Final Results

Narf Industries plc (LSE: NARF), a leading U.S.-based cybersecurity group specialising in advanced threat intelligence and software system security, is pleased to announce its Audited Financial Results for the year-ended 31 March 2026. The full report is available on the Company's website at https://narfgroup.com/investor-relations/corporate-document.

Overview

• Revenue increased 50% to US$4.5 million (FY25: US$3.0 million).
• Operating expenses remained broadly unchanged at approximately US$2.1 million, demonstrating the scalability of the Group's operating model.
• Successfully transformed the Ranger research programme into the commercial UPxi platform.
• Government Research & Development business remained the Group's principal revenue driver, while continuing to generate technologies to enhance the UPxi platform.
• US$4.1 million contracted revenue backlog expected to be recognised during FY27, together with a significant pipeline of active proposals, supporting the Board's expectation of a strong growth year.
• US$3.0 million CEO loan facility extended to July 2027, strengthening the Group's financial flexibility.

Executive Chair's Statement

I am pleased to present the audited financial results of Narf Industries plc for the year ended 31 March 2026.

FY26 was a year of strong financial execution and important strategic progress for the Group. Revenue increased 50% to $4.5 million from $3.0 million in the prior year, while operating expenses remained essentially unchanged (approximately $2.1 million), demonstrating the scalability of the Group's operating model.

The Group achieved a significant strategic milestone transforming the Ranger research programme into UPxi, a commercial software platform. Throughout the reporting period, we committed significant resources to productisation, platform development and establishing the commercial foundations necessary for launch. The Group is currently advancing opportunities within the government market while establishing strategic partnerships with leading software security and cybersecurity companies to accelerate broader commercial adoption.

Our Government Research & Development ("GR&D") business continued to perform exceptionally well, generating the majority of the Group's revenue. GR&D work delivers a continuous pipeline of differentiated technologies in areas including software supply chain security, automated vulnerability discovery, artificial intelligence and cyber resilience. These capabilities are targeted to transition into the UPxi platform, further expanding its functionality and strengthening its long-term competitive position.

The Group is committed to maintaining a strong financial position to support the execution of its strategic business plan within its current financing facilities. Approximately $4.1 million of contracted backlog is projected as revenue during FY27. In addition, the Group has a significant portfolio of active proposals and business development opportunities that have the potential to generate additional contract awards and revenue during the year. This financial position is further supported by the Group's demonstrated ability to deliver significant revenue growth while maintaining essentially unchanged operating expenses.

Separately the CEO has extended the Group's $3 million loan facility through July 2027, further strengthening the Group's financial flexibility.

Notwithstanding the above, the Group continues to operate in a rapidly evolving external environment. Agentic AI and large language models are reshaping the cybersecurity market, creating significant opportunities while increasing the complexity of customer investment decisions. In this regard, following this reporting period, on 20 July 2026, the Group was notified that further work on one GR&D contract had been cancelled following the customer's decision to pursue an alternative technical approach. Additionally, geopolitical tensions, including the conflict involving Iran, place increasing demands on limited government resources and budget priorities.

The Board continues to monitor the Group's financial position and the evolving external environment closely. The Group's disciplined financial planning, available financial facilities and demonstrated ability to manage its operating cost base provide the flexibility to respond to changing circumstances while continuing to execute its FY27 strategic business plan.

On behalf of the Board, I would like to thank our employees, customers, partners and shareholders for their continued support. Their confidence in our vision and commitment to innovation has enabled the Group to reach this important milestone, and we look forward to building on this momentum in the year ahead.

John Herring

Executive Chair

Other comprehensive income/(expense)

Items that may be reclassified subsequently to profit or loss:

The above results relate entirely to continuing activities.

NARF INDUSTRIES PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2026

The Company has elected to take the exemption under Section 408 of the Companies Act 2006 from presenting the Parent Company profit and loss account. The Parent Company loss for the year was $4,223,777 (year to 31 March 2025: loss $7,045,828).

NARF INDUSTRIES PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 MARCH 2026

See notes below parent company statement of changes in equity for explanation as to the reserves.

NARF INDUSTRIES PLC

PARENT COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2026

Share capital - the ordinary issued share capital of the Company.

Share premium - consideration less nominal value of issued shares and costs directly attributable to the issue of new shares.

Share based payment reserve - the value of equity settled share-based payments provided to past and present employees, including key management personnel, and to third parties for services provided.

Foreign exchange reserve - a reserve arising on conversion of company balances in the functional currency of sterling and the reporting currency of US$.

Reverse acquisition reserve - the difference between the cost of acquiring the parent company and the fair value of the parent company's net assets on the acquisition date together with the deemed cost of listing.

Retained deficit - Cumulative net gains and losses recognised in the Statement of Comprehensive Income

NARF INDUSTRIES PLC

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2026

1 GENERAL INFORMATION

The principal activity of Narf Industries Plc (the "Company") and its subsidiaries (the "Group'') is the provision of research and software development services aimed at enhancing the cybersecurity measures of its US government agency clients. The subsidiaries consist of Narf Industries LLC, a California limited liability company together with Narf Industries PR, LLC, a Puerto Rican limited liability company ("Narf US" or the "Operating Group") and Narf Holdings US, Inc. a Delaware corporation which was dormant throughout the period. The Company is the parent and sole shareholder of Narf Holdings US, Inc which, in turn, is the sole member of Narf Industries LLC. The Company is the sole member of Narf Industries PR LLC.

The Company is domiciled in the United Kingdom and incorporated and registered in England and Wales as a public limited company. The Company's registered office is 5 Fleet Place, London EC4M 7RD. The Company's registered number is 11701224.

2 ACCOUNTING POLICIES

2.1 Basis of preparation

The Financial Statements have been prepared under the historical cost convention unless otherwise stated. The principal accounting policies are set out below and have, unless otherwise stated, been applied consistently.

They have been prepared to reflect the acquisition of Narf Industries LLC and Narf Industries PR LLC via a reverse takeover on 15 March 2022, which resulted in the Company becoming the ultimate holding company of the Group.

The Financial Statements are prepared in US Dollar ("US$", "USD" or "$") which is the functional and presentational currency and presented to the nearest dollar.

2.2 Consolidation and Acquisitions

The Financial Statements consolidate the financial information of the Company and companies controlled by the Group (its subsidiaries) at each reporting date following the reverse takeover on 15 March 2022.

In the consolidated statement of financial position, the share capital and share premium as at 31 March 2026 and 31 March 2025 is that of Narf Industries Plc with the reverse acquisition reserve representing the difference between the deemed cost of the acquisition and the net assets of Narf Industries plc at 15 March 2022. The consolidated statement of comprehensive income for the years ended 31 March 2026 and 31 March 2025 include the results of both the parent and the Operating Group throughout the year.

Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity, has the rights to variable returns from its involvement with the investee entity and has the ability to use its power to affect its returns. The results of subsidiaries acquired or sold are included in the financial information from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the results of acquired subsidiaries to bring their accounting policies into line with those used by the Group. All intra-Group transactions, balances, income and expenses are eliminated on consolidation. The financial statements of all Group companies are adjusted, where necessary, to ensure the use of consistent accounting policies.

The Group applies the acquisition method to account for any business combinations that fall within the scope of IFRS 3.

Acquisition-related costs are expensed as incurred.

2.3 Comparative information

The comparative information covers the year ended 31 March 2025.

2.4 Going concern

The Directors believe the Company and the Group have sufficient resources to continue in operational existence for the foreseeable future and at least until 30 July 2027, being 12 months after the date these financial statements were issued. Currently, management believe that the Group's existing contract pipeline and cash flow management provides sufficient runway to enable it to continue through the next period to execute its medium-term strategy without new capital resources or significant reliance on near term additional contracts awards.

The Group has made significant progress towards being EBITDA positive during the year and had a very strong backlog of over $9 million in contracted future revenues as at 31 March 2026. The Group also has a strong pipeline of potential contracts that it has submitted proposals for and a strong track record of successful bids.

The Group recently extended the existing Letter of Credit ("LOC") provided by the Group's CEO through to July 2027. The Group continues to closely manage its operational expenses and has demonstrated significant flexibility to adjust its resources and expenses in line with its contracted revenues. Management can rapidly make decisions to redeploy resources on the exciting new projects discussed elsewhere in this Annual Report and Financial Statements.

The Board is open to potential joint ventures should an attractive opportunity arise, but the work to manage cash outgoings along with the significant contract wins means the Board need only consider those opportunities which add significant value to the Group. The Board further notes the Company's potential to pursue an LSE market fundraise in the event this is deemed appropriate and market conditions allow.

The Directors believe the Group's plan is based on sound analysis and is supported by a combination of contractual commitments and a strong pipeline of potential contracts Whilst there has been significant improvement in the value of contracted future revenues and the number of contracts since the prior year, some contracts cease around the calendar year-end, or require additional funding commitments to continue beyond that point and are subject to funding commitments that can be withdrawn with limited notice.

Although the Directors expect that remaining contract commitments will be fully funded, contract options will be taken up and the Group will be awarded sufficient new contracts that it is bidding for, there are inherent uncertainties and difficulties in assessing future customer intentions. The Board has in place contingency plans to defer payments and reduce costs in the event of any adverse funding event or delays in winning pipeline contracts. Also, although the amount of the loan has not yet formally been increased, the CEO has also indicated his willingness to further support the cash needs of the Group as a result of any such adverse circumstances. Nonetheless, these conditions indicate a material uncertainty exists that may cast significant doubt on the Group's ability to remain a going concern through to July 2027.

2.5 Revenue Recognition

Substantially all of the Group's revenues derive from long-term contracts with US government agencies. The contractual arrangements fall into four types:

Research where the principal asset transferred to the client are ideas about potential cybersecurity threats and source code to test those threats.

Cost plus where the Group receives a fee based on the hours worked on a project with reimbursement of travel and sub-contract costs.

Infrastructure where the principal asset transferred is a test environment along with the ongoing maintenance of the ability to test various scenarios and meetings where the principal asset transferred is the intellectual input to those meetings.

Meetings-based where the contract specifies a requirement for Group employees to prepare for and attend meetings where they will share their expertise and provide insights to the meeting.

The nature of the research and infrastructure contracts is such that the deliverables themselves are of little value to the customer. The main value of the contract to the customer is the inherent promise that the Group will continue to provide the ideas and support to allow the customer to enhance its understanding of cybersecurity threats and how to counter them. Given that the deliverables themselves have no inherent value, the Group takes the view that revenue from research and infrastructure contracts should be recognized over time based on progress towards a milestone. For meetings-based contracts revenue is recognized when the meetings occur, as this is the point at which an asset is transferred to the client. For cost plus contracts revenue is recognised based on the hours worked on that project up to the period end with the revenue adjusted to reflect projected labor rates which are subject to adjustment to reflect actual fringe (staff benefits) together with general and administration costs (overheads) incurred during the financial year.

2.6 Segmental Reporting

The Group has two business sectors, GR&D and GS&S as described in the Strategic Direction section of this Annual Report. The revenues attributable to each business segment are detailed in the Statement of Comprehensive Income whilst an analysis of those costs attributable to each business segment is provided in Note 3. As the GS & S segment was transitioning its focus to UPxi and reorganizing its teams, during the first half of the financial year, all project team costs up to the end of September 2025 have been allocated to the GR & D segment.

2.7 Foreign currency translation

The financial information is presented in US Dollars, which is the Group's presentational and functional currency as substantially all of the Group's operational activities are undertaken in US Dollars. The Company's functional currency is Sterling. Sterling amounts recorded in the accounting records of the Company are converted using the year-end foreign exchange rate for the year end balances and the average foreign exchange rate for movements during the year.

2.8 Cash and cash equivalents

Cash and cash equivalents comprise cash at hand and current and instant access deposit balances at banks.

2.9 Intangible assets

Intangible assets comprise non-physical assets comprising the cost of acquiring the licensing rights in relation to the commercialisation of TIGR that can be determined with reasonable certainty.

All intangible assets were fully impaired in the prior year. Management has not sought to capitalise development costs relating to UPx as there can be no certainty at this point that the product will lead to commercial revenues. The uncapitalised labor hour cost of the development work on UPxi during the year is $349,272 using the same labor hour rates as have been applied to cost plus projects.

2.10 Tangible fixed assets

All tangible fixed assets had been fully depreciated in prior periods. The car owned by the Group was sold to the Chief Executive generating a profit of $30,000 which was set off against the LOC. As none of the tangible assets previously recognised are in use by the Group all have been treated as having been fully disposed of.

2.11 Leased assets

Identification of leased assets

For any new contracts entered into, the Group considers whether a contract is, or contains a lease. A lease is defined as 'a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for over a year in exchange for consideration'. To apply this definition the Group assesses whether the contract meets two key evaluations which are whether:

• the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group
• the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract the Group has the right to direct the use of the identified asset throughout the period of use.

The Group assesses whether it has the right to direct 'how and for what purpose' the asset is used throughout the period of use.

​Measurement and recognition of leases

At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, and any lease payments made in advance of the lease commencement date (net of any incentives received). The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist. At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group's incremental borrowing rate. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest accrued.

2.12 Trade and other receivables

Trade receivables are amounts due from customers for goods or services rendered in the ordinary course of business. Trade receivables are initially recognised at the amount of consideration that is unconditional, i.e. fair value and subsequently measured at amortised cost using the effective interest method, less loss allowance. Prepayments and other receivables are stated at their nominal values.

2.13 Trade and other payables

Trade payables are recognised initially at their fair value and subsequently measured at amortised cost, less repayments.

2.14 Financial instruments

Initial recognition

A financial asset or financial liability is recognised in the Statement of Financial Position when it arises or when the Group becomes part of the contractual terms of the financial instrument.

Classification

Financial assets at amortised cost

The Group measures financial assets at amortised cost if both of the following conditions are met:

Financial liabilities at amortised cost

Derecognition

A financial asset is 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 undertaken the commitment to fully pay the cash flows received without significant delay to a third party under an arrangement and has either (a) transferred substantially all the risks of the asset or (b) has neither transferred nor held substantially all the risks and estimates of the asset but has transferred the control of the asset.

Impairment

The Company recognises a provision for impairment for expected credit losses regarding all financial assets. Expected credit losses are based on the balance between all the payable contractual cash flows and all discounted cash flows that the Company expects to receive. Regarding trade receivables, the Company applies the IFRS 9 simplified approach in order to calculate expected credit losses. Therefore, at every reporting date, provision for losses regarding a financial instrument is measured at an amount equal to the expected credit losses over its lifetime without monitoring changes in credit risk. To measure expected credit losses, trade receivables and contract assets have been grouped based on shared risk characteristics.

2.15 Equity

Share capital is determined using the nominal value of shares that have been issued.

Equity-settled share-based payments are credited to a "Share based payments reserve" within the Consolidated Statement of Financial Position and the Parent Statement of Financial Position as a component of equity until related options or warrants are exercised or lapse.

The share-based payment reserve comprises share warrants issued to service providers and options issued to employees under long-term incentive schemes. Both share options and warrants are measured at fair value at the date of issue and treated as a separate component of equity.

The Foreign exchange reserve includes all exchange differences arising from translating the net assets of the parent from sterling into US Dollars, being the presentational currency.

The Reverse acquisition reserve relates to the costs associated with the acquisition of Narf Industries Plc. A reverse acquisition occurs if the entity that issues securities (the legal acquirer) is identified as the acquiree for accounting purposes and the entity whose equity interests are acquired (legal acquiree) is the acquirer for accounting purposes.

The reverse acquisition in a previous year did not constitute a business combination and was accounted for in accordance with IFRS 2 "Share-based Payments" and associated IFRIC guidance. Although the reverse acquisition was not a business combination, the Company has become a legal parent and is required to apply IFRS 10 and prepare consolidated financial statements.

The Directors have prepared these financial statements using the reverse acquisition methodology, but with the result that rather than recognising goodwill, the difference between the equity value given up by Narf US's former owners and the share of the fair value of the net assets gained by these former owners, is charged to the Consolidated Statement of Comprehensive Income as a share-based payment on reverse acquisition.

Retained earnings include all current and prior period results as disclosed in the income statement.

2.16 Foreign currency

For the purposes of the consolidated financial statements, the results and financial position of each Group company are expressed in US Dollars ("$"), which is the functional currency of all of the operating entities in the Group, excluding the Company, and the presentation currency for the consolidated financial statements.

Exchange differences are recognised in the Statement of Comprehensive Income in the period in which they arise other than those arising on conversion of the Company's Statement of Financial Position on consolidation which are recognised as a foreign exchange reserve.

2.17 Earnings per share

Basic earnings per share is calculated by dividing:

The Group loss attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares by the weighted average number of ordinary shares outstanding during the financial period.

As the Group is currently loss making and the current share price is below the exercise price, none of the options or warrants in issue are dilutive to the basic earnings per share figure.

2.18 Share-based payments

The Parent Company has issued options to Directors and Group employees under long-term incentive arrangements.

Equity-settled share-based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value so determined is expensed on a straight-line basis over the vesting period, based on the Parent Company's estimate of the number of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions. The fair value is recognised in the profit and loss account of the entity where the option beneficiary is employed.

Fair value is measured using the Black Scholes pricing model. The key assumptions used in the model have been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

The Company has issued warrants with a fair value of $311,250 to a former employee who accepted those warrants in lieu of payment for amounts due to him under a settlement agreement entered into prior to the RTO.

2.19 Taxation

Taxable losses of the Parent Company from its activities in the United Kingdom and that inure to the Parent Company from the two members of the Operating Group as their sole partner differ from losses for the Parent Company as reported in the accompanying consolidated income statement because it excludes items of income and expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Parent Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the accompanying parent 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 utilised. Such assets and liabilities are not recognised if the temporary difference arises from 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 liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Parent Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Parent Company intends to settle its current tax assets and liabilities on a net basis.

2.20 Critical accounting judgements and key sources of estimation uncertainty

In the process of applying the entity's accounting policies, management makes estimates and assumptions that have an effect on the amounts recognised in the financial information. Although these estimates are based on management's best knowledge of current events and actions, actual results may ultimately differ from those estimates. The Directors consider that the following judgements are critical to an understanding of these accounts:

Impairment of Narf US

The Parent Company Statement of Financial Position includes the investment in Narf US at cost less impairment. The Directors undertook an impairment review as at 31 March 2026 and assessed the value of the investment as being around $9.35 million. This review involves judgements about potential future cash flows which are highly subjective and subject to matters outside the control of the Directors.

Segmental Reporting

Note 3 seeks to analyse the contribution of each business segment to the profitability of the Group. The allocation of costs includes the costs of some employees who work on both business segments which requires judgements as to the allocation of resources. Management have not sought to allocate costs related to the time of the CEO because he has agreed to waive any remuneration until his loan is repaid.

Share Based Payments

Equity-settled share-based payments are measured at fair value. Fair value is measured using the Black Scholes pricing model. The key assumptions used in the model have been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The fair value also makes certain assumptions about whether non-market vesting conditions will be met and such assumptions are highly subjective.

Revenue recognition

The Group's revenues arise from contracts which either have monthly milestones or fees based on labour hours incurred together with hourly labour rates . Some of these contracts span more than one accounting period and some are based on provisional calculations of indirect costs, which are subject to independent audit and revision. The Group generally recognises revenue based on milestones that have been met, the labour hours incurred and the labour hour rates that it expects to be able to charge based on the accounting information which supports these financial statements.

Nonetheless there is some uncertainty at each milestone date as to the extent to which additional work may have been completed and the extent to which the contracted amount attributable to each milestone represents a fair proportion of the overall contract. There is also some uncertainty as to whether the Defense Contract Audit Agency (DCAA) will agree the labor rate calculations submitted by the Group and based on which the revenues in these accounts have been stated.

Management rely on the output method to allocate revenue between accounting periods for milestone based contracts and the input method for cost plus contracts.

2.21 Standards, amendments and interpretations to existing standards that are not yet effective

New standards, amendments to standards and interpretations

The Company has adopted all of the new and revised Standards and Interpretations that are relevant to their operations and effective for accounting periods beginning 1 April 2025. The Company has not adopted any standards or interpretations in advance of their required implementation dates.

The following Standards and Interpretations have become effective and, if relevant, have been adopted in these financial statements. No other Standards or Interpretations have been adopted early in these financial statements.

The amended standards have not had a material impact on these consolidated financial statements.

Standards not yet applied

At the date of authorisation of these financial statements, the following relevant Standards and Interpretations, which have not been applied in these financial statements, were in issue but not yet effective.

The Group intends to adopt these new and amended standards and interpretations, if applicable, when they become effective.

2.22 Financial Risk Management Objectives and Policies

The Group does not enter into any forward exchange rate contracts nor does it have any other market risks apart from the Sterling assets held by the Parent Company which are matched by Sterling liabilities.

The main financial risks arising from the Group's activities are interest rate risk, credit risk, liquidity risk and capital risk management. Further details on the risk disclosures can be found in Notes 19 and 20.

REVENUE AND SEGMENTAL REPORTING

The Group records contract revenue in accordance with IFRS 15 Revenue from Contracts with Customers, which requires that revenue be recorded over time as/when performance obligations within contracts are performed/delivered. Whilst some performance obligations are defined within the Group's contracts, management considers that the main asset transferred to the customers over the term of the contract is the implied promise that the customer will have access to Group employees throughout the duration of the contract. The customer is expecting that those employees will be able to develop ideas, explain outputs from the software developed and generally push the boundaries to understand how to develop what may start as a concept into something that has commercial value. The Group invoices customers based on a billing schedule contained within each contract. The Group considers trade and other receivables to be fully collectible as it has no history of non-payment; accordingly, no allowance for expected credit losses have been recorded at either period end because all debts were recovered before the reporting date. Costs incurred to obtain contracts are expensed as incurred and losses on contracts are recognised in the period when determined. The Group sometimes warrants that its deliverables will perform within parameters contained in the statements of work referenced in the contracts.

Revenue for performance obligations is generally recognised as each performance obligation is completed and, to the extent applicable, delivered - an output measurement. Where a performance obligation crosses a period end, revenue for that performance allocation is pro-rated on a time expired basis and allocated proportionately to the relevant period.

As performance obligations are completed and delivered, invoices are issued to customers and the debtor recorded in the Trade Accounts Receivables, which represents a conditional right to consideration, which generally becomes an unconditional right on payment. There were no amounts invoiced that were subsequently challenged as being in excess of completed performance obligations as at 31 March, 2026 or 31 March, 2025. To the extent that the measurement of outputs suggests that a future milestone has been met in part or labor hours have been incurred on a cost-plus project but not billed, a debtor is recorded in the caption Prepayments and Accrued Income.

​

The business aims to operate under two separate segments, being GR & D and GS & S. During both the current year and the prior year there were periods when the GS &S segment had no business head and accordingly all project costs were allocated to GR &D. Based on these categories, disaggregated contract revenues and their related costs as follows:

Customers comprising 10% or more of Contract Revenue were as follows:

DARPA stands for Defense Advanced Research Projects Agency, a US government research and development organisation. IARPA stands for Intelligence Advanced Research Projects Activity, another US government research and development organisation

OPERATING LOSS

DIRECTORS AND STAFF COSTS

The average number of persons employed by the Group, including Directors, was:

Remuneration, other benefits supplied and social security costs to the directors and staff during the period was as follows:

The charge for the period is made up as follows:

A reconciliation of the tax charge / credit appearing in the income statement to the tax that would result from applying the standard rate of tax to the results for the period is:

Estimated tax losses of $7.3 million (2025: $8.2 million) are available for relief against future UK profits and estimated tax losses of $2.3 million (2025: $2.9 million) are available for relief against future US profits. No related deferred tax asset has been provided for in the accounts based on the uncertainty as to when profits will be generated against which to relieve said asset. The amount of the deferred tax asset not recognised in relation to losses for the Group is $1.8 million (2025: $2.7 million) and for the Company $1.3 million (2025: $2.1 million).

EARNINGS AND DILUTED EARNINGS PER SHARE

No dilution has been applied in respect of the options outstanding at the period end because the Group is loss making and the average price of the Company's shares during the year was below the exercise price.

Amortisation and impairment of licenses is charged to the Income statement in the period to which it relates and disclosed within "Depreciation, amortisation and impairment of fixed assets".

TANGIBLE ASSETS - GROUP

All tangible fixed assets had been fully depreciated in prior years. The car was sold in the current year and the remaining tangible fixed assets are no longer in use so have been written off.

INVESTMENTS IN SUBSIDIARY UNDERTAKINGS - PARENT COMPANY

Shareholdings and member interests in subsidiary undertakings: Cost At 1 April 2025 25,602,000 Capital contribution in the form of options issued to employees of the subsidiary 318,474 At 31 March 2026 25,920,474 Impairment At 1 April 2025 12,800,000 Impairment charge for the year 3,768,474 At 31 March 2026 16,568,474 Net book amount At 31 March 2026 $9,352,000 At 31 March 2025 $12,802,000

Investments in subsidiary undertakings are valued at cost less the Directors' impairment assessment which reflects changes in the business plan of the subsidiaries since the reverse takeover.

Principal subsidiaries

The group's subsidiaries at 31 March 2026 are set out below. Two of the subsidiaries are LLCs, which have no issued share capital and accordingly the proportion of ownership interests held equals the voting rights held by the group. The country of incorporation or registration is also their principal place of business.

Ownership

Narf Industries LLC is held indirectly through Narf Holdings, Inc. The interests in the other two subsidiaries are held directly.

TRADE AND OTHER RECEIVABLES - GROUP AND PARENT COMPANY

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

Ageing analysis

The following presents an ageing analysis of Accounts Receivable:

The Group considers trade and other receivables to be fully collectible; accordingly, no bad debt provision or expenses have been recorded in either financial period ending 31 March 2026 and 31 March 2025 respectively and all amounts listed in Accounts Receivable were received post period-end.

CASH AND CASH EQUIVALENTS - GROUP AND PARENT COMPANY

Cash at bank comprises balances held by the Company in current bank accounts and instant access deposit accounts. The carrying value of these approximates to their fair value. The majority of cash is held in a bank with a BBB+ credit rating.

TRADE AND OTHER PAYABLES - GROUP AND PARENT COMPANY

Trade payables and accruals principally comprise amounts outstanding for trade purchases and continuing costs. The Directors consider that the carrying value amount of trade and other payables approximates to their fair value. Refer to Note 18.

​

The Loan from Director and Chief Executive Officer represents advances to the Group (plus accrued interest of $310,711) for working capital purposes from Steve Bassi, CEO (see Note 22). The loan is granted under a credit facility of $3 million with an interest rate equal to the Federal 1 year interest rate. Effective 15 June 2026 the credit facility was extended until 31 July 2027. A portion or all of the note may be repaid early without penalty and the Director may request the Group to pay amounts when working capital exceeds $500,000 at the end of any given month. This credit facility is being presented without any discount to account for time as the facility may be partially or fully repaid prior to the due date of 31 July, 2027.

SHARE CAPITAL / SHARE PREMIUM - GROUP AND PARENT COMPANY

The Company has only one class of share. All ordinary shares of 0.1p each ("Shares") have equal voting rights and rank pari passu for the distribution of dividends and repayment of capital. As at 31 March 2026 and 31 March 2025 the Company's issued and outstanding capital structure comprised 1,697,381,100 shares and there were no other securities in issue and outstanding.

At 31 March 2026 the Company had 206.7 million options outstanding and 51.6 million warrants outstanding (see note 15)

SHARE BASED PAYMENT RESERVE- GROUP AND PARENT COMPANY

Details of the warrants that were outstanding at 31 March 2026 are as follows:

Warrants

Details of the options that were outstanding at 31 March 2026 are set out below:

Options

An additional 67.4 million £0.01 options had been granted at the period end which are subject to vesting conditions which hadn't been met at 31 March 2026 but are expected to be met in the future. The movements in the share-based payment reserve are as follows:

Of the amount credited to share based payment reserve $434,588 (2025: $499,831) related to options issued for services provided and therefore resulted in a charge to the Statement of Comprehensive

Income and $nil (2025 $311,250) related to an amount due to a former employee that had previously been accrued for A share-based payment credit of $594,045 (2025: $303,123) was recognised during the year on options that lapsed due to the options expiring, employees leaving or vesting conditions not being met.

The estimated fair value of the options and warrants granted during the year or the prior year were calculated by applying the Black-Scholes option pricing model. The assumptions used in the calculation were as set out below:

*The expected volatility in 2024/25 was calculated using historical 360-day volatility of the share price of Narf Industries plc for the year to 31 March 2023 (since the shares were suspended for a significant part of the period from 1 April 2023 to the date of grant).

The movements in share options and share warrants are as follows:

LEASES - GROUP

As further discussed in Note 20, the Group has a lease agreement in relation to their office in California which expires on 31 December 2026, including minimum rental payments of $5,000 per month. As this lease has a term of one year it is considered a short-term lease under the requirements of IFRS 16 - Leases and the monthly rent is being accounted for in the Statement of Comprehensive Income as it becomes due.

Commitments payable in respect of short-term leases comprise:

The net present value of lease liabilities accounted for under IFRS 16 are all due within 1 year and comprise

* The lease liability relates to a former right of use asset where the lease has ended but the Group has not settled the lease payments due.

CONTINGENT LIABILITIES

There were no contingent liabilities at 31 March 2026 (31 March 2025: £nil).

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The Group's financial instruments comprise primarily cash and various items such as trade debtors and trade payables which arise directly from operations. The main purpose of these financial instruments is to provide working capital for the Group's operations. The Group does not utilise complex financial instruments or hedging mechanisms.

Financial assets by category

The categories of financial assets are as follows:

All amounts owed by the Parent Company and the Group are short term and payable in 0 to 3 months, apart from the short-term loan which is disclosed in Notes 13 and 20. The short-term loan facility has been extended to 31 July 2027 but is repayable on demand under certain circumstances.

Credit risk

Credit risk is the risk that an amount owed to the Parent Company or the Group will not be settled as a result of the failure of the counterparty. Credit risk is considered to be minimal as accounts receivable are due from US government agencies with no history of non-payment, other receivables represent VAT due from the UK government or payroll taxes recoverable from the IRS and cash is held in high street banks with most of the deposits protected.

The maximum exposure to credit risk at the reporting date by class of financial asset was:

Foreign exchange risk

The Group operates principally in the USA with income and operating costs possibly arising in US Dollars. The majority of the operating revenues and costs are incurred in US Dollars although there are a number of Sterling costs incurred by the Parent Company in relation to the costs of maintaining a listing. The Company does not hedge potential future income or costs, since the existence, quantum and timing of such transactions cannot be accurately predicted. The Company's and therefore the Group's exposure to non- US Dollar assets and liabilities is detailed below.

Company and Group

Given the insignificant foreign exchange exposure, management do not believe that sensitivity analysis would provide any meaningful information to readers of these financial statements.

Interest rate risk

The only Parent Company or Group's asset or liability that is subject to any material interest rate risk is the loan from the CEO which has a variable interest rate. All deposits are placed with main clearing banks with minimal amounts attracting interest. A 1% increase in interest rates would increase the annual interest charge by approximately $33k.

Liquidity risk

The Parent Company and the Group seek to maintain adequate bank balances to meet those financial liabilities that are payable in the short term (between 0 to 3 months) but has access to the CEO's credit facility in the event of a shortfall. DARPA, the entity with whom the Group has the majority of contracts with at the year end, has a track record of paying all invoices within four weeks of submission.

​19. CAPITAL MANAGEMENT

The Group manages its capital with a view to ensuring that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the balance between debt and equity. The Group utilizes options on its shares to seek to incentivize the Directors and Group employees to remain loyal and meet strategic goals which will add shareholder value.

The capital structure of the Group as at 31 March, 2026 consisted of negative equity attributable to the equity holders of the Group, totalling $3,528,059 (2025: $2,988,273) bolstered by working capital advances from an officer and shareholder of $3,276,961 (2025: $2,999,211) (see Notes 13 and 20).

The Group reviews the capital structure on an on-going basis. As part of this review, the directors consider the cost of capital and the risks associated with each class of capital. The Group will balance its overall capital structure through new share issues or potentially through the issue of convertible debt instruments. There are no plans to pay dividends for the foreseeable future.

RELATED PARTY TRANSACTIONS

The compensation payable to Key Management personnel, who comprise the Directors, comprised $130,000 in amounts payable by the Group together with the fair value of options issued in respect of services to the Group. Full details of the compensation for each Director are provided in the Directors' Remuneration Report. During the year the Company paid a former director $33,043 in settlement of all historic director's fees of which $14,346 was previously accrued.

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Included in Trade and Other Payables in the accompanying Consolidated Statement of Financial Position are balances of $91,000 and $16,300 at 31 March, 2026 and 31 March, 2025 respectively, related to an short team office lease with a term of one year between the Group and an entity in which Steve Bassi is an owner. Included in Trade and Other Payables in the accompanying Consolidated Statement of Financial Position are balances of $94,625 and $94,625 at 31 March, 2026 and 31 March, 2025 respectively, related to an office operating lease agreement which had an original term of over one year between the Group and an entity in which Steve Bassi is an owner. The amount remains unpaid.

Included in Administrative Expenses in the accompanying Consolidated Statement of Comprehensive income is US$74,700 (2025: US$300) in operating lease expense, $nil (2025: $48,173) in amortisation of right of use asset and $nil (2025: $832) of lease interest relating to leases entered into with that related entity.

As further discussed in Note 13, a Director and CEO made loans to the Group which at the year end totalled $3,276,961 including accrued interest (2025: $2,999,211). The amounts represent a drawdown on a $3 million credit facility with a variable rate of interest. $30,000 of this loan was settled during the year in exchange for transferring a car with a net book value of nil to the CEO. The profit on the sale of the car is included in operating expenses.

The Group earned revenues of $90,000 (2025: $nil) during the year under a services contract with Swarm Technologies, Inc("Swarm") which is owned by the CEO. There were no amounts outstanding under the agreement with Swarm at the year-end or prior year end.

EVENTS SUBSEQUENT TO YEAR END

Effective 15 June 2026 the loan facility of $3 million provided by the CEO was extended to 31 July 2027.

CONTROL

In the opinion of the Directors there is no single ultimate controlling party.