CL-2022-000367 - [2025] EWHC 2877 (Comm)

CVS argued that the Aaqua App never reached the proof-of-concept stage of development.

Mr Ellis said in his expert report that based on internal accounting management, it is clear that the Aaqua App had not transitioned from the “research” into the “development” stage, as the costs were not capitalised on the balance sheet as an asset (which a company can only do once a number of conditions are satisfied to demonstrate that it has entered the development phase).

The research stage is defined in Mr Ellis’ report as when:

“an entity cannot demonstrate that an intangible asset exists that will generate probable future economic benefits. Therefore, this expenditure is recognised as an expense when it is incurred.”

Mr McQuade said that upon joining Aaqua in January 2022:

“I found that the AAQUA app was still in a very basic state…The look and feel of AAQUA’s app was obsolete. In my view, this was a direct result of lack of professional product and design input. Given the historic cash expenditure on product development, I found this astonishing. The app was low quality, did not scale and had very little functionality.”

The Aaqua App’s lack of functionality is relevant because it underlines the fact that the Defendants had no realistic way of attracting investment, or of generating income, except by misrepresenting the position to any potential investor. The underlying technological assets could not be monetised, and this was unlikely to change in the foreseeable future.