2021 Annual Report and Accounts

RNS Number : 4793I

Crossword Cybersecurity PLC

19 April 2022

Crossword Cybersecurity Plc

19 April 2022 - London, UK - Crossword Cybersecurity Plc (AIM:CCS, "Crossword", the "Company" or the "Group"), the technology commercialisation company focused on cyber security and risk, is pleased to announce its final results for the year ended 31 December 2021. The Annual Report and Accounts along with the Notice of its Annual General meeting ("AGM") and a Form of Proxy will be posted to Shareholders shortly.

A copy of the Annual Report and Accounts and the notice of AGM are available on the Company's website at www.crosswordcybersecurity.com.

AGM and Investor Meeting

The AGM will be held on Monday 16 May 2022 at 10.00am at the offices of Shakespeare Martineau LLP, 6th Floor, 60 Gracechurch Street, London EC3V 0HR.

Additionally, the Company will be hosting an update on the Investor Meet Company platform on Tuesday 17 May at 2.00pm. Click here to register for this event.

2021 Financial Highlights

· Delivered 43% revenue growth to £2.3m (including Grant Income of £152k included in 'Other Income'), despite the turbulence in the economy.

· Revenues from product and services expanded by 56%.

· Annual recurring revenue doubled during 2021.

· £1.6m equity fund raise February 2021, and a £5.0m equity fund raise July 2021.

· £1.3m cost increases driven by headcount increasing by 74%, with continued investment in sales and marketing and product development, and increased professional fees in 2021 driven by two acquisitions, two equity fund raises and the opening of an overseas company in Oman.

· £457k gain on revaluation of CyberOwl Limited shareholding measured at fair value. Crossword catalysed the creation of CyberOwl Limited in 2016.

· Loss of £2.5m.

· £3.4m closing cash.

2021 Operational Highlights

· Rizikon users grew to over 500 users by the end of 2021.

· Acquired Verifiable Credentials Limited in May 2021, adding IdentiProof to the product portfolio.

· Acquired Stega UK Limited in August 2021. Integrated the threat intelligence and monitoring company and their sophisticated in-house platform, Nightingale.

· Integrated DarkBeam's cyber risk audits into Rizikon, significantly enhancing its functionality.

· Completed grant funded feasibility study with Liverpool John Moores University to investigate the underlying problems and causes of failures in supply chain risk and assurance.

· The IASME Consortium Limited commenced using Rizikon to deliver its Counter Fraud Fundamentals Certification. This is as well as delivering its Internet of Things security certification.

· Consulting secured two more FTSE250 clients.

· Crossword Cybersecurity LLC was formed in the Sultanate of Oman.

· Designed, built and market tested a completely new product in the privacy governance space, for the University of Glasgow.

· Refreshed the Board with the appointment of Dr Robert Coles and Tara Cemlyn-Jones.

· Share split where each Ordinary Share of 5p was sub-divided into ten new ordinary shares of 0.5p.

· Great progress on gender diversity with the Board being 37.5% women and Advisory Board at 50:50 parity. The Women at Crossword Group was established.

· Office move in London from Richmond to a flexible Waterloo office.

Post Period Highlights

· Acquired Threat Status Limited, the threat intelligence company and provider of Trillion™, the cloud-based software as a service (SaaS) platform for enterprise-level credential breach intelligence. This takes the number of acquisitions in the past 12 months to three.

· The IASME Consortium Limited commenced using Rizikon to deliver its Maritime Security Certification. This is as well as delivering its Internet of Things security and Counter Fraud Fundamentals certifications.

· Continued to expand the membership body network to distribute Rizikon. Launched an offer to members of techUK, the UK technology trade association, and BESA, the British Educational Suppliers Association, for a single-use cyber security assessment to support them towards Cyber Essentials certification.

Outlook

· Expect rate of growth in income to be circa 75% in 2022, in line with market expectations.

· Continue rapid roll out of Rizikon Pro, on the back of partnerships and membership deals.

· Target over 1,000 organisations using Rizikon to assess over 10,000 suppliers by end 2022.

· Take Identiproof to market as well as continuing product development.

· Continued focus on Sales and Marketing.

· Complete the integration of Threat Status Ltd into Crossword.

· Focus on cross sell opportunities following three acquisitions in less than 12 months, with the addition of circa 50 new clients, three new products (Identiproof, Trillion and Arc), and new threat monitoring service using Nightingale, our world class platform.

· Growing client interest in Nixer and Nixer functionality being used to enhance Rizikon.

Tom Ilube, CEO of Crossword Cybersecurity plc, commented: "I am incredibly pleased with the progress Crossword made in 2021, achieving 43% total revenue growth, and 56% growth in our product and services revenue. We expanded our product portfolio with the addition of Identiproof, our services offering with the addition of Nightingale, and our geographical reach with the opening of our Oman office. We were delighted to welcome new institutional investors in our February and July 2021 fund raises and are appreciative of the ongoing support of our shareholders.

" We have welcomed the teams from Stega UK Ltd and Verifiable Credentials into the Crossword fold during 2021, and the team from Threat Status Ltd post period in March 2022. Crossword employees continue to embody our culture and values of responsibility, openness, flexibility and learning.

" We have had a strong start to 2022, commencing delivery of services to a new FTSE 100 company, also to a company which supports UK critical national infrastructure, progressed cross sell opportunities of Nightingale into our consulting client base and have already sold Trillion into our Rizikon network.

" Following our three successful acquisitions in the past 12 months, we will continue to make targeted acquisitions to accelerate growth, where we see interesting cyber security companies. "

- Ends -

The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. The information is disclosed in accordance with the Company's obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain

Contacts

Crossword Cybersecurity plc - Tel: +44 (0) 333 090 2587

Email: info@crosswordcybersecurity.com

Tom Ilube, Chief Executive Officer

Mary Dowd, Chief Financial Officer

Grant Thornton (Nominated Adviser) - Tel: +44 (0) 20 7383 5100

Colin Aaronson / Daphne Zhang / Ciara Donnelly

Hybridan LLP (Broker) - Tel: +44 (0)203 764 2341

Claire Louise Noyce

For media enquiries contact:

Duncan Gurney, GingerPR

duncan@gingerpr.co.uk - Tel: +44 (0)1932 485 300

About Crossword Cybersecurity plc

Crossword Cybersecurity plc reduces the cyber risks for clients by providing a portfolio of products and services, powered by university and other research-driven insights. Crossword focuses on the development and commercialisation of cyber security and risk management related software and cyber security services. The Group's specialist cyber security product development and software engineering teams develop the research concept into a fully-fledged commercial product that it will then take to market. The Group's aim is to build up a portfolio of revenue generating, intellectual property based, cyber security products. Rizikon Assurance, Crossword's leading product, is a SaaS platform that enables medium to large companies to assess and manage all risks from their suppliers. Nixer CyberML, another Crossword product, is a new tool for businesses that want to solve advanced security and cybercrime problems, such as detecting and dealing with compromised accounts, fraud, and in-application denial of service attacks. Identiproof, is the World Wide Web Consortium (W3C) verifiable credentials compatible middleware and wallet technology. Trillion and Arc are the latest additions to Crossword's product suite, offering some of the strongest and most advanced credential leak monitoring services in the market. Crossword's team of expert cyber security consultants leverages years of experience in national security, defence and commercial cyber intelligence and operations to provide bespoke cyber security consulting advice tailored to its clients' business needs, including threat monitoring using Nightingale, our world class platform.

Chairman's Statement

Strong growth as the economy emerges from the pandemic

As the world emerged slowly from the challenging pandemic period, Crossword continued to progress rapidly with our strategy of building a significant intellectual property-based, AIM quoted cyber security business.

By the end of 2021, Crossword had grown revenue (including Grant Income) by a very healthy 43%. 2022 has started positively, and the company is confident of achieving growth of circa 75% in the coming year. Rizikon now has over 500 organisations using the platform, we have integrated two acquisitions and our first-class specialist cyber security consulting team is building on its major client relationships.

Management and staff are to be congratulated on achieving 43% revenue growth in 2021, as the economy emerged gradually from a very tough period. We look forward to continuing to build value for shareholders in the year ahead.

A series of smart acquisitions

During 2021, Crossword continued to expand its product portfolio and accelerate growth through a series of targeted acquisitions. Crossword acquired Verifiable Credentials Limited in the first half of the year and Stega UK Limited in the second half. The company also signed a head of terms to acquire a cyber threat company, Threat Status Limited, in December and the transaction completed in March 2022.

Robust Governance

We strengthened the Group Balance Sheet in 2021 by completing two equity fund raises, with significant shareholder support and new investors coming on board. We completed a £1.6m fundraise early in the year followed by a £5m raise in July. We would like to thank our shareholders for their support as we build for the future.

We were delighted to welcome aboard two new Board members, Dr Robert Coles and Tara Cemlyn-Jones, at the AGM. Once again, I would like to take this opportunity to thank Dr David Stupples and Gordon Matthew for their invaluable contributions as they retired from the Board.

The Board maintains a robust framework of controls and high standards, enabling the company to adapt quickly and securely in a way that safeguards our stakeholders longer-term interests. The Board continues to adhere to the Quoted Companies Alliance Corporate Governance Code (the 'QCA Code') in line with the London Stock Exchange's requirement for all AIM listed companies to adopt a recognised corporate governance code. The Chairman's Corporate Governance Statement within the Annual Report provides further details.

Significant growth in 2021, set to accelerate in 2022

The last year has been one of rapid growth once again as we emerge from the worst of the pandemic. Crossword is well set for faster growth in 2022. We have experienced leadership, an expert cyber security team and a strong set of best-in-class cyber security products and services to offer in the fast-growing cyber security market.

Our diverse and committed team of employees has performed remarkably during this period and I would like to acknowledge them all. Crossword's core values of responsibility, openness, flexibility and learning underpin everything we do and will enable our company to accelerate in 2022 and beyond.

Sir Richard Dearlove KCMG OBE

13 April 2022

Chief Executive Officer ' s Statement

It is my pleasure, as Chief Executive Officer, to present the Annual Report and audited accounts for Crossword Cybersecurity Plc ('Crossword' or the 'Company' or the 'Group') for the financial year ended 31 December 2021.

Crossword grew strongly in 2021, as the economy and wider society started to emerge from the pandemic albeit with stops and starts along the way. Overall, the business grew by an impressive 43% through the year.

In the period under review, product and services revenue (including Grant Income) grew by 56% over the comparative period. The Group revenue growth of 43% includes software development services to related party which has now discontinued. We were particularly pleased to see consulting services recurring revenue increase by almost 100% over the prior year.

Despite the pandemic reaching new heights and negatively impacting the economy worldwide, the field of cyber security experienced high demand and demonstrated its resilience with another consecutive record year of investment in cyber security firms. Crossword's products and services have seen a growing demand throughout 2021 leading to another successful year of operations. According to the UK Cyber Security Sectoral Analysis 2022, the UK remains the largest cyber security market in Europe with a total revenue of £10.15bn, which represents growth of 14% from last year's figure (£8.9bn). The UK maintained its spot as the biggest exporter of cyber services in Europe, increasing its exports from £3.9bn to £4.24bn.

Going into 2021, after a tough period the previous year due to the pandemic, the Executive team was determined to make solid progress in building the business. We decided to accelerate our growth and enhance our product portfolio through a series of tactical acquisitions, and we successfully completed two transactions during the year. The first was Verifiable Credentials Limited which has been assigned intellectual property from the University of Kent, adding its product Identiproof to our product portfolio. Identiproof addresses the growing 'digital credentials' market whereby tens of millions of physical certificates (such as academic certificates, insurance documents, health certificates and many others) will be converted into digital certificates that need to be verified to confirm their authenticity. Identiproof was created by Professor David Chadwick, an acknowledged expert and co-author of the global W3C standard in the digital credentials field, who joined Crossword's team. The second, Stega UK Limited, the threat intelligence and monitoring company that is particularly strong in the financial services and hedge fund sector, added significant technical expertise, in-depth cyber threat data and thirty new clients, bringing our revenue generating services client base to over 100 organisations. We also signed a heads of terms for our third acquisition, Threat Status Limited, a threat intelligence company, that we completed in March 2022. Following the acquisition of Threat Status Limited, products Trillion™ and Arc will be incorporated into Crossword's product suite, completing our aim of having five products in the market by the end of 2022.

Rizikon, Crossword's leading product, continued to make strong progress as we rolled it out to a wide range of clients, driven by our membership body programme. Our agreement to launch Rizikon to the 10,000 Chartered Institute of Information Security members resulted in great take-up. We also signed up a number of other membership organisations. As a result, we ended 2021 with more than 500 organisations using Rizikon, either in trials or contracted. We also enhanced the product by integrating Darkbeam cyber risk audits into Rizikon. Our R&D team, who work closely with universities on cyber risk intellectual property-based product ideas, completed a revenue generating project with the University of Glasgow on privacy governance software. They also completed an Innovate UK-funded project to investigate Manufacturing Supply Chain Risk with Liverpool John Moores University and a number of industry partners. Concepts generated by this project will be used to enhance Rizikon over the coming year.

Crossword's Consulting division continued to secure projects with major FTSE, mid-market and fast-growing entrepreneurial companies. We are particularly pleased that our consulting services division has secured a good mix of vCISO revenue contracts, which will deliver recurring revenue through 2022 and beyond. vCISO is a virtual/remote CISO (Chief Information Security Officer) service, provided by Crossword Consulting cyber security experts at a fraction of the cost of an in-house CISO. Crossword services recurring revenue, strengthened by the acquisition of Stega UK Ltd, increased by almost 100% over the prior year.

Following consulting and market research projects carried out in the region in 2020, Crossword established an Oman subsidiary, in partnership with Al-Rawahy Holdings, a significant Omani Group with extensive interests across the Gulf region. Our subsidiary, Crossword Cybersecurity LLC, will be the exclusive third-party distributor of Crossword's existing and future cyber security products, including Rizikon. Our full range of products and services will be made available across the region to help organisations improve their cyber security posture.

On the corporate front, Crossword strengthened its balance sheet, completing a £1.6m equity fundraise in 2021 through a placing and subscription of Crossword Ordinary Shares at a price of 260 pence per share. In May, we competed a 10:1 share split to support liquidity and following the share split, we raised £5m at a price of 30 pence in July 2021. I was delighted with the level of support from our existing shareholders through this period and was very pleased to welcome several major new shareholders.

At our AGM in May 2021, we welcomed two new Board members, Dr Robert Coles and Tara Cemlyn-Jones. Robert was lead partner for KPMG's Information Security consulting business prior to moving into industry where he held a number of CISO positions at large corporations including GlaxoSmithKline. Robert previously chaired Crossword's Advisory Board and continues to chair our consulting business. Tara has 28 years' experience in financial services with specialist knowledge of capital markets, M&A, strategy and digital transformation. We would like to thank Dr David Stupples and Gordon Matthew for their excellent contribution over the years as they retired from the Board at the AGM.

As Crossword continues to grow and mature as an organisation, a keen focus is kept on our wider stakeholder and social responsibilities. Our Polish team reacted quickly to the suffering of Ukrainians evacuating to Poland, putting a donations scheme in place, and sharing experiences with the whole group. Crossword is considering the BCorp accreditation, as we believe that this will provide external parties with confidence that Crossword holds itself to high standards in relation to stakeholders, in areas such as governance, employees, community, environment and customers.

I want to close by thanking all those who helped Crossword accelerate through a tricky year which ended with an excellent result. As we look forward, 2022 looks incredibly exciting for Crossword. We are aiming for 75% revenue growth across the Group and with Crossword's outstanding team and our culture of responsibility, openness, flexibility and learning, I am confident that we will achieve our goals.

Tom Ilube

Chief Executive Officer

13 April 2022

Consolidated Statement of Comprehensive Income		12 Months ended 31st December	12 Months ended 31st December
	Notes	2021	2020
		£	£
Revenue	2	2,171,137	1,627,611
Cost of Sales	3	(1,957,178)	(1,582,194)
Gross Profit		213,959	45,416

Administrative expenses	3,4	(3,260,139)	(2,320,675)
Other operating income	6	358,727	209,647
Finance income-bank interest income and foreign exchange		4,956	(3,205)
Finance costs-other interest expense	7	(220,545)	(204,679)
Gain on revaluation of financial assets	22	456,803	-
Loss for the year before taxation		(2,446,239)	(2,273,497)

Tax credit / expense	9	172,615	(4,840)

Loss for the Year		(2,273,624)	(2,278,336)

Other Comprehensive Income
Items that may be reclassified to profit or loss:
Foreign exchange translation Gain / (Loss)		(13,220)	9,595
Other Comprehensive Income		(13,220)	9,595

Total Comprehensive Loss		(2,286,844)	(2,268,741)

Loss for the period attributable to:
Owners of the parent		(2,229,296)	(2,249,707)
Non-controlling interests		(44,328)	(28,629)
Total Loss for the Year		(2,273,624)	(2,278,336)

Total comprehensive loss for the period attributable to:
Owners of the parent		(2,242,516)	(2,240,112)
Non-controlling interests		(44,328)	(28,629)
Total Comprehensive Loss		(2,286,844)	(2,268,741)

Loss Per Share (basic)*	20	(0.03)	(0.05)
Loss Per Share (diluted)		(0.03)	(0.05)

All results are derived from continuing operations

* 2020 Loss per share was re-stated following share split in 2021

Statements of Financial Position as at 31 December		Group	Group	Company	Company
	Notes	2021	2020	2021	2020
		£	£	£	£
Non-Current Assets
Intangible assets	11	1,103,679	-	521,603	-
Tangible assets	12	5,460	70,064	-	38,392
Investments in subsidiaries	14	-	-	1,637,518	458,164
Goodwill	10	875,277	-	-	-
Unlisted investment	13	456,834	31	456,834	31
Intercompany receivable greater than one year		-	-	918,206	653,316
Total non-current assets		2,441,250	70,095	3,534,161	1,149,902

Current Assets
Trade and other receivables	15	1,066,076	497,912	838,622	275,680
Cash and cash equivalents		3,373,062	958,341	3,106,817	824,667
Total current assets		4,439,138	1,456,253	3,945,439	1,100,347
TOTAL ASSETS		6,880,388	1,526,348	7,479,600	2,250,249

EQUITY
Attributable to the owners of the Company
Share Capital	19	374,786	256,605	374,786	256,605
Share premium account	19	14,971,221	8,518,391	14,971,221	8,518,391
Other reserves	21	240,310	181,618	240,310	181,618
Retained earnings		(11,827,351)	(9,598,055)	(10,800,700)	(8,835,874)
Translation of foreign operations		(14,992)	(1,772)	-	-
Attributable to owners of the parent		3,743,974	(643,213)	4,785,617	120,740
Non-controlling interests		(139,127)	(94,799)	-	-
Total equity		3,604,847	(738,012)	4,785,617	120,740

LIABILITIES
Current Liabilities
Trade and other payables	16	1,413,658	929,038	1,049,960	794,187
Other current liabilities	17	1,368,638	-	1,351,471	-
Total current liabilities		2,782,296	929,038	2,401,431	794,187
Long Term Liabilities
Other non-current liabilities	18	493,245	1,335,322	292,552	1,335,322
Total long term liabilities		493,245	1,335,322	292,552	1,335,322

Total Liabilities		3,275,541	2,264,360	2,693,983	2,129,509
Total Equity & Liabilities		6,880,388	1,526,348	7,479,600	2,250,249

The company's loss for the year was £1,964,825 (2020: £1,921,160).
The financial statements were approved by the Board and authorised for issue on 13 April 2022. They were signed on its behalf by
Tom Ilube
Chief Executive Officer

Statements of Changes in Equity
Group 2021	Share Capital	Share Premium	Equity Reserve	Retained Earnings	Translation Reserve	Non-controlling interests	Total
£
At 1st January	256,605	8,518,391	181,618	(9,598,056)	(1,772)	(94,799)	(738,012)
Issue of shares	118,181	6,770,954	-	-	-	-	6,889,135
Transaction costs	-	(318,124)	-	-	-	-	(318,124)
Employee share schemes - value of employee services	-	-	58,692	-	-	-	58,692
Loss for the period	-	-	-	(2,229,296)	-	(44,328)	(2,273,624)
Other comprehensive loss for the period	-	-	-	-	(13,220)	-	(13,220)
At 31st December	374,786	14,971,221	240,310	(11,827,351)	(14,992)	(139,127)	3,604,847

Group 2020
At 1st January	234,061	7,515,744	128,826	(7,428,818)	(11,367)	-	438,447
Issue of shares	22,543	1,021,108	-	-	-	-	1,043,651
Transaction costs	-	(18,461)	-	-	-	-	(18,461)
Employee share schemes - value of employee services	-	-	52,792	-	-	-	52,792
Transfer on issue of shares to non-controlling interest	-	-	-	66,169	-	(66,169)	-
Gain from issue of shares to non-controlling interest	-	-	-	14,300	-	-	14,300
Loss for the period	-	-	-	(2,249,707)	-	(28,629)	(2,278,336)
Other comprehensive loss for the period	-	-	-		9,595	-	9,595
At 31st December	256,605	8,518,391	181,618	(9,598,056)	(1,772)	(94,799)	(738,012)

Company 2021	Share Capital	Share Premium	Equity Reserve	Retained Earnings	Translation Reserve	Non-controlling interests	Total
£
At 1st January	256,605	8,518,391	181,618	(8,835,874)	-	-	120,740
Issue of shares	118,181	6,770,954	-	-	-	-	6,889,135
Transaction costs	-	(318,124)	-	-	-	-	(318,124)
Employee share schemes - value of employee services	-	-	58,692	-	-	-	58,692
Loss for the period	-	-	-	(1,964,825)	-	-	(1,964,825)
At 31st December	374,786	14,971,221	240,310	(10,800,699)	-	-	4,785,617

Company 2020
At 1st January	234,061	7,515,744	128,826	(6,914,714)	-	-	963,917
Issue of shares	22,543	1,021,108	-	-	-	-	1,043,651
Transaction costs	-	(18,461)	-	-	-	-	(18,461)
Employee share schemes - value of employee services	-	-	52,792	-	-	-	52,792
Loss for the period	-	-	-	(1,921,160)	-	-	(1,921,160)
At 31st December	256,605	8,518,391	181,618	(8,835,874)	-	-	120,740

Statements of Cashflows		12 Months ended 31st December	12 Months ended 31st December	12 Months ended 31st December	12 Months ended 31st December
		Group	Group	Company	Company
Years	Notes	2021	2020	2021	2020
Cashflows From Operating Activities		£	£	£	£
Loss for the year		(2,273,624)	(2,278,336)	(1,964,825)	(1,921,160)
Movement in trade and other receivables		(412,005)	128,385	(837,873)	450,691
Movement in trade and other payables		86,231	457,260	40,374	(265,054)
Depreciation	3	66,243	10,740	38,392	7,774
Amortisation	3	37,881	139,697	9,931	98,478
Finance Costs	7	220,545	204,681	138,742	200,844
Gain on measurement of financial assets	22	(456,803)	-	(456,803)	-
Employee share schemes	4	58,692	52,792	58,692	52,792
Tax (credit) / expense	9	(172,615)	4,840	-	-
Tax paid		(5,396)	(4,840)	-	-
Net Cashflow from Operating Activities		(2,850,851)	(1,284,780)	(2,973,370)	(1,375,635)

Cashflow From Investing Activities
Investment in intangible assets	11	(183,796)	-	(183,796)	-
Purchase of tangible assets	12	-	(2,001)	-	-
Acquisition of subsidiaries, net of cash acquired	10	(645,390)	-	(700,000)	-
Net Cashflow from Investing Activities		(829,186)	(2,001)	(883,796)	-

Cashflows From Financing Activities
Proceeds from issue of ordinary shares		6,639,135	1,043,651	6,639,135	1,043,651
Share issuance costs		(318,124)	(18,461)	(318,124)	(18,461)
Interest paid on convertible loan notes		(168,000)	(168,000)	(168,000)	(168,000)
Proceeds from issue of shares in subsidiary to non-controlling interests		-	14,300	-	-
Interest paid		(1,638)	(1,592)	(186)	(460)
Payments for right of use assets Net Cash Inflow from Financing Activities		(43,734)	(148,536)	(13,507)	(108,513)
		6,107,639	721,362	6,139,319	748,217

Net Increase in Cash & Cash Equivalents		2,427,602	(565,419)	2,282,151	(627,418)
Foreign Currency Translation Difference		(12,881)	9,595	-	-
Cash and Cash Equivalent at the beginning of the period		958,341	1,514,166	824,667	1,452,085
Cash and Cash Equivalent at the end of the period		3,373,062	958,341	3,106,818	824,667

Notes to the Financial Information

1 Accounting Policies

1.1 The Group and its operations

Crossword Cybersecurity plc (the "Company") is a Company incorporated on 6 March 2014 in England and Wales under the Companies Act 2006. The Company is the parent company of the Crossword Group of Companies focusing on the cybersecurity sector. The principal activities are the development and commercialisation of university research-based cyber security related software and cybersecurity consulting.

The financial information includes the results of the Company and its subsidiaries (together referred to as the "Group" and individually as "Group entities").

The principal accounting policies applied in the preparation of the financial information are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

1.2 Basis of preparation of financial information

The financial information has been prepared in accordance with the requirements of the London Stock Exchange plc AIM Rules for Companies and in accordance with International Financial Reporting Standards as adopted in the United Kingdom ("UK adopted IFRS") and those parts of the Companies Act 2006 applicable to companies reporting in accordance with UK adopted IFRS.

The financial information has been prepared on the historical cost basis. The preparation of financial information in conformity with UK adopted IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. Changes in assumptions may have a significant impact on the financial information in the year the assumptions changed. Management believes that the underlying assumptions are appropriate. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial information are disclosed in note 1.21.

Changes in accounting policy and disclosures

There were no changes in the accounting policy and disclosures in the current financial year.

At the year end, the following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective. The group is considering their impact but do not expect a material on the future results of the Group.

New standards, interpretations and amendments adopted in current period

The following new standards or amendments to existing standards were applicable for the first time and have not had an impact on the financial statements.

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform - Phase 2 (issued in August 2020)

The amendments are aimed at helping companies to provide investors with useful information about the effects of the reform of interest rate benchmarks on those companies' financial statements.

The amendments complement those issued in 2019 and focus on the effects on financial statements when a company replaces the old interest rate benchmark with an alternative benchmark rate as a result of the reform. The Phase 2 amendments relate to:

· changes to contractual cash flows -a company will not have to derecognise or adjust the carrying amount of financial instruments for changes required by the reform, but will instead update the effective interest rate to reflect the change to the alternative benchmark rate;

· hedge accounting -a company will not have to discontinue its hedge accounting solely because it makes changes required by the reform, if the hedge meets other hedge accounting criteria; and

· disclosures -a company is required to disclose information about new risks arising from the reform and how it manages the transition to alternative benchmark rates.

The Group has not had a material impact on its consolidated financial statements from these amendments.

New standards, interpretations and amendments not yet adopted

The Group adopt early the following amendments to standards which are not yet mandatory.

IFRS 17 Insurance Contracts (including the June 2020 Amendments to IFRS 17, effective from 1 January 2023)

Amendments to IFRS 3Business Combinations - Reference to the Conceptual Framework (effective from 1 January 2022)

Amendments to IAS 16 Property, Plant and Equipment - Proceeds before Intended Use (effective from 1 January 2022).

Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors - Definition of Accounting Estimates (effective 1 January 2023).

Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (effective 1 January 2023).

Amendments to IAS 12 Income Taxes - Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective 1 January 2023).

Amendments to IAS 1 Presentation of Financial Statements - Classification of Liabilities as Current or Non-current (effective 1 January 2024).

1.3 Going Concern

The financial information has been prepared on a going concern basis. The Group's business model has been enhanced following the two acquisitions in 2021 and a further acquisition in early 2022. The Group's operations have incurred a loss in the financial year whilst the Group's products and services continue to be enhanced, developed and brought to market. The Directors forecast in 2022 show a trading loss with net cash outflows as the business continues to develop and enhance its products and services and grows revenue. In 2021, the Groups operations have been supported by cash inflows from customers and from the issue of £6.3m equity net of costs during 2021.

The Directors have considered the Group's future and forecast business and cash requirements. Following the completion of successful fundraises in 2021, the Directors have determined that the group wants to continue to expand, potentially through future acquisitions, which will require a further fund raise in 2022.

In December 2022, the £1.4m convertible loan notes mature and will either be converted to equity, repaid, or re-negotiated. The outcome of the settlement of the convertible loan notes is uncertain but may require further finance for repayment of the debt.

Whilst the Group has £3.4m as cash and cash equivalent at 31 December 2021, on 14 March 2022, the Group acquired another acquisition for a total consideration of £1.5m.

The Directors have concluded that these circumstances could give rise to a material uncertainty arising from events or conditions that may cast significant doubt on the entity's ability to continue as a going concern if a further fund raise was unsuccessful. However, considering recent successful fund raises the Directors are confident that they can continue to adopt the going concern basis in preparing the financial statements.

The financial statements do not include any adjustment that may arise in the event that the Group is unable to raise finance, realise its assets and discharge its liabilities in the normal course of business.

1.4 Basis of consolidation

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. Control exists when then the Group has:

- the power over the investee;

- exposure, or rights, to variable returns from its involvement with the investee;

- the ability to use its power over the investee to affect the amount of the investor's returns.

All intra-Group transactions balances income and expenses are eliminated on consolidation. Uniform accounting policies are applied by the Group entities to ensure consistency.

1.5 Revenue

Revenue comprises the fair value of consideration received or receivable for licence income and the rendering of services in the ordinary course of the Group's activities. Revenue is shown net of value added tax and trade discounts. Income is reported as follows:

(a) Licence income

Technology and product licensing revenue represents amounts earned for licenses granted under licensing agreements and recognized over time . Revenues relating to up-front payments are recognised when the obligations related to the revenues have been completed.

Revenues for maintenance and support services are recognised in the accounting periods in which the services are rendered.

(b) Rendering of Services

Services relate to implementation and deployment fees for the technology and products licensed to customers. Revenue is recognised in the accounting periods in which the services are rendered.

Consulting revenue is recognised when the performance obligation is met, primarily at a point of time. Contracts are structured to support the revenue recognition process by stating what the objectives and deliverables are for each part of the project, and the revenue attributable to each deliverable.

1.6 Functional and presentation currency

The presentation currency of the Group is pounds sterling (GBP). The functional currency of the Company is pounds sterling. The functional currency of the Company's polish subsidiary is Polish Zloty (PLN).

1.7 Business combinations

The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured as the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition related costs are recognised in the income statement as incurred.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in the consolidated income statement. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the cash generating unit ("CGU") that is expected to benefit from the synergies of the combination. CGU to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. Any impairment loss is recognised directly in the income statement.

1.8 Foreign operations

The assets and liabilities of foreign operations are translated into Pound sterling using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Pound sterling using the average exchange rates, which approximate the rates at the dates of the transactions, for the period.

All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.

On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the consolidated statement of comprehensive income as part of the profit or loss on disposal.

1.9 Intangible assets - research and development

Expenditure on research is written off in the period in which it is incurred.

Development expenditure incurred on specific projects is capitalised where the management is satisfied that the following criteria have been met:

• it is technically feasible to complete the software product so that it will be available for use;

• management intends to complete the software product and use or sell it;

• there is an ability to use or sell the software product;

• it can be demonstrated how the software product will generate probable future economic benefits;

• adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and

• the expenditure attributable to the software product during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.

Other development expenditure that does not meet these criteria is recognised as an expense as incurred.

1.10 Property, plant and equipment

Property, plant and equipment is stated at purchase price less accumulated depreciation and impairment losses. The cost includes all expenses directly related to the purchase of a relevant asset.

All other repair and maintenance costs are charged to the income statement for the period during the reporting period in which they are incurred.

1.11 Depreciation and amortisation

Each item of property, plant and equipment is depreciated using the straight-line method over the estimated useful life and depreciation charge is included in the income statement for the period.

The depreciation is charged to the income statement for the period and determined using the straight-line method over the estimated useful life of the item of property, plant and equipment.

The expected useful lives of property, plant and equipment in the reporting and comparative periods are as follows: Useful lives in years

Computers 3.33

Furniture & fittings 3.33

Computer software development expenditure recognised as assets is amortised on a straight-line basis over their estimated useful lives, which does not exceed 5 years.

1.12 Impairment of non-financial assets

The residual value of an asset is the estimated amount that the Group would currently obtain from disposal of the asset less the estimated costs of disposal, if the asset was already of the age and in the condition expected at the end of its physical life.

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

At the end of each reporting period management assesses whether the indicators of impairment of property, plant and equipment exists.

The carrying amounts of property, plant and equipment and all other non-financial assets are reviewed for impairment if there is any indication that the carrying amount may not be recoverable.

For the purpose of impairment testing the recoverable amount is measured by reference to the higher of value in use (being the net present value of expected future cashflows of a relevant cash generating unit) and fair value less costs to sell (the amount obtainable from the sale of an asset or cash generating unit in an arm's length transaction between knowledgeable, willing parties who are independent from each other less the costs of disposal).

Where there is no binding sale agreement or active market, fair value less costs to sell is based on the best information available to reflect the amount the Group would receive for the cash generating unit.

A cash generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

If the carrying amount of the asset exceeds its recoverable amount, the asset is impaired and an impairment loss is charged to the income statement so as to reduce the carrying amount in the statement of financial position to its recoverable amount.

A previously recognised impairment loss is reversed if the recoverable amount increases as a result of a reversal of the conditions that originally resulted in the impairment.

This reversal is recognised in profit or loss for the period and is limited to the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised in prior years.

1.13 Financial Instruments

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

All financial instruments are classified in accordance with the principles of IFRS 9 Financial Instruments.

1.13 a Financial assets

Classification of financial assets

Debt instruments that meet the following conditions are subsequently measured at amortised cost:

• the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Debt instruments that meet the following conditions are subsequently measured at FVTOCI:

• the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets; and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

By default, all other financial assets are subsequently measured at FVTPL.

Amortised cost and effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period.

For financial instruments other than purchased or originated credit-impaired financial assets, the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter period to the gross carrying amount of the debt instrument on initial recognition. For purchased or originated credit-impaired financial assets, a credit-adjusted effective interest rate is calculated by discounting the estimated future cash flows, including expected credit losses, to the amortised cost of the debt instrument on initial recognition.

The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. On the other hand, the gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.

Impairment of financial assets

The Company recognises a loss allowance for expected credit losses on financial assets that are measured at amortised cost. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

Expected credit loss measurement

The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.

1.13 b Financial liabilities and equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company entity are recognised at the proceeds received, net of direct issue costs.

Financial liabilities

All financial liabilities are subsequently measured at amortised cost using the effective interest method or at "Fair Value Through Profit or Loss" ("FVTPL").

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when the financial liability is contingent consideration of an acquirer in a business combination to which IFRS 3 applies, or it is designated as at FVTPL.

Financial liabilities subsequently measured at amortised cost

Financial liabilities that are not 1) contingent consideration of an acquirer in a business combination, 2) held-for-trading, or 3) designated as at FVTPL, are subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.

Derecognition of financial liabilities

The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in the statement of comprehensive income.

1.14 Leases

The Company assesses whether a contract is or contains a lease, at inception of the contract. The Company recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Company recognises the lease payments as an administrative expense on a straight-line basis over the term of the lease.

1.15 Taxes

Current tax is calculated using rates and laws enacted or substantively enacted at the reporting date. Current tax is recognised in profit or loss unless it relates to an item of other comprehensive income or equity whereby it is recognised in other comprehensive income or equity respectively.

Deferred income tax is calculated using rates and laws enacted or substantively enacted at the reporting date that are expected to apply on reversal of the related temporary difference, and is determined in accordance with the expected manner of recovery of the related asset.

Deferred income tax is recognised in profit or loss unless it relates to an item of other comprehensive income or equity whereby it is recognised in other comprehensive income or equity respectively.

1.16 Share Based Payments

On occasion, the Company has made share-based payments to certain Directors and employees by way of issue of share options. The fair value of these payments is calculated by the Company using the binomial option valuation model and Monte Carlo simulation model.

The expense, where material, is recognised on a straight-line basis over the period from the date of award to the date of vesting, based on the Company's best estimate of the number of shares that will eventually vest.

1.16 Investments

Shares in subsidiary undertakings are stated at cost less provision for impairment. Unlisted investments are measured at fair value through profit or loss.

1.17 Intercompany Financing arrangements

The amortised cost methodology is applied to the financing arrangement between the Company and subsidiary Crossword Consulting Limited. An assessment in undertaken to determine the market rate of interest for a similar loan given the credit rating of the subsidiary to apply discounting with the principal conceptually including a financing element.

1.18 Pension Obligations

The Group operates a defined contribution pension scheme for employees in the United Kingdom. A defined contribution scheme is a pension plan under which the Group pays fixed contributions into a separate entity.

Contributions payable to the Group's pension scheme are charged to the income statement in the year to which they relate. The Group has no further payment obligations once the contributions have been paid.

In Poland, the Group pays the statutory employer's contribution into the public pension scheme for each employee, but does not operate any pension schemes. In 2021, the Group implemented the Employee Capital Plans (PPK) programme which involved employee consultation and selection of a financial institution.

1.19 Cash and Cash Equivalents

Cash comprises cash-in-hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash, and which are subject to an insignificant risk of change in value.

1.20 Accounting for Government Grants

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attached to them and that the grants will be received.

Government grants are recognised as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in the income statement in the period in which they become receivable.

UK Government Furlough Funding is netted of against Gross Staff Costs in the period in which it is incurred, while all other grants recognised as income are presented within Other Operating Income.

1.21 Critical accounting estimates and judgements and key sources of estimation uncertainty

Estimates and judgements are continually evaluated and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The following are the key estimates that the directors have made in the process of applying the Group's accounting policies and have the most significant effect on the amounts recognised in the financial information. There are no further critical accounting judgements.

Fair value of options granted to employee

The Group uses the Binomial model and Monte Carlo simulation model in determining the fair value of options granted to employees under the Group's various share schemes. The determination of the fair value of options requires a number of assumptions. The alteration of these assumptions may impact charges to the income statement over the vesting period of the award. Details of the assumptions used are shown in note 4.

Convertible Loans

The Group has given consideration to the measurement and presentation of the convertible loans.

On legal execution of the loans the financial liability is initially measured at its fair value which is the face value of the loans. Immediately after recognition, at fair value, the financial liability is measured at amortised cost, using a reasonable estimate of the Group's cost of capital. The difference between the fair value and the amortised cost is taken to the P&L account.

Impairment

An impairment assessment of the carrying value in the Company of the investment in subsidiaries is undertaken using an NPV model over the projected cash flows, with a discount rate based on the assessment of weighted average cost of capital.

Business combinations

The recognition of business combinations requires management to make estimates in order to determine fair value of consideration payable on acquisition as well as fair value of identifiable assets, particularly intangibles, and liabilities acquired. These estimates are based on all available information and in some cases assumptions with respect to the timing and amount of future revenues and expenses associated with an asset.

Deferred tax

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies. The company has taxable temporary differences that partly support the recognition of the losses as deferred tax assets based on the above. The company has determined that it cannot recognise deferred tax assets on all of the tax losses carried forward however, based on the likely characteristics, timing and level of future taxable profits, together with future tax planning strategies. Further details on taxes are disclosed in note 9.

2 Revenue and segmental information

An analysis of the Group's revenue for each period for its continuing operations, is as follows:

£	Group 2021	Group 2020
Revenue from the sale of goods/licences	189,252	136,206
Revenue from the rendering of services	183,855	34,675
Revenue from Consulting	1,660,207	1,229,000
Revenue from Byzgen Limited for software development	137,823	203,030
Revenue from Cyberowl Limited for software development	-	24,700
Total Revenue	2,171,137	1,627,611

The IFRS 8 Operating segments requires the Group to determine its operating segments based on information which is provided internally. Based on the internal reporting information and management structures within the Group, it has been determined that there are two operating segments established in accordance to differences in products and services provided - Software product and services and Cybersecurity consulting.

These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments.

The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements. The information regarding the Group's reportable segments is presented below:

2021 £	Software product and services	Cybersecurity consulting	Eliminations	Total
Revenue	462,108	1,784,309	(75,280)	2,171,137
Cost of Sales	(358,333)	(1,598,845)	-	(1,957,178)
Gross Profit	103,775	185,464	(75,280)	213,959

Administrative expenses	(2,703,009)	(632,410)	75,280	(3,260,139)
Other operating income	358,727	-	-	358,727
Financial income and expenses	323,725	(82,512)	-	241,213
Loss for the year before taxation	(1,916,782)	(529,457)	-	(2,446,239)

Tax credit / (expense)	172,615	-	-	172,615
Loss for the Year	(1,744,167)	(529,457)	-	(2,273,624)

Total Comprehensive Loss	(1,757,387)	(529,457)	-	(2,286,844)

Segment assets	8,178,282	1,029,509	(2,327,403)	6,880,388
Segment liabilities	2,924,439	1,762,053	(1,410,951)	3,275,541

EBITDA	(2,168,462)	(414,866)	-	(2,583,328)

2020
Revenue	553,946	1,285,293	(211,629)	1,627,611
Cost of Sales	(483,580)	(1,098,615)	-	(1,582,194)
Gross Profit	70,366	186,679	(211,629)	45,416

Administrative expenses	(2,060,206)	(472,097)	211,628	(2,320,675)
Other operating income	209,647	-	-	209,647
Financial income and expenses	(102,818)	(105,067)	-	(207,885)
Loss for the year before taxation	(1,883,011)	(390,486)	-	(2,273,497)

Tax expense	(4,840)	-	-	(4,840)
Loss for the Year	(1,887,850)	(390,486)	-	(2,278,336)

Total Comprehensive Loss	(1,878,256)	(390,486)	-	(2,268,741)

Segment assets	2,480,051	375,437	(1,329,141)	1,526,348
Segment liabilities	2,129,509	1,340,505	(1,205,654)	2,264,360

EBITDA	(1,625,501)	(284,918)	-	(1,910,419)

During the year ended 31 December 2021 approximately 17% (2020: 32%) of the consolidated entity's external revenue was derived from sales to a major United Kingdom client. No other clients accounted for 10% or more of the consolidated entity's external revenue.

No analysis of net assets by geographic segment is provided as the net assets are principally all within the UK.

3 Expenses by nature

Expenses By Nature

£	Group 2021	Group 2020
Staff and related costs	3,305,430	2,643,670
Consultancy and related costs	450,028	280,917
Professional fees	616,791	268,567
Property related costs	172,823	82,776
Depreciation	66,243	150,437
Amortisation	37,881	-
Capitalised costs	(138,067)	-
Other expenses	706,188	476,502
Total cost of sales and administrative expenses	5,217,317	3,902,870

Expenses by geographic location

£	Group 2021	Group 2020
UK	4,695,737	3,410,235
Poland	521,580	492,635
Total cost of sales and administrative expenses	5,217,317	3,902,870

4 Staff Costs

Staff costs, including directors' remuneration, were as follows:

£	Group 2021	Group 2020	Company 2021	Company 2020
Wages and salaries	2,924,357	2,454,980	1,321,393	1,150,153
Furlough receipts for wages and salary	-	(93,510)	-	(36,218)
Social security costs	327,012	243,642	142,103	119,755
Furlough receipts for social security costs	-	(6,363)	-	(2,430)
Other pension costs	54,061	46,509	37,003	31,470
Furlough receipts for pension costs	-	(1,588)	-	(625)
	3,305,430	2,643,670	1,500,499	1,262,106

The average monthly number of employees, including the directors, during the period was as follows:

	Group 2021	Group 2020	Company 2021	Company 2020
Staff	42	34	17	13
Directors	9	10	8	8
Total	51	44	25	21

Share based payments

The amount recognised in respect of share-based payments was £58,692 (2020: £52,792).

The Group has established share option programmes that entitle certain employees to purchase shares in the Group.

There are no performance conditions attaching to these options. 5,840 options were exercised in 2021 (133,330 in 2020).

Total options issued as at 31 December 2021 amount to 2,348,653 (2020: 2,065,730, re-stated for share split).

"The share options have been valued using a binomial model applying the following inputs:

• Exercise price - equal to the share price at grant date,

• Vesting date - all options vest in three tranches, on the first, second and third anniversary from the grant date;

• Expiry/Exercise date - 10 years from the grant date;

• Volatility (sigma) - 40%. This has been calculated based on the historic volatility of the Company's share price.

• Risk free rate - yield on a zero coupon government security at each grant date with a life congruent with the expected option life;

• Dividend yield - 0%,

• Future staff turnover - 0%. We have however adjusted the P+L charge for the current year (and future years) to account for lapsed options due to Leavers; and

• Performance conditions - none."

Reconciliation of share options - Company

		Weighted average exercise price		Weighted average exercise price
	2021	2021	2020	2020
		£		£
1st January	2,065,730	0.36	1,888,890	0.26
Granted during the period	352,923	0.36	496,840	0.70
Lapsed during the period	(64,160)	0.36	(186,670)	0.31
Exercised during the period	(5,840)	0.28	(133,330)	0.28
End of the period	2,348,653	0.36	2,065,730	0.36

The 2020 numbers and 2021 opening have been re-stated for share split (note 19).

The weighted average share Price at the exercise date was £0.36.

The range of exercise prices is from £0.05 to £0.55.

The weighted average remaining life of the options was 6.5 years (2020: 6.7 years).

5 Directors' Remuneration

The remuneration of the Directors who served in the current year was as follows:

2021 £	Basic Salary and Fees	Bonus	Taxable Benefits	Employer's Pension Contribution	Total
Executive Directors
Tom Ilube	128,311		3,942	1,318	133,572
Mary Dowd*	130,000			10,000	140,000
					-
Non-Executive Directors					-
Sir Richard Dearlove	25,000		25,000		50,000
Ruth Anderson	12,000				12,000
Andy Gueritz	16,000				16,000
Gordon Matthew	6,000				6,000
Dr David Secher	16,000				16,000
Prof David Stupples	4,750				4,750
Robert Coles	7,250				7,250
Tara Cemlyn-Jones	7,231				7,231
Total	352,541	-	28,942	11,318	392,801
2020 £
Executive Directors
Tom Ilube	126,622		3,689	1,314	131,625
Mary Dowd*	130,000			10,000	140,000
					-
Non-Executive Directors					-
Sir Richard Dearlove	25,000		25,000		50,000
Ruth Anderson	12,000				12,000
Andy Gueritz	16,000				16,000
Gordon Matthew	12,000				12,000
Dr David Secher	16,000				16,000
Prof David Stupples	12,000				12,000
Total	349,622	-	28,690	11,314	389,625

*	Denotes highest paid director

Share Options issued

	Year	Share Options	Exercise Price	Total Value
Mary Dowd	2020	25,000	0.31	2,903
Sir Richard Dearlove	2020	94,340	0.27	9,496
Sir Richard Dearlove	2021	70,423	0.36	25,000

During the year the Company implemented a Long Term Incentive Plan (LTIP) whereas awards have been made to the following executives - Mary Dowd, Stuart Jubb, Jake Holloway and Sean Arrowsmith. Each award is of nominal cost (£0.005) options to acquire up to 750,000 Crossword ordinary shares of 0.5p each which vest at the average mid-market price of the Ordinary Shares over the 20 trading days preceding the end of the performance period which ends on 30 September 2024. 25% of the options will vest if the Award Price is 50p, and 100% will vest if the Award Price is equal to or greater than 100p, with straight line vesting between 50p and 100p.

6 Other Operating Income

	Group 2021	Group 2020
	£	£
Research & development tax credits	206,380	209,647
Grant Income	152,347	-
	358,727	209,647

The grant income represents award from Innovate UK for Group's participation in feasibility studies on digital supply chain.

7 Finance Costs

	Group 2021	Group 2020
	£	£
Finance Cost of Financial Liabilities (Loan Notes)	184,149	196,546
Interest on deferred and contingent considerations	34,978	-
Company right to use assets Interest	187	4,298
Crossword Cybersecurity sp z.o.o. right to use assets interest	452	2,705
Crossword Consulting Ltd Overdraft Annual Fees & Interest	735	876
Crossword Cybersecurity Spolka z.o.o Interest	44	256
	220,545	204,679

8 Auditor's Remuneration

The expenses for services rendered by the Group auditor present themselves as follows:

£	Group 2021	Group 2020
Fees for the parent company individual and consolidated financial statements	46,000	40,250
Fees for legal audit of subsidiary financial information	17,000	6,204
Fees for tax advisory services	-	6,000
	63,000	52,454

9 Tax

£	Group 2021	Group 2020
Current income tax expense	5,396	4,840
Deferred tax credit	(178,011)	-
Total tax (credit) / expense	(172,615)	4,840

There is no tax charge in respect of other comprehensive income.

The deferred tax liability arising on fair value revaluation on acquisitions of Verifiable Credentials Ltd and Stega UK Ltd (note 10) has been offset with a deferred tax asset recognised in respect of losses brought forward from prior periods, resulting in deferred tax credit to the statement of comprehensive income.

There is a deferred tax liability of £114,201 arising on the fair value uplift of £456,803 of the unlisted investment in CyberOwl Limited. This deferred tax liability has been offset by trading losses of the group.

Corporation tax losses carried forward for offset against future year's trading profits amount to approximately £4,800,000 (2020: £4,400,000).

£	Group 2021	Group 2020
Loss before taxation	2,446,239	2,273,497
Average rate of corporation tax	19.00%	19.00%
Tax on loss	(464,785)	(431,964)
Effects of:
Expenses not deductible for tax purposes	24,578	17,640
Depreciation for the period in excess of capital allowances	104,124	150,437
Trading loss carried forward	508,699	259,047
Total tax charge	172,615	(4,840)

Factors that may affect future tax changes

The rate of corporation tax in the United Kingdom had been expected to reduce from 19% to 17% per cent from 1 April 2020. However in March 2020 it was announced that the rate would continue at 19%. In March 2021 it was announced that UK corporation tax rates would rise to 25% from 2023.

Polish Corporation Tax has been 19% until 1 January 2017, when Crossword started to benefit from the new small companies reduced rate of 15% adopted by the Parliament Act amendment to Polish CIT Law.

10 Business Combinations

On 26 May 2021 the Group acquired 100% of the issued share capital of Verifiable Credentials Ltd ("VCL"), the provider of Identiproof, the World Wide Web Consortium verifiable credentials compatible middleware and wallet technology.

The net consideration used in the acquisition of VCL and the provisional fair value of assets acquired and liabilities assumed on the acquisition date are detailed below:

£	Book value	Adjustment	Fair value
Intangible assets	127,306	477,728	605,034
Tangible assets	1,098		1,098
Non-current assets	128,404	477,728	606,132

Trade and other receivables	69,538	-	69,538
Cash and cash equivalents	37,684	-	37,684
Current assets	107,222	-	107,222

Other non-current liabilities	135,953	-	135,953
Deferred tax liability	-	95,545	95,545
Non-current liabilities	135,953	95,545	231,498

Trade and other payables	101,421	-	101,421
Current liabilities	101,421	-	101,421

Total fair value of net assets acquired	(1,748)	382,183	380,435

Fair value of consideration
Cash on completion			100,000
Shares at acquisition date			150,000
Deferred consideration in shares			130,435
Total consideration			380,435

Goodwill			-

Acquisition costs of £17,345 arose as a result of the transaction, which have been recognised as part of administrative expenses in the statement of comprehensive income.

The Share Purchase Agreement stipulates that contingent consideration becomes payable once certain revenue targets are achieved, this can range from 0 to £750k for the first earn-out period (12 months after acquisition) and from 0 to £1.5m for the second earn-out period (24 months after acquisition). The management estimates that it is unlikely that the company will achieve the revenue necessary to trigger earn-out payments for both periods, hence no contingent consideration has been recorded. The company did not generate any revenue in 2021.

On 9 August 2021 the Group acquired 100% of the issued share capital of Stega UK Ltd ("Stega"), the threat intelligence and monitoring company.

The net consideration used in the acquisition of Stega and the provisional fair value of assets acquired and liabilities assumed on the acquisition date are detailed below:

£	Book value	Adjustment	Fair value
Intangible assets	-	354,301	354,301
Tangible assets	30,509	(24,437)	6,072
Non-current assets	30,509	329,864	360,373

Trade and other receivables	86,619	-	86,619
Cash and cash equivalents	16,927	-	16,927
Current assets	103,546	-	103,546

Bank loans	68,000	-	68,000
Deferred tax liability	-	82,466	82,466
Non-current liabilities	68,000	82,466	150,466

Trade and other payables	82,990	-	82,990
Current liabilities	17,000	-	17,000
Current liabilities	99,990	-	99,990

Total fair value of net assets acquired	(33,935)	247,398	213,463

Fair value of consideration
Cash on completion			600,000
Shares at acquisition date			100,000
Deferred consideration in cash			134,435
Deferred consideration in shares			84,022
Contingent consideration in cash			119,604
Contingent consideration in shares			50,679
Total consideration			1,088,740

Goodwill			875,277

The goodwill relates mainly to the expected synergies and assembled workforce that do not meet criteria for recognition as a separate intangible assets.

The acquisition terms include additional consideration which is contingent upon achieving certain revenue targets. The contingent consideration ranges from 0 to £420k for the first earn-out period (12 months after acquisition) and from 0 to £420k for the second earn-out period (18 months after acquisition).

The Group has recorded the contingent consideration at management's estimate of fair value. For the specific purpose of estimating the fair value of the contingent liability, management assumes that Stega UK Ltd will achieve revenue target in the second earn-out period, that the contingent consideration will consequently become payable, and that the timing and the amount of the resulting cash outflows will be consistent with the terms outlined in the agreement with the seller.

Acquisition costs of £17,780 relating to this transaction have been recognised as part of administrative expenses in the statement of comprehensive income.

Since the acquisition date, Stega has contributed £210,650 to group revenues and £93,177 to group loss. If the acquisition had occurred on 1 January 2021, group revenue would have been £2,500,250 and group loss for the period would have been £2,535,237.

These two acquisitions help to implement Group's strategy to create a portfolio of subscription-based, enterprise-class products and services for its clients.

11 Intangible Assets

Software Development
£	Group 2021	Group 2020	Company 2021	Company 2020
Cost b/f	-	-	-	-
Acquired through business combinations	957,764	-	347,738	-
Additions	183,796		183,796
	1,141,560	-	531,534	-

Accumulated Depreciation
B/F	-	-	-	-
Charge for the period	37,881	-	9,931	-
C/d	37,881	-	9,931	-

Net Book Value	1,103,679	-	521,603	-

Intangible assets comprise of 3 different software development projects with remaining useful life of approximate 5 years each and the carrying amounts of £676,022, £326,351 and £101,306.

12 Tangible Assets

Computers
£	Group 2021	Group 2020	Company 2021	Company 2020
Cost b/f	24,675	22,674
Additions	-	2,001
Acquired through business combinations	7,170	-
	31,845	24,675	-	-

Accumulated Depreciation
B/F	21,124	18,157
Charge for the period	4,924	2,966
Translation adjustments	337	-
C/d	26,385	21,124	-	-

Net Book Value	5,460	3,551	-	-


Furniture and Fittings
£	Group 2021	Group 2020	Company 2021	Company 2020
Cost b/f	15,157	15,157	15,157	15,157
	15,157	15,157	15,157	15,157

Accumulated Depreciation
B/F	12,009	4,235	12,009	4,235
Charge for the period	3,148	7,773	3,148	7,773
C/d	15,157	12,009	15,157	12,009

Net Book Value	-	3,148	-	3,148


Right of Use Assets
£	Group 2021	Group 2020	Company 2021	Company 2020
Cost b/f	344,058	344,058	231,935	231,935
Disposals	(344,058)	-	(231,935)	-
	-	344,058	-	231,935

Accumulated Depreciation
B/F	280,694	140,996	196,687	98,209
Charge for the period	58,171	139,697	35,248	98,478
Translation adjustments	5,193	-	-	-
Disposals	(344,058)	-	(231,935)	-
C/d	-	280,694	-	196,687

Net Book Value	-	63,365	-	35,248

Total
£	Group 2021	Group 2020	Company 2021	Company 2020
Cost b/f	383,890	381,889	247,092	247,092
Additions/(disposals)	(344,058)	2,001	(231,935)	-
Acquired through business combinations	7,170	-	-	-
	47,002	383,890	15,157	247,092

Accumulated Depreciation
B/F	313,826	163,389	208,696	102,445
Charge for the period	66,243	150,437	38,396	106,252
Translation adjustments	5,530	-	-	-
Disposals	(344,058)	-	(231,935)	-
C/d	41,542	313,826	15,157	208,696

Net Book Value	5,460	70,064	-	38,395

13 Unlisted Investments

		Group 2021	Group 2020	Company 2021	Company 2020
Fair value at 1 January and 31 December		456,834	31	456,834	31

The above Group investment represents Crossword Cybersecurity Plc's 2021 - 4.4% (2020 - 4.4%) holding in CyberOwl Limited which was purchased on 18 April 2016.

The investment has been revalued at a fair value following successful fundraise by CyberOwl in February 2022.

14 Investment in subsidiaries

£	2021	2020
Cost b/f 1 January	458,164	11,017
Acquired during the year	1,088,740	-
Capital contribution	90,614	447,147
Cost c/f 31 December	1,637,518	458,164

The group's subsidiary undertakings are listed below, including name, country of incorporation, and proportion of ownership interest:

Name	Registered office	Principal activity	2021	2020
	6th Floor, 60 Gracechurch Street, London EC3N 0HR United Kingdom		%	%
Crossword Consulting Limited		Cybersecurity services	90	90


Crossword Cybersecurity SP Z.o.o.	ul. Wiejska 12a, 00-490 Warszawa, Poland	Cybersecurity services	100	100
	ul. Wiejska 12a, 00-490 Warszawa, Poland
Stega UK Ltd	6th Floor, 60 Gracechurch Street, London EC3N 0HR United Kingdom	Cybersecurity services	100	-

Verifiable Credentials Ltd	6th Floor, 60 Gracechurch Street, London EC3N 0HR United Kingdom	Cybersecurity services	100	-

Crossword Cybersecurity LLC	PO Box 808, Alwattayah / Muttrah / Muscat Governorate, Postcode: 100, Oman	Cybersecurity services	90	-

15 Trade and Other Receivables

£	Group 2021	Group 2020	Company 2021	Company 2020
Trade receivables	509,576	289,811	192,975	125,115
Other receivables	254,451	66,714	247,274	63,067
Prepayments	149,309	102,112	105,101	83,749
Accrued income	140,708	27,394	131,025	3,750
VAT Refund	12,033	11,881	-	-
Intercompany receivables within one year	-	-	162,247	-
	1,066,076	497,913	838,622	275,680

All of the above amounts are considered to be due within one year.

The maximum exposure to credit risk at the reporting date is the carrying value as above and the cash and cash equivalents and none are either past or impaired.

Of the above amounts held within the Group, £18,419 is denominated in Polish Zloty with the remainder in GBP (2020: £15,529).

Foreign exchange risk is currently minimal as balances in Polish Zloty are between the parent and its wholly owned subsidiary.

16 Trade and Other Payables

£	Group 2021	Group 2020	Company 2021	Company 2020
Trade payables	331,043	204,243	459,753	372,359
Employment taxes and VAT payable	242,642	163,002	56,790	38,746
Accruals	226,623	403,997	164,284	289,488
Deferred income	331,198	101,438	94,333	71,789
Deferred consideration	261,606	-	261,606	-
Other payables	20,546	56,360	13,194	21,805
	1,413,658	929,038	1,049,960	794,187

All of the above amounts are considered to be due within one year.

The deferred income relates to contract liabilities arising from contracts with customers.

Of the Trade and Other Payables amounts held within the Group, £57,836 (2020: £29,630) is denominated in Polish Zloty with the remainder in GBP.

17 Other Current Liabilities

£	Group 2021	Group 2020	Company 2021	Company 2020
Convertible loan notes	1,351,471	-	1,351,471	-
Bank loan	17,167	-	-	-
	1,368,638	-	1,351,471	-

18 Other Non-current Liabilities

£	Group 2021	Group 2020	Company 2021	Company 2020
Convertible loan notes	-	1,335,322	-	1,335,322
Bank loan	68,000	-	-	-
Deferred consideration	111,900	-	111,900	-
Contingent consideration	180,652	-	180,652	-
Deferred grant income	132,693	-	-	-
	493,245	1,335,322	292,552	1,335,322

19 Share Capital

Allotted called up and fully paid

Number of shares	2021	2020
B/f	51,320,900	46,805,610
Shares Issued in period	23,636,250	4,515,290
C/d	74,957,150	51,320,900

In May 2021 the company sub-divided each existing ordinary share of £0.05 into 10 new ordinary shares of £0.005 each.

The shares issued consequently were ordinary shares of £0.005 issued at a premium of £6,452,830 (2020: £1,002,647).

All shares carry the same voting and capital distribution rights.

£
Share Capital	2021	2020
Cost b/f	256,605	234,061
Shares Issued in period	118,181	22,544
	374,786	256,605

Share Premium
B/f	8,518,391	7,515,744
Shares Issued in period	6,452,830	1,002,647
C/d	14,971,221	8,518,391

20 Loss per share

Earnings per share is calculated by dividing the loss for the period attributable to ordinary equity shareholders of the parent by the weighted average number of ordinary shares outstanding during the year.

During the year the calculation for basic loss per share was based on the loss for the year attributable to owners of the parent of £2,229,296 (2020: £2,249,707) divided by the weighted average number of ordinary shares of 64,491,462 (2020: 49,819,800, re-stated following share split in 2021).

21 Reserves

The following describes the nature and purpose of each reserve within owners' equity

Reserve	Description and purpose
Share capital	This represents the nominal value of shares issued
Share premium	Amount subscribed for share capital less any issue costs more than nominal value
Equity reserve	Represents amounts charged on share options that have been granted to employees
Retained earnings	Cumulative net gains and losses recognised in the consolidated statement of comprehensive income
Translation of foreign operations	Is the difference that arises due to consolidation of foreign subsidiaries using an average rate during the period and a closing rate for the period end statement of financial position

22 Financial Instruments

£
Current Financial Assets	Group 2021	Group 2020	Company 2021	Company 2020
Financial assets measured at amortised cost
Trade and other receivables	904,735	383,920	733,521	191,932
Cash and cash equivalents	3,373,062	958,341	3,106,817	824,667

Non-Current Financial Assets
Financial assets measured at amortised cost
Loan to subsidiary	-	-	918,206	653,316

Financial assets measured at fair value through profit or loss
Financial investments	456,834	31	456,834	31

	4,734,631	1,342,292	5,215,378	1,669,945

The financial investments comprise of investment in CyberOwl Ltd, which has been revalued on the basis of valuation per share at as 1 February 2022 during the investment round, multiplied by the number of shares the Company owns in it. This methodology of determining a fair value equates to a level 2 assessment based on observed transactions of share price in recent transactions in the entity's equity.

£
Current Financial Liabilities	Group 2021	Group 2020	Company 2021	Company 2020
Financial liabilities measured at amortised cost
Trade and other payables	839,818	664,599	898,836	683,653
Short-term loans and leases	1,368,638	-	1,351,471	-

Non-Current Financial Liabilities
Financial liabilities measured at amortised cost
Loans	68,000	1,335,322	-	1,335,322
Non-current deferred consideration	111,900	-	111,900	-

Financial liabilities measured at fair value through profit or loss
Non-current contingent consideration	180,652	-	180,652	-

	2,569,008	1,999,921	2,542,858	2,018,974

The contingent consideration becomes payable upon achieving certain revenue targets stipulated in Share Purchase Agreement of Stega.

The fair value of the liability was established by using income approach, i. e. management's estimate that Stega will achieve its revenue target for the period between 12 and 18 months from the date of acquisition based on the latest internal revenue forecasts (IFRS 13 Level 3 hierarchy approach) and was determined by calculating the present value of estimated future cash outflows using the discount rate adjustment technique (the discount rate of 15% has been applied).

Reconciliation of Level 3 fair value measurements of financial liabilities:

£		Contingent consideration
B/f		-
Fair value on initial recognition		170,283
Interest		10,369
C/d		180,652

Lease capital liabilities of the group and of the company amounted to £nil in 2021 (2020: £43,734 and £13,416 respectively).

23 Financial Instruments - Risk

The Group could be exposed to risks that arise from its use of financial instruments. Risks in relation to financial assets include:

Market risk

Market risk covers foreign exchange risk, price risk and interest rate risk.

As the majority of the Group's transactions are either in Sterling or in Polish Zloty the Group considers its exposure to foreign exchange risk to be minimal.

There are no derivatives and hedging instruments.

The Group is not exposed to price risk given that no securities are held under financial assets.

The Group is not exposed to interest rate or cash flow risk due to the fact that the Group has no borrowing or complex financial instruments.

Credit risk

Credit risk is considered to be the risk of financial loss incurred by the Group in the event that a customer or counterparty to an asset fails to meet contractual obligations. The Group has adopted a policy of only dealing with credit worthy counterparties.

The Group's maximum credit exposure at the reporting date is represented by the carrying value of its financial assets. The Group's financial instruments do not represent a concentration of credit risk since the Group deals with a variety of counterparties.

Financial Assets
£	Group 2021	Group 2020	Company 2021	Company 2020
Cash and cash equivalents	3,373,062	958,341	3,106,817	824,667
Trade and other receivables	904,735	383,920	733,521	191,932
Loan to subsidiary	-	-	918,206	653,316
Financial investments	456,834	31	456,834	31
Total	4,734,631	1,342,292	5,215,378	1,669,945

Liquidity risk

Management monitor rolling forecasts of the Group's liquidity reserves, cash and cash equivalents on the basis of expected cash flows and therefore monitors liquidity risk sufficiently.

Financial Liabilities	2021		2020
£	due < 1 year	due 1 - 2 years	due < 1 year	due 1 - 2 years
Trade payables	331,043	-	204,243	-
Accruals	226,623	-	403,997	-
Deferred consideration	261,606	111,900	-	-
Contingent consideration	-	180,652	-	-
Other Payables	20,546	-	56,360	-
Loans	1,368,638	68,000	-	1,335,322
Total	2,208,456	360,552	664,600	1,335,322

24 Capital management

The Group considers its capital to comprise of its equity share capital, share premium, foreign exchange reserve, share options reserve and capital redemption reserve, less its accumulated losses. Quantitative detail is shown in the consolidated statement of changes in equity.

The directors' objective when managing capital is to safeguard the Group's ability to continue as a going concern in order to provide returns for the shareholder and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The directors monitor a number of KPIs at both the Group and individual subsidiary level on a monthly basis. As part of the budgetary process, targets are set with respect to operating expenses in order to effectively manage the activities of the Group. Performance is reviewed on a regular basis and appropriate actions are taken as required. These internal measures indicate the performance of the business against budget/forecast and to confirm that the Group has adequate resources to meet its working capital requirements.

25 Pensions

Employer contributions to the Group defined contribution pension scheme for employees in the United Kingdom were £51,485 (2020: £46,509). A defined contribution scheme is a pension plan under which the Group pays fixed contributions into a separate entity.

In Poland, the Group pays the statutory employer's contribution into the public pension scheme for each employee, but does not operate any pension schemes.

26 Related Party Transactions

Subsidiary Transactions
2021	Crossword Consulting Limited	Crossword Cybersecurity SP Z.o.o	Stega UK Limited	Verifiable Credentials Limited
Services received from £	274,099	580,704	7,000	-
Services supplied to £	-	-	-	-
Balance trade payable to £	150,311	102,067	4,200	-
Balance trade receivable from £	165,757	-	-	10,736
Intercompany loan receivable from £	918,207	-	-	-

2020
Services received from £	56,294	502,374	-	-
Services supplied to £	145,466	-	-	-
Balance trade payable to £	5,629	189,541	-	-
Balance trade receivable from £	368,271	-	-	-
Intercompany loan receivable from £	653,316	-	-	-

Tom Ilube, CEO, has made a loan of £250,000 to the Company on the same terms as the other Lenders as described in Note 27.

The Company has a related party relationship with its key management who are the Executives: Tom Ilube, Mary Dowd, Jake Holloway, Sean Arrowsmith and Stuart Jubb, whose total compensation amounted to £744,483 (2020: £697,924).

In March 2020, the subsidiary Crossword Consulting Limited issued 110,000 A shares to Stuart Jubb, Managing Director of the subsidiary and member of the executive team which equated to 10% of the subsidiary entity, for a subscription price of £15,400, which was estimated to equate to fair value.

27 Convertible Loan Notes

In 2019, the company received funds for £1.4m of Convertible Loan Notes. The term of the loans is 3 years and the interest is 12% payable quarterly in arrears. Early repayment is at the Company's sole option, subject to a minimum repayment amount of £10,000. Repayment is at the end of the term, in cash, save that each lender may opt to convert part or all of their loan into Ordinary Shares at £0.48 (value adjusted following share split in 2021). On repayment of the Loans in cash, each lender will be issued warrants valid for three months to subscribe for Ordinary Shares representing 10% of the value of the Loan at £0.48.

Included among the loan notes is one from Tom Ilube, CEO, for an amount of £250,000. Tom Ilube made a loan to the Company on the same terms as the other Lenders as described above.

28 Controlling Party

The Company does not have a controlling party.

29 Subsequent Events

On the 14th March 2022, Crossword Cybersecurity Plc acquired the whole of the share capital of Threat Status Limited, the threat intelligence company and provider of Trillion, the cloud based software as a service (SaaS) platform for enterprise-level credential breach intelligence, for a total consideration of £1,529,000 (£500,000 paid on completion and the rest deferred between first and second anniversary of the transaction, all amounts are undiscounted).

The acquisition of Threat Status adds a new cyber security offering to the Group's portfolio, cross sell opportunities are currently being explored with the acquisition, alongside operating synergies.

At the date of finalisation of these consolidated financial statements, the necessary market valuations and other calculations in relation to acquisition accounting had not been completed yet.

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