Annual Results for the year ended 31 December 2010

RNS Number : 8868D

SocialGO plc

30 March 2011

 



30^th March 2011

SocialGO plc

("SocialGO" or the "Company")

Annual Results for the year ended 31 December 2010

Highlights

The Group has made progress in a number of areas;

·    Revenues have increased by 183% over the comparable nine month period in the prior year;

·    Gross Profit of £238,000 was reported for the period against a gross loss of £24,000 for the prior 12 month period;

·     Completed fundraisings totalling £700,000 during the period (gross of £24,000 related expenses), in which 56,000,000 new ordinary shares were allotted at a price of 1.25p;

·     Post period end the Group raised a further £300,000 from the issue of 10,909,091 new Ordinary 1p shares at 2.75p per share and £1,355,500 from the issue of 45,271,186 new Ordinary 1p shares at 2.95p per share;

·    SocialGO™  Version 2 beta testing progressed well in Quarter 1, 2011 and is due to launch at the end of Quarter 2;

·    SocialGO™  boxed version on sale in Apple stores in USA;

·    Dominic Wheatley appointed Executive Chairman of the Board of Directors;

·    Alex Halliday appointed Chief Executive Officer and Steve Hardman appointed Chief Operating Officer;

·    Canaccord Genuity Limited appointed as Company NOMAD and Broker;

·    Post period end the Group appointed First Columbus LLP as Co-Broker.

"It is evident from the ongoing take-up of the SocialGO product by a diverse array of interest groups -  schools, sports clubs, churches and political movements - that there is growing appetite for a personalised platform on which to interact. This trend is only going to continue and we believe we are uniquely placed to succeed in capturing the opportunities ahead, particularly as we look towards the launch of Version 2 of the product in summer 2011."

Alex Halliday, CEO

During the period the Group has made progress in a number of verticals, with high profile users including:

·     Corporations - Hilton Hotels, Texas Instruments, Asda and Levis;

·     Charities - Oxfam and The Big Society;

·     Politicians - Dominique de Villepin.

Directors
	Dominic Wheatley	Chairman
	Alex Halliday	CEO
	Steve Hardman	COO
	Brett Morris	Finance Director
	Ian Livingstone	Non-Executive Director
	Vikrant Bhargava	Non-Executive Director
Secretary and Registered Office
	Brett Morris
	7 Pilgrim Street
	London  EC4V 6LB
Company number
	Registered in England No. 05066489

For further information contact:

SocialGO plc
Dominic Wheatley, Chairman Alex Halliday, Chief Executive Officer	Tel: [phone] www.socialgoplc.com

Canaccord Genuity Limited
Mark Williams / Christopher Fincken	Tel: [phone] www.canaccordgenuity.com
First Columbus
John Nuttall / Chris Crawford / Kelly Gardiner	Tel: [phone]
	www.first-columbus.com

Pelham Bell Pottinger
Mark Antelme / Jenny Renton / Charlie Stewart	Tel: [phone] www.pelhambellpottinger.co.uk

Note to the Editors

SocialGO Plc is a developer and provider of software as a service which allows groups to build their own online social networks, SocialGO™. SocialGO's software allows customers to quickly and easily create, manage and control their own private social network and provides the members of these networks with the ability to communicate and share with like minded people in a controlled and secure environment.  SocialGO derives its revenues from subscription premiums paid by network owners and from selling value added services which allows network owners to maximise the social networking experience and the revenues that can derive from creating and managing a social network.  SocialGO is part of the burgeoning Silicon Roundabout in London, UK.

Chairman's statement

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I am pleased to report that the Company has made steady progress in the nine month period ended 31 December.  Sales have increased by 183% over the comparable nine month period last year and we have continued to see a rise in adoption of our social networking services globally.

SocialGO plc is an ambitious company and our product is at the forefront of the social media revolution that is changing the way we work and communicate. From SocialGO™'s inception in 2007 through to the present date, the team has delivered on an idea that was conceived considerably ahead of it's time. These types of internet based companies go through a series of phases from design, programming, beta testing to launch, and then through refinement, adjustment and improvement. In many cases software development is an iterative process, and the re-worked subsequent versions are based upon the knowledge and the experience of the development team.

We know from the adoption and sales of SocialGO™ that there is a market for the products and that this market will pay the premium prices that we ask. We also know that the trend in social media is increasing on all fronts. The potential market is very large and international. Our product is very scalable and ready to service demand. However, we have identified a number of customer preferences and market trends that we believe can rapidly improve both adoption and retention. Our CEO, Alex Halliday provides these measures in his report.

The next twelve months will be both exciting and challenging. I am confident that the SocialGO plc team has both the experience and ability to effect the radical improvements and meet the increase in demand we anticipate.  SocialGO plc is part of the burgeoning Silicon Roundabout in London, UK. We have a growing brand awareness and thought leadership in the social media field. Our aim is to grow the Company revenues and build a world class product. 

My thanks as always goes to the dedicated staff at SocialGO plc, all of whom have a stake in the success of the Company.

Dominic Wheatley

Chairman

29 March 2011

CEO's statement

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Overview

The Company continued to make good progress in the period on a number of key fronts. Firstly we have seen increased adoption in a number of important verticals as the wider market moves to take advantage of social media. Growth has been steady on our first generation platform and the improvements and new features made to it have been well received. The majority of the development work during the period was on SocialGO Version 2, our next generation platform which has been a large investment for the Company. We are excited about the launch of Version 2 as it will take the business into a wider market and will make it easier than ever for the mass market to build social websites. With the growth of Facebook and Twitter, more and more groups, businesses and societies are looking to leverage social networks to disseminate their message widely and build a community. We are looking forward to positioning the Company to capture this wave of interest and help more and more people use social media in an effective, efficient and highly targeted way.

The board has been supportive of the focus on getting the product and technology right, which has been reflected in the board changes as we move towards our Version 2 launch in the middle of the year. Many peer platforms have seen their largest growth in years 3-5 as the technology, team and marketing all mature, and with SocialGO™ entering its third year I am hopeful this coming period will be a transformative one for the Company.

Results

The results disclosed in this report are for the nine month period to 31 December 2010 and unless otherwise stated, the comparatives are for the year to 31 March 2010.

The period has seen SocialGO plc continue to focus on the sales, marketing and further development of new offerings and new revenue streams for its product SocialGO™, the social network maker, which was launched in February 2009.

This focus has seen revenues increase significantly, both in comparison to the same nine month period within the comparatives and the prior 12 month period as a whole, as the customer base expanded and average revenue per user increased as new revenue streams and value added services were introduced.

Revenue of £574,000 for the nine months to 31 December 2010 (year to 31 March 2010 - £369,000) consists of sales from SocialGO™, the internet based social networking service aimed at privately managed special interest groups and niche communities, and ancillary products, such as widgets and themes. The loss before and after tax for the period decreased to £1,079,000 (year to 31 March 2010 - £1,524,000).

All overhead expenditure continues to be closely monitored in order to ensure that cash resources are effectively and efficiently managed to maximise the benefit delivered to the business. Marketing expenditure incurred in the promotion of SocialGO™'s services was considerably reduced as the PPC campaign (pay per click - a payment made to Google or other search engine when a user clicks on a SocialGO™ link following an internet search) was improved to give a better rate of return. Research and development expenditure and the product improvements it brings are key to increasing sales and as such both expensed and capitalised research and development costs have remained a large portion of the expenditure in the period. Amortisation of capitalised development for the period increased to £88,000 (year to 31 March 2010 - £45,000); this and the share based payment charge for the period of £176,000 (year to 31 March 2010 - £85,000) account for a large portion of the relative increase reflected in the overheads.

Financing

As reported in the Interim Report, the Group raised £500,000 on 16 June 2010 by the issuing of 40,000,000 new Ordinary 1p Shares at 1.25p per share, with one warrant, exercisable at 1.5p per share, for every four shares subscribed.

On 3 November 2010 16,000,000 new Ordinary 1p Shares were issued at 1.25p per share as a draw down against the £500,000 Underwriting Facility provided to the Company by Bentworth Holdings Limited, trading as Veddis Ventures, raising £200,000.

SocialGO™

The service continues to be robust with improved availability and response times inline with industry best practices. I am pleased with the quality of the service being offered and with the additional features that have been introduced over the period to make the social networking experience more interactive and rewarding for the network owners and members. We have invested in our infrastructure over the period to prepare for growth and improve reliability of the service.

The SocialGO™ software allows customers to quickly and easily create, manage and control their own private social network and provides the members of these networks with the ability to communicate and share with like minded people in a controlled and secure environment.  SocialGO™ revenues are generated by subscription premiums paid by network owners and from selling value added services which allows network owners to maximise the social networking experience and the revenues that can derive from creating and managing a social network. 

Prospects and Strategy

The SocialGO™ service was conceived at a time when social networks where being created by 'early adopters' who were looking to run and own isolated social networks. Interest in creating these niche sites using our service has continued to grow over the period and we are seeing adoption in a wider range of verticals and countries as social networking awareness increases and becomes more mainstream.

Over the past few years, the social web has exploded and has become an important layer across nearly every online experience. Consumers are more aware than ever of the power of social media in growing an audience and creating a community around their message. We believe this represents a huge opportunity for the Company going forward as SocialGO™ Version 2, our next major release, will seek to help the mass market leverage social media through a central web presence with deep integration into the major social networks. We will be taking forward key technologies, learnings and experience from the Version 1 product into Version 2 which will be launching in the middle of the year.

The product team has been working hard to understand how consumers are using the service, where they are succeeding and where they are failing to get the results they desire. The new product will approach the setup and creation of sites in a significantly different way which we believe will dramatically improve our customer satisfaction and have a material impact on retention. Price points will change to remain competitive and to capture a greater proportion of value. In addition we are forming key partnerships with third parties who are expert at delivering portions of the service, allowing the Company's resources to remain focused on the core experience.

The Directors continually monitor the Company's financial position and have prepared the financial statements on a going concern basis having given consideration to forecast sales and the marketability of SocialGO™ for the foreseeable future, as highlighted in note 1.

Management Team and Board of Directors

As the SocialGO™ platform grows and matures, so does the need for the management team to align their roles with the priorities that exist within the business in order to ensure the effective and efficient management of the business and its resources.  On this basis, as reported in the interims, various changes have been made within the Management Team, with Dominic Wheatley being appointed Executive Chairman of the Board of Directors and Ian Livingstone taking a Non-Executive Director role.  I have been appointed Chief Executive Officer and Steve Hardman takes on the role of Chief Operating Officer. 

Post Balance Sheet Events

On 12 January 2011 and 28 February 2011 the Company raised £300,000 from the issue of 10,909,091 new Ordinary 1p shares at 2.75p per share and £1,335,500 from the issue of 45,271,186 new Ordinary 1p shares at 2.95p per share, respectively. 

On 28 February 2011 the Company issued 5,833,333 shares to the vendors of Get On With It Limited as part of the acquisition terms. 5,219,298 of these shares went to directors of SocialGO plc.

On 28 February 2011, the Company allotted 598,802 new Ordinary 1p shares to First Columbus LLP at 3.34p per share as consideration for brokers' fees.

Following the issue of these shares, the Company has 445,195,407 Ordinary Shares in issue.

In addition to appointing Canaccord Genuity Limited in November 2010, the Company has appointed First Columbus LLP as Co-Broker with effect from 20 January 2011 as part of the evolution of the business.

Summary

SocialGO has delivered growth in revenues and customer numbers over the past nine months, nonetheless our efforts to grow and develop the market for social networking products and tools continue as we strive to deliver profitable results for the business along with cash positive operations.

The Board remain excited about the prospects offered by SocialGO™. The growth of similar types of products is encouraging and the Board considers the product to be well positioned to take a stake in this market.

I join the Chairman in thanking the staff at SocialGO plc for all their efforts over the period.

Alex Halliday

CEO

29 March 2011

Operational and financial review

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2010 financial period product portfolio

SocialGO plc released SocialGO™ - Social Network Maker boxed version during the period.

SocialGO™ Version 2 - The Social Website Creator is substantially developed and is scheduled for release early summer 2011.

Strategy for the future

We continue to retain the core management and technical skills in house.

At year end 31 March 2010, we described our resource focus as being on further development and additional marketing. We have found that development has been the main focus in the period to 31 December 2010 with Version 2 being responsible for this and that marketing expenditure has reduced, as discussed on page 7.

As described in the CEO's statement, the Company at present is preparing to launch SocialGO Version 2 and is focusing its resources on further development of SocialGO™ and expanding the customer base through additional marketing with the aim of increasing sales.

Please refer to the CEO's statement for more details on Version 2.

Results from operations

The Group made a loss from operations for the nine month period of £1,079,000 (year to 31 March 2010 - £1,524,000).

Research and development and other administrative expenses were the main components of the loss on ordinary activities during the period ended 31 December 2010. 

Revenue, £574,000 (year to 31 March 2010- £369,000) and cost of sales, £336,000 (year to 31 March 2010 - £393,000)

Revenue for the period consists of sales of SocialGO™ and ancillary products, such as widgets and themes and has increased by £205,000 over the period. This represents a 56% increase on the year to 31 March 2010.

During the period the number of networks subscribed has increased steadily and additional functionality developed in the period has lead to a higher spend per network. The number of users with free networks continues to increase and we hope to convert some of these users into paying customers when Version 2 launches.

Cost of sales comprises £153,000 SocialGO™ server costs, £139,000 SocialGO™ sales and support staff, £26,000 payment processor fees (the cost of collecting subscription payments) and £18,000 third party revenue share costs.

Administrative expenses

Administrative expenses for the period ended 31 December 2010 are the main component of the loss on ordinary activities during the period. Administrative expenses are in line with expectation and are divided into two categories:

Research and Development, £103,000 (year to 31 March 2010 - £260,000)

All research and development expenditure has been charged to the statement of comprehensive income as incurred unless the required criteria for capitalisation are met in which case they are included within intangible fixed assets as capitalised development.

Group forecasts show how the capitalised development will generate future economic benefit and support this treatment allowing the cost of new development to be amortised over its expected useful life.

Other administrative expenses, £1,214,000 (year to 31 March 2010 - £1,241,000)

Other administrative expenses comprise all the costs of running the Group's operating and corporate functions.  This includes the staff, contractors and agencies together with associated costs employed in sales, marketing, PR, design, project management, production, IT, quality assurance, finance and legal. There was no impairment of IP or of goodwill in the period (year to 31 March 2010 - Nil).

The main component of administrative expenditure in the period relates to human resource costs, totalling £482,000 (year to 31 March 2010 - £367,000) including a share based payment charge of £176,000 (year to 31 March 2010 - £85,000). Share options are used to incentivise and reward certain employees to ensure SocialGO plc retains key staff.

Marketing costs total £270,000 (year to 31 March 2010 - £531,000).  These costs primarily relate to PPC spend for SocialGO™ and the reduction of cost in the period follows the hiring of a marketing director, who optimised the campaign to achieve a better return on expenditure. External agencies and contractors have been used to assist in marketing and PR roles.  

Also included in other administrative expenses is depreciation and amortisation of £157,000 (year to 31 March 2010 - £131,000), of this £62,000 (year to 31 March 2010 - £83,000) related to the amortisation of IP and £88,000 (year to 31 March 2010 - £45,000) related to the amortisation of capitalised development costs.  The remainder related to depreciation of tangible fixed assets.

Taxation

No tax charge arises on the loss for the financial period (year to 31 March 2010 - Nil).  At 31 December 2010 the Group has approximately £16.4 million (year to 31 March 2010 - £15.3 million) of losses available to carry forward to set against future taxable profits, subject to agreement with the UK and USA tax authorities.

Loss per share

Basic and diluted loss per share for the period of 0.30p (year to 31 March 2010 - 0.61p) has decreased compared to the year ended 31 March 2010 principally due to a 29% fall in the loss for the period and a 43% increase in the weighted average number of shares following the issue of new shares in the period.

Risks and uncertainties

The principal risks to the business and it's ability to grow its customer base in order to generate future profits are:

·     The Group's ability to market and sell SocialGO™ in order to increase income.

·     Ensuring that products keep abreast of technological developments to retain current and gain new customers.

·     Ensuring the Group has adequate cash resources to enable it to build the SocialGO™ brand.

·     The retention of key staff members.

These risks are addressed by:

·     The Group has retained sales marketing and PR consultants to maximise opportunities for SocialGO™.

·     The Group is launching a second version of SocialGO™ to enhance the current offering in addition to monitoring comparable products and attending conferences and workshops applicable to the sector to keep abreast of technological developments.

·     The Group has raised additional funds that are sufficient to support and grow the business for the next 12 months and beyond.

·     The Group offers share options to ensure that key staff members are suitably incentivised.

The going concern basis of preparation has been applied in preparing these financial statements as disclosed in note 1.

Details of the Group's exposure to financial risk and its associated risk management policies are contained in note 13 to the financial statements and in this operational and financial review.

Key performance indicators

The key current issues and key performance indicators for the continuing success of the development of the business revolve around three major factors.

These are:

·     The adequacy and availability of cash resources to fund the R&D and commercialisation of the product pipeline.

·     That all the intellectual property owned by the group is properly and thoroughly protected.

·     The Group's ability to increase new sign-ups to SocialGO™ and convert existing free networks to premium customers.

Key financial performance indicators are:

·     Sales revenue growth, as described on page 6.

·     Number of new subscribed networks, as described on page 6.

·     Number of new free networks as described on page 6.

·     Net working capital, which is the Group's current assets less liabilities (measured against forecast).

Working Capital

The Group's operational cash position has been reduced by the continued investment in research and development during the period together with operational overheads.  At 31 December 2010, the Group had cash of £26,000 (year to 31 March 2010 - £204,000).  At the end of the financial period the group had net current liabilities of £318,000 (31 March 2010 net current assets of £34,000). This is in line with Group forecasts.

Details of funds raised during and after the financial period are provided in the CEO's statement and note 14 to the financial statements.

The board continues to closely monitor the organisation's general overheads making savings and seeking cost efficiencies as appropriate.

Dominic Wheatley

Chairman

29 March 2011

Directors and board committees

Dominic Wheatley

Chairman, chairman of remuneration committee, chairman of audit committee, aged 51

Dominic co-founded Bright Things, now SocialGO, in September 2002.  Before co-founding Bright Things, Dominic had considerable executive management experience in the video games industry.  He co-founded Domark in 1984, a video games company that he later reversed into Eidos.  In 1992 Dominic established Domark's US subsidiary in California.  The company changed its name and Dominic served as CEO of Eidos Interactive until 1997.  He then became an investor in various companies, some of which he joined as a Director and helped float on the London Stock Exchange (Statpro plc, Kuju plc, and Telecom Plus plc).  He also has commercial interests in France.  As co-founder, Dominic owned 50 per cent of Bright Things until its floatation in April 2004.  

Alex Halliday

CEO, remuneration committee member, audit committee member, aged 25

Alex Halliday has been building and running online businesses for the past 10 years, most recently founding Complete Creative, a design agency which provided web strategy and technical services to larger agencies and their brands such as Vodafone, Diageo and Carlsberg. Previous projects include a fansite hosting and revenue share platform which maintained official and unofficial communities for over 100 artists as well as a government funded academic news and resource aggregation service in Dubai. Alex is the architect of the SocialGO™ and manages the team in Shoreditch, London.

Brett Morris

Finance director, remuneration committee member, audit committee member, aged 41

Brett is a qualified Chartered Accountant with more than 15 years of experience in Financial and Operational Management. Having spent the first 10 years of his career in banking specialising in mergers and acquisitions and debt financing Brett obtained an MBA from the London Business School after which he moved into Private Equity, where he used his experience to assist companies in growing and developing their businesses. During this time he also focused on company performance monitoring and management where he gained experience in strategic development, business planning and execution as well as general management.

Steve Hardman

COO, remuneration committee member, aged 42

Steve Hardman has been a technology entrepreneur for over 20 years having established a number of business in automotive & motorsport sectors. He co-founded MSD Ltd to provide advanced engineering & marketing services to the likes of Hyundai, Peugeot, Honda, Lada and General Motors. More recently he established Get On With It Ltd with Alex Halliday to develop the social networking software that forms the basis of SocialGO™. He is also an alumnus of London Business School and Columbia Business School NY (2005).

Ian Livingstone

Non-executive director, remuneration committee member, audit committee member, aged 61

Ian has been in the interactive games industry for over 25 years.  In 1975, with Steve Jackson, he co-founded Games Workshop and launched Dungeons & Dragons in Europe.  In 1982 he co-authored the first of the multi-million selling Fighting Fantasy Game books.  His former positions include Executive Chairman of Eidos plc.  He has helped Eidos secure many of its major franchises, including Tomb Raider.  Following the Square-Enix buyout of Eidos Interactive, Ian was promoted to Life President of Eidos.

Vikrant Bhargava

Non-executive director, remuneration committee member, aged 38

Mr. Bhargava was a co-founder and the Group Marketing Director of PartyGaming Plc, a company listed on the London Stock Exchange. He spearheaded PartyPoker's growth from a start-up site in 2001 to the world's largest poker room with revenues of circa US$ 1 billion in 2006. Mr. Bhargava stepped down from his role at PartyGaming in 2006 and has since been involved with a number of projects as well as seeking interesting opportunities mainly in the media, e-commerce and real estate sectors. He is also focused on building LetzDream, a non-profit, self-sustaining platform to help organizations engaged in social projects scale up by providing access to human and financial capital. Mr. Bhargava is an alumnus of the Indian Institute of Technology, Delhi (1994) and the Indian Institute of Management, Calcutta (1996).

Corporate governance statement

The board is committed to establishing and maintaining high standards of corporate governance, the process by which the Group is directed and managed, risks are identified and controlled and effective accountability assured.  The Board voluntarily applies the principles of good corporate governance so far as is practicable for a group of this size. 

The Board of Directors

The Board currently comprises two non-executive directors and four executive directors.  One non-executive director is appointed as the Chairman of the group.  Non-executive directors are considered independent.  All directors are required to stand for re-election at least every three years.

All members of the board are equally responsible for the management and proper stewardship of the Group.  The non-executive directors are independent of management and, other than described in note 17 to the accounts, free from any business or other relationship with the Company or Group.  The non-executive directors are able to bring independent judgement to issues brought before the Board.

The Board meets throughout the year. The meetings follow a formal agenda, which includes matters specifically reserved for decisions by the Board.  Prior to each board meeting directors are sent an agenda together with additional information, including financial reports, required for the meeting.

The Board also meets where necessary to approve specific decisions.  The Board has delegated responsibility to two sub-committees, the audit committee and the remuneration committee. The audit committee and remuneration committee are chaired by the Chairman.

Directors have access to the advice and services of the Company Secretary and may take, at the Company's expense, independent professional advice.

The audit committee

The audit committee has four members, Alex Halliday, Ian Livingstone, Brett Morris and Dominic Wheatley and meets at least twice a year to review the financial results, the findings of the external independent auditors, internal control systems and the Group's financial accounting procedures and policies and the cost effectiveness, independence and objectivity of the external auditors.  

The remuneration committee

This committee is made up of the full Board, and is responsible for the remuneration of the executive directors.  It reviews the broad framework for executive remuneration and determines, on behalf of the Group, the individual remuneration packages.  The policies they adopt along with details of directors remuneration and service contracts are included in the Remuneration report on pages 14-17.  The committee meets on an ad hoc basis as required and has met once during the period. 

The nomination committee

The directors do not consider it is appropriate for a company of this size to have a nomination committee.

Communication with shareholders

The executive directors meet regularly with institutional shareholders and are available to answer questions from private shareholders.  Each shareholder receives the annual report, which contains the Chairman's and CEO's statements. The annual and interim reports, together with other corporate press releases are available on the Company website.

The Annual General Meeting provides a forum for all shareholders to raise issues with the directors.  The Notice convening the meeting is issued with notice of 21 clear days.  Separate resolutions are proposed on each substantially separate issue.

Risk management and internal controls

The directors are responsible for the Group's system of internal control and for reviewing its effectiveness.  However, such a system can only provide reasonable, but not absolute, assurance against material misstatement or loss.

The Board confirms that there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Group, in compliance with the guidance Internal Control: Guidance for Directors on the Combined Code.  This process, which is closely tied to operations, is regularly reviewed by the Board.

The key procedures that the directors have established to ensure risk management and internal controls are effective are as follows:

Risk identification

The Board has identified its major risks and put policies in place to avoid and mitigate those risks.  All senior members of staff have participated in this process and the results have been reported to the Board.

Operational risk

The internal control process is supported by (a) a comprehensive financial control and rolling forecast system; (b) a flat management structure which facilitates open and timely communication; (c) a project management system that is available to all members of staff; and (d) a programme of commercial insurance covering the key risks the Group is exposed to.

The Board considers that the size of the Group is not sufficient to warrant a dedicated internal audit function.

Going concern

As explained in note 1 to the financial statements, the directors confirm that they have a reasonable expectation that the company has adequate resources to continue operations for the foreseeable future.  For this reason, they adopt the going concern basis in preparing the financial statements.

External audit matters

Independence

The audit committee has sole responsibility for assessing the independence of the external auditors, BDO LLP.  Each year the committee undertakes to:

·      Seek reassurance that the external auditors and their staff have no family, financial, employment, investment or business relationship with the Company.  To this end the committee requires the external auditor and their associates to confirm this in writing, and detail the procedures which the auditor has carried out in order to make this confirmation.

·      Check that all partners engaged in the audit process are rotated at least every 5 years.

·      Assess the likely impact on the auditors' independence and objectivity before awarding them any contract for additional services. It is company policy to require the auditors to tender for all non-audit services where the fee is in excess of £25,000.

·      Having as a standing agenda item auditor independence issues at each audit committee meeting.

Analysis of fees

Statutory disclosures required by the Companies Act 2006 of audit and non-audit fees are given in note 4.

Remuneration report

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Compliance

The Company has applied the principles relating to directors' remuneration as described below.

Details of each individual director's remuneration and share options are included on pages 16 and 17 within the remuneration report and those of directors' shareholdings are set out in the report of the directors.

Remuneration committee

The Committee comprises the full Board. Dominic Wheatley is chairman of the remuneration committee.  The committee has access to professional advice as and when it considers it necessary.

The Remuneration Committee's principal functions are to advise on the broad framework for executive remuneration and to determine the remuneration package of executive directors.  It reviews the performance of the executive directors and sets the scale and structure of their remuneration and the basis of their service agreements with due regard to the interests of the shareholders.  No executive director may participate in decisions regarding their own remuneration.

The Committee is also responsible for overseeing the operation of the share option schemes operated by the company.

Remuneration policy

In determining remuneration packages the Remuneration Committee has regard to the importance of retaining and motivating executive directors as well as linking reward to the Group's performance.  Within this context, the Committee's policy on executive director remuneration is to:

·      Pay a competitive base salary designed to attract and retain executive directors relevant to each director's role, experience and the external market;

·      Provide incentive arrangements which are subject to performance targets (based on share price performance), reflect the Group's objectives and recognise the importance of providing sustained motivation of management to focus on annual, as well as longer-term performance, and:

·      Align the interest of the executive directors with those of shareholders.

In order to achieve these objectives the committee's approach is that a significant proportion of the overall remuneration package should be linked to the performance of the Group, through participation in share options. 

Remuneration policy for non-executives

The Group's policy on non-executive director remuneration is to pay fees based upon the experience and expertise of the directors.  The level of non-executive fees reflects the amount of time that the non-executives are required to spend on Group duties during the period.  The non-executive directors received no other benefits, with exception to the share options referred to on page 17.

Remuneration packages

Basic salary

Basic salary and benefits are reviewed as required. Reviews take place at the discretion of senior management or the Remuneration Committee. Each review shall consider the individual's performance and responsibilities, Company performance and market trends. 

Share options

Share option awards may be made to directors under the various schemes in place.

Share options are the main incentive scheme for the executive directors of the Company.  The Board believe that this is the best way to align the interest of the directors with the shareholders in this early stage of the Company.

Service contracts

The service contracts of the individual directors are as follows:

	Commencement date	Expiry date
Executive directors:
Dominic Wheatley	1 December 2003	terminable on three month's rolling notice
Alex Halliday	12 January 2010	terminable on six month's rolling notice
Steve Hardman	12 January 2010	terminable on six month's rolling notice
Brett Morris	1 March 2010	terminable on three month's rolling notice
Non-executive directors:
Ian Livingstone	15 April 2004	terminable on one month's rolling notice
Vikrant Bhargava*	12 January 2010	terminable if Veddis Ventures shareholding falls below four per cent

*or other Bentworth Holdings Ltd (Veddis Ventures) nominated non-executive director

Directors' remuneration

The emoluments of the individual directors were as follows:

Basic salary and fees:

	Period ended 31 December 2010 £'000	Year ended 31 March 2010 £'000
Executive directors:
Dominic Wheatley	62	96
Alex Halliday	56	19
Steve Hardman	56	19
Brett Morris	23	2
Edward Levey*	-	35
Charles Delamain**	-	8
Non-executive directors:
Ian Livingstone	9	12
Vikrant Bhargava	-	-
Matthew Tims***	-	9
	________ 206 ________	________ 200 ________

* Retired on 28 February 2010

** Retired on 6 April 2009

*** Retired on 12 January 2010

The directors listed above represent the Group and Company's key management personnel.

£87,000 (year to 31 March 2010 - £35,000) of the share based payment charge recorded in the statement of comprehensive income for the period ended 31 December 2010 relates to directors and £nil (year to 31 March 2010 - £10,000) relates to retired directors. £49,000 (year to 31 March 2010 - £22,000) relates to Veddis Ventures, a company in which Vikrant Bhargava holds a beneficial interest.

No amounts (year to 31 March 2010 - Nil) were paid by the Company into pension schemes for the benefit of the directors.

Of the £206,000 due to the directors in the period to 31 December 2010, £175,000 was paid in the year. The following amounts were paid post period end; Dominic Wheatley £7,000; Alex Halliday £9,000; Steve Hardman £9,000; Brett Morris £4,000; and Ian Livingstone £2,000.

The share options granted to the directors under EMI and individual share option agreements are set out below:

	Number at start and end of period	Exercise price per share	Date from which exercisable*	Expiry date
Executive directors:
Alex Halliday	1,500,000	1.25 pence	24/10/2009	24/10/2018
Alex Halliday	7,046,053	1.25 pence	12/01/2012	12/01/2020
Brett Morris	10,000,000	1.5 pence	18/09/2010	18/03/2020
Steve Hardman	1,500,000	1.25 pence	24/10/2009	24/10/2018
Steve Hardman	6,263,158	1.25 pence	12/01/2012	12/01/2020
Non-executive directors:
Ian Livingstone	50,000	14 pence	26/04/2004	26/04/2014
Ian Livingstone	50,000	90 pence	01/10/2005	01/10/2014
Ian Livingstone	250,000	13.5 pence	20/09/2007	20/09/2016
Ian Livingstone	300,000	4 pence	01/05/2009	01/05/2018
Ian Livingstone	300,000	1.25 pence	24/10/2009	24/10/2018

*      The only vesting condition is that the individual remains a director of the group, with the exception of the 14p share options issued in April 2004. These do not lapse on resignation.

No options held by directors serving at the period end lapsed during the period.

The market price of the shares at 31 December 2010 was 3.925 pence (31 March 2010 - 1.27 pence) and the range during the financial period was 1.0 pence to 4.625 pence. The Combined Code recommends that non-executive directors should not be eligible for the award of share options.  The Board believes that given the size and nature of the Group it is appropriate for non-executive directors to be incentivised in the same manner as other directors.

On behalf of the Board

Dominic Wheatley

Chairman, Remuneration Committee

29 March 2011

 Report of the directors for the period ended 31 December 2010

_________________________________________________________________________________

The directors present their annual report on the affairs of the Group, together with the accounts and the independent auditor's report for the period ended 31 December 2010.

The current period under review is the nine month period ended 31 December 2010. The prior period under review is the 12 month period ended 31 March 2010. The period end was changed to 31 December to coincide with the majority of companies in this sector. 

Principal activities, review of business and future developments

The Group's principal activity is the development of a social networking platform "SocialGO™".

A review of the Group's performance during the nine months to 31 December 2010, including financial performance, likely future developments, discussion of key performance indicators, key risks and uncertainties facing the Company, the prospects and position of the Company at the period-end and information that fulfils the requirements of the Business Review, is set out in the CEO's statement, and the Operational and financial review on pages 3 to 9. Principal subsidiaries are listed in note IV to the Company accounts on page 57.

The first version of SocialGO™ was launched in February 2009 and since then development has continued to improve the applications, functionality and stability of the offering. Development work in the period has been focused on version two, scheduled to launch early summer 2011.

SocialGO plc continues to operate in a relatively new and developing market. The Board continue to be excited about the prospects offered by SocialGO™. The sales growth of similar types of products is impressive and the Board considers the product to be well positioned to take a stake in this market.

We will continue to explore all opportunities to utilise the Company's expertise and intellectual property.

Results and dividends

The consolidated statement of comprehensive income is set out on page 25.  The group loss for the period before and after tax is £1,079,000 (year to 31 March 2010 - £1,524,000).  Basic loss per share is 0.30 pence (year to 31 March 2010 - 0.61 pence).  The directors do not recommend the payment of a dividend for the period (year to 31 March 2010 - £Nil).

Events after the balance sheet date

These are detailed in note 19 to the financial statements.

Research & development

The Group is committed to research and development activities as a key strategy to drive organic growth and to improve the Group's competitive position. The Group spent £434,000 during the period on development of SocialGO™, of which £331,000 was capitalised. For further details refer to operational and financial review on pages 6-9.

Financial instruments and financial capital management

The Group's policy on the use of financial instruments and financial capital management is set out in notes 1 and 13.

Share listing

The Company's Ordinary shares are listed on the Alternative Investment Market on the London Stock Exchange.

Share capital

       Changes to share capital during the period are given in note 14 to the accounts on page 46 onwards.

Supplier payment policy

The Group's policy is to settle terms of payment with suppliers when agreeing the business transaction; ensure that those suppliers are made aware of the terms of payment by including them in the terms and condition of the contract; and pay in accordance with contractual and legal obligations.

Trade payables of the Group at period end represented 61 days purchases (year to 31 March 2010 - 37 days).

Charitable and political donations

During the period the Company made no charitable or political donations (year to 31 March 2010 - Nil).

Directors

The directors of the Company during the period and at the period end and their beneficial interests in the ordinary share capital and options to purchase such shares were as follows:

	Ordinary shares of 1p each
	31 December 2010		1 April 2010
	Share Options	Shares	Share Options	Shares
Executive directors:
Dominic Wheatley	-	71,805,102	-	69,005,102
Alex Halliday	8,546,053	16,992,432	8,546,053	16,592,432
Steve Hardman	7,763,158	15,801,202	7,763,158	15,001,202
Brett Morris	10,000,000	-	10,000,000	-
Non-executive directors:
Ian Livingstone	950,000	12,905,556	950,000	10,905,556
Vikrant Bhargava*	-	-	-	-

*Vikrant Bhargava is the nominated representative of Bentworth Holdings Ltd, trading as Veddis Ventures, a company in which he holds an indirect beneficial interest. Bentworth Holdings Ltd held 16,400,000 share options and 77,448,000 shares at 31 December 2010 (31 March 2010 - 15,000,000 share options and 40,000,000 shares).

Dominic Wheatley, and Brett Morris also served as directors to 100% owned subsidiary SocialGO™ Development Limited (formerly SocialGO™ Limited) throughout the period. Dominic Wheatley also served as a director to 100% owned subsidiary Bright Things Inc. throughout the period.

No director has any interest in the shares of the subsidiary companies at 31 December 2010.  Further details of the directors' share options are shown in the remuneration report on page 17, which also shows the movements during the period.  Details of any directors' interest in transactions of the group are given in note 17.

On 28 February 2011, 5,833,333 1p Ordinary shares issued as deferred consideration on the acquisition of GOWIT were admitted to AIM, 5,219,298 of which were issued to directors. Alex Halliday received 2,763,158 shares and Steve Hardman received 2,456,140 shares,

Bentworth Holdings Ltd held 16,400,000 share options and 77,448,000 shares at 28 February 2011.

The directors who retire by rotation are Dominic Wheatley and Steve Hardman who, being eligible, offer themselves for re-election.

Directors' responsibilities

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

Company law requires the directors to prepare financial statements for each financial year.  Under that law the directors have elected to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).  Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of the group for that period.  The directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market. 

In preparing these financial statements, the directors are required to:

·   select suitable accounting policies and then apply them consistently;

·   make judgements and estimates that are reasonable and prudent;

·   for the group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the European Union;

·   for the parent company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

·   prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent company will continue in business.

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

Website publication

The directors are responsible for ensuring the annual report and the financial statements are made available on a website.  Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions.  The maintenance and integrity of the Company's website is the responsibility of the directors.  The directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

Going concern

The going concern basis of preparation has been applied in preparing these financial statements as disclosed in note 1.

Auditors

BDO LLP has expressed their willingness to continue in office and a resolution to re-appoint them will be proposed at the annual general meeting.

Directors' statement as to disclosure of information to auditors

All of the current directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Company's auditors for the purposes of their audit and to establish that the auditors are aware of that information. The directors are not aware of any audit information of which the auditors are unaware.

On behalf of the Board

Dominic Wheatley

Chairman

29 March 2011

Report of the independent auditors

_________________________________________________________________________________

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SOCIALGO PLC

We have audited the financial statements of SocialGO Plc for the period ended 31 December 2010 which comprise the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated statement of financial position, the Company balance sheet, the consolidated statement of cash flows and the related notes.  The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.  The financial reporting framework that has been applied in preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

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

Respective responsibilities of directors and auditors

As explained more fully in the statement of directors' responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.  Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland).  Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the APB's website at www.frc.org.uk/apb/scope/private.cfm.

Opinion on financial statements

In our opinion:

·     the financial statements give a true and fair view of the state of the group's and the parent company's affairs as at 31 December 2010 and of the group's loss for the period then ended;

·     the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

·     the parent company's financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

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

Opinion on other matters prescribed by the Companies Act 2006

In our opinion the information given in the directors' report for the financial period for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

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

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

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

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

·     we have not received all the information and explanations we require for our audit.

Ian Clayden (senior statutory auditor)

For and on behalf of BDO LLP, statutory auditor

London

29 March 2011

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Consolidated statement of comprehensive income for the nine month period ended 31 December 2010

	Note	Nine month period to 31 December 2010 £'000	Year to 31 March 2010 £'000
Revenue	3	574	369
Cost of sales		(336)	(393)
		_______	_______
Gross profit/(loss)		238	(24)
Research and development costs		(103)	(260)
Administrative expenses - other		(1,214)	(1,241)
Total administrative expenses		(1,317)	(1,501)
		_______	_______
Loss from operations	4	(1,079)	(1,525)
Finance income		-	1
		_______	_______
Loss before and after tax and total comprehensive income for the period	6	(1,079)	(1,525)
		_______	_______
Loss per share	7
Basic and diluted		(0.30)p	(0.61)p
		_______	_______

The notes on pages 28 to 52 form part of the group financial statements.

Consolidated statement of changes in equity

	Share capital	Share premium	Merger reserve	Retained deficit	Shares to be issued	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000
31 March 2009	4,098	10,137	(136)	(14,051)	-	48
Share based payment charge	-	-	-	85	-	85
Issue of shares and warrants - private placings	1,752	416	-	22	-	2,190
Share issue costs	-	(83)	-	-	-	(83)
Issue of shares and warrants - acquisition of Get On With It Ltd	117	-	18	314	268	717
Loss before and after tax and total comprehensive income	-	-	-	(1,524)	-	(1,524)
31 March 2010	5,967	10,470	(118)	(15,154)	268	1,433

	Share capital	Share premium	Merger reserve	Retained deficit	Shares to be issued	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000
31 March 2010	5,967	10,470	(118)	(15,154)	268	1,433
Share based payment charge	-	-	-	176	-	176
Issue of shares and warrants - private placings	600	73	-	77	-	750
Share issue costs	-	(24)	-	-	-	(24)
Loss before and after tax and total comprehensive income	-	-	-	(1,079)	-	(1,079)
31 December 2010	6,567	10,519	(118)	(15,980)	268	1,256

The notes on pages 28 to 52 form part of the group financial statements.

Consolidated balance sheet at 31 December 2010

Company number 05066489

	Note	Group 31 December 2010 £'000	Group 31 December 2010 £'000	Group 31 March 2010 £'000		Group 31 March 2010 £'000
Assets Non-current assets
Property, plant and equipment	8		18		24
Intangible assets	9		1,556		1,375
			_______		_______
Total non-current assets			1,574		1,399
Current assets
Trade and other receivables	11	167		95
Tax asset	11	10		82
Cash and cash equivalents	13	26		204
		_______		_______
Total current assets			203		381
			_______		_______
Total assets			1,777		1,780
Liabilities
Current Liabilities
Trade and other payables	12	(181)		(197)
Tax liabilities	12	(108)		(38)
Accurals	12	(232)		(112)
		_______		_______
Total liabilities			(521)		(347)
Total net assets			_______ 1,256 _______		_______ 1, 433 _______
Capital and reserves attributable to owners of the parent
Share capital	14		6,567		5,967
Share premium			10,519		10,470
Merger reserve			(118)		(118)
Retained deficit			(15,980)		(15,154)
Shares to be issued			268		268
Total equity			_______ 1,256 _______		_______ 1,433 _______

The financial statements were approved by the Board and authorised for issue on 29 March 2011.

Dominic Wheatley

Chairman

The notes on pages 28 to 52 form part of the group financial statements.

Consolidated cash flow statement for the nine month period ended 31 December 2010

	Nine month	Nine month
	period to	period to	Year to	Year to
	31 December	31 December	31 March	31 March
	2010	2010	2010	2010
	£'000	£'000	£'000	£'000
Cash flows from operating activities
Loss before tax		(1,079)		(1,524)
Share based payments		226		85
Depreciation on property plant and equipment		7		3
Amortisation of intangible assets		150		128
Finance income		-		(1)
		_______		_______
Cash used in operating activities before		(696)		(1,309)
changes in working capital
Decrease/(increase) in trade and other         receivables		-		(133)
Increase/(decrease) in trade and other payables		174		(161)
		_______		_______
Cash used in operations		(522)		(1,603)
Investing activities
Purchase of property, plant and equipment	(1)		(6)
Capitalised R&D expenditure	(331)		(382)
Cash acquired on business acquisition	-		3
Finance income	-		1
	_______		_______
Net cash used in investing activities		(332)		(384)
Financing activities
Issue of new share capital and warrants	700		2,190
Costs of issue of new share capital	(24)		(83)
	_______		_______
Net cash from financing activities		676		2,107
Net (decrease)/increase in cash and cash equivalents		(178)		120
Cash and cash equivalents at beginning of the period		204		84
		_______		_______
Cash and cash equivalents at end of the period		26		204
		_______		_______

The notes on pages 28 to 52 form part of the group financial statements.

Notes forming part of the financial statements for the period ended 31 December 2010

1      Accounting policies

Principal accounting policies

The Company is a public company incorporated and domiciled in the United Kingdom. The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods 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 European Union ("adopted IFRSs") and those parts of the Companies Act 2006 which apply to companies preparing their financial statements under IFRSs.

The current period under review is the nine month period ended 31 December 2010. The prior period under review is the 12 month period ended 31 March 2010. The amounts presented in the financial statements are therefore not entirely comparable. The reason for the changes is set out in the Report of the Directors on page 18.

Changes in accounting policies

a)   New standards, interpretations and amendments effective from 1 January 2010

None of the standards, interpretations or amendments effective in this financial period have had a material impact on the financial statements.

b)   New standards, interpretations and amendments not yet effective

None of the new standards, interpretations or amendments issued but not yet effective is expected to have a material effect on the financial statements.

Going concern

The Board continually monitors the financial position of the Group, taking into account the latest 3 year cash flow forecasts and the ability of the Group to generate cash.

Subsequent to the period end, the Company has raised additional funds through private placings of £300,000 and £1,335,500 (see note 19).

The Board has prepared the financial statements on a going concern basis having given consideration to forecast sales and the marketability of SocialGO™, together with the above fundraising activity, for the foreseeable future. 

Going concern (Continued)

Given the level of paid subscription taken up since commercial launch, the Board believe it's most recent sales forecasts, which incorporate continued growth in paid subscriptions to SocialGO™, to be achievable.  However, given that SocialGO™ represents a new product in a relatively new market, there remains an inherent uncertainty in the level or timing of growth that will actually be achieved.  The Board are confident that any shortfall or delay in forecast growth in revenues, were this to happen, could be absorbed by existing working capital or mitigated by a reduction in the Group's cost base to ensure that the Group will have sufficient working capital to operate as a going concern for the foreseeable future.

The Board therefore believe thatit is appropriate to draw up the financial statements on a going concern basis.

Basis of Consolidation

The consolidated financial statements incorporate the results of SocialGO plc and its subsidiary undertaking, SocialGO Development Limited, using the merger accounting method.

The results also include the results of its other subsidiaries, Bright Things International Limited, Bright Things Inc., PushPlay Interactive LLCand Get On With It Limited using the purchase accounting method. The acquisition of CommonWorld Limited was deemed to be a purchase of an asset rather than a business combination. On this basis, the acquisition of the SocialGO™ Intellectual Property has been recorded at cost.

Merger accounting

In the consolidated financial statements, applying the exemption from the requirement to restate pre-transition date acquisitions available under IFRS1, merged subsidiary undertakings are treated as if they had always been a member of the Group.  Any difference between the nominal value of the shares acquired by the Company and those issued by the Company to acquire them is taken to the merger reserve. Assets and liabilities are included at their merger date book values.

            Purchase accounting

In the consolidated financial statements, the results of subsidiary undertakings acquired prior to 1 April 2010 are taken from the date on which control is obtained. For acquisitions qualifying as 'business combinations' any difference between the fair value of separately identifiable assets, liabilities and contingent liabilities acquired and the consideration paid is treated as goodwill in the consolidated balance sheet.

Revenue recognition

Revenue relates to subscription fees for SocialGO™ services and sales of ancillary products less value added tax and provision against any subsequent refunds. SocialGO™ subscription income is billed monthly in advance and revenue is deferred in the balance sheet until the service is provided.

Where SocialGO™ sales include goods with a revenue share agreement and SocialGO plc acts as the principal, the sale is recorded gross and the shared portion is recorded as a cost of sale.

Goodwill

Goodwill results from the acquisition of subsidiaries and corresponds to the difference between the fair value of the acquisition consideration and the fair value of the assets, liabilities and contingent liabilities identified at the date of acquisition.

Goodwill is not amortised, but it is subject to an annual impairment review.

Foreign currency

Transactions entered into by group entities in a currency other than the currency of the primary economic environment in which they operate (their "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the balance sheet date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the profit or loss.

On consolidation, the results of overseas operations are translated into sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the balance sheet date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised directly in equity (the "foreign exchange reserve"). No material differences arise on translation.

Financial assets

Loans and receivables: These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (trade receivables), but also incorporate other types of contractual monetary asset. They are carried at amortised cost using effective rate method.

Cash and cash equivalents: Cash and cash equivalents include cash in hand and deposits held at call with banks.

Financial liabilities

Other financial liabilities: Other financial liabilities include trade payables and other short-term monetary liabilities, which are recognised at fair value on initial recognition and subsequently carried at amortised cost using the effective interest method.

Share capital

Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial liability. The Groups ordinary shares are classified as equity instruments.

Share based payments 

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the statement of comprehensive income on a straight line basis over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

Where equity instruments are granted to persons other than employees, the statement of comprehensive income is charged with the fair value of goods and services received.  If it is not possible to identify the fair value of these goods or services provided, the statement of comprehensive income is charged with the fair value of the options granted.

Fair value is calculated using the Black-Scholes model, details of which are given in note 15.

Externally acquired intangible assets

Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives. The amortisation expense is included within the administrative expenses line in the consolidated statement of comprehensive income.

Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. Only elements whose cost can be determined reliably and for which it is probable that future benefits exist are recorded as non current assets.

Where assets are acquired in transactions that do not meet the definition of a 'business combination', the assets are treated as acquired at cost, being the fair value of consideration.

The significant intangibles recognised by the group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:

Intangible asset	Useful economic life
SocialGO™ Intellectual property rights	5 years
Goodwill	Annual impairment reviews

Internally generated intangible assets (research and development costs)

Expenditure on internally developed products is capitalised if it can be demonstrated that:

·     it is technically feasible to develop the product for it to be sold;

·     adequate resources are available to complete the development;

·     there is an intention to complete and sell the product;

·     the group is able to sell the product;

·     sale of the product will generate future economic benefits; and

·     expenditure on the project can be measured reliably.

Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the consolidated statement of comprehensive income as incurred.

Capitalised development costs are amortised on a straight-line basis over their useful economic life of five years. The amortisation expense is included within administrative expenses in the consolidated statement of comprehensive income.

Property, plant and equipment

Property, plant and equipment are stated at cost net of accumulated depreciation and provision for impairment. Depreciation is provided on all property plant and equipment, at rates calculated to write off the cost less estimated residual value, of each asset on a straight-line basis over its expected useful life. The residual value is the estimated amount that would currently be obtained from disposal of the asset if the asset were already of the age and in the condition expected at the end of its useful economic life.

The method of depreciation for each class of depreciable asset is:

Computer equipment	-     3 years straight line
Office fixtures, fittings & equipment	-     3 years straight line

Impairment of Assets

Impairment tests on goodwill and development in progress are undertaken annually at the financial period end. The recoverable value of goodwill is estimated on the basis of value in use. Value in use is defined as the present value relating to the cash flow generating units with which the goodwill is associated. When value in use is less than the book value, impairment is recorded and is irreversible.

Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.  Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.  Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset's cash-generating unit (i.e. the lowest group of assets in which the asset belongs for which there are separately identifiable cash flows).

The carrying value of property, plant and equipment is assessed annually if there is an indication of impairment. Any impairment is charged to the statement of comprehensive income.

Impairment charges are included in the administrative expenses line item in the consolidated statement of comprehensive income. 

Taxation and deferred taxation

            Corporation tax payable is provided on taxable profits at prevailing rates.

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its tax base, except for differences arising on:

·     the initial recognition of goodwill; and

·     the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit.

Recognition of deferred tax assets is restricted to those instances where it is probable that future taxable profit will be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

Deferred tax assets and liabilities are offset when the group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

·     the same taxable group company; or

·     different group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered. 

2      Critical accounting estimates and judgements

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. These judgements and estimates are based on managements' best knowledge of the relevant facts and circumstances, having regard to prior experience, but actual results may differ from the amounts included in the financial statements. Information about such judgements and estimations is contained below, as well as in the accounting policies and accompanying notes to the financial statements.

Impairment of goodwill and intangible assets

The group is required to test, on an annual basis, whether goodwill has suffered any impairment. Other intangible assets are tested whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the choice of a discount rate in order to calculate the present value of the cash flows. More information including carrying values is included in note 9.

Capitalisation of development costs

The Group capitalises expenditure on internally developed products in line with the accounting policy set out in note 1.

For the Board, the key estimates and judgements are with regard to assessing how the intangible asset under development will generate probable future economic benefits.  The Board considers this requirement to be fulfilled once it can demonstrate the existence of a market for the output of the intangible asset.

In the opinion of the Board, the assessment that costs associated with the development of  SocialGO™ would generate probable future economic benefits was reached once the product demonstrated an ability to derive revenues.  This was determined to be when revenues were received shortly after commercial launch.  This was considered to be a critical factor as prior to this the Board had significant uncertainty around the transition from a free to a paid product. 

From the point that this, and all other, requirements are met, the Group capitalises development expenditure that (i) is considered to enhance the economic benefits that can be derived from the asset (ii) meets the definition of an asset and (iii) meets the general recognition criteria for intangible assets.

The Group has capitalised development costs in the amount of £331,000 in the period (year to 31 March 2010 - £382,000).

The carrying value of goodwill and other intangible assets, including capitalised development costs, are sensitive to estimates of future cash flows that support recoverable amounts.

In preparing cash flow forecasts, management set assumptions based on reasonably achievable outcomes and, where appropriate, consider the impacts of sensitivities applied to these assumptions.

Useful lives of intangible assets

Intangible assets are amortised over their useful lives. Useful lives are based on management's estimates of the period that the assets will generate revenue, which are periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the carrying value and amounts charged to the consolidated statement of comprehensive income in specific periods. More details including carrying values are included in note 9.

3      Segmental information

The Group's operations are structured to focus on the development and sale of SocialGO^TM networks and all revenues arise from the sales of SocialGO^TM. The Group's activities are operated through a common infrastructure and support functions and therefore, in the opinion of the Directors, its activities constitute one operating segment through which it provides services.

The Group operates in four main geographic areas:

Revenue
	Period ended 31 December 2010 £'000		Year ended 31 March 2010 £'000
United Kingdom	109		58
United States of America	332		207
EU	37		32
Other	96		72
	________ 574 ________		________ 369 ________

All the Group's assets are UK based.

4      Loss from operations                                                                                                                      

	Period ended 31 December 2010 £'000	Period ended 31 March 2010 £'000
This is arrived at after charging;
Staff costs (see note 5)	775	456
Depreciation	7	3
Amortisation of intellectual property	150	128
Exchange differences	6	23
Development expenses	103	260
Auditors' remuneration in respect of Company	20	18
Audit of subsidiary undertakings pursuant to legislation	20	17
Auditors' remuneration -non-audit services - other services	2	22
Auditors' remuneration- non-audit services - taxation	2	14
Share based payments - employee and director share options	127	63
Share based payments - consultants and advisers share options	49	22
Operating lease expense - property	44	3
	________	________

5      Staff costs                                                                                                                                         

	Period ended 31 December 2010 £'000	Year ended 31 March 2010 £'000
Staff costs for all employees, including Directors and development staff, consist of:
Wages and salaries	701	413
Social security costs	74	43
	________	________
	775	456
Share based payment charge	127	85
	________	________
	902 ________	541 ________

£40,000 (year to 31 March 2010 - £18,000) of the share based payment charge relates to employees and £87,000 (year to 31 March 2010 - £45,000) relates to directors and retired directors. There were no other benefits in kind.

	Period ended 31 December 2010 £'000	Year ended 31 March 2010 £'000
The average number of employees of the group during the period, including directors, was as follows:
Management and administration	7	6
Sales and support	9	-
Development	11	6
	________	________
	27 ________	12 ________

	Period ended 31 December 2010 £'000	Year ended 31 March 2010 £'000
Key management remuneration consists of:
Payroll costs	229	193
Compensation for loss of office	-	7
Share based payment charge	87	45
	________	________
	316 ________	245 ________

The highest paid director during the period was paid £62,000 (year to 31 March 2010 - £96,000).

        The directors' emoluments are disclosed in the report of the remuneration committee on page 16.

6      Taxation on profit from ordinary activities 

	Period ended 31 December 2010 £'000	Year ended 31 March 2010 £'000
Loss on ordinary activities before tax	(1,079) ________	(1,524) ________

The tax assessed for the period differs from the standard rate of corporation tax in the UK applied to profit before tax.

The differences are explained below:                                                                                             

	Period ended 31 December 2010 £'000	Year ended 31 March 2010 £'000
Loss on ordinary activities at the standard rate of corporation tax in the UK of 28% (2010 - 28%)	(302)	(427)
Effects of:
Unutilised losses carried forward	299	405
Capital allowances for the period in deficit of depreciation	2	18
Expenses not deductible for tax purposes	1	4
	________	________
Current tax charge for period	- ________	- ________

Deferred Tax

At 31 December 2010 the Group had £16.2 million (year to 31 March 2010 - £15.1 million) carried forward as losses, subject to the agreement of the Inland Revenue and US tax authorities.  After assessing the prospects for the 2011 financial period the board has decided to not recognise any deferred tax asset as it is prudent to estimate that no losses will be utilised in that period.  The value of the unprovided deferred tax asset at 27% (2010 - 28%), is calculated at £4.37 million (year to 31 March 2010 - £4.23 million).

At 31 December 2010 the Group had £211,000 (year to 31 March 2010 - £209,000) of unclaimed capital allowances. These have not been recognised as management cannot prudently estimate that these will be utilised in the forthcoming period. The value of the unprovided deferred tax asset is calculated at £57,000 (year to 31 March 2010 - £59,000)

7      Loss per share

        Loss per share has been calculated using the following:

	Period ended 31 December 2010	Period ended 31 March 2010
Loss (£'000)	(1,079)	(1,524)
Weighted average number of shares (£'000s)	355,528	249,219
	________	________
Basic and diluted loss per ordinary share	(0.30)p ________	(0.61)p ________

Loss per ordinary share has been calculated using the weighted average number of shares in issue during the relevant financial periods.  The weighted average number of equity shares in issue, is 355,528,540 (year to 31 March 2010 - 249,219,305) and the earnings, being loss after tax is £1,079,000 (year to 31 March 2010 - £1,524,000 loss). There are no potentially dilutive shares in issue. Share options totalling 62,593,835 (year to 31 March 2010 - 54,134,103) have not been included in the calculation of diluted loss per share because they are anti-dilutive for the periods presented.

After the balance sheet date, on 12 January 2011 and 28 February 2011 the Company raised £300,000 from the issue of 10,909,091 new Ordinary 1p shares at 2.75p per share and £1,335,500 from the issue of 45,271,186 new Ordinary 1p shares at 2.95p per share. Also issued on 28 February were 5,833,333 shares to the vendors of Get On With It Limited as part of the acquisition terms, 5,219,298 of these shares went to directors and 598,802 new Ordinary 1p shares at 3.34p per share to First Columbus LLP as consideration for brokers' fees. These issues would not significantly alter the basic and diluted EPS calculations if they had occurred before the period end.

The Company has outstanding issued warrants to subscribe for 540,541 1p ordinary shares at £1.50 per share, 250,000 1p ordinary shares at £2.50 per share, 35,380,000 1p ordinary shares at 5p per share, 44,515,873 1p ordinary shares at 1.25p per share and 10,000,000 1p ordinary shares at 1.5p per share (year to 31 March 2010 - 540,541 1p ordinary shares at £1.50 per share, 250,000 1p ordinary shares at £2.50 per share, 35,380,000 1p ordinary shares at 5p per share  and 44,515,873 1p ordinary shares at 1.25p per share). These outstanding warrants are considered to be anti-dilutive to a loss per share.

8      Property, plant and equipment

	Computer equipment £'000	Office fixtures, fittings and equipment £'000	Total £'000
Cost	116	32	148
Balance at 1 April 2009	6	-	6
Additions	17	-	17
Additions relating to GOWIT acquisition	________	________	________
Balance at 31 March 2010	139	32	171
Additions	1	-	1
	________	________	________
Balance at 31 December 2010	140 ________	32 ________	172 ________
Accumulated depreciation
Balance at 1 April 2009	112	32	144
Provision for year	3	-	3
	________	________	________
Balance at 31 March 2010	115	32	147
Provision for period	7 ________	- ________	7 ________
Balance at 31 December 2010	122 ________	32 ________	154 ________
Net book value
At 1 April 2009	4 ________	- ________	4 ________
At 31 March 2010	24	-	24
	________	________	________
At  31 December 2010	18 ________	- ________	18 ________

9      Intangible assets

	Goodwill on consolidation £'000	Capitalised development £'000	Intellectual Property £'000	Total £'000
Cost
Balance at 1 April 2009	832	23	635	1,490
Additions	697 ________	382 ________	- ________	1,079 ________
Balance at 31 March 2010	1,529	405	635	2,569
Additions	- ________	331 ________	- ________	331 ________
Balance at 31 December 2010	1,529	736	635	2,900
	________	________	________	________
Accumulated amortisation
Balance at 1 April 2009	832	-	234	1,066
Provision for year	-	45	83	128
	________	________	________	________
Balance at 31 March 2010	832	45	317	1,194
Provision for period	- ________	88 ________	62 ________	150 ________
Balance at 31 December 2010	832 ________	133 ________	379 ________	1,344 ________
Net book value
At 31 March 2009	- ________	23 ________	401 ________	424 ________
At 31 March 2010	697 ________	360 ________	318 ________	1,375 ________
At  31 December 2010	697 ________	603 ________	256 ________	1,556 ________

The carrying value of goodwill has been supported by reference to the group's detailed 3 year cash flow forecasts (as referred to in note 1 to the financial statements), that, based on reasonably achievable growth rates, suggest that the carrying value of these assets is not impaired. The group's forecasts are based on revenue growth rates and a reasonably predictable cost base that management believe are reasonably achievable and have been achieved in the period subsequent to the balance sheet date.

An appropriate discount rate has been applied to cash flow forecasts that takes in to account the time value of money, possible variations in the timing and amount of cash flows and uncertainties inherent within the asset

10    Acquisition of subsidiary undertakings

On 12 January 2010, the Group acquired 100% of the voting equity instruments of Get On With It Limited, a software development business whose sole activity was the development of SocialGO™.

The fair value of purchase consideration and book and fair value of assets and liabilities acquired are as follows:

Consideration paid	Fair value £'000
11,666,667 1p ordinary shares issued 12 January 2010 at market value of 1.15p per share	134
11,666,667 warrants to subscribe for 1p ordinary shares issued 12 January 2010	88
23,333,332 1p ordinary shares to be issued	268
29,958,333 warrants to subscribe for 1p ordinary shares to be issued	227
Assets acquired
Computer equipment	(17)
Receivables	(97)
Cash	(3)
Payables	97
	________
Goodwill	697
	________

The main asset purchased was the GOWIT workforce. However, due to its transient nature this cannot be treated as a separately identifiable intangible asset under IFRS, therefore it must be subsumed within the goodwill arising on purchase.

The fair value of the shares issued was determined by reference to the market price of 1.15p on the date of issue, 12 January 2010. The fair value of warrants was calculated using the Black-Scholes method.

The GOWIT loss in the period was £11,000 (loss since acquisition to 31 March 2010 was £4,000).

GOWIT had the following results from 1 December 2009, the start of its most recent accounting period to the date of acquisition:

	£'000
Turnover
Operating loss	76
	(4)
	________
	(4)
Loss before tax	________
	£'000
Profit after tax for the financial year to 30 November 2009	1,011 ________

11    Trade and other receivables

	31 December 2010 £'000	31 March 2010 £'000
Trade receivables	36	46
Prepayments and accrued income	89	49
Other receivables - advances	27	-
Other receivables - unpaid allotted shares	15	-
	________	________
Other receivables - VAT	167	95
	10	82
Total trade and other receivables	________	________
	177 ________	177 ________

12    Trade and other payables - current                                                                      

	31 December 2010 £'000	31 March 2010 £'000
Trade payables	168	195
Other payables	13 ________	2 ________
	181	197
Tax liabilities	108	38
Accruals	232	112
	________	________
	512 ________	347 ________

13    Financial risk management 

The Group is exposed to risks that arise from its use of financial instruments. These financial instruments are shown on the face of the balance sheet and comprise the following:

	31 December 2010 £'000	31 March 2010 £'000
Loans and receivables
Trade receivables	36	46
Cash and cash equivalents	26	204
Financial liabilities at amortised cost
Trade and other payables	181	197

            Credit risk

The Group manages this risk by using a reputable bank and billing subscriptions in advance.

Trade receivables

The Group's main income is from subscribers to the SocialGO™ networks. These subscriptions are received in advance. The trade receivables balance relates to period end funds being held in the SocialGO plc PayPal account, prior to it being transferred to the bank account.

Any receivables are reviewed regularly by senior management and the finance director to assess the collectability of amounts due. Where it is unlikely that amounts would be recovered these are provided for immediately. In addition to requesting references, the Group has previously requested payment on delivery.

All trade receivables are current for the current and prior period.

            Cash at bank and cash equivalents

The Group's policy in respect of cash and cash equivalents is to limit its exposure by reducing cash holding in the operating units and investing amounts that are not immediately required in funds that have low risk and are placed with a reputable bank.

Floating rate financial assets of £26,000 (year to 31 March 2010 - £204,000) comprise Sterling and US Dollar cash deposits on special interest bearing accounts, money market deposit at call and 7 day rates and a PayPal account. There are no fixed rate financial assets. 

At 31 December 2010 the Group had the following cash balances:

	31 December 2010 £'000	31 March 2010 £'000
Sterling (weighted average rate of interest 0.25%, 31 March 2010 - 0.25%)	19	195
US Dollar (weighted average rate of interest 0.25%, 31 March 2010 - 0.25%)	7 ________	9 ________
	26 ________	204 ________

All monetary assets and liabilities within the group are denominated in the functional currency of the operating unit in which they are held. All amounts stated at carrying value equate to fair value.

            Liquidity risk

Liquidity risk arises from the Group's management of working capital and the finance charges and repayments of its liabilities.

The Group's policy is to ensure that it will have sufficient cash to allow it to meet its liabilities when they become due and so cash holdings may be high during certain periods throughout the period. Refer to the basis of preparation in note 1 for further consideration of liquidity risk as part of the going concern assessment.

The Group currently has no overdraft facility.

The table below illustrates the ageing of trade payables:

	31 December 2010 £'000	31 March 2010 £'000
Current	52	117
31 - 60 days	12	4
61 - 90 days	15	20
91 - 120 days	5	9
121 - and over	97	47
	________	________
	181 ________	197 ________

On 3 November 2010 16,000,000 new Ordinary 1p Shares were issued at 1.25p per share as a draw down against the £500,000 Underwriting Facility provided to the Company by Bentworth Holdings Limited, trading as Veddis Ventures, raising £200,000. There are currently no plans to utilise the remaining £300,000 which can be drawn down until 16 September 2011.

            Capital Disclosures

The Group's management define capital as the Group's equity share capital and reserves.

The Group's objective when maintaining capital is to safeguard the Group's ability to continue as a going concern, so that it can begin to provide returns for shareholders and benefits for other stakeholders.

Companies at an early stage of product development often need to use equity for funding. To date the Group has only used equity funding to increase capital but would consider debt as a future source of funding.

The Group manages its capital structure and makes adjustments to it in the light of changes in the business and in economic conditions. In order to maintain or adjust the capital structure, the Group may from time to time issue new shares, based on working capital and product development requirements and current and future expectations of the Company's share price.

Share capital is used to raise cash and as direct payments to third parties for assets or services acquired.

            Market risk

Currency risk

Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates.

The Group's operating currency is GBP, the other currency used in operations is USD. Whilst priced in USD, revenue receipts are paid by the credit card processor to SocialGO plc in GBP and the majority of expenditure to date have been made in GBP.

Any payments made in USD are paid from the USD bank accounts to reduce the exposure to currency risk. As in the prior year, the group entered into no forward contracts for US dollars during the period.

At 31 December 2010, the group had the following GBP amounts in USD balances: Bank £7,000; Trade receivables £36,000; and Trade payables £33,000.

Interest rate risk

Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group considers the interest rates available when deciding where to place cash balances. The Group has no material exposure to interest rate risk.

14    Share capital

On 16 June 2010, the Company raised £500,000 from the issue of 40,000,000 new Ordinary 1p shares at 1.25p per share and 10,000,000 warrants exercisable at 1.5p.

On 3 November 2010 the Company raised £200,000 from the issue of 16,000,000 new Ordinary 1p shares at 1.25p per share.

On 19 November 2010 the Company issued 4,000,000 new Ordinary 1p shares at 1.25p per share as consideration for broker fees.

After the balance sheet date, on 12 January 2011 and 28 February 2011 the Company raised £300,000 from the issue of 10,909,091 new Ordinary 1p shares at 2.75p per share and £1,335,500 from the issue of 45,271,186 new Ordinary 1p shares at 2.95p per share.

Also issued post period end on 28 February 2011 were 5,833,333 shares to the vendors of Get On With It Limited as part of the acquisition terms.

On 28 February 2011, the company allotted 598,802 new Ordinary 1p shares at 3.34p per share as consideration for brokers' fees.

Called up share capital

	Authorised
	31 December 2010 Number		31 March 2010 Number	31 December 2010 £'000	31 March 2010 £'000
Ordinary shares of 1p each	500,000,000		500,000,000	5,000	5,000
Deferred shares of 9p each	30,450,078		30,450,078	2,741 ________ 7,741 ________	2,741 ________ 7,741 ________
		Allotted, called up and fully paid*
		31 December 2010 Number	31 March 2010 Number	31 December 2010 £'000	31 March 2010 £'000
Ordinary shares of 1p each		382,582,995	322,582,995	3,826	3,226
Deferred shares of 9p each		30,450,078	30,450,078	2,741 ________ 6,567 ________	2,741 ________ 5,967 ________

* £15,000 of allotted share capital is unpaid.

The share price ranged from a low of 1.0 pence to a high of 4.625 pence.

The movement in share capital was as follows:                                                               

	Ordinary shares of 1p each
	Number	£'000
In issue at 31 March 2010	322,582,995	3,226
1p Ordinary Shares issued for 1.25p each - 16 June 2010	40,000,000	400
1p Ordinary Shares issued for 1.25p each - 3 November 2010	16,000,000	160
1p Ordinary Shares issued as consideration - 19 November 2010	4,000,000	40
	________	________
In issue at 31 December 2010	382,582,995 ________	3,826 ________

At 31 December 2010, options were outstanding over 62,593,835 shares, (31 March 2010 - 54,134,103), including options held by directors.

    Unapproved Share Options

At 31 December 2010 the following share options were outstanding in respect of the ordinary shares under option agreements entered into by the Company:

Number of options	Date of Grant	Exercise period	Exercise price pence per share
400,000	26 April 2004	26 April 2004 to 26 April 2014	14.0
155,050	26 April 2004	26 April 2004 to 30 June 2012	10.0
75,000	26 April 2004	26 April 2004 to 30 June 2012	14.0
49,055	26 April 2004	30 April 2004 to 30 April 2011	90.0
100,000	31 August 2004	31 August 2005 to 3 December 2014	90.0
100,000	31 August 2004	31 August 2005 to 1 October 2014	90.0
185,000	1 October 2004	1 October 2005 to 1 October 2014	90.0
24,000	30 November 2004	30 November 2004 to 30 November 2014	90.0
10,000	30 November 2004	30 November 2005 to 30 November 2014	90.0
25,000	1 December 2004	1 December 2005 to 1 December 2014	90.0
75,000	21 December 2004	1 January 2005 to 1 January 2015	90.0
30,000	7 January 2005	7 January 2006 to 7 January 2015	90.0
136,666	20 July 2005	20 July 2006 to 20 July 2015	149.5
91,667	20 July 2005	20 July 2007 to 20 July 2015	149.5
91,667	20 July 2005	20 July 2008 to 20 July 2015	149.5
45,000	20 September 2006	20 September 2007 to 20 September 2016	13.5
166,666	20 September 2006	20 September 2007 to 20 September 2016	13.5
166,667	20 September 2006	20 September 2008 to 20 September 2016	13.5
166,667	20 September 2006	20 September 2008 to 20 September 2016	13.5
100,000	21 September 2006	21 September 2007 to 21 September 2016	11.3
200,000	1 April 2007	1 April 2008 to 1 April 2017	10.0
650,000	1 May 2008	1 May 2009 to 1 May 2018	4.0
275,000	1 May 2008	1 May 2009 to 1 May 2018	4.0
275,000	1 May 2008	1 May 2009 to 1 May 2018	4.0
2,133,334	24 October 2008	24 October 2009 to 24 October 2018	1.25
1,733,333	24 October 2008	24 October 2009 to 24 October 2018	1.25
1,733,333	24 October 2008	24 October 2009 to 24 October 2018	1.25
3,000,000	12 January 2010	12 January 2010 to 12 January 2016	1.25
3,000,000	12 January 2010	12 January 2010 to 12 January 2016	1.25
3,000,000	12 January 2010	12 January 2010 to 12 January 2016	1.25
3,000,000	12 January 2010	12 January 2010 to 12 January 2016	1.25
3,000,000	12 January 2010	12 January 2010 to 12 January 2016	1.25
1,400,000	16 June 2010	16 September 2010 to 16 September 2016	1.25
1,750,000	29 November 2010	29 November 2010 to 15 February  2011	1.3
450,000	29 November 2010	November 2011 to 29 November 2016	1.25
________ 27,793,105 ________

EMI Plan

At 31 December 2010 the following share options were outstanding in respect of the ordinary shares under the EMI plan:

Number of options	Date of Grant	Exercise period	Exercise price pence per share
6,551,426	12 January 2010	12 January 2011 to 12 January 2020	1.25
6,551,426	12 January 2010	12 January 2011 to 12 January 2020	1.25
6,551,426	12 January 2010	12 January 2011 to 12 January 2020	1.25
4,000,000	18 March 2010	18 September 2010 to 12 January 2020	1.50
2,000,000	18 March 2010	18 September 2010 to 12 January 2020	1.50
2,000,000	18 March 2010	18 September 2010 to 12 January 2020	1.50
2,000,000	18 March 2010	18 September 2010 to 12 January 2020	1.50
1,715,484	29 November 2010	29 November 2011 to 29 November 2020	1.25
1,715,484	29 November 2010	29 November 2011 to 29 November 2020	1.25
1,715,484	29 November 2010	29 November 2011 to 29 November 2020	1.25
________ 34,800,730 ________

15   Share based payment

SocialGO plc operates two equity settled share based remuneration schemes for employees: a long term incentive scheme and an unapproved scheme for executive directors, certain senior management and contractors. All employees are eligible to participate in the long term incentive scheme, the only vesting condition being that the individual remains an employee of the group over the savings period.

	31 December 2010		31 March 2010
	Weighted average price (pence)	Number	Weighted average price (pence)	Number
Outstanding at the beginning of the period	3.5	54,134,103	10.3	13,193,105
Granted during the period	1.25	8,746,452	1.3	44,940,998
Lapsed during the period	1.25	(286,720)	1.25	(4,000,000)
Outstanding at the end of the period	________ 3.2 ________	________ 62,593,835 ________	________ 3.5 ________	________ 54,134,103 ________

The exercise price of options outstanding at the end of the period ranged between 1.25p and 149.5p (year to 31 March 2010 - 1.25p and 149.5p) and their weighted contractual life was 8.92 periods (year to 31 March 2010 - 8.88 periods).

Of the total number of options outstanding at the end of the period, 13,643,105 (year to 31 March 2010 - 6,543,105) had vested and were exercisable at the end of the period.

There were no options exercised in the current period (year to 31 March 2010 - nil).

The weighted average fair value of each option granted during the period was 1.0p (year to 31 March 2010 - 0.8p).

The following information is relevant in the determination of the fair value of options granted during the period under the equity settled share based remuneration schemes operated by SocialGO plc.

            Equity settled                                                                                                                              

	31 December 2010	31 March 2010
Option pricing model used	Black-Scholes	Black-Scholes
Weighted average share price at grant date (pence)	1.2	1.2
Exercise price (pence)	1.26	1.25
Weighted average contractual life (days)	3341	3241
Expected volatility	84%	83.1%
Expected dividend growth rate	NIL	NIL
Risk-free interest rate	2.1%	4%
	________	________

The volatility assumption, measured at the standard deviation of expected share price returns, is based on a statistical analysis of daily share prices over the last three years.

17    Related party transactions

Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are described below.

Alex Halliday and Steve Hardman are directors of SocialGO™ and were among the vendors of Get On With It Limited. During the previous period, prior to the acquisition in January 2010, Get On With It Ltd had the contract to complete the development of SocialGO™ and provide ongoing development support. £nil (year to 31 March 2010 - £726,722) was due under this agreement in the period.  At 31 December 2010, £nil (year to 31 March 2010 - Nil) was outstanding.

During the year ended 31 March 2010 the Company entered into a consultancy agreement with Bentworth Holdings Ltd, the consideration for which is 15,000,000 share options, exercisable between 1 and 5 years. The share based payment charge for the period relating to these options was £36,618 (year to 31 March 2010 - £21,804). In a separate agreement, so long as it holds not less than 4 per cent of the issued share capital of the Company, Bentworth Holdings Ltd is entitles to appoint a non-executive director to the Board of SocialGO™, subject to approval by the Board and the Company's nominated adviser. The non-executive director appointed was Vikrant Bhargava. Vikrant Bhargava is the founder of and holds an indirect beneficial interest in Veddis Ventures, which is the trading name of Bentworth Holdings Ltd. At 31 December 2010 Veddis Ventures held 8,252,873 warrants, 16,400,000 share options and 77,448,000 shares at 31 December 2010 (31 March 2010 - 2,890,873 warrants, 15,000,000 share options and 40,000,000 shares).

Warrants, including those that are deferred, held by Directors at 31 December 2010, totalled 54,112,368 (31 March 2010 - 52,612,368), with Alex Halliday holding 22,659,841 (31 March 2010 - 22,559,841); Dominic Wheatley 8,700,000 (31 March 2010 - 8,000,000); Ian Livingstone 2,500,000 (31 March 2010 - 2,000,000); and Steve Hardman 20,252,527 (31 March 2010 - 20,052,527).

Some costs including US server fees are paid for by Directors, when this occurs Directors are reimbursed via expenses. At 31 December 2010, £260 (31 March 2010 - £19,288) was outstanding to Dominic Wheatley, £Nil (31 March 2010 - £624) to Brett Morris and £Nil (31 March 2010 - £3,175) to Steve Hardman. At 31 December 2010, £7,500 (31 March 2010 - nil) had been advanced to Alex Halliday and £1,443 (31 March 2010 - nil) had been advanced to Brett Morris for expenses.

At the period end, the following balances were owed to the Company, Alex Halliday £5,000 (31 March 2010 - Nil), Steve Hardman £10,000 (31 March 2010 - Nil) and Brett Morris £8,000 (31 March 2010 - Nil). These amounts represent the highest amounts due from the directors during the period.

The balances owed by Alex Halliday and Steve Hardman relate to unpaid shares allotted in the period.

18    Licence Commitments

At 31 December 2010 the Group was committed to pay £33,127 (year to 31 March 2010 - £33,127) under licensing agreements.

19    Events after the balance sheet date

     After the balance sheet date, on 12 January 2011 and 28 February 2011 the Company raised £300,000 from the issue of 10,909,091 new Ordinary 1p shares at 2.75p per share and £1,335,500 from the issue of 45,271,186 new Ordinary 1p shares at 2.95p per share.

On 28 February 2011, 5,833,333 1p Ordinary shares issued as deferred consideration on the acquisition of GOWIT were admitted to AIM, 5,219,298 of which were issued to directors. Alex Halliday received 2,763,158 shares and Steve Hardman received 2,456,140 shares.

20    Operating lease commitments

     At 31 December 2010 the Group had the following operating leases commitments:

	31 December 2010 £'000	31 March 2010 £'000
Land and buildings
Between one and five years	130 ________	170 ________

Company balance sheet at 31 December 2010 under UK GAAP

_________________________________________________________________________________

Company number 05066489

	Note		Company 31 December 2010 £'000	Company 31 December 2010  £'000	Company 31 March 2010 £'000	Company 31 March 2010 £'000
Fixed Assets
Intangible assets		III		-		-
Investments		IV		1,075 ________		1,075 ________
				1,075		1,075
Current assets
Debtors		V	235		231
Cash at bank and in     hand			1 ________		169 ________
			236		400
Creditors: amounts falling due within one year		VI	(59) ________		(42) ________
Net current assets				177 ________		358 ________
Total assets less current liabilities				1,252 ________		1,433 ________
Capital and reserves
Called up share capital		VII		6,567		5,967
Share premium account				10,519		10,470
Merger reserve				722		722
Retained losses				(16,789)		(15,959)
Shares to be issued				233 ________		233 ________
Shareholders' funds				1,252 ________		1,433 ________

The financial statements were approved by the Board and authorised for issue on 29 March 2011.

Dominic Wheatley

Chairman

The notes on pages 55 to 61 form part of these financial statements.

Notes forming part of the Company financial statements for the period ended 31 December 2010

_________________________________________________________________________________

I       Accounting policies

The principal accounting policies applied are summarised below.

Basis of preparation

The financial statements have been prepared under the historical cost convention and are in accordance with applicable UK accounting standards.

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied throughout the current and prior period unless otherwise stated.

Going concern

As detailed in note 1 to the consolidated financial statements on page 29 onwards, the Board continually monitors the financial position of the Company, taking into account the latest cash flow forecasts and the ability of the Company to generate cash.

Subsequent to the period end, the Company has raised additional funds through private placings of £300,000 and £1,335,500. 

The Board has prepared the financial statements on a going concern basis having given consideration to forecast sales and the marketability of SocialGO™, together with the above fundraising activity, for the foreseeable future. 

Given the level of paid subscription taken up since commercial launch, the Board believe it's most recent sales forecasts, which incorporate continued growth in paid subscriptions to SocialGO™, to be achievable.  However, given that SocialGO™ represents a new product in a relatively new market, there remains an inherent uncertainty in the level of growth that will actually be achieved.  The Board are confident that any shortfall in forecast growth in revenues, were this to happen, could be sufficiently mitigated by a reduction in the Company's cost base to ensure that the Company will have sufficient working capital to operate as a going concern for the foreseeable future.

The Board therefore believe thatit is appropriate to draw up the financial statements on a going concern basis.

The financial statements do not include any adjustments that would result if the going concern basis of preparation were to become no longer appropriate.

            Externally acquired intangible assets

Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives.

            Intellectual Property - 3-5 years straight line

            Valuation of investments

Investments held as fixed assets are stated at cost less any provision for impairment in value.             

Share based payments 

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the income statement on a straight line basis over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

Where equity instruments are granted to persons other than employees, the income statement is charged with the fair value of goods and services received.  If it is not possible to identify the fair value of these goods or services provided, the income statement is charged with the fair value of the options granted.

Fair value is calculated using the Black-Scholes model.

Where equity instruments are issued by the Company in respect of services received by a subsidiary undertaking, this is treated as a capital contribution and included in the cost of the investment in the subsidiary, unless otherwise reimbursed, or due to be reimbursed, by the subsidiary undertaking.

            Deferred taxation

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date except that the recognition of deferred tax assets is limited to the extent that the Company anticipates making sufficient taxable profits in the future to absorb the reversal of the underlying timing differences.

            Deferred tax balances are not discounted.

II      Loss for the financial period

SocialGO plc has taken advantage of the exemption allowed under s408 of the Companies Act 2006 and has not presented its own profit and loss account in these financial statements.  The Company's loss for the period is £1,083,000 (year to 31 March 2010 - £1,903,000 loss). 

III     Intangible assets

		Intellectual property	Total
		£'000	£'000
Cost
Balance at 1 April 2010 and 31 December 2010		19	19
		=============================	==================================

            Amortisation

Balance at 1 April 2010 and 31 December 2010		19	19
		=============================	==================================

            Net book value

At 31 December 2010 and 31 March 2010		-	-
		=============================	==================================

IV     Fixed asset investments 

            Subsidiary undertakings

	31 December 2010  £'000	31 March 2010 £'000
Cost
Balance at 1 April 2010	3,191	2,526
Additions	- ________	665 ________
Balance at 31 December 2010	3,191	3,191
Provisions
Balance at 1 April 2010 and 31 December 2010	(2,116) ________	(2,116) ________
Carrying value of investments	1,075 ________	1,075 ________

The opening balance relates to Bright Entertainment Limited (£1,000,000), PushPlay Interactive (£1,112,000), the acquisition of 100% of the voting equity instruments of CommonWorld Ltd on 27 December 2007 (£414,000) and to the acquisition of Get On With It Limited (£665,000).

The cost of Get On With It Ltd investment stated at the nominal value of shares and warrants issued or to be issued, was calculated as follows:

	£'000
Consideration paid
11,666,667 1p ordinary shares issued 12 January 2010	117
11,666,667 warrants to subscribe for 1p ordinary shares issued 12 January 2010	88
23,333,332 1p ordinary shares to be issued	233
29,958,333 warrants to subscribe for 1p ordinary shares to be issued	227 ________
Intellectual property	665 ________

The fair value of the shares and warrants to be issued was calculated using the Black-Scholes method.

The following were subsidiary undertakings at the end of the period:

Name	Country of incorporation or registration	Proportion of voting rights and ordinary share capital held	Nature of business
SocialGO Development Limited	England & Wales	100%	Trading company
Bright Things International Limited	England & Wales	100%	Holding company
Bright Things Inc	USA	100%	Trading company
PushPlay Interactive LLC	USA	100%	Trading company
CommonWorld Limited	England & Wales	100%	Trading company
Get On With It Limited	England & Wales	100%	Trading company

For all undertakings listed above, the country of operation is the same as its country of incorporation or registration.

Bright Things Inc. is 100% owned by Bright Things International Limited. 

SocialGO plc took advantage of the merger relief provisions under s131 Companies Act 1985 when it issued equity shares on a share for share basis to acquire a 100% interest in SocialGO Development Ltd, PushPlay Interactive LLC and CommonWorld Limited.

SocialGO plc took advantage of the merger relief provisions under s612 Companies Act 2006 when it issued equity shares on a share for share basis to acquire a 100% interest in Get On With It Limited.

V      Debtors due within one year

	31 December 2010 £'000	31 March 2010 £'000
Debtors - Amounts owed by subsidiary undertakings	131	183
Debtors - Unpaid shares (note XI)	15	-
Debtors - Deposits	17	17
Other debtors - VAT	6	17
Prepayments	66 ________ 235 ________	14 ________ 231 ________

VI     Creditors: amounts falling due within one year

	31 December 2010 £'000	March 2010 £'000
Amounts owed to subsidiary undertakings	26	26
Trade creditors	28	16
Accruals	5	-
	________ 59 ________	________ 42 ________

VII    Auditors' remuneration

	31 December 2010 £'000	31 March 2010 £'000
Auditors' remuneration - audit services	20	18
- non-audit services - interim review	1	7
- non-audit services - taxation	1	7
	________ 22 ________	________ 32 ________

VIII   Share capital and reserves

Details of the Company's share capital and the movements in the year can be found in note 14 to the consolidated financial statements, on page 46 onwards.

At the period end, there was £15,000 unpaid on shares allotted in the period due from Alex Halliday £5,000 (31 March 2010 - Nil) and Steve Hardman £10,000.

	Share capital	Share premium	Merger reserve	Retained deficit	Shares to be issued	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000
31 March 2010	5,967	10,470	722	(15,959)	233	1,433
Share based payment charge	-	-	-	176	-	176
Issue of shares and warrants - private placings	600	73	-	77	-	750
Share issue costs	-	(24)	-	-	-	(24)
Loss before and after tax and total comprehensive income	-	-	-	(1,083)	-	(1,083)
31 December 2010	6,567	10,519	722	(16,789)	233	1,252

IX    Share options

Unapproved Share Options

Details of the unapproved share options outstanding at 31 December 2010 in respect of the ordinary shares under option agreements entered into by the Company can be found in note 14.

EMI Plan

Details of the EMI share options outstanding at 31 December 2010 in respect of the ordinary shares under option agreements entered into by the Company can be found in note 14.

X     Events after the balance sheet date

Details of the post balance sheet events can be found in note 19 on page 53.

XI    Related party transactions

Details of the related party transactions can be found in note 17 on page 52.

The Company has exercised the exemption provided under FRS 8 in respect of wholly-owned subsidiaries.

XII   Operating lease commitments

     At 31 December 2010 the Company had the following operating leases commitments:

	31 December 2010 £'000	March 2010 £'000
Land and buildings
In one year or less	56	53
	________ 56 ________	________ 53 ________

Advisers

_________________________________________________________________________________

Registrars	Share Registrars Limited Suite E - First Floor 9 Lion and Lamb Yard Farnham Surrey  GU9 7LL
Nominated Adviser & Brokers	Canaccord Genuity Limited Cardinal Place 80 Victoria Street 7th Floor London  SW1E 5JL
Co-Broker	First Columbus Investments New Broad Street House 35 New Broad Street London  EC2M 1NH
Solicitors	Faegre & Benson LLP 7 Pilgrim Street London  EC4V 6LB
Bankers	The Royal Bank of Scotland 13 Market Place Reading Berks  RG1 2EP
PR	Pelham Bell Pottinger 5th Floor Holborn Gate 330 High Holborn London WC1V 7QD
Independent Auditors	BDO LLP 55 Baker Street London  W1U 7EU

 

END

 

 

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