the fair value of employees’ services is determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions.

All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to retained earnings. The expense is allocated over the vesting period, based on the best available estimate of the number of shares expected to vest.

Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, are allocated to share capital up to the nominal (or par) value of the shares issued with any excess being recorded as share premium.

At the date of authorisation of these financial statements, the following standards and interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

Management has assessed that the above changes to the standards are not expected to have a material impact on the financial position or financial performance of the company.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

In the opinion of the directors, there are no areas where management judgements have had a significant effect on amounts recognised in the financial statements.

The average monthly number of persons (including directors) employed by the group during the year was:

Their aggregate remuneration comprised:

Directors' remuneration of £90,073 (2021: £144,337) is included in consultancy costs in the detailed group profit and loss account.

The charge for the year can be reconciled to the profit/(loss) per the income statement as follows:

At 31st December 2022 the group had unrelieved trading losses amounting to approximately £4,800,000 (2021: £3,300,000) which are available to be carried forward and offset against future trading profits. No deferred tax asset has been recognised in respect of these losses as there is uncertainty about the timing and extent of future trading profits.

The parent company losses are not available to transfer against taxable profits in the subsidiary undertaking and a deferred tax asset is recognised in respect of timing differences in the subsidiary as set out in Deferred Tax note 21 in the financial statements.

Details of the company's subsidiaries at 31 December 2022 are as follows:

The parent company has surrendered its losses relating to Research and Development costs, including the enhanced allowances available, in order to receive a cash refund.

Tax receivable is categorised in level 2 within the fair value hierarchy.

The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.

No significant receivable balances are impaired at the reporting end date.

Financial liabilities and are categorised in level 2 within the fair value hierarchy except other loans outstanding at 31st December 2020 which are categorised in level 3 within the fair value hierarchy.

Other loans outstanding at 31st December 2021 represent amounts due under a convertible loan agreement entered into by the company on 27th October 2020 which were converted during the year.

The directors consider that the carrying amounts of financial liabilities carried at amortised cost in the financial statements approximate to their fair values.

The following table details the remaining contractual maturity for the group's financial liabilities with agreed repayment periods. The contractual maturity is based on the earliest date on which the group may be required to pay.

The company is exposed to various financial risks such as market risk (variation in foreign exchange rates, interest rates etc.), credit risk and liquidity risk. The company's risk management policy is aimed at limiting the negative impact of these risks on its financial results which are derived from the inability to predict financial markets and the changes in variables affecting costs and revenue.

The risk management policy is executed by the company's directors using the following procedure:

Business risk

The directors consider that the company's principal business risks are over-reliance on key customers. The directors are confident that the company is well placed to retain its existing customers and to also attract new business.

Financial instruments

The company's financial instruments are mainly comprised of bank deposits and amounts owed to and owed from third parties.

The carrying amounts reflected in the accompanying Statement of Financial Position for balances approximately their respective fair values due to the relatively short-term maturity of these financial instruments.

All assets and liabilities for which fair value is disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

For the purpose of fair value disclosures, the company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

Liquidity risk

The company manages its liquidity by carefully monitoring scheduled debt servicing payments for long-term financial liabilities as well as cash outflows due in its day-to-day business. Liquidity needs are monitored in various time bands, on a daily, weekly and monthly basis.

Foreign exchange risk

Currency risk arises from the fair values, or the cash flows, of a financial instrument fluctuating due to changes in foreign currency exchange rates. The group has trade receivables in various currencies such as Sterling, the Euro and the US Dollar and a significant proportion of the group's payables are also denominated in foreign currencies.

With a high level of foreign currency income and foreign currency costs there is a significant exposure to currency risk because the LLP does not actively undertake currency hedging transactions. Risks have been managed successfully to date through the operation of bank accounts for each currency with low levels of foreign exchange differences in the current year or previous period.

Credit risk

Credit risk is the risk of financial loss to the group if a counterparty fails to meet its contractual obligations.

Maximum exposure to credit risk at the reporting date to which the group is exposed is the carrying value of the trade and other receivables and customer defaults could adversely affect the liquidity of the group. However, due to the large number of customers and the diversification of the customer base, there is an acceptable level of concentration of credit risk with respect to these receivables.

The group has established credit policies under which customers are analysed for creditworthiness and there is an effective management of receivables in place both before and after they become overdue and if they were to become doubtful. In monitoring credit risk, customers are grouped according to their credit risk characteristics, ageing profile and existence of previous financial difficulties. If customers were to be characterised as doubtful, they would be reassessed at each reporting date for the estimated loss that would be expected, and an appropriate impairment allowance would be established.

The following are the major deferred tax liabilities and assets recognised by the group and movements thereon during the current and prior reporting period.

Deferred tax assets are expected to be recovered after more than one year.

The group operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

Contributions totalling £3,009 (2021: £1,112) were payable to the scheme at the end of the year and are included in creditors.

The group operates an Employee Management Incentive ("EMI") scheme which will be settled by share based payments.

The scheme granted 43,941 share options on 24 September 2020 with a vesting period of 4 years from the date of employment. The estimated fair value of each share option granted in the Employee Management Incentive scheme is £0.17. The exercise price at the date of the grant of the share options is £0.17 and as a result of the fair value and exercise prices being equal there is no cost that needs to be accounted for as a share based payment.

At 31st December 2022:

12,128 EMI share options have been exercised

19,824 EMI share options have lapsed

11,989 un-exercised EMI share options remain

There was a weighted average remaining contractual life of 7.75 years.

During the year ended 31 December 2022 the group has granted further share options that are not part of the EMI scheme which will be settled by share based payments.

The scheme granted 32,330 "Non-EMI" share options on 4 May 2022 with a vesting period of 4 years from the date of employment. The estimated fair value of each share option granted in the Employee Management Incentive scheme is £3.17. The exercise price at the date of the grant of the share options is £3.17 and as a result of the fair value and exercise prices being equal there is no cost that needs to be accounted for as a share based payment.

None of the Non EMI share options have been exercised at 31st December 2022

The ordinary, series A1, Series A2, G, Preferred, Y1 Preferred and Y2 Preferred classes of shares have equal voting and dividend rights. Series A1, Series A2, Y1 Preferred and Y2 Preferred classes of shares have a preference on a capital distribution. B Ordinary shares have no dividend rights or rights to attend, speak or vote at any general meetings or on any written shareholder resolutions.

On 18th November 2019 a special resolution was passed giving Series A1 and Series A2 shares priority over the ordinary shares on distributions from a winding up of the company.

On 4 May 2022, 262,405 Y1 ordinary shares of £0.000001 were issued and fully paid for by cash, at a price of £9.53 per share.

On 4 May 2022, 209,890 Preferred shares of £0.000001 were issued and fully paid for by cash, at a price of £7.62 per share.

On 4 May 2022, 32,833 Preferred shares of £0.000001 were issued and fully paid for by cash, at a price of £9.53 per share.

On 5 September 2022, 5,200 Ordinary shares of £0.00001, 121,455 Series A1 shares of £0.000001 and 8,583 Series A2 shares of £0.000001 were re-designated as 135,238 Y2 Preferred shares of £0.000001.

On 5 September 2022, 22,048 Series A1 shares of £0.00001, 121,455 Series A1 shares of £0.000001 and 6,404 Series A2 shares of £0.000001 were re-designated as 28,452 Preferred shares of £0.000001.

On 21 December 2022, 101,039 G shares of £0.000001 were issued and fully paid for by cash, at a price of £0.43 per share.

On March 31, 2023, the parent company secured significant external financing from YFM Equity Partners Growth III LP, Adara Ventures III Sicar SCA  and Aldea Opportunity Fund I, FCR  to provide additional working capital to support the business investment and growth. The total amount receivable on 5 April, after deducting fees and associated VAT, was £5,450,198. On March 31, 2023, the parent company has also re-designated the existing classes of share capital to new classes of share capital.

During the year the group entered into the following transactions with related parties:

The following amounts were outstanding at the reporting end date:

During the year the company made a loan advance to M Sutherland and at 31st December 2022 the outstanding balance was £20,446 excluding £12 of accrued interest charged by the company. The maximum amount of loan outstanding in the period was £20,446.

No single party has had ultimate control of the parent company during the current year or previous year.

The notes on pages 33 to 37 form part of these parent financial statements.

As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s loss for the year was £2,222,708 (2021 - £1,571,616 loss).

The notes on pages 33 to 37 form part of these parent financial statements.

Quality Clouds Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 20-22 Wenlock Road, London, N1 7GU. The company's principal activities and nature of its operations are disclosed in the directors' report.

The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The company applies accounting policies consistent with those applied by the group. To the extent that an accounting policy is relevant to both group and parent company financial statements, please refer to the group financial statements for disclosure of the relevant accounting policy.

The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.

As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the requirements of IFRS

• presentation of the parent company's statement of cash flows and related notes;

• disclosure of key management personnel compensation; and

• disclosure of the categories of financial instrument and the nature and extent of risks arising on these financial instruments;

The directors have carefully assessed the appropriateness of the going concern concept in relation to these financial statements and believe that the accounts should be prepared on a going concern basis.

The directors have made enquiries and assessed the continuing impact of Covid-19 on the company and the group. Whilst the impact of Covid-19 is likely to be long lasting and will affect the global economy for the foreseeable future, the directors believe that the company and the group have more than enough financial resources to continue operating for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the company’s financial statements.

The directors continue to monitor the impact of Brexit and the geographical situation in Ukraine on the company and the group but, in their opinion, it has been minimal so far. The directors believe the going concern assumption to be appropriate given the company and group’s working capital position post year end.

Losses in 2022 resulted in the company having negative equity of £382,645 and net current liabilities of £124,957 at 31st December 2022 and the group having negative equity of £47,805. 83% of the group's total liabilities are deferred income, and for the company, deferred income and group creditors are 83% of the company's total liabilities. This, and further equity funding after the year end, have enabled the directors to conclude that going concern assumption remains appropriate.

At the date of authorisation of these financial statements, the following Standards and Interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective (and in some cases had not yet been adopted by the EU):

Management has assessed that the above changes to the standards are not expected to have a material impact on the financial position or financial performance of the company.

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

Except as detailed below the directors believe that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.

Details of the company's principal operating subsidiaries are included in note 13.

The directors consider that the carrying amounts of financial liabilities carried at amortised cost in the financial statements approximate to their fair values.