Note

2008

2007

Revenue

Continuing operations

-

-

Discontinued operations

214,310

277,747

───────

───────

214,310

277,747

Cost of sales

Continuing operations

-

-

Discontinued operations

(91,286)

(187,023)

───────

───────

(91,286)

(187,023)

GROSS PROFIT

─────── 

123,024

 ───────

90,724

Administrative expenses

Continuing operations - recurring

(64,888)

(135,644)

Discontinued operations - recurring

(182,399)

(212,325)

Discontinued operations  - Impairment of intangibles

2

-

(106,406)

Discontinued operations - Income from a guarantee agreement

2

-

100,829

───────

───────

Total administrative expenses

2

(247,827)

(353,546) 

───────

───────

LOSS FROM OPERATIONS

(124,263)

(262,822)

Financial expenses

6

Continuing operations

(5,530)

(11,570)

Discontinued operations

(10)

-

───────

───────

(5,540)

(11,570)

───────

───────

LOSS BEFORE TAXATION 

(129,803)

(274,392)

Income tax on loss on ordinary activities 

7

-

-

───────

───────

LOSS AFTER TAXATION - CONTINUING OPERATIONS

(70,418)

(147,214) 

LOSS AFTER TAXATION - DISCONTINUED OPERATIONS

(59,385)

(127,178)

───────

───────

LOSS FOR THE PERIOD

(129,803)

(274,392)

══════

══════

BASIC AND DILUTED EARNINGS PER SHARE 

Loss per share - Basic

9

(£0.0003)

(£0.0015)

══════

══════

Loss per share - Diluted

9

(£0.0003)

(£0.0015)

══════

══════

GROUP

COMPANY

Note

2008

2007

2008

2007

£

£

£

£

NON-CURRENT ASSETS

Investment in subsidiary

10

-

-

-

-

Intangible assets

11

1

5,415

-

5,415

Property, plant and equipment

12

1,485

1,360

-

1,360

───────

───────

───────

───────

1,486

6,775

6,775

CURRENT ASSETS

Inventories

13

4,377

4,395

-

4,395

Trade and other receivables

14

202,169

299,913

9,330

236,138

Cash and cash equivalents

5,308

10,162

4,732

4,341

───────

───────

───────

───────

211,854

314,470

14,062

244,874

───────

───────

───────

───────

TOTAL ASSETS

213,340

321,245

14,602

251,649

══════

══════

══════

══════

EQUITY

Share capital

18

3,775

3,775

3,775

3,775

Share premium

18

1,585,336

1,585,336

1,585,336

1,585,336

Retained earnings

(1,673,441) 

(1,543,638) 

(1,681,615) 

(1,608,641)

───────

───────

───────

───────

TOTAL EQUITY

(84,330)

45,473

(92,504)

(19,530)

───────

───────

───────

───────

CURRENT LIABILITIES

15

271,714

275,772

80,610

271,179

NON-CURRENT LIABILITIES

Long term borrowings

16

25,956

-

25,956

-

───────

───────

───────

───────

TOTAL LIABILITIES

297,670

275,772

106,566

271,179

───────

───────

───────

───────

TOTAL EQUITY AND LIABILITIES

213,340

321,245

14,062

251,649

══════

══════

══════

═══════

GROUP

COMPANY

Operating Activities

Note

2008

2007

2008

2007

£

£

£

£

Loss from Operations

(124,263)

(257,245)

(67,444)

(326,943)

Depreciation of property, plant and equipment 

12

1,320

6,313

-

6,313

Loss on disposal of tangible assets

12

-

975

-

975

Amortisation of intangible assets 

11

5,414

40,000

-

40,000

Cash received from a guarantee agreement

-

100,829

-

100,829

Gain on transfer of assets to subsidiary

-

-

(39,923)

-

───────

──────

──────

─────

Cash flows from operating activities before changes in working capital

(117,529)

(109,128)

(107,367)

(178,826)

(Increase) / decrease in inventories

18

81,810

-

81,810

(Increase) / decrease in receivables

47,744

(11,225)

62,541

45,537

Increase / (decrease) in payables

(4,058)

95,721

(24,209)

104,550

───────

──────

──────

─────

Cash (absorbed in) / generated from operations 

(73,826)

57,178

(69,035)

53,071

Interest paid

(84)

(11,570)

(74)

(11,570)

───────

──────

───────

──────

Net cash (absorbed in) /generated from operating activities 

(73,909)

45,608 

(69,109)

41,501

───────

──────

───────

─────

Cash flows from investing activities 

Net cash transferred on disposals to subsidiary

-

-

(1,000)

-

Purchases of property, plant and equipment

12

(1,445)

-

-

-

───────

──────

──────

──────

Net cash absorbed in investing activities 

(1,445)

- 

(1,000)

-

───────

──────

──────

──────

Cash flows from financing activities

Proceeds of borrowings

16

20,500

20,500

-

Repayment of borrowings

-

(36,955)

-

(38,669)

Proceeds from issue of ordinary shares

50,000

50,000

-

───────

──────

───────

──────

Net cash raised / (repaid) by financing activities 

70,500

(36,955)

70,500

(38,669)

───────

──────

───────

──────

Net (decrease)/increase in cash and cash equivalents

(4,854)

8,653

391

2,832

Cash and cash equivalents at beginning of period

10,162

1,509

4,341

1,509

───────

──────

───────

──────

Cash and cash equivalents at end of the period

5,308

10,162

4,732

4,341

══════

══════

══════

═════

1.1

Basis of preparation of financial statements

The financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') and IFRIC interpretations as adopted by the European Union and with those parts of the Isle of Man Companies Acts 1931 to 2004 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention. A summary of the more important Group accounting policies is set out below.

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. 

The financial statements are prepared on a going concern basis, the validity of which is dependent on the raising of finance by the conversion of loans as described in notes 20 and 21. . 

The Company has elected to take the exemption under Section 230 of the Isle Of Man Companies Acts 1931 to 2004 to not present the parent company income statement. The amount of the loss for the 12 months, after taxation, accounted for within the parent company income statement amounted to £72,974 (2007: £344,091 loss).

1.2

Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency'). The consolidated financial statements are presented in Sterling, which is the Company's functional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each balance sheet presented are translated at the closing rate of that balance sheet;

• income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transaction); and

• all resulting changes are recognised as a separate component of equity.

1.3

Revenue

Revenue represents sales of licences and boxed software to external customers. Revenue comprises the fair value of the consideration for the sale of goods and services, net of value added tax, rebates and discounts. Revenue from the sale of goods and services is recognised on delivery of the respective goods and services, when the Company has transferred risks and rewards of ownership to the customer, the amount of revenue can be measured reliably and collectability of the related receivables is reasonably assured. 

1.4

Discontinued operations

A discontinued operation is a component of the Group's business that represents a separate major line of business or geographical area of operations that has been disposed of, has been abandoned or meets the criteria to be classified as held for sale.

Discontinued operations are presented on the income statement as separate lines and are shown net of tax.

1.5

Business Combinations

The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at 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, plus any costs directly attributable to the business combination. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date. 

1.6   Investments in subsidiaries

   Investments in subsidiaries are stated at cost less provision for impairment, if any.

1.7

Intangible assets 

Intangible assets arise on the Group's portfolio of games and on technology developed by the Group. Intangible fixed assets are stated at cost less amortisation. Amortisation is provided at rates calculated to write off the cost of these fixed assets, less their estimated residual value, over their expected useful lives.

Impairment reviews are performed at the end of the first full financial year following initial recognition and, thereafter, if subsequent events or changes in circumstances indicate that the carrying value may not be recoverable. Where appropriate, the intangible fixed assets are then written down to their recoverable amount.

1.8

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation.  Regular purchases and sales are accounted for at the trade date. Depreciation is provided on all property, plant and equipment at rates calculated to write off the cost less residual value of each asset over its expected useful life, as follows:

Computer equipment

33%

Straight line basis

Fixtures and Fittings

33%

Straight line basis

1.9

Inventories

Inventories consist of games in the course of development. Inventories are stated at the lower of cost and net realisable value.  Costs represent all direct expenditure and an appropriate proportion of fixed and variable overheads. It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

1.10

Royalty payments

Where the company acquires games under licence, royalty payments may be payable on future sales under terms agreed with the vendor. In certain cases, royalty payments may be made in advance of sales. Such payments will be carried forward on the balance sheet until the game is released or for a maximum of twelve months. When the game is released, royalties arising on sales will be charge to the profit and loss account. Any remaining balances of advances which have not been fully covered by royalties payable on sales after twelve months will be reviewed and written off if necessary.

1.11

Taxation 

Income tax comprises current and deferred tax (if applicable). It is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. 

Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. 

The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets and liabilities that affect neither accounting nor taxable profit, other than in a business combination; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. 

Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.

1.12

Financial assets 

Financial assets are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Financial assets are classified into the following specified categories: financial assets at 'fair value through the profit and loss' (FVTPL), 'held-to-maturity' investments (HTM), 'available-for-sale' (AFS) financial assets, and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. No FVTPL or HTM assets or liabilities are held.

Loans and receivables

Trade receivables, loans and other receivables that are non-derivative instruments having fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are initially recognised at fair value less directly related transaction costs. They are subsequently measured at amortised cost using the effective interest method less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. 

Available for sale

Financial assets that are not classified as held-to-maturity; held-for-trading; designated as fair value through the profit and loss; or loans and receivables are classified as available-for-sale. Available-for-sale assets are initially recognised at fair value plus directly related transaction costs. They are subsequently measured at fair value. Unquoted equity investments whose fair value cannot be measured reliably are carried at cost and are classified as available-for-sale financial assets. Impairment losses and exchange differences resulting from re-translating the amortised cost of currency monetary available-for-sale assets are recognised in profit and loss together with interest calculated using the effective interest method. 

1.13

Financial liabilities 

Financial Liabilities

Financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument. All the Group's financial liabilities are classified as measured at amortised cost.

Other financial liabilities

Other financial liabilities including borrowings are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. 

Short term and long term borrowings

Short term and long term borrowings are initially measured at fair value and, are subsequently measured at amortised cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the Group's accounting policy for borrowing costs (see below).

Borrowing costs

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Interest is not capitalised within property, plant and equipment.

The effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability (or group of financial assets or liabilities) and of allocating the interest income or interest expense over the expected life of an asset or liability. The effective interest rate is the rate that exactly discounts estimate future cash flows to the instrument's initial carrying amount. 

1.14

Interest Expense

Interest expense is recognised in the income statement on an accruals basis using the effective interest method. 

1.15

Impairment of assets

At each reporting date, the Company assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Company makes an estimate of recoverable amount. Where the carrying value of an asset exceeds its recoverable amount the asset is written down to its recoverable amount. Recoverable amount is the higher of fair value less costs to sell and value in use and is deemed for an individual asset. If the asset does not generate cash flows that are largely independent of those from other assets or groups of assets, the recoverable amount of the cash generating unit to which the asset belongs is determined. Discount rates reflecting the asset specific risks and the time value of money are used for the value in use calculation. 

1.16

Share-Based Payments

The Group has applied the requirements of IFRS 2 Share-based Payments.

The Group issues equity-settled share based payments to certain employees. Equity-settled share based payments are measured at fair value at the date of the grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non market-based vesting conditions.

1.17

Key sources of estimation uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation and uncertainty at the balance sheet date, that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:

Recoverability of intangible assets

During the year, the Directors reconsidered the recoverability of the Group's intangible asset arising from its licenses and technology. Given the trading environment continues to be challenging the Group's technology assets were impaired and a charge of £5,414 was recognised in the profit and loss account to write these assets down to a nominal value of £1.  

1.18

New IFRS standards and interpretations effective in the current period

The following new accounting standards, amendments and interpretations became effective for periods beginning on or after 1 January 2008:

IAS 39 and IFRS 7 Reclassification of financial instruments

IFRIC 12 Service concession arrangements

IFRIC 14 The limit on a defined benefit asset, minimum funding requirements and their Interaction

The implementation of these new interpretations did not have any significant impact on the Group's accounting policies or treatments.

The following standards, amendments and interpretations to existing international standards have been published but are not yet mandatory for the Group and have not been adopted early.

IFRS 2 Amendment to IFRS 2 Vesting conditions and cancellations

IFRS 3 (Revised) Business combinations

IFRS 8 Operating segments

IAS 1 (Revised) Presentation of Financial Statements

IAS 23 (Revised) Borrowing costs

IAS 27 (Revised) Consolidated and separate Financial Statements

IAS 32 (Revised) Financial Instruments: Presentation

Not relevant to the Group:

IFRIC 13 Customer loyalty programmes

IFRIC 15 Agreement for the construction of real estate

IFRIC 16 Hedges of a net investment in a foreign operation

IFRIC 17 Distribution of non-cash assets to owners

IFRIC 18 Transfer of assets from customers

The analysis of auditors' remuneration is as follows:

2008

2007

£

£

Fees payable to the Company's auditors for the audit of the Company's annual accounts

Total audit fees

10,000

17,850

══════

══════

2008

2007

Discontinued

Discontinued

Continuing

Discontinued

Discontinued

Discontinued

Continuing

Allocated

Europe

Rest of the World

Head Office

Total

Europe

Rest of the World

Head Office

Head Office

Total

£

£

£

£

£

£

£

Turnover

158,937

55,373

-

214,310

253,113

24,634

-

-

277,747

Cost of sales

(83,190)

(8,096)

-

(91,286)

(170,436)

(16,587)

-

-

(187,023)

───────

───────

───────

───────

───────

───────

───────

───────

───────

Gross margin

75,747

47,277

-

123,024

82,677

8,047

-

-

90,724

Administrative expenses 

  Recurring

(182,399)

-

(64,888)

(247,287)

(212,325) 

-

-

(135,644)

(347,969)

  Impairment of intangibles

-

-

-

-

-

-

(106,406)

-

(106,406)

Income from guarantee agreement

-

-

-

-

-

-

100,829

-

100,829

───────

───────

───────

───────

───────

───────

───────

───────

───────

Total administrative expenses

(182,399)

-

(64,888)

(247,827)

(212,325) 

-

(5,577)

(135,644)

(353,546)

───────

───────

───────

───────

───────

───────

───────

───────

───────

Segmental Operating loss

(106,652)

47,277

(64,888)

(124,263)

(129,648) 

8,047

(5,577)

(135,644)

(262,822)

───────

───────

───────

───────

───────

───────

───────

───────

───────

Net finance expense

(10)

-

(5,530)

(5,540)

-

-

-

(11,570)

(11,570)

───────

───────

───────

───────

───────

───────

───────

───────

───────

Loss on ordinary activities before tax

(106,662)

47,277

(70,418)

(129,803)

(129,648)

8,047

(5,577)

(147,214)

(274,392)

══════

══════

══════

══════

══════

══════

══════

══════

══════

2008

2007

Discontinued

Discontinued

Continuing

Discontinued

Discontinued

Continuing

Allocated

Europe

Rest of the World

Head Office

Total

Europe

Rest of the World

Head Office

Total

Balance Sheet

Total Assets

199,278

-

14,062

213,340

69,596

-

251,649

321,245

Total liabilities

(191,104)

-

(106,566)

(297,670)

(4,593)

-

(271,179)

(275,772)

_________

_________

_________

_________

_________

_________

_________

_________

Net Assets

8,174

-

(92,504)

(84,330)

65,003

(19,530)

(45,473)

══════ 

══════

══════

══════

══════

══════

══════

══════

Capital Expenditure

1,445

-

-

1,445

-

-

-

-

Depreciation & Amortisation

1,320

-

-

1,320

-

-

6,313

6,313

2008

2007

Group

£

£

Wages and salaries

-

63,226

Emoluments paid to directors

10,000

73,673

Social security costs

-

4,882

───────

───────

10,000

141,781

══════

══════

Company

Wages and salaries

-

63,226

Emoluments paid to directors

2,192

73,673

Social security costs

-

4,882

───────

───────

2,192

141,781

══════

══════

2008

2007

No.

No.

Group

Administration and sales

2

3

Directors

1

1

══════

══════

Company

Administration and sales

-

-

Directors

-

-

══════

══════

2008

2007

£

£

Emoluments paid to directors

10,000

73,673

══════

══════

2008

2007

£

£

Bank interest payable

5,540

11,570

══════

══════

2008

2007

£

£

Accounting loss before income tax 

129,803

274,392

At the statutory income tax rate of 0% (2007: 0%) 

-

-

Effects of:

Temporary differences and tax losses not brought to account as a deferred tax asset 

-

-

Less:

Non assessable items 

-

-

───────

───────

Income tax expense

-

-

══════

══════

Effective rate of income tax

0%

0%

2008

2007

£

£

Net foreign exchange (gains) / losses

(5,341)

1,317

Depreciation of tangible fixed assets:

1,320

6,313

Amortisation of intangible assets

5,414

40,000

Developer subcontractors

87,373

30,110

Travel and accommodation expenses

17,203

10,335

Telephone and internet

10,698

11,867

Wages and salaries

-

63,226

Office rents and rates

7,152

10,791

Bad debts

25,593

22,493

══════

══════

2008

£

ASSETS

Intangible assets

1

Property, plant and equipment

1,485

Inventories

4,377

Trade and other receivables

192,838

Cash and cash equivalents

576

───────

TOTAL ASSETS

199,277

══════

CURRENT LIABILITIES

191,104

───────

TOTAL LIABILITIES

191,104

══════

Operating Activities

2008

£

Loss from Operations

(56,820)

Depreciation of property, plant and equipment 

1,320

Amortisation of intangible assets 

5,414

Revaluation on transfer of assets to subsidiary

39,923

─────

Cash flows from operating activities before changes in working capital