Ora Technology PLC

Notes to the Financial Statements          

For the year ended 31 July 2024

1.     Accounting Policies

    Corporate Information

The principal activity of Ora Technology PLC (the 'Company') is the operation of an online platform named "Ora Carbon" on which users will be able to buy, sell and retire carbon credits.

The Company is a public limited company incorporated and domiciled in England and Wales. The registered office is Ground Floor, 72 Charlotte Street, London, W1T 4QQ.

The Company was incorporated on 3 November 2021 originally under the name IO Health PLC. On 17 August 2022 the name was changed to JSON Technology PLC and then to Ora Technology PLC on 1 May 2023.

The Company is listed on the Access segment of the Aquis Stock Exchange Growth Market.   

                              General information

The financial statements have been prepared in Pound Sterling (£), which is the Company's presentation currency and functional currency and are rounded to the nearest £1.

The financial statements were approved and authorised for issue by the Board on 30 January 2025.

Summary of significant accounting policies

The principal accounting policies adopted in the preparation of these 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 United Kingdom ("UK adopted IFRSs") and those parts of the Companies Act 2006 which apply to companies preparing their financial statements under IFRSs.

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of assets and liabilities at fair value.

The preparation of financial statements in conformity with UK adopted international accounting standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies.  The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant in the financial statements, are disclosed in note 2.

Reporting period

In the 2023 reporting period, the Company changed its reporting period from 30 November to 31 July. Thus amounts presented for the 2023 reporting period are for 8 months from 1 December 2022 to 31 July 2023. Consequently, comparative amounts for the statement of comprehensive income, and related notes are not entirely comparable.    

Going concern

The Company's business activities, together with the factors likely to affect its future development, financial performance and position have been assessed by management. The financial position of the Company, its cash flows and liquidity position are presented in the Annual Report and Financial statements. In addition, note 13 to the financial statements includes the Company's objectives, policies, and processes for managing its capital, its financial risk management objectives and its exposures to risk.

As at 31 July 2024, the Company's current liabilities exceed the current assets by £31,865. As part of the going concern assessment, the Directors have considered the implications of the potential transaction with Kondor AI Plc whereby Kondor AI Plc purchases the entire share capital of the Company and the 'enlarged' entity lists onto one of the London Markets. In parallel with this transaction, it is anticipated that there will be a further fundraise by Kondor AI Plc of an amount sufficient to enable the 'enlarged' entity to continue in operational existence for the period to at least 31 January 2026.

However, as disclosed in the strategic report, there can be no guarantee that the potential transaction will complete and that the parallel fundraise will take place and since the Company's future plans are largely reliant on the successful outcome of the matters set out herein, there exists a material uncertainty as to the Company's ability to continue as a going concern.

New standards, amendments and interpretations adopted by the Company

The following IFRS or IFRIC interpretations were effective for the first time for the annual periods beginning on or after 1 August 2023

New standards, amendments and interpretations in issue but not yet effective (in some cases not yet adopted by the UK) and not applied in these financial statements

The Directors do not expect that the adoption of these standards will have a material impact on the financial statements of the Company in future periods. There are no IFRS's or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company.

               Intangible assets

Software development costs

Software development costs are initially recognised at cost where it is probable that there will be future economic benefits from the asset and the cost of the asset can be reliably measured. The cost of internally generated intangible assets are only recognised in the development phase of an internal project, with the cost of the research phase and maintaining or running the day-today operations recognised as an expense. These capitalised costs comprise all directly attributable costs necessary to create, produce, and prepare the asset to be capable of operating in the manner intended by management.

After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Capitalised software development costs are amortised on a straight-line basis over a period of five years from the date that the product is brought into first use and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and amortisation method are reviewed at each financial year end.

Financial Instruments        

a)    initial recognition

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The Company shall only recognise a financial instrument when the Company becomes a party to the contractual provisions of the instrument.

b)    classification and measurement

Financial assets and financial liabilities are initially measured at their fair value.

               Financial assets

The Company determines the classification of classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date based on the business model for managing these financial assets and the contractual cash flow characteristics.

Currently the Company only has financial assets at amortised cost which consist of trade and other receivables, and cash and cash equivalents.

Financial assets are classified as at amortised cost only if both of the following criteria are met:

•       The asset is held within a business model whose objective is to collect contractual cash flows; and

•       The contractual terms give rise to cash flows that are solely payments of principal and interest.

Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are subject to impairment.

The Company recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original EIR. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Company applies the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Company does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset's lifetime ECL at each reporting date.

At each reporting date, financial assets are reviewed to assess whether there is objective evidence of impairment. If any such evidence exists, impairment loss is determined and recognised based on the classification of the financial asset.

Financial liabilities

The Company's financial liabilities comprise trade and other payables. Trade and other payables are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest rate method, less settlement payments.

c)    derecognition

Financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:

•     The rights to receive cash flows from the asset have expired; or

•     The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

The Company's financial liabilities are derecognised when extinguished, discharged, cancelled or expired.

Financial liabilities

Gains or losses from derecognition of financial liabilities are recognised in the statement of profit or loss

d)    modification of financial assets and liabilities

Financial assets

If a renegotiation or other modification of the contractual cash flows of a financial asset results in derecognition the revised instrument is treated as a new instrument. The impairment model would then apply to the new instrument as normal.

If a renegotiation or other modification of the contractual cash flows of a financial asset does not result in derecognition, the Company recalculates the gross carrying amount of the financial asset (i.e. amortised cost amount before adjusting for any loss allowance). This is done by discounting the new expected contractual cash flows (post modification) at the original effective interest rate and recognising any resulting modification gain or loss in profit or loss. From this date, the Company assesses whether the credit risk of the financial instrument has increased significantly since initial recognition of the instrument by comparing the credit risk at the reporting date.

Financial liabilities

When the terms of a financial liability are modified the Company needs to consider whether that modification is substantial. If the modification is considered substantial the original financial liability is derecognised and a new financial liability is recognised at fair value.

Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand and current and deposit balances at banks with maturities of three months or less from inception.

Current and Deferred Taxation

The tax expense represents the sum of the tax currently payable and deferred tax. The liability for current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the reporting date.

Deferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying amounts of assets and liabilities in the Company 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 recognised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax is calculated at the tax rates and laws that are expected to apply in the period when the liability is settled, or the asset is recognised based on tax laws and rates that have been enacted at the reporting date. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.

Value-Added Tax ('VAT')

Expenses and assets are recognised net of the amount of associated VAT, unless the VAT incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated at gross amount inclusive of the amount of VAT receivable or payable.

Share based payments

The Company operates equity-settled, share-based compensation plan, under which the entity receives services from employees as consideration for equity instruments (warrants) of the Company.

The fair value of all share-based payments granted are determined using the Black-Scholes option pricing model which incorporates assumptions regarding risk-free interest rates, dividend yield, expected volatility, estimated forfeitures, and the expected life of warrants. The fair value of the employee services received in exchange for the grant of warrants is recognised as an expense. The total amount to be expenses is determined by reference to the fair value of the warrants granted:

•      including any market performance conditions;

•     excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period); and

•      excluding the impact of any non-vesting conditions (for example, the requirement of employees to save).

Assumptions about the number of warrants that are expected to vest include consideration of non-market vesting conditions. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of warrants that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

When the warrants are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the warrants are exercised.

Share capital

Share capital represents the nominal value on the issue of the Company's equity share capital, comprising £0.001 ordinary shares.

Share premium

Share premium represents the amount subscribed for the Company's equity share capital in excess of nominal value.

Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

Retained earnings

Retained earnings represent the cumulative net income and losses of the Company recognised through the statement of comprehensive income.

Share based payment reserve

Share based payment reserve represents the cumulative cost of share-based payments.

2.     Critical accounting estimates and judgements

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have had a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the previous financial period are discussed below.

Share-based payment transactions

The estimate of share-based payments costs required management to select an appropriate valuation model and make decisions about various inputs into the model including the volatility of its own share price, the probable life of the options, the vesting date of options where non-market performance conditions were set and the risk free interest rate.

Impairment of Intangible Assets

The impairment assessment required management to exercise judgment around the reasonableness of the Useful Estimated Life (UEL) and also consider 'indicators' of impairment through a review of various sources of information.   

3.     Administrative expenses

¹ The auditors' remuneration for non-audit services (reporting accountant) for the period ended 31 July 2023 was £32,500 plus VAT, however a proportion was charged to the share premium account as it was directly attributable to the new share issue.

4.     Directors' and key management personnel

Directors' remuneration for year ended 31 July 2024 is as follows:

Directors' remuneration for the 8 months ended 31 July 2023 is as follows:

At 31 July 2024, £15,000 was owing to M Edwards, £3,524 to J Hives and £3,875 to N Lyth. These amounts have been included in trade and other payables and accruals (refer Note 10). Amounts owed to the Company by N Lyth amounted to £3,000 at 31 July 2024.

At 31 July 2023 there were no amounts owing to or due from the Directors.

During the year ended 31 July 2024, the Company had an average of 3 employees who were management (8 months ended 31 July 2023: 3). The employees are Directors and key management of the Company. There are no employees other than Directors.

5.     Taxation

No provision for taxation has been made as the Company did not generate any assessable profits during the current year and prior period.

No deferred tax asset has been recognised in respect of the losses and temporary differences due to the unpredictability of future revenue streams. Such losses may be carried forward indefinitely.

The current tax charge for the period can be reconciled to the loss per statement of comprehensive income as follows:

5.     Taxation (continued)

The tax assessed on loss before tax for the period is at 25% (2023:22%). The differences are explained below:

The standard UK rate of Corporation tax increased to 25% with effect from 1 April 2023 on taxable profits exceeding £250,000, with the 19% rate continuing to apply to companies with profits of £50,000 or less. Marginal relief will operate for profits between £50,000 and £250,000. The aggregate unrecognised deferred tax asset of £265,370 (2023: £39,788) reflects the expectation that the 25% corporation tax rate will apply to the Company for the foreseeable future.

6.     Loss per ordinary share

The earnings and number of shares used in the calculation of loss/earnings per ordinary share are set out below:

There is no difference between the diluted loss per share and the basic loss per share presented due to the loss position of the Company. Share options and warrants could potentially dilute basic earnings per share in the future, but were not included in the calculation of diluted earnings per share as they are anti-dilutive for the year/period presented.

7.     Intangible Assets

For the year ended 31 July 2024, there were no additional costs incurred in the development of the ORA Platform.

The capitalised software development costs for the 8 months ended 31 July 2023 comprised costs directly related to developing the Ora Platform. The capitalised software development costs were settled by issuing shares.

The ORA Platform was launched on 4 December 2023 and thus per the accounting policy, there was an amortisation charge for the year ended 31 July 2024. This asset was amortised for eight months over a period of five years. The remaining amortisation period is fifty-two months.

8.     Other receivables

Other receivables relates to amount receivable from one of the Directors, refer note 15 to the financial statements for further details.

The Directors consider that the carrying value of other receivables approximates to the fair value.

9.     Cash and cash equivalents

The Directors consider that the carrying value of cash and cash equivalents approximates their fair value.

10.  Trade and other payables

All trade and other payables fall due for payment within one year. The Directors consider that the carrying value of trade and other payables approximates to their fair value.

11.  Share capital

The nominal value of each share issued is 0.1p. No restriction of the rights, preferences and restrictions attached to the class of share capital including restrictions on the distribution of dividends and the repayment of capital.

For the year ended 31 July 2024, there were no shares issued.

During the 8 months ended 31 July 2023 the following shares were issued:

12.  Share based payments

Share warrants

At 31 July 2024, the Company had the following warrants in issue:

The contracted average remaining life of warrants at 31 July 2024 was 2 years (31 July 2023: 3 years).

.

The fair value of warrants is determined using the Black-Scholes valuation model. The charge to the profit and loss for the year ended 31 July 2024 was Nil (8 months ended 31 July 2023: £387,225).

The assumptions used in the calculation of fair value of the warrants was as follows:

100% of the warrants vested on the date of grant and accordingly the full charge was recognised in the previous year. Any shares that are acquired as a result of exercising warrants granted on 22 June have a lock in of IPO date plus 1 year. Management expect the warrants to be exercised half-way through their contractual life and the volatility was determined by reference to similar comparable companies.

13.  Financial Risk Management

Capital Management

The Company defines capital as issued capital, reserves and retained earnings as disclosed in statement of changes in equity. The Company manages its capital to ensure that the Company will be able to continue to pursue strategic investments and continue as a going concern. The Company does not have any externally imposed financial requirements. The Company manages its capital structure and makes adjustments in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares as relevant.

Financial risk

Financial risk arises through the Company's holdings in financial assets and financial liabilities. The key financial risk is that proceeds from financial assets are insufficient to fund obligations arising from distributions to its shareholders as they fall due. The most important components of financial risk are interest rate risk, foreign currency risk and liquidity risk.

13.    Financial Risk Management (continued)

Risk amounts are monitored to ensure these are maintained within permissible ranges based on the Company's economic capital model and are reported to the Board of Directors.

Interest rate risk

The Company' operating cash flows are substantially independent of changes in market interest rates.

The Company does not have any debt and thus is not exposed to any interest rate risk.

Market risk

Market risk pertains to the potential fluctuations in demand, supply, and pricing of carbon credits. Factors such as changes in market sentiment, shifts in government policies and emerging low-carbon technologies can impact the value and liquidity of carbon credits.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities. The Company's policy and approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stress conditions, without incurring unacceptable losses or risking damage to the reputation of the Company.

Foreign currency risk

The Company's functional and presentational currency is the pound sterling as it is the currency of its main trading environment.

Ongoing management and operational costs are denominated in the pound sterling. For the year ended 31 July 2024 the Company had no exposure to foreign currency risk (8 months ended 31 July 2023: Nil)

However, the Company's growth prospects include increasing trading activity in a wide range of territories. The Company may therefore be exposed to foreign currency risk in the future.

Credit risk

The Company's credit risk is attributable to cash and cash equivalents and trade and other receivables.

Cash is deposited with reputable financial institutions with a high credit rating. The maximum credit risk relating to cash and cash equivalents and other receivables is equal to their carrying value of £71,890 (31 July 2023: £1,120,513).

14.  Financial Instruments

Set out below is an overview of financial instruments held by the Company

The carrying amounts of the Company's financial instruments held approximate their fair value.

15.  Related party transactions

Full details of directors' remuneration are provided in Note 4 to these financial statements.

The Company incurred charges to the following companies controlled by the Directors in relation to their directors' fees.

At 31 July 2024, £15,000 was owing to M Edwards, £3,524 to J Hives and £3,875 to N Lyth. These amounts have been included in trade and other payables and accruals (refer Note 10). Amounts owed to the Company by N Lyth amounted to £3,000 at 31 July 2024. There is no interest charged or conditions attached to such amount owed by the Director to the Company.

At 31 July 2023 there were no amounts owing to or due from the Directors.

16.  Ultimate Controlling Party

The Company considers that there is no ultimate controlling party.

17.  Post Balance Sheet Events

On 23 August 2024 the Company announced that it had entered into non-binding Heads of Terms with Kondor AI plc for Kondor AI plc to purchase the entire issued share capital of the Company. The potential result of this transaction is that ORA shareholders will receive 0.9848 Kondor shares in exchange for each ORA share held.

On 02 December 2024 the Company announced a placing of 3,192,500 new Ordinary shares at a price of £0.08 per share, raising proceeds of £255,400 before expenses.