Warwick Acoustics Limited - Accounts to registrar (filleted) - small 18.2

REGISTERED NUMBER: 04451674 (England and Wales)

WARWICK ACOUSTICS LIMITED

UNAUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30TH SEPTEMBER 2018

Page

Company Information

1

Statement of Financial Position

2

to

3

Notes to the Financial Statements

4

to

9

DIRECTORS:

Dr D R Billson

Dr M A Grant

R J Kendrick

Mercia Fund Management (Nominees) Limited

M A Roberts

G Waters

A J Hawken

D Roberts

SECRETARY:

Brodies Secretarial Services Limited

REGISTERED OFFICE:

MIRA Technology Park

Suite 1.02, NW05

Watling Street

Nuneaton

Warwickshire

CV10 0TU

REGISTERED NUMBER:

04451674 (England and Wales)

ACCOUNTANTS:

Duncan & Toplis Limited

The Gables

Bishop Meadow Road

Loughborough

Leicestershire

LE11 5RE

BANKERS:

Barclays Bank Plc

150 Parade

Leamington Spa

Warwickshire

CV32 4AG

FIXED ASSETS

Intangible assets

4

2,239,950

1,560,495

Property, plant and equipment

5

126,758

93,372

Investments

6

1

1

2,366,709

1,653,868

CURRENT ASSETS

Inventories

305,899

108,993

Debtors

7

395,156

883,122

Cash at bank

351,723

1,611,383

1,052,778

2,603,498

CREDITORS

Amounts falling due within one year

8

1,265,017

106,340

NET CURRENT (LIABILITIES)/ASSETS

(212,239

)

2,497,158

TOTAL ASSETS LESS CURRENT LIABILITIES

2,154,470

4,151,026

CAPITAL AND RESERVES

Called up share capital

10

379,257

379,200

Share premium

11,402,361

11,402,304

Share option reserve

315,392

101,484

Retained earnings

(9,942,540

)

(7,731,962

)

2,154,470

4,151,026

The company is entitled to exemption from audit under Section 477 of the Companies Act 2006 for the year ended 30th September 2018.

The members have not required the company to obtain an audit of its financial statements for the year ended 30th September 2018 in accordance with Section 476 of the Companies Act 2006.

The directors acknowledge their responsibilities for:

(a)	ensuring that the company keeps accounting records which comply with Sections 386 and 387 of the Companies Act 2006 and

(b)

preparing financial statements which give a true and fair view of the state of affairs of the company as at the end of each financial year and of its profit or loss for each financial year in accordance with the requirements of Sections 394 and 395 and which otherwise comply with the requirements of the Companies Act 2006 relating to financial statements, so far as applicable to the company.

The financial statements have been prepared and delivered in accordance with the provisions of Part 15 of the Companies Act 2006 relating to small companies.

In accordance with Section 444 of the Companies Act 2006, the Income Statement has not been delivered.

The financial statements were approved by the Board of Directors on 6th February 2019 and were signed on its behalf by:

Dr M A Grant - Director

1.	GENERAL INFORMATION

Warwick Acoustics Limited (Formerly Warwick Audio Technologies Limited) is a Private Company, Limited by

shares, registered in England and Wales.

The company's registered office address and principal place of business is MIRA Technology Park Suite 1.02,

Nw05, Watling Street, Nuneaton, United Kingdom, CV10 0TU.

The company's registered number is 04451674.

The financial statements are presented in sterling which is the functional currency of the company and

rounded to the nearest £.

The significant accounting policies applied in the preparation of these financial statements are set out below.

These policies have been consistently applied to all years presented unless otherwise stated.

The financial statements cover the individual entity.

Sonoma Acoustics Limited is a subsidiary of the company, however the company is exempt by virtue of size

from the requirement to prepare group accounts.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with the provisions of Section 1A "Small Entities" of Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The

Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party

transactions with wholly owned subsidiaries within the group.

Revenue

Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates,

value added tax and other sales taxes.

Intangible assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost

less any accumulated amortisation and any accumulated impairment losses.

Development costs are being amortised evenly over their estimated useful life of eight years.

Property, plant and equipment

Property, plant and equipment is stated at cost less depreciation. Depreciation is provided at rates calculated

to write off the cost less estimated residual value of each asset over its expected useful life, as follows:

Office construction

Straight line over 24 months

Tooling

Straight line over 36 months

Other assets

Straight line over 36 months

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost less impairment.

Inventories

Inventories are valued at the lower of cost and fair value less costs to complete and sell, after making due

allowance for obsolete and slow moving items.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to

the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or

substantively enacted by the statement of financial position date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the

statement of financial position date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different

from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and

laws that have been enacted or substantively enacted by the year end and that are expected to apply to the

reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that

they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Research and development

Research expenditure is written off to the income statement in the year in which it is incurred. Development

expenditure is written off in the same way unless the directors are satisfied as to the technical, commercial and

financial viability of individual projects. In this situation, the expenditure is capitalised and amortised over the

period during which the company is expected to benefit.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the

statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate

of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the

operating result.

Share-based payment

The cost and corresponding increase in equity in respect of equity-settled share-based payment transactions

with employees are measured by reference to the fair value of equity instruments issued at the date of grant.

Amounts are expensed on a straight line basis over the vesting period based on the estimate of shares that will

eventually vest and adjusted for the effect of non market-based vesting conditions. The cost and fair value of

the liability incurred in respect of cash-settled transactions is measured using an appropriate option pricing

model with changes in fair value recognised in profit or loss for the period.

Going concern

The Company has significant retained losses which has highlighted the need to consider the appropriateness of

preparing the financial statements on a going concern basis.

The Company continues to successfully pursue its early stage strategy with the ultimate aim of delivering

outstanding HiResTM Audio experiences to the widest possible audience. It is seeking to do this through the

development and delivery of High Precision Electrostatic Laminate (HPEL) transducers a new and patented

type of lightweight, thin film Electrostatic planar speaker delivering ultra high quality audio.

The Company is primarily focussed on exploiting the opportunity to disrupt the $8bn automotive audio

market, seeking to deliver next generation premium audio solutions based on its technology to car

manufacturers (OEMs). OEMs tell the Company that its solutions potentially offer significant benefits in

providing infotainment within the vehicle, enabling OEMs to pursue new design themes within the vehicle,

power efficiency improvements, weight reduction, significantly improved acoustical quality, and cost savings.

The Company's approach to exploiting this market is to engineer and qualify appropriate variants of the

technology and validate the principles of its proposition initially through the development and launch of a

series of specialist audiophile headphone systems for consumers. As a by-product of this strategy, the

Company is also establishing a set of brand values and presence that may be highly valuable in the context of

the car market.

During the year the Company entered into a convertible loan facility with Mercia Technologies for £1m.

Post year end the company completed the first stage of a multistage funding round, raising from existing

shareholders £1.074m out of a total of up to £7m anticipated raise.

With the progress the company continues to make in executing its stated strategy, shareholders continue to

demonstrate support of the business and of management's strategy through the support of further funding

rounds. This support is given while taking into account the typical multiyear sell in cycles of the automotive

industry. This, coupled with commercial progress made to date post year end, gives the directors confidence

that funding to continue the business through the coming twelve months will be forthcoming.

The directors considered a period in excess of 12 months from the date of approval of the financial statements

when making this assessment and consider that in preparing the financial statements, they have taken into

account all information that could reasonably be expected to be available.

On this basis they consider that it is appropriate to prepare the financial statements on the going concern

basis.

3.	EMPLOYEES AND DIRECTORS

The average number of employees during the year was 8 (2017 - 7 ) .

4.	INTANGIBLE FIXED ASSETS

Other

intangible

assets

£

COST

At 1st October 2017

1,658,423

Additions

886,759

At 30th September 2018

2,545,182

AMORTISATION

At 1st October 2017

97,928

Charge for year

207,304

At 30th September 2018

305,232

NET BOOK VALUE

At 30th September 2018

2,239,950

At 30th September 2017

1,560,495

5.	PROPERTY, PLANT AND EQUIPMENT

Plant and

machinery

etc

£

COST

At 1st October 2017

242,383

Additions

79,789

At 30th September 2018

322,172

DEPRECIATION

At 1st October 2017

149,011

Charge for year

46,403

At 30th September 2018

195,414

NET BOOK VALUE

At 30th September 2018

126,758

At 30th September 2017

93,372

6.	FIXED ASSET INVESTMENTS

Shares in

group

undertakings

£

COST

At 1st October 2017

and 30th September 2018

1

NET BOOK VALUE

At 30th September 2018

1

At 30th September 2017

1

The fixed asset investment relates to Sonoma Acoustics Limited, a wholly owned subsidiary. The trade and

assets of Sonoma Acoustics Limited were transferred to Warwick Acoustics Limited on 28th September 2018.

As part of this agreement, an amount of £878,889 owed to Warwick Acoustics Limited by Sonoma Acoustics

Limited was waived. This is recognised in the income statement as an amount written off on investments.

7.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2018

2017

£

£

Trade debtors

-

67,535

Amounts owed by group undertakings

105,378

493,122

Other debtors

289,778

322,465

395,156

883,122

8.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2018

2017

£

£

Trade creditors

193,653

68,800

Taxation and social security

22,005

16,219

Other creditors

1,049,359

21,321

1,265,017

106,340

9.	SECURED DEBTS

The following secured debts are included within creditors:

2018

2017

£

£

Loan Notes

1,000,000

-

The loan note is secured with a fixed and floating charge over the assets of the company.

It is agreed that after the year end the outstanding loan of £1,000,000 due to Mercia Investment Plan LP

(Acting by Its General Partner Mercia (General Partner) Limited), along with the interest accrued on this loan,

will be converted into shares. The conversion is expected to happen in May 2019.

10.	CALLED UP SHARE CAPITAL

2018

2017

£

£

Allotted, called up and fully paid

749,815,286 Ordinary of £0.0001 each

75,038

74,981

244,443,343 C Ordinary of £0.001 each

244,443

244,443

597,756,169 D Ordinary of £0.0001 each

59,776

59,776

379,257

379,200

During the year the company issued 569,867 (2017: nil) Ordinary £0.0001 shares, nil (2017: nil) C Ordinary

£0.001 shares and nil (2017: 597,756,169) D Ordinary £0.0001 shares with a total nominal value of £nil (2017:

£57). Total consideration of £114 (2017: £4,218,003) was received which resulted in a share premium of £57

(2017: £3,913,784).

During the year share options for directors vested with a fair value of £213,907 (2017: £101,484) which has

been recognised with an increase in the share option reserve.

11.	CAPITAL COMMITMENTS

2018

2017

£

£

Contracted but not provided for in the

financial statements

-

332,619

12.	OTHER FINANCIAL COMMITMENTS

The company has the following commitments due as follows:

2018

2017

£

£

In one year

18,176

-

2-5 years

19,691

-

37,867

-