Half-year Results

The Board of IQ-AI Ltd is pleased to announce the Company's half yearly report for the period ended 30 June 2024.

• First half revenue was £444,000, an increase of 57% over the comparable period in 2023.
• Net assets have increased from £94,924 as of 31 December 2023 to £433,188 as of 30 June 2024.

Phase 1 Clinical Trial (IB003, gallium maltolate)

The trial is in its final stages. As soon as all the results are available, an End of Phase 1 ("EOP1") meeting will be held with the US Food and Drug Administration ("FDA"). The EOP1 meeting is critical. In an FDA Fast Track Designated development program, FDA resources are assigned to help abbreviate various aspects of the development pathway, including offering strategic guidance for the phase 2 protocol that is currently being drafted. We anticipate this will happen before the end of this year.

Since receiving FDA approval to proceed with the EAP, 32 patients have expressed an interest in participating. We are working closely with eligible patients to help them navigate the on-boarding process and we are providing resources and information to help them cover the costs of the EAP. We are waiting for various sites across the US to obtain final administrative approval and anticipate the first site to become active in late August.

The development of IB003 and the EAP remain our priority. We are continually exploring how we can further utilise the regulatory milestones achieved last year (our two Orphan Drug and two Rare Paediatric Disease Designations). Data from a phase 2 trial will be represent a significant step towards having an approved agent. If granted approval by the FDA, the Directors believe that the ensuing commercial impact would be significant for IQAI.

IB Clinic

We will be introducing the next software release of IB Clinic later in Q3. This release includes important new features and enhancements requested by current and prospective clients, along with some necessary upgrades in cybersecurity and general updates to the code base. Of most significance, will be the ability to post-process Spin and Gradient Echo ("SAGE") data. This development is the result of funding provided by the National Institutes of Health ("NIH") under a multi-centre grant. To our knowledge, we will be the first company to offer SAGE processing. An enhancement to IB Neuro, it will be the only processing application built upon a cross-vendor effort to implement SAGE. SAGE permits the collection of rCBV information with a variable sensitivity to vessels of different diameters, as well as additional tissue biophysical metrics relevant to changes observed with cancer and treatment and represents the future of perfusion MRI.

In parallel with the next release, we will be offering an artificial intelligence (AI) based pipeline that enables the automatic generation of quantitative perfusion class maps (also known as "FTB" or fractional tumour burden). This long-awaited and highly demanded feature eliminates the need for an end user, such as a neuroradiologist or skilled MR technologist, from performing a manual segmentation step. As more and more groups are reporting, FTB maps are demonstrating direct clinical benefit in terms of diagnostic and treatment assessment capabilities, as well as heightening inter-reader confidence. Our channel partners are anxiously waiting for the imminent release of this automated pipeline as their platforms only support fully automated applications.

An exciting new application of our quantitative imaging capabilities is using Delta T1™ maps for assessing the extent of surgical resection using laser interstitial thermal therapy ("LITT"). Essentially, Delta T1 maps can intraoperatively assessment whether neurosurgeons have removed the viable tumour tissue. It is well acknowledged that the removal of tumour tissue directly correlates with Overall Survival.

In development is the launch of a new product development program to process arterial spin labelling ("ASL") data. ASL is an MR perfusion technique that uses no exogenous contrast agent. Instead, it tags the patient's own blood which then acts as the contrast medium during MRI exams. While not as commonly accepted as the technology contained in IB Neuro, IB ASL™ offers potential application into new pathologies (such as Alzheimer, epilepsy, and infectious diseases) and populations. For example, children who require follow-up imaging or people who may have adverse reactions to gadolinium-based contrast agents find ASL an attractive imaging modality.

IB Nimble

Development work is nearing completion. The remaining work packages concern the homogenization of the legacy IB Nimble code base into a single, robust platform that is compatible with both Android and iOS, and the ability to view medical images directly on the mobile app. This work is expected to be completed in late Q1 2025, but discussions are already underway with multiple new cancer centres who are interested in adopting IB Nimble for metastatic brain cancer. Ultimately, cancer centres across the world who adopt IB Nimble will benefit from what could conceivably be the world's largest repository of mineable healthcare data and outcomes. While this will take some time to populate, our vision for this potentially huge source of imaging data presents significant benefits for predicting health outcomes, improving accuracy, personalizing medicine, boosting operational efficiency, continuing research and development, and addressing health disparities across patient populations.

Outlook

Our diversified product portfolio continues to evolve and proliferate. While the basic message may now be familiar to shareholders, the directors believe that the years of sustained development and innovation will, in due course, yield positive results for the Company.

Trevor Brown

Chief Executive

Results for the 2024 interim financial period

A summary of the key financial results is set out in the table below:

£

Interest

The net interest cost for the Group for the period was (£410) (2023: £5,311).

Loss before tax

Loss before tax for the period was £274,309, which includes a Share Based Payment expense of £259,081 (2023: £300,473).

Taxation

Taxation charge was £nil for the period (2023: £nil).

Earnings per share

Basic and diluted earnings per share for the period were 0.13p loss (2023: 0.16p loss).

Financial position

The Group's balance sheet as at 30 June 2024 can be summarised as set out in the table below:

Net assets £'m

£

Cash flow

Net cash inflow for the period was £47,368 (2023: £223,779 outflow).

Consolidated Income Statement

For the six months ended 30 June 2024

Other comprehensive income

Items that may be subsequently reclassified as profit or loss

Summary of significant accounting policies

IQ-AI Limited (the "Company") is a limited liability company incorporated and domiciled in Jersey.

The financial statements are presented in pounds sterling (£) since that is the currency of the primary environment in which the Group and Company operates.

Basis of preparation

These financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations (IFRS IC) as adopted by the European Union.

The financial statements have been prepared under the historical cost convention, as modified for the assets held for sale measured at fair value less costs to sell.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed under the heading 'Critical accounting estimates and judgements' below.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chief Executive Officer's Statement.

The current economic conditions continue to create uncertainty, particularly over (a) the level of demand for the group's products; and (b) the availability of finance for the foreseeable future. The group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that additional funding will be required either via an issue of equity or through the issuance of convertible loan notes. The Directors are reasonably confident that funds will be forthcoming if and when they are required. The Chief Executive Officer has provided a letter of financial support to the Group to make sufficient funds available, if required, to ensure the Group can meet its obligations over the going concern period.

Taking in to account the comments above, the Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Therefore, they continue to adopt the going concern basis of accounting in preparing the financial statements

New standards, amendments and interpretations adopted by the Group and Company

Basis of consolidation

Investments in subsidiaries

Investments in subsidiaries are held at cost less any impairment.

Goodwill

Segment reporting

An operating segment is a component of the Group that engages in business activity from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with and of the Group's other components. All operating segments' operating results, for which discrete financial information is available, are reviewed regularly by the Group's Board to make decisions about resources to be allocated to the segment and assess its performance. As a result of the acquisition during the year, the Group reports on a two-segment basis - holding company expenses and medical software.

Foreign Currency Translation

• all resulting exchange differences are recognised in other comprehensive income.

Intangible Assets - Intellectual property and internally generated software

• it is technically feasible to complete the software product so that it will be available for use;
• management intends to complete the software product and use or sell it;
• there is an ability to use or sell the software product;
• it can be demonstrated how the software product will generate probable future economic benefits;

Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Software development costs recognised as assets are amortised over their estimated useful lives, which do not exceed 5 years. Amortisation commences when regulatory approval is obtained, and the product is commercially available.

Impairment of Non-Financial Assets

Financial instruments

Financial assets

Loans and receivables

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with maturities of three months or less. In the consolidated Statement of Financial Position, bank overdrafts are shown within borrowings in current liabilities.

Financial liabilities and equity instruments issued by the group

Non-Current Assets (or Disposal Groups) Held-for-Sale and discontinued operations

Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell. A discontinued operation is a component of the Group that is classified as held for sale and that represents a separate line of business or geographical area of operations. The results of discontinued operations are presented separately in the Consolidated Income Statement.

Convertible loan notes

Trade and other payables

Share capital

Ordinary shares

Share-Based Payments

• including any market performance conditions (for example, an entity's share price);

Revenue recognition

Taxation

The major components of income tax on profit or loss include current and deferred tax.

Critical accounting estimates and judgements

Critical Accounting Estimates and Assumptions

Fair value measurement

Management uses valuation techniques to determine the fair value of assets held for sale. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on best observable data available as far as possible. Estimated fair values may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date.

Critical judgments in applying the entity's accounting policies

Capitalisation of internally developed software

Distinguishing the research and development phases of the software suites and determining whether the recognition requirements for the capitalisation of development costs are met requires judgement. After capitalisation, management monitors whether the recognition requirements continue to be met and whether there are any indicators that capitalised costs may be impaired.

Earnings per share

Basic and diluted