AdAlta
Annual Report 2018

Plain-text annual report

FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2018 ADALTA LTD ABN 92 120 332 925 CORPORATE DIRECTORY DIRECTORS Dr Paul MacLeman Ms Samantha Cobb Dr James Williams Ms Elizabeth McCall Dr John Chiplin Dr Robert Peach COMPANY SECRETARY Cameron Jones REGISTERED OFFICE Unit 15 2 Park Drive Bundoora VIC 3083 Telephone: +61 3 9479 5159 Email: enquiries@adalta.com.au Website: adalta.com.au STOCK EXCHANGE Australian Securities Exchange Limited Level 4, North Tower Rialto 525 Collins Street Melbourne VIC 3000 ASX CODE 1AD SHARE REGISTRY Automic Registry Services Suite 310, Level 3 50 Holt Street Surrey Hills NSW 2010 Telephone: 1300 288 664 Website: automic.com.au AUDITOR Butler Settineri (Audit) Pty Ltd Unit 16, First Floor 100 Railway Road Subiaco WA 6008 BANKERS Westpac Banking Corporation SOLICITORS Lander & Rogers Level 12, 600 Bourke Street Melbourne VIC 3000 AdAlta Limited Annual Report 2018 2 CONTENTS DIRECTORS’ REPORT ........................................................ 6 AUDITOR’S INDEPENDENCE DECLARATION ....................22 CORPORATE GOVERNANCE STATEMENT .......................23 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ................................ 24 STATEMENT OF FINANCIAL POSITION ........................... 25 STATEMENT OF CHANGES IN EQUITY ............................26 STATEMENT OF CASH FLOWS ........................................27 NOTES TO THE FINANCIAL STATEMENTS ........................28 DIRECTORS’ DECLARATION ............................................47 INDEPENDENT AUDITOR’S REPORT ................................ 48 SHAREHOLDER INFORMATION .......................................53 AdAlta Limited Annual Report 2018 3 AdAlta Limited Annual Report 20184CHAIRMAN’S LETTERIt is my pleasure to open the financial year 2018 annual report looking back upon a year of notable achievements for AdAlta as we progress our new lead candidate to the clinic.During the year we made great advancement in demonstrating the strength of the AdAlta drug development platform and the therapeutic potential of the i-body. Off the back of this effort, just after year end, we successfully completed a placement to institutional and sophisticated investors as well as a share purchase plan with existing shareholders raising $4.73 million for manufacturing and preclinical studies of our lead candidate, AD-214.When AdAlta listed in 2016, we made clear our objective to partner our i-body platform to generate early revenues. We listed with an i-body demonstrated as a CXCR4 antagonist and chose to focus on Idiopathic Pulmonary Fibrosis, which is a rare disease with high unmet patient need and a disease area with a precedent of early stage agreements.In line with this objective, one of the most commercially significant activities to occur throughout the year was the redesign of what was our lead candidate, AD-114, into what is now an Fc-fusion molecule that we’ve called AD-214. With AD-214, we now have a more potent therapeutic with a longer half-life for less frequent dosing – and ultimately a more attractive product for potential pharmaceutical partners.We have been able to apply to AD-214 all the preclinical work undertaken prior to the redesign and, importantly, we carried over our Orphan Drug status with the US FDA. This is important because in February we announced the peer reviewed publication of our data which showed that CXCR4 is an important alternative target for treating IPF and fibrotic diseases, and that our i-body molecule selectively blocks migration of some of the cells implicated in fibrosis without impacting healthy tissue. This data was published in Scientific Reports, a prestigious journal from the publishers of Nature, giving further weight to the credibility of AdAlta’s i-body as a therapeutic.While the two marketed treatments Nintedanib and Pirfenidone provide relief for some IPF patients, not all can tolerate the side effects nor respond to these available treatments, making further treatment options greatly needed. Later in this report, we set out the competitive landscape for IPF treatments in more detail. Unlike other disease areas, the drug development field for IPF treatments is small, and with drugs being partnered either during or at the end of Phase 1, companies developing drugs in this space can deliver short term returns to investors.Reflecting now on the landscape in which AdAlta operates, we were very interested to see next generation antibody developer Ablynx Inc acquired by pharmaceutical giant Sanofi for EUR 3.9 billion. While more clinically advanced with a number of partnerships, Ablynx has perhaps the closest technology to AdAlta at the platform level, so this acquisition sets the vision for where we think our next generation antibody technology – our i-body platform could take us, and further validates the Company’s business objectives.On behalf of the Board, sincere thanks to all investors who have supported us through the last 12 months, and thanks also to our CEO and Managing Director Sam Cobb and the team for their tireless efforts throughout the year. We expect the upcoming year to continue to deliver strong results and growth for AdAlta and its investors.Paul MacLemanChairmanAdAlta Limited Annual Report 20185DIRECTORS’ REPORT The Directors of AdAlta Limited (“AdAlta” or “the Company”) submit herewith the annual report of the Company for the financial year ended 30 June 2018. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows: Information about the Directors The names and particulars of the Directors of the Company during or since the end of the financial year are: Paul MacLeman MBA, BVSc, Grad Dip Tech, Grad Cert Eng, GAICD, MATT Chairman and non-executive Director, joined the Board 16 April 2015. Paul has over 20 years’ experience across the life sciences sector; encompassing technical, commercial and financial areas. With a career-spanning veterinary practice, pharmaceuticals, biotechnology, diagnostics and finance, Paul has expertise in capital raising, business development, research management, technology commercialisation, staff development, and sales and marketing. He has also founded life sciences start-ups in the biologics area and worked in investment banking focusing on the analysis and financing of technology companies. Paul has previously served as Director and CEO of several VC funded, ASX, NASDAQ and TSX listed companies. Paul is also current Chairman of LiVac Pty Limited and is a Non-Executive Director of Sypharma Pty Limited. Samantha Cobb BSc, MApL, GAICD Managing Director / CEO, appointed 29 June 2007. Sam is the founding CEO of AdAlta and has over fifteen years experience in business development and commercialisation of early stage scientific technologies. Prior to AdAlta, Sam was the Business Development Director at the Co- operative Research Centre for Diagnostics. Sam has also worked for the biotech start-up companies Sensologix Inc and Nephrogenix Pty Ltd and at the University of Queensland’s technology commercialisation companies, Uniquest Pty Ltd and IMBcom Pty Ltd. Sam has a Bachelor of Science, a Masters of Intellectual Property Law and has completed the Australian Institute of Company Directors course. Dr James Williams BSc (Hons), MBA, PhD, GAICD Non-Executive Director, joined the Board 16 December 2010. Dr Williams is co-founder and Investment Director of Yuuwa Capital LP, a venture capital firm based in Western Australia. Prior to establishing Yuuwa Capital, he was managing Director of two medical device companies, ASX- listed Resonance Health Limited and Argus Biomedical Pty Ltd, both of which secured regulatory approvals under his leadership. Dr Williams conceived, co-founded and is a former CTO and Director of iCeutica Inc., a clinical stage nano drug reformulation company. iCeutica was acquired by Philadelphia-based Iroko Pharmaceuticals in 2011. Dr Williams is non-executive Director of Dimerix Limited (ASX:DXB) and a Director of Yuuwa investee companies PolyActiva Pty Ltd and iCetana Pty Ltd. He is also a Director of the Tailor Made Spirits Company Ltd, Linear Clinical Research Ltd, a specialist early phase trial unit and a member of the “Panel of Experts” for the University of Western Australia’s Pathfinder Fund. Elizabeth (Liddy) McCall LLB., B.Juris, B.Com (Hons), GDipApFin (SIA), GAICD Non-Executive Director, joined the Board 16 December 2010. Liddy is a co- founder and Investment Director of Yuuwa Capital LP. Liddy is also a Director of various unlisted Yuuwa investee companies. Her experience includes a range of roles in drug development and medical device companies, including business development and finance. She was co- founder and Director of iCeutica Inc. Liddy was also a co-founder of Dimerix Limited (now an ASX-listed clinical stage drug discovery and development company) and held various executive roles during its establishment and growth. Liddy was co-founder and Director of Tessitura Pty Ltd, a consulting company providing services to the biotechnology industry. Previously, Liddy was an Associate Director in the Corporate Advisory Company of Macquarie Bank and prior to that worked as a lawyer with a leading Australian law firm. John Chiplin BPharm, PhD, MRPharmS Non-Executive Director, appointed 16 May 2014. John has significant international experience in the life science and technology industries, from both an operational and investment perspective. Recent transactions in which John has been instrumental include Benitec BioPharma (US IPO), Medistem Inc. (acquired by Intrexon Corporation for US$26 million), former CEO of ASX-listed Arana Therapeutics (acquired by Cephalon Inc. for US$200 million), and Domantis (acquired by GSK for £230 million). Immediately prior to running Arana, John was head of the ITI Life Sciences investment fund in the UK, negotiating significant funding with Government Ministers. His own investment company, Newstar Ventures Ltd., has funded more than a dozen early stage companies in the past ten years. John currently serves on the boards of Batu Biologics, Cynata Therapeutics Limited (ASX: CYN), Scancell Holdings plc (LSE: SCLP), Sienna Cancer Diagnostics Limited (ASX: SDX) and ScienceMedia Inc. Robert Peach BSc, MSc, PhD Non-Executive Director, appointed 14 November 2016. Dr Peach has over 25 years of drug discovery and development experience in the Pharmaceutical and Biotechnology industry. In 2009 he co-founded Receptos, becoming Chief Scientific Officer and raising $59M in venture capital and $800M in an IPO and three subsequent follow-on offerings. In August 2015 Receptos was acquired by Celgene for $7.8B. Robert held senior executive and scientific positions in other companies including Apoptos, Biogen Idec, IDEC and Bristol-Myers Squibb, supporting in-licensing, acquisition and venture investments. His extensive drug discovery and development experience in autoimmune and inflammatory diseases, and cancer has resulted in multiple drugs entering clinical trials and 3 registered drugs. He currently serves on the Board of Directors of Innate Immunotherapeutics (ASX:IIL) and Avalia Immunotherapies and is a consultant for several other biotechnology companies. Robert is the co-author of 70 scientific publications and book chapters, and 17 patents. He was educated at the University of Canterbury and the University of Otago, New Zealand. The above named Directors held office during the whole of the financial year and since the end of the financial year unless otherwise indicated. AdAlta Limited Annual Report 2018 6 Directors’ shareholdings The following table sets out each Director’s relevant interest in shares, debentures and rights or options in shares or debentures of the Company as at the date of this report: Directors Paul MacLeman Samantha Cobb James Williams1 Liddy McCall1 John Chiplin Robert Peach Fully paid ordinary shares Number Options under ESOP Number 439,636 1,443,843 54,159,848 54,159,848 810,883 - 30,000 1,750,000 - - 20,000 200,000 1James Williams and Elizabeth McCall’s interests are partly held (54,059,848 ordinary shares) indirectly through Yuuwa Capital LP, a venture capital firm managed by its General Partner which is associated with James Williams and Elizabeth McCall Company Secretary Cameron Jones B.Bus, CA Cameron Jones is a Chartered Accountant and holds a Certificate in Governance (Practice) from the Governance Institute of Australia. Cameron is a Director of Bio101Group Pty Ltd, a wholly owned subsidiary of BTC health Limited providing life science companies with accounting, back office administration and company secretarial solutions. Dividends No dividends have been paid or declared since the start of the financial year and the Directors have not recommended the payment of a dividend in respect of the financial year. Shares under option or issued on exercise of options (a) Details of unissued shares or interests under option as at the date of this report are: Number of shares under option Class of shares Exercise price of option Expiry date of options 234,472 600,000 1,150,000 650,000 350,000 350,000 200,000 200,000 Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary $0.17 $0.17 $0.25 $0.50 $0.75 $1.00 $0.31 $0.31 1 November 2020 16 October 2020 14 November 2021 14 November 2021 14 November 2021 14 November 2021 30 September 2021 30 September 2022 The holders of these options do not have the right to participate in any share issue of the Company. (b) Details of ordinary shares issued by the Company during the year on the exercise of options are: Date option exercised Issue price of shares Number of shares issued 25 September 2017 4 December 2017 $0.09 $0.17 AdAlta Limited Annual Report 2018 146,544 588,411 7 Indemnification of officers and auditors During the financial year, the Company paid a premium in respect of a contract insuring the Directors of the Company (as named above), the company secretary and all executive officers of the Company and of any related body corporate against a liability incurred as such a Director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor. Directors’ meetings The following table sets out the number of Directors’ meetings (including meetings of committees of Directors) held during the financial year and the number of meetings attended by each Director (while they were a Director or committee member). During the financial year, thirteen Board meetings were held. Directors Paul MacLeman Samantha Cobb James Williams Liddy McCall John Chiplin Robert Peach Board of Directors Held Attended 13 13 13 13 13 13 12 12 12 13 10 10 Proceedings on behalf of the Company No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. Non-audit services Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in note 19 to the financial statements. In the event non-audit services are provided, the Board has established procedures to ensure that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. These include: • all non-audit services are reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and • non-audit services do not undermine the general principles relating to auditor independence as set out in APES 110 ‘Code of Ethics for Professional Accountants’ issued by the Accounting Professional & Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards. Auditor’s independence declaration The auditor’s independence declaration is included on page 22 of the financial report. AdAlta Limited Annual Report 2018 8 OPERATING AND FINANCIAL REVIEWSummary of principal activitiesThe principal focus for AdAlta Limited (ASX: 1AD) during the reporting period was to continue to advance its lead i-body toward the clinic for the treatment of Idiopathic Pulmonary Fibrosis. I-bodies are a new class of small, targeted, fully-human protein treatments which are being used to make medicines for hard to treat diseases. During the year, AdAlta significantly improved the design of its lead candidate AD-114 by fusing two i-bodies to the Fc fragment of an antibody, a process known as Fc-fusion. This redesigned molecule, called AD-214, has demonstrated significantly increased potency and greater half-life, or time that it remains in the body compared to the original molecule.While the primary focus of AdAlta is taking its improved lead candidate through to a Phase 1 human clinical trial, AdAlta is also looking to expand its pipeline of i-body candidates. This will involve using the Company’s novel platform technology to identify unique binders to drug targets that have proven difficult for currently available therapeutics. StrategyAdAlta Limited intends to further develop its novel i-body platform with a focus on its lead candidate AD-214, a first-in class treatment for Idiopathic Pulmonary Fibrosis (IPF) and other fibrotic diseases for which current therapies are sub-optimal and there is a high unmet medical need. AdAlta is undertaking the manufacturing of AD-214 in order to complete a four week non-human primate study, which will be followed by first in man studies to evaluate the drug’s safety. AD-214 could have applications in the treatment of fibrotic diseases beyond IPF. During the last twelve months the Company has explored the wider applicability of its lead i-body in several animal models of disease and with human tissues, demonstrating the broad anti-fibrotic and anti-inflammatory effects in models of lung, eye, liver, skin and kidney fibrosis.In conjunction with work on AD-214, the Company also plans to continue further drug discovery and development, using its i-body technology platform to identify other drug targets and diseases. This work is being completed at La Trobe University and directed by AdAlta’s Chief Scientific Officer, Mick Foley. The pipeline of i-bodies being developed are focusing on difficult targets, including other G-Protein Coupled Receptors (GPCRs) and ion channel targets. AdAlta’s focus is to “drug these undruggable targets” with the i-body platform.AdAlta Limited Annual Report 20189FINANCIAL YEAR 2018 – A YEAR OF ADVANCEMENT FOR OUR LEAD I-BODY Overview and market conditions Introducing AD-214 During the past year AdAlta has made significant improvements to its lead i-body candidate, AD-114, resulting in a second- generation lead candidate called AD-214. The new i-body has been designed as an Fc-fusion protein with two AD-114 i-body molecules at the front end that bind with high affinity to the human target, CXCR4. The presence of two i-bodies now, instead of one, works to increase the potency of AdAlta’s lead i-body candidate. At the back end of AD-214 is the Fc fragment or tail region of a traditional monoclonal antibody, which works to increase the half-life of the fused protein, thus decreasing the required frequency of dosing. Due to the injected nature of Fc-fusion protein and the chronic nature of fibrotic diseases, a decreased dosing frequency is a significantly more desirable outcome for patients and physicians, leading to better patient compliance. The structure of AD-214 is further outlined below: The two AD-114 i-body molecules positioned at the front of AD-214 have not been modified. They have only been joined through the addition of an Fc fragment, enabling AdAlta to make use of the existing strong preclinical package which was developed for AD-114, while also retaining FDA orphan drug status for the treatment of idiopathic pulmonary fibrosis. The therapeutic benefits of AD-214 for patients and physicians along with the Company’s ability to leverage work completed to date make AD-214 more attractive to partners, particularly given the strong commercial precedent of mainstream drugs which are currently being manufactured and marketed using the Fc-Fusion route. AdAlta Limited Annual Report 2018 10 Idiopathic Pulmonary Fibrosis – a large market with high unmet medical need AdAlta is developing its improved lead candidate, AD-214, for the treatment of Idiopathic Pulmonary Fibrosis (IPF), a condition of unknown origin, which causes significant scarring of the lungs that manifests in severe breathing difficulties. Idiopathic Pulmonary Fibrosis is a chronic and ultimately fatal disease. IPF is categorized as a rare disease but each year still affects an estimated: • 135,000 people in the United States (US), with about 48,000 new cases being diagnosed annually. In the US 50,000 people die each year from IPF; the same mortality rate as breast cancer; • 100,000 people in Europe; and • 10,000 people in Australia. Japan EU US The treatment of IPF was greatly improved in 2014 with the United States FDA approval of two anti-fibrotic agents – Pirfenidone (Esbriet) and Nintedanib (Ofev). Despite differing modes of action, Pirfenidone and Nintedanib are deemed by respiratory clinicians to be equally effective, with both compounds slowing the reduction in lung volume that is characteristic in IPF patients albeit with substantial side effects. In 2015, sales of these two drugs were approximately $900 million and by 2025 this market is expected to grow to $3.2 billion (Global Data IPF Forecast 2016). These compounds only slow the progression of the disease, they do not act as a cure and cannot halt or reverse the decline in lung function, with the median survival from diagnosis only 2-3 years (Ley et al. Respir Crit Care Med. 2011). There is therefore still a significant, unmet need for new therapeutics to treat idiopathic pulmonary fibrosis. AdAlta Limited Annual Report 2018 11 IPF programs are attracting deals early in the development pathway The significant value in therapeutics to treat Idiopathic Pulmonary Fibrosis has been demonstrated by a series of early stage licensing deals, as outlined below. These transactions involved a combination of upfront payments, milestones and royalties, and highlight the established attractiveness of IPF programs to pharmaceutical companies such as Roche and Bristol Myers Squibb (BMS). Comparable transactions confirm that big pharma are actively acquiring fibrosis assets at an early stage – typically based on Phase I results. These are detailed in the table below: Date Company Target Acquired by Deal value (US$) Deal commentary SEP – 15 Adheron Therapeutics SDP051 Roche $105M upfront, plus $475M in milestones SDP-51 at end of Phase I for IPF AUG – 15 Promedior PRM-151 BMS $150m upfront + $1.25B Phase II IPF and myelofibrosis NOV – 14 Galecto Biotech AB AUG – 14 Intermune JUN – 13 MicroDose Therapeutx TD139 BMS $444M Option to acquire at end of clinical POC (no later than 60 days following Ph 1b for IPF completion) Esbriet / Pirfenidone MMI0100 Roche $8.3B Approval in Europe / Japan, phase III in the US Teva Pharmaceuticals $40M upfront $125M milestones MMI0100 was in pre-clinical development MAR – 12 Stromedix STX100 Biogen Idec JUL – 11 Amira / BMS BMS- 986020 BMS $75M upfront $487.5M milestones $325M upfront $150M milestones End of phase I for IPF End of phase I for IPF There are several companies that have generated clinical readouts from Phase II studies, demonstrating significant market uplift in value with the completion of both small Phase IIa studies (23 IPF patients) and a larger Phase IIb study (104 IPF patients). Significant milestones achieved during the reporting period Engagement of manufacturing partners for AD-214 AdAlta is focused on expediting the development of AD-214 into the clinic and has completed the critical step of engaging partners for its manufacture. The use of Fc-fusion technology for AD-214 requires an alternate manufacturing process to the first generation i-body, AD-114. During the period, AdAlta engaged two partners for the manufacture of AD-214: Selexis SA, for cell line development, and KBI Biopharma, for process development, analytical development, formulation development and clinical manufacturing services. Selexis SA and KBI Pharma are owned by the same parent company and have worked together on the development of several Fc-Fusion products. AdAlta Limited Annual Report 2018 12 The appointment of Selexis SA and KBI Biopharma was the result of a substantial tender process led by AdAlta Chief Operating Officer, Dallas Hartman, who has significant experience manufacturing drugs designed using the Fc-Fusion process. Selexis SA and KBI Biopharma have extensive experience and expertise in the development of manufacturing processes for biological compounds including specific development of Fc-fusion proteins. Following appointment, Selexis has initiated cell line development and AdAlta expects to receive material for the four-week non-human primate toxicology study in the second half of 2019. Publication of data AdAlta published a data set in February 2018 pertaining to its lead i-body candidate in the peer-reviewed journal, Scientific Reports, from the publishers of Nature. The publication, which utilised samples taken from patients with IPF, demonstrated that the i-body target, CXCR4, is more highly expressed in IPF lung tissue compared to normal tissue and that the i-body slows the migration of diseased fibroblasts while having no effect on healthy cells. This data demonstrated the specificity of AdAlta’s i-body for diseased tissue and a unique profile compared to existing treatments. The team was delighted to have its research published by such a highly regarded scientific journal. Bolstering of IP portfolio AdAlta was granted a key patent relating to its lead i-body product. The patent titled ‘CXCR4 binding molecules’ was granted in Australia in November 2017 with a priority date of 9 January 2015. Patents are granted on a country by country basis and the grant of an Australian patent is a positive indication of the validity of the claims, which are being pursued internationally. Creating a capable team AdAlta expanded its team during the reporting period to build the capabilities required to successfully move AD-214 into the clinic and for the development of the i-body pipeline. Chief Operating Officer, Dr Dallas Hartman, joined AdAlta in October 2017, bringing over 20 years of industry experience in manufacturing and characterisation of Fc-fusion products from both CSL and Nexvet. AdAlta has also recently appointed Dr Angus Tester as Head of Drug Discovery. Dr Tester has significant commercial experience in roles with other listed biotech companies Opthea and Telix Pharmaceuticals and will be guiding the expansion of the i-body pipeline during 2019. Continuing research and collaboration AdAlta has continued its collaboration with Professor Carol Pollock at the University of Sydney to evaluate the lead i-body for the treatment of chronic kidney disease. Professor Pollock was awarded a project grant from the National Health and Medical Research Council (NHMRC) totalling $768,000. The grant provides non-dilutive funding to build on the initial work completed by the Kolling Institute and University of Sydney that demonstrated the anti-fibrotic effects of AdAlta’s lead candidate in the kidney via a different mechanism of action from currently-approved therapies. AdAlta Limited Annual Report 2018 13 Profile building AdAlta has continued to raise its profile and engage across a range of market segments including the investor community, biotechnology industry, IPF community and general public. AdAlta Chief Executive Officer Sam Cobb has continued a strong investor outreach program providing the opportunity to engage with both existing and prospective shareholders. AdAlta held its second Investor and Analyst briefing day in February, bringing together leading speakers in funds management, research and drug development to discuss the ability of the i-body platform to ‘drug’ difficult to access targets. AdAlta also held Shareholder Briefing Sessions at several locations in July 2017 and April 2018 and presented at several investor events such as the Biotech Showcase, Biotech meets Broker, Gold Coast Investment Showcase and 121 Tech Investment in Hong Kong. AdAlta also received analyst coverage from Bioshares, Patersons and NDF Research along with media coverage from Small Caps, Stockhead and Biotech Daily, Fairfax media, Biotech Dispatch, Check Orphan, Rare Disease Report and Clinical Leader. AdAlta has increased its profile within the biotechnology community with CEO Sam Cobb promoted as a key speaker at the BioMelbourne Connecting Women lunch and a feature on both Sam Cobb and AdAlta published in Australasian Biotechnology. The Company was recognised as a player in the single domain antibody and phage display spaces through mentions in reviews in Nature Reviews Drug Discovery in July 2017 and June 2018, respectively. The Company increased the use of its website and social media channels throughout the period, which has seen in increase in stakeholder engagement more broadly. AdAlta undertook significant engagement with the IPF patient and clinician network during 2018. AdAlta CEO Sam Cobb presented at the inaugural IPF Summit held in Boston in August 2017, which brought together IPF researchers and drug developers. Updates to the IPF program have been covered in both Pulmonary Fibrosis News and Lung Disease News, which are valuable news portals for patients with fibrotic lung conditions. AdAlta also ran a series of weekly articles during Pulmonary Fibrosis Awareness Month with contributions from clinicians, patients and allied health to help raise awareness of this disease. Summary of operating results The Company reported a loss for the year ended 30 June 2018, after accounting for income tax benefit, of ($3,854,894) (30 June 2017: ($2,832,517)). The year ended 30 June 2018 operating results are attributed to the following: • Research and Development tax incentive refund: $2,020,175 (30 June 2017: $1,777,030); • Cost of services expense of $3,980,633 (30 June 2017: $3,598,678); and • Employment benefit expense of $664,909 (30 June 2017: $404,669). Financial liquidity and capital resources AdAlta ended the financial year with $2,306,048 in the bank. In July 2018 the Company announced that it completed a placement to sophisticated and institutional investors and in August 2018 a share purchase plan (SPP) to existing shareholders on the same terms as those offered under the placement raising a total of $4.73 million. As a result, the Directors believe the Company is in a strong and stable financial position and that the funds raised from the placement and SPP will be used for manufacturing and pre-clinical studies of AD-214 as well as internal research and development of new i-bodies and corporate costs. Events after the reporting period On 13th July 2018, the Company announced the placement of 14,166,667 fully paid ordinary shares to sophisticated and institutional investors at a price of $0.30 per share to raise $4.25 million. Directors intend to take up a total of 522,450 shares, the issue of which will be subject to shareholder approval at the Annual General Meeting. On 16th July 2018, eligible shareholders were offered the opportunity to subscribe for up to $15,000 of new fully paid ordinary shares in AdAlta, free of brokerage and commission, under a share purchase plan (SPP) at the same price as the placement. On 15 August 2018, the Company announced the Placement of 1,592,011 fully paid ordinary shares to eligible shareholders at a price of $0.30 per share to raise $477,603 from the SPP. Otherwise, there has not been any matter or circumstance that has arisen subsequent to the end of the financial year that has significantly affected, or may significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years. AdAlta Limited Annual Report 2018 14 Future developments, prospects and business strategies AdAlta’s strategy is to continue to develop its lead i-body drug candidate, AD-214, demonstrating its safety and advancing it to the clinic for treatment of fibrosis-related diseases. The Company also has a focus on increasing the interest in its novel i-body platform, which has several advantages over more traditional drug discovery platforms. The long loop has far greater access to targets than monoclonal antibodies, and with high affinity and specificity. This ability to drug the undruggable was highlighted at the AdAlta Investor and Analyst Briefing day in February 2018 but also in a recent Nature publication, suggesting technologies like AdAlta’s i-body platform may open up further opportunities to develop therapeutics to GPCRs and ion channels that have traditionally been hard to drug. Increasing interest in the i-body platform provides an opportunity to expand the pipeline of drug candidates in multiple therapeutic areas, creating the potential for additional revenue, including up-front, milestone payments and licensing payments. Greater interest in the platform also creates partnering opportunities. AdAlta plans to maximise the benefits of its i-body platform and i-body libraries through partnerships, while retaining the ability to resource and focus on its own in-house discovery and development activities. AdAlta will continue to engage all relevant stakeholders in order to ensure the best commercial outcomes can be secured. Environmental issues The Company’s operations are not subject to significant environmental regulation under the Australian Commonwealth or State Law. Remuneration report (audited) This remuneration report, which forms part of the Directors’ report, sets out information about the remuneration of AdAlta Limited’s key management personnel for the financial year ended 30 June 2018. The term ‘key management personnel’ refers to those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any Director (whether executive or otherwise) of the Company. The prescribed details for each person covered by this report are detailed below under the following headings: • key management personnel • remuneration policy • relationship between the remuneration policy and Company performance • remuneration of key management personnel • key terms of employment contracts. Key management personnel The Directors and other key management personnel of the Company during the financial year were: Non-executive Directors Position Paul MacLeman Chairman & Non-executive Director John Chiplin Liddy McCall Robert Peach Non-executive Director Non-executive Director Non-executive Director James Williams Non-executive Director Executive Directors Samantha Cobb Managing Director & CEO The named persons held their current position for the whole of the financial year and since the end of the financial year unless otherwise indicated. AdAlta Limited Annual Report 2018 15 Remuneration policy The Board of Directors of the Company is currently responsible for determining and reviewing compensation arrangements for key management personnel. The Company has a Remuneration Committee, which consists of John Chiplin (Chair of Remuneration Committee), Paul MacLeman and Liddy McCall. The remuneration policy, which is set out below, is designed to promote superior performance and long-term commitment to the Company. Non-Executive Director remuneration Non-executive Directors are remunerated by way of fees, in the form of cash, non-cash benefits, superannuation contributions or salary sacrifice into equity and do not normally participate in schemes designed for the remuneration of executives. Shareholders approval must be obtained in relation to the overall limit set for the non-executive Directors’ fees. The maximum aggregate remuneration approved by shareholders for non-executive Directors is $350,000 per annum. The Directors set the individual non-executive Director fees within the limit approved by shareholders. Non-executive Directors are not provided with retirement benefits. Executive Director remuneration Executive Directors receive a base remuneration which is at market rates, and may be entitled to performance based remuneration, which is determined on an annual basis. Overall remuneration policies are subject to the discretion of the Board and can be changed to reflect competitive and business conditions where it is in the interests of the Company and shareholders to do so. Executive remuneration and other terms of employment are reviewed annually by the Board having regard to the performance, relevant comparative information and expert advice. The Board’s remuneration policy reflects its obligation to align executive remuneration with shareholders’ interests and to retain appropriately qualified executive talent for the benefit of the Company. The main principles are: (a) remuneration reflects the competitive market in which the Company operates; (b) individual remuneration should be linked to performance criteria if appropriate; and (c) executives should be rewarded for both financial and non-financial performance. The total remuneration of executives consists of the following: (a) salary – executives receive a fixed sum payable fortnightly in cash plus superannuation at 9.5% of salary; (b) cash at risk component – executives may participate in share and option schemes generally made in accordance with thresholds set in plans approved by shareholders if deemed appropriate. However, the Board considers it appropriate to issue shares and options to executives outside of approved schemes in exceptional circumstances; (c) other benefits – executives may, if deemed appropriate by the Board, be provided with a fully expensed mobile phone and other forms of remuneration; and (d) performance bonus. The Board has not formally engaged the services of a remuneration consultant to provide recommendations when setting the remuneration received by Directors or other key management personnel during the financial year. Relationship between the remuneration policy and Company performance The Board considers that at this time, evaluation of the Company’s financial performance using generally accepted measures such as profitability, total shareholder return or per Company comparison are not relevant as the Company is at an early stages of development trial which is continuing as outlined in the Directors’ report. AdAlta Limited Annual Report 2018 16 Remuneration of key management personnel 2018 Non-executive Directors Paul MacLeman James Williams1 Liddy McCall1 John Chiplin Robert Peach Executive Directors Samantha Cobb Total Short-term employee benefits Post- employment benefits Salary & fees $ Other $ Superannuation $ Share- based payment Options $ 60,771 45,000 45,000 45,000 45,000 - - - - - - - - - 4,229 3,396 260,000 500,771 66,300* 66,300 30,999 35,228 Total $ 68,396 45,000 45,000 47,264 67,963 389,714 663,337 - - 2,264 22,963 32,415 61,038 *Bonus paid in August 2017 as decided by the Board and remuneration committee. 1James Williams and Liddy McCall’s interests are indirectly via a payment to Yuuwa Capital LP for services. Yuuwa Capital LP is a venture capital firm that is managed by its General Partner, Yuuwa Managment LP/Yuuwa Capital Management Pty Ltd which are associated with James Williams and Liddy McCall. 2017 Non-executive Directors Paul MacLeman James Williams1 Liddy McCall1 John Chiplin Robert Peach* Executive Directors Samantha Cobb Total Short-term employee benefits Post- employment benefits Salary & fees $ Other $ Superannuation $ Share- based payment Options $ 60,108 38,650 38,650 41,503 28,125 - - - - - - - - - - 218,135 425,171 67,500 67,500 27,680 27,680 - - - - - - - Total $ 60,108 38,650 38,650 41,503 28,125 313,315 520,351 *Appointed 14 November 2016 1James Williams and Liddy McCall’s interests are indirectly via a payment to Yuuwa Capital LP for services. Yuuwa Capital LP is a venture capital firm that is managed by its General Partner, Yuuwa Managment LP/Yuuwa Capital Management Pty Ltd which are associated with James Williams and Liddy McCall. 2,000,000 share options were issued to Directors and key management personnel as remuneration during the financial year as set out in the following table. 502,938 share options were exercised by Directors and key management personnel during the year (2017: 903,303). 2018 Samantha Cobb Paul MacLeman James Williams Liddy McCall John Chiplin Robert Peach Total Balance at 1 July No. 356,394 146,544 - - - - Granted as compensation No. 1,750,000 30,000 - - 20,000 200,000 Exercised (356,394) (146,544) - - - - 502,938 2,000,000 (502,938) Net other change No. - - - - - - - Balance at 30 June No. 1,750,000 30,000 - - 20,000 200,000 2,000,000 AdAlta Limited Annual Report 2018 17 2017 Samantha Cobb Paul MacLeman James Williams Liddy McCall John Chiplin Robert Peach Balance at 1 July No. 790,751 366,363 - - 249,127 - Total 1,406,241 Granted as compensation No. - - - - - - - Exercised (434,357) (219,819) - - (249,127) - (903,303) Net other change No. - - - - - - - Balance at 30 June No. 356,394 146,544 - - - - 502,938 Options have been granted to the Managing Director on a case by case basis since 2011 based on the achievement of milestones which varied for the relevant year depending on the stage of the Company’s research projects and the achievement of funding. The milestones selected were considered relevant to enable the Company to progress its research projects and the assessment as to their achievement was performed by the Board. Options granted to the non-executive Directors related to their efforts in securing additional funding for the Company. A performance condition is attached to a portion of the options issued being that the options can only be exercised in the event of a transaction or exit of the Company. All other options are subject to time based vesting conditions and some of these have specific performance condition attached. Key terms of employment contracts Samantha Cobb is employed in the position of Managing Director/CEO of the Company on the following material terms: 1. Effective 1 June 2017, a salary of $260,000 plus superannuation. 2. A short term cash incentive of up to 30% of the annual salary subject to achieving key performance indicators as set by the Board from time to time. 3. Either party is entitled to terminate the employment contract by giving 3 months’ notice. 4. After termination of employment, Ms Cobb is subject to a non-compete condition within Australia for a period of 3 months, non-solicitation of employees and customers for a period of 6 months. Set out below are the remuneration arrangements with Non-Executive Directors: Name Paul MacLeman James Williams1 Elizabeth McCall1 John Chiplin Robert Peach Position Annual Salary (inclusive of superannuation) Non-Executive Chairman Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director $65,000 $45,000 $45,000 $45,000 $45,000 1James Williams and Liddy McCall’s interests are indirectly via a payment to Yuuwa Capital LP for services. Yuuwa Capital LP is a venture capital firm that is managed by its General Partner, Yuuwa Managment LP/Yuuwa Capital Management Pty Ltd which are associated with James Williams and Liddy McCall. The Company has entered into consulting agreements with both Paul MacLeman (Chairman), Robert Peach and John Chiplin as independent Directors of the Board. Under the terms of these consulting agreement, the agreements can be terminated by either party by giving one months’ notice. Further, continuation of appointment is subject to re-election at a forthcoming AGM. The Directors fees for Paul MacLeman are paid to Dalroar Pty Ltd, ATF MacLeman Investment Trust, which is his personal company for the period 1 July to 30 September 2017. Both Elizabeth McCall and James Williams are currently appointed as nominated Directors of Yuuwa Capital LP. An equivalent amount to the fee paid for non-executive directors is paid under a contract to Yuuwa Capital LP. No additional fees are payable to Directors for their involvement in Board committees. On appointment to the Board, all non-executive Directors are required to sign a letter of appointment with the Company. The letter of appointment summarises the Board policies and terms, including compensation relevant to the office or Director. AdAlta Limited Annual Report 2018 18 Key management personnel equity holdings Fully paid ordinary shares of AdAlta Limited Balance at 1 July Received on exercise of options Net other change Additions 2018 No. Samantha Cobb 1,087,449 Paul MacLeman 293,092 James Williams1 54,159,848 Liddy McCall1 54,159,848 John Chiplin Robert Peach 810,883 - No. 356,394 146,544 - - - - No. - - - - - - - - - - - - Balance at 30 June No. 1,443,843 439,636 54,159,848 54,159,848 810,883 - 1James Williams and Elizabeth McCall’s interests are partly held (54,059,848 ordinary shares) indirectly through Yuuwa Capital LP, a venture capital firm managed by its General Partner which is associated with James Williams and Elizabeth McCall. 2017 Samantha Cobb Paul MacLeman James Williams1 Liddy McCall1 John Chiplin Robert Peach No. 653,092 73,273 - - 73,273 - Balance at 1 July Received on exercise of options No. 434,357 219,819 - - Net other change * No. - - 54,059,848 54,059,848 249,127 488,483 - - Additions No. - - 100,000 100,000 - - Balance at 30 June No. 1,087,449 293,092 54,159,848 54,159,848 810,883 - *The net other change relates to the conversion of Convertible Notes and Series A Preference Shares to Ordinary Shares upon ASX listing. 1James Williams and Elizabeth McCall’s interests are partly held (54,059,848 ordinary shares) indirectly through Yuuwa Capital LP, a venture capital firm managed by its General Partner which is associated with James Williams and Elizabeth McCall. AdAlta Limited Annual Report 2018 19 Share Options of AdAlta Limited 2018 Balance at 1 July Granted as compensation Exercised Balance at 30 June Balance vested at 30 June Vested and exerciseable Options vested during year No. No. No. No. No. Samantha Cobb 356,394 1,750,000 (356,394) 1,750,0000 1,750,000 No. - No. - Paul MacLeman 146,544 30,000 (146,544) 30,000 30,000 30,000 30,000 James Williams Liddy McCall John Chiplin Robert Peach - - - - - - 20,000 200,000 - - - - - - - - - - - - 20,000 20,000 20,000 20,000 200,000 100,000 100,000 100,000 2017 Balance at 1 July Granted as compensation Exercised Balance at 30 June Balance vested at 30 June Vested and exerciseable Options vested during year No. No. No. No. No. No. No. Samantha Cobb 790,751 Paul MacLeman 366,363 James Williams Liddy McCall - - John Chiplin 249,127 Robert Peach - - - - - - - (434,357) 356,394 356,394 356,394 534,591 (219,819) 146,544 146,544 146,544 293,090 - - (249,127) - - - - - - - - - - - - - - - 175,854 - Series A Preference shares of AdAlta Limited 2018 Samantha Cobb Paul MacLeman James Williams1 Liddy McCall1 John Chiplin Robert Peach 2017 Samantha Cobb Paul MacLeman James Williams1 Liddy McCall1 John Chiplin Robert Peach Balance at 1 July No. Granted as compensation No. Net other change No. Balance at 30 June No. - - - - - - - - - - - - Balance at 1 July No. Granted as compensation No. - - 2,394,454* 2,394,454* - - - - - - - - - - - - - - Net other change No. - - (2,394,454)* (2,394,454)* - - - - - - - - Balance at 30 June No. - - - - - - *Upon ASX listing, all Preference Shares automatically converted into Ordinary Shares. The conversion ratio for each Preference Share was adjusted as provided in the relevant subscription agreement and for the Share Split. As a result of listing, 2,394,454 Preference Shares converted to 17,235,679 Ordinary Shares. 1These share are held by Yuuwa capital LP (managed by its general partner Yuuwa Management LP and its general partner Yuuwa Capital Management Pty Ltd of which James Williams and Liddy McCall are Directors and have an indirect shareholding). AdAlta Limited Annual Report 2018 20 Convertible notes of AdAlta Limited2018Balanceat 1 JulySubscriptions/conversionsNet otherchange #Balance at30 June No.No.No.No.Samantha Cobb----Paul MacLeman----James Williams1----Liddy McCall1----John Chiplin----2017Balanceat 1 JulySubscriptions/conversionsNet otherchangeBalance at30 June No.No.No.No.Samantha Cobb----Paul MacLeman----James Williams12,500,000*-(2,500,000)*-Liddy McCall12,500,000*-(2,500,000)*-John Chiplin50,000-(50,000)-*Upon ASX listing, all Convertible Notes converted into Ordinary Shares. The conversion ratio for each Convertible Note was adjusted as provided in the relevant subscription agreement and for the Share Split. As a result of listing, 2,500,000 Convertible Notes converted to 24,424,169 Ordinary Shares. 1Held by Yuuwa capital LP (managed by its general partner Yuuwa Management LP and its general partner Yuuwa Capital Management Pty Ltd of which James Williams and Liddy McCall are Directors and have an indirect shareholding).This Directors’ report, incorporating the remuneration report, is signed in accordance with a resolution made pursuant to s.298(2) of the Corporations Act 2001.On behalf of the DirectorsPaul MacLeman ChairmanMelbourne, 5 September 2018AdAlta Limited Annual Report 201821AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of AdAlta Limited for the year ended 30 June 2018, I declare that, to the best of my knowledge and belief, there have been: a) No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) No contraventions of any applicable code of professional conduct in relation to the audit. BUTLER SETTINERI (AUDIT) PTY LTD MARIUS VAN DER MERWE Director Perth Date: 5 September 2018 AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of AdAlta Limited for the year ended 30 June 2018, I declare that, to the best of my knowledge and belief, there have been: a) No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) No contraventions of any applicable code of professional conduct in relation to the audit. BUTLER SETTINERI (AUDIT) PTY LTD MARIUS VAN DER MERWE Director Perth Date: 6 September 2018 ADALTA LTD ABN 92 120 332 925 CORPORATE (cid:28)OVERNANCE The Board of Directors of AdAlta Limited is responsible for the corporate governance of the Company and guides and monitors the business and affairs of the Company on behalf of its shareholders. To ensure the Board is well equipped to discharge its responsibilities it has guidelines for the nomination and selection of Directors and for the operation of the Board. The key charters and policies associated with AdAlta’s corporate governance practices are: • Constitution • Board Charter • Code of Conduct • Securities Trading Policy • Continuous Disclosure Policy • Shareholders Communication Policy • Risk Management Policy • Diversity Policy • Audit & Risk Committee Charter • Remuneration & Nomination Committee Charter The Board has also reviewed its compliance with the ASX Corporate Governance Principles and Recommendations (3rd Edition). The Board has also reviewed its skill matrix setting out the mix of skills and diversity that the Board currently has. In accordance with Listing Rule 4.10.3, the Company has elected to disclose its Corporate Governance policies and its compliance with them on its website, rather than in the Annual Report. Accordingly the information detailed above about the Company’s Corporate Governance practices is set out on the Investor page of the Company’s website at www.adalta.com.au. AdAlta Limited Annual Report 2018 23 Page 29 ADALTA LTD ABN 92 120 332 925 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2018 Note 2018 $ 2017 $ Revenue Interest Received (cid:41)ther Revenue Expenses Cost of services Depreciation and amortisation expenses Employee benefit expense Travel expense Board fees Patent and legal costs Share based payments (cid:41)ther expenses Net foreign exchange (loss) (cid:13) gain Profit (loss) before income tax Tax expense Profit (loss) for the year Earnings per Share Basic and diluted loss per share (cents) 2 7 3 4 (cid:19)9,(cid:22)04 2,020,1(cid:21)(cid:19) 2,0(cid:21)9,9(cid:21)9 1(cid:21)0,92(cid:20) 1,(cid:21)9(cid:20),(cid:21)(cid:19)4 1,9(cid:20)(cid:21),(cid:20)(cid:22)0 (3,9(cid:22)0,(cid:20)33) (3,142) ((cid:20)(cid:20)4,909) (113,(cid:20)91) (24(cid:19),000) (1(cid:21)1,909) (1(cid:20)(cid:22),9(cid:19)(cid:22)) ((cid:19)33,(cid:22)(cid:21)4) ((cid:19)2,(cid:21)(cid:19)(cid:21)) ((cid:19),934,(cid:22)(cid:21)3) (3,(cid:19)9(cid:22),(cid:20)(cid:21)(cid:22)) ((cid:19),43(cid:19)) (404,(cid:20)(cid:20)9) ((cid:21)(cid:20),(cid:19)(cid:21)(cid:19)) (20(cid:21),03(cid:21)) ((cid:21)3,310) (cid:11) (434,493) (cid:11) (4,(cid:22)00,19(cid:21)) (3,854,894) (2,832,517) - - (3,854,894) (2,832,517) (3.(cid:22)1) (3.1(cid:19)) The accompanying notes form part of these financial statements. Page 30 AdAlta Limited Annual Report 2018 24 ADALTA LTD ABN 92 120 332 925 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018 ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables TOTAL CURRENT ASSETS NON-CURRENT ASSETS Plant and equipment (cid:41)ther non(cid:11)current assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables Provisions TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS E(cid:38)UITY Issued capital Reserves Retained earnings (accumulated losses) TOTAL E(cid:38)UITY Note 2018 $ 2017 $ 5 (cid:18) 7 8 2,30(cid:20),04(cid:22) 2,130,300 (cid:20),224,(cid:20)1(cid:21) 1,(cid:22)(cid:20)2,(cid:20)(cid:21)3 4,43(cid:20),34(cid:22) (cid:22),0(cid:22)(cid:21),290 (cid:11) 2,(cid:20)00 2,(cid:20)00 (cid:11) 2,(cid:20)00 2,(cid:20)00 4,43(cid:22),94(cid:22) (cid:22),0(cid:22)9,(cid:22)90 9 10 2(cid:22)(cid:19),149 (cid:22)1,1(cid:20)(cid:22) 3(cid:20)(cid:20),31(cid:21) 2(cid:22)(cid:19),91(cid:19) (cid:19)(cid:22),(cid:19)9(cid:21) 344,(cid:19)12 3(cid:20)(cid:20),31(cid:21) 344,(cid:19)12 4,072,(cid:18)31 7,745,378 11 12 1(cid:21),(cid:19)(cid:21)3,(cid:19)2(cid:21) 1(cid:21)2,(cid:22)(cid:20)(cid:20) (13,(cid:20)(cid:21)3,(cid:21)(cid:20)2) 1(cid:21),(cid:19)(cid:20)0,33(cid:22) 3,90(cid:22) (9,(cid:22)1(cid:22),(cid:22)(cid:20)(cid:22)) 4,072,(cid:18)31 7,745,378 The accompanying notes form part of these financial statements. Page 31 AdAlta Limited Annual Report 2018 25 ADALTA LTD ABN 92 120 332 925 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018 Balance at 1 July 2016 Comprehensive income Profit (loss) for the year Total comprehensive income for the year attributable to the member of the company Transactions with the owner, in capacity as owner and other transfers Issue of ordinary shares Conversion of options to shares Share issue costs Conversion of Preference Shares Conversion of Convertible Notes Total transactions with the owner and other transfers Balance at 30 June 2017 Balance at 1 July 2017 Comprehensive income Profit (loss) for the year Total comprehensive income for the year attributable to the member of the company Transactions with the owner, in capacity as owner and other transfers Conversion of options to shares Share based payments recognised Total transactions with the owner and other transfers Balance at 30 June 2018 Share Capital Series A Preference Shares $ Convertible Notes $ 2,999,998 2,660,000 Retained Earnings $ (6,986,351) Share based payment reserve $ 3,908 - - - - - (2,999,998) - (2,999,998) - - (2,832,517) (2,832,517) - - - - (2,660,000) (2,660,000) - - - - - - - - - - - - - - Total $ 1,167,888 (2,832,517) (2,832,517) 10,000,000 58,984 (648,977) - - 9,410,007 - - - - - - - - - (9,818,868) 3,908 7,745,378 - (9,818,868) 3,908 7,745,378 - - - - - - (3,854,894) (3,854,894) - - - - - - 168,958 168,958 (3,854,894) (3,854,894) 13,189 168,958 182,147 (13,673,762) 172,866 4,072,631 Ordinary shares $ 2,490,333 - - 10,000,000 58,984 (648,977) 2,999,998 2,660,000 15,070,005 17,560,338 17,560,338 - - 13,189 - 13,189 17,573,527 The accompanying notes form part of these financial statements. Page 32 AdAlta Limited Annual Report 2018 26 ADALTA LTD ABN 92 120 332 925 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018 Note 2018 $ 2017 $ Cash flows from operating activities Payments to suppliers and employees R & D tax incentive Interest received Grants received Net cash provided by (used in) operating activities (5,788,893) 1,777,030 83,247 - (3,928,616) (4,632,076) 738,046 147,483 19,724 (3,726,823) 20 (b) Cash flows from investing activities Proceeds from disposal of property, plant and equipment Payments for property, plant and equipment Payments for other assets Net cash provided by (used in) investing activities Cash flows from financing activities Proceeds from convertible notes Proceeds from share capital Proceeds from option conversions Payment of share issue costs Net cash provided by financing activities - (3,142) - (3,142) - - 13,189 - 13,189 1,000 (6,745) (2,600) (8,345) - 10,000,000 58,984 (584,757) 9,474,227 Net increase (decrease) in cash held Cash and cash equivalents at beginning of financial year Cash and cash equivalents at end of financial year (3,918,569) 6,224,617 2,306,048 5,739,059 485,558 6,224,617 20 (a) The accompanying notes form part of these financial statements. Page 33 AdAlta Limited Annual Report 2018 27 ADALTA LTD ABN 92 120 332 925 NOTES TO THE F(cid:32)NANC(cid:32)AL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 The financial statements cover (cid:27)d(cid:27)lta (cid:38)td as an individual entity. (cid:27)d(cid:27)lta (cid:38)td is a company limited by shares, incorporated and domiciled in (cid:27)ustralia. The financial statements (cid:74)ere authorised for issue on 5 (cid:45)eptember 2018 by the Directors of the Company. 1(cid:11) SUMMARY OF S(cid:32)(cid:30)N(cid:32)F(cid:32)CANT ACCOUNT(cid:32)N(cid:30) (cid:39)OL(cid:32)C(cid:32)ES (a) Basis of (cid:39)reparation The financial report is a general purpose financial report that has been prepared in accordance (cid:74)ith (cid:27)ustralian (cid:27)ccounting (cid:45)tandards, (cid:27)ustralian (cid:27)ccounting Interpretations, other authoritative pronouncements of the (cid:27)ustralian (cid:27)ccounting (cid:45)tandards (cid:28)oard ((cid:27)(cid:27)(cid:45)(cid:28)) and the Corporations (cid:27)ct 2001. The financial report is presented in (cid:27)ustralian Dollars. The Company is a for-profit entity for financial reporting purposes under (cid:27)ustralian (cid:27)ccounting (cid:45)tandards. (cid:27)ustralian (cid:27)ccounting (cid:45)tandards set out accounting policies that the (cid:27)(cid:27)(cid:45)(cid:28) has concluded (cid:74)ould result in a financial report containing relevant and reliable information about transactions, events and conditions to (cid:74)hich they apply. (cid:39)aterial accounting policies adopted in the preparation of this financial report are presented belo(cid:74). They have been consistently applied unless other(cid:74)ise stated. (cid:31)xcept for cash flo(cid:74) information, the financial report has been prepared on an accruals basis and is based on historical costs, modified, (cid:74)here applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. (b) (cid:30)oing Concern These financial statements have been prepared on the going concern basis, (cid:74)hich contemplates the continuity of normal business activities and the realisation of assets and settlement of liabilities in the normal course of business. (cid:27)s disclosed in the financial statements, the Company incurred losses of (cid:2)3,854,894 (2017(cid:23) (cid:2)2,832,517) and the Company had net cash outflo(cid:74)s from operating activities of (cid:2)3,928,616 (2017(cid:23) (cid:2)3,726,823). (cid:27)s at balance date, the Company had net current assets of (cid:2)4,072,631 (2017(cid:23) (cid:2)7,745,378). The Directors believe that it is reasonably foreseeable that the Company (cid:74)ill continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report. (c) (cid:32)ncome Ta(cid:72) The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income). AdAlta Limited Annual Report 2018 28 Page 34 ADALTA LTD ABN 92 120 332 925 NOTES TO THE F(cid:32)NANC(cid:32)AL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 1(cid:11) SUMMARY OF S(cid:32)(cid:30)N(cid:32)F(cid:32)CANT ACCOUNT(cid:32)N(cid:30) (cid:39)OL(cid:32)C(cid:32)ES (Continued) (c) (cid:32)ncome ta(cid:72) (continued) Current income tax expense charged to profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as (cid:74)ell unused tax losses. Current and deferred income tax expense (income) is charged or credited outside profit or loss (cid:74)hen the tax relates to items that are recognised outside profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period (cid:74)hen the asset is realised or the liability is settled and their measurement also reflects the manner in (cid:74)hich management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit (cid:74)ill be available against (cid:74)hich the benefits of the deferred tax asset can be utilised. (d) Fair value measurement (cid:32)air value is the price the Company (cid:74)ould receive to sell an asset or (cid:74)ould have to pay to transfer a liability in an orderly (ie unforced) transaction bet(cid:74)een independent, (cid:62)no(cid:74)ledgeable and (cid:74)illing mar(cid:62)et participants at the measurement date. (cid:27)s fair value is a mar(cid:62)et-based measure, the closest equivalent observable mar(cid:62)et pricing information is used to determine fair value. (cid:27)d(cid:61)ustments to mar(cid:62)et values may be made having regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities that are not traded in an active mar(cid:62)et are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable mar(cid:62)et data. (cid:32)or non-financial assets, the fair value measurement also ta(cid:62)es into account a mar(cid:62)et participant(cid:5)s ability to use the asset in its highest and best use or to sell it to another mar(cid:62)et participant that (cid:74)ould use the asset in its highest and best use. The fair value of liabilities and the entity(cid:5)s o(cid:74)n equity instruments (excluding those related to share-based payment arrangements) may be valued, (cid:74)here there is no observable mar(cid:62)et price in relation to the transfer of such financial instrument, by reference to observable mar(cid:62)et information (cid:74)here such instruments are held as assets. (cid:49)here this information is not available, other valuation techniques are adopted and, (cid:74)here significant, are detailed in the respective note to the financial statements. (e) (cid:39)lant and E(cid:65)uipment (cid:31)ach class of plant and equipment is carried at cost or fair value as indicated less, (cid:74)here applicable, any accumulated depreciation and impairment losses. AdAlta Limited Annual Report 2018 29 Page 35 ADALTA LTD ABN 92 120 332 925 NOTES TO THE F(cid:32)NANC(cid:32)AL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 1(cid:11) SUMMARY OF S(cid:32)(cid:30)N(cid:32)F(cid:32)CANT ACCOUNT(cid:32)N(cid:30) (cid:39)OL(cid:32)C(cid:32)ES (Continued) (e) (cid:39)lant and E(cid:65)uipment (continued) Plant and equipment are measured on the cost basis and are therefore carried at cost less accumulated depreciation and any accumulated impairment losses. In the event the carrying amount of plant and equipment is greater than its estimated recoverable amount, the carrying amount is (cid:74)ritten do(cid:74)n immediately to its estimated recoverable amount and impairment losses recognised either in profit or loss or as a revaluation decrease if the impairment losses relate to a revalued asset. Depreciation The depreciable amount of all fixed assets is depreciated on a diminishing value basis over the asset(cid:5)s useful life to the Company commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable asset are(cid:23) Class of (cid:32)ixed (cid:27)sset(cid:23) Computer soft(cid:74)are (cid:41)ffice equipment (cid:41)ffice equipment Depreciation Rate 13.17(cid:3) 17.31(cid:3) 100(cid:3) Notes (cid:27)ssets acquired pre 31 December 2016 (cid:27)ssets acquired post 31 December 2016 The assets(cid:5) residual values and useful lives are revie(cid:74)ed, and ad(cid:61)usted if appropriate, at the end of each reporting period. (cid:27)n asset(cid:5)s carrying amount is (cid:74)ritten do(cid:74)n immediately to its recoverable amount if the asset(cid:5)s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds (cid:74)ith the carrying amount. These gains or losses are recognised in profit or loss (cid:74)hen the item is derecognised. (cid:49)hen revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. (f) Financial (cid:32)nstruments (cid:32)nitial recognition and measurement (cid:32)inancial assets and financial liabilities are recognised (cid:74)hen the entity becomes a party to the contractual provisions of the instrument. (cid:32)or financial assets, this is equivalent to the date that the Company commits itself to either purchase or sell the asset (i.e. trade date accounting is adopted). (cid:32)inancial instruments are initially measured at fair value plus transactions costs, except (cid:74)here the instrument is classified (cid:5)at fair value through profit or loss(cid:5) in (cid:74)hich case transactions costs are recognised as expenses in profit or loss immediately. Classification and subse(cid:65)uent measurement (cid:32)inancial instruments are subsequently measured at fair value, amortised cost using the effective interest method or cost. (cid:49)here available, quoted prices in an active mar(cid:62)et are used to determine fair value. In other circumstances, valuation techniques are adopted. AdAlta Limited Annual Report 2018 30 Page 36 ADALTA LTD ABN 92 120 332 925 NOTES TO THE F(cid:32)NANC(cid:32)AL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 1(cid:11) SUMMARY OF S(cid:32)(cid:30)N(cid:32)F(cid:32)CANT ACCOUNT(cid:32)N(cid:30) (cid:39)OL(cid:32)C(cid:32)ES (Continued) (f) Financial (cid:32)nstruments (continued) (cid:27)mortised cost is calculated as the amount at (cid:74)hich the financial asset or financial liability is measured at initial recognition less principal repayments and any reduction for impairment, and ad(cid:61)usted for any cumulative amortisation of the difference bet(cid:74)een that initial amount and the maturity amount calculated using the effective interest method. The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or (cid:74)hen this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flo(cid:74)s (cid:74)ill necessitate an ad(cid:61)ustment to the carrying amount (cid:74)ith a consequential recognition of an income or expense item in profit or loss. (i) Financial assets at (cid:34)ai(cid:45) val(cid:48)e t(cid:36)(cid:45)(cid:42)(cid:48)(cid:35)(cid:36) (cid:43)(cid:45)(cid:42)(cid:34)it (cid:42)(cid:45) l(cid:42)ss (cid:32)inancial assets are classified at (cid:5)fair value through profit or loss(cid:5) (cid:74)hen they are held for trading for the purpose of short-term profit ta(cid:62)ing, derivatives not held for hedging purposes, or (cid:74)hen they are designated as such to avoid an accounting mismatch or to enable performance evaluation (cid:74)here a group of financial assets is managed by (cid:62)ey management personnel on a fair value basis in accordance (cid:74)ith a documented ris(cid:62) management or investment strategy. (cid:45)uch assets are subsequently measured at fair value (cid:74)ith changes in carrying amount being included in profit or loss. (ii) (cid:24)(cid:42)ans an(cid:32) (cid:45)eceivables (cid:38)oans and receivables are non-derivative financial assets (cid:74)ith fixed or determinable payments that are not quoted in an active mar(cid:62)et and are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and (cid:74)hen the financial asset is derecognised. (iii) (cid:21)el(cid:32)(cid:5)t(cid:42)(cid:5)(cid:40)at(cid:48)(cid:45)it(cid:52) invest(cid:40)ents (cid:34)eld-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Company(cid:5)s intention to hold these investments to maturity. They are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and (cid:74)hen the financial asset is derecognised. (iv) (cid:15)vailable(cid:5)(cid:34)(cid:42)(cid:45)(cid:5)sale invest(cid:40)ents (cid:27)vailable-for-sale investments are non-derivative financial assets that are either not capable of being classified into other categories of financial assets due to their nature or they are designated as such by management. They comprise investments in the equity of other entities (cid:74)here there is neither a fixed maturity nor fixed or determinable payments. They are subsequently measured at fair value (cid:74)ith any re-measurements other than impairment losses and foreign exchange gains and losses recognised in other comprehensive income. (cid:49)hen the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or loss. Page 37 AdAlta Limited Annual Report 2018 31 ADALTA LTD ABN 92 120 332 925 NOTES TO THE F(cid:32)NANC(cid:32)AL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 1(cid:11) SUMMARY OF S(cid:32)(cid:30)N(cid:32)F(cid:32)CANT ACCOUNT(cid:32)N(cid:30) (cid:39)OL(cid:32)C(cid:32)ES (Continued) (f) Financial (cid:32)nstruments (continued) (cid:27)vailable-for-sale financial assets are classified as non-current assets (cid:74)hen they are not expected to be sold (cid:74)ithin 12 months after the end of the reporting period. (cid:27)ll other available- for-sale financial assets are classified as current assets. (v) Financial liabilities Non-derivative financial liabilities other than financial guarantees are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and (cid:74)hen the financial liability is derecognised. (cid:32)mpairment (cid:27)t the end of each reporting period, the Company assesses (cid:74)hether there is ob(cid:61)ective evidence that a financial asset has been impaired. (cid:27) financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is ob(cid:61)ective evidence of impairment as a result of one or more events (a (cid:5)loss event(cid:5)) having occurred, (cid:74)hich has an impact on the estimated future cash flo(cid:74)s of the financial asset(s). In the case of available-for-sale financial assets, a significant or prolonged decline in the mar(cid:62)et value of the instrument is considered to constitute a loss event. Impairment losses are recognised in profit or loss immediately. (cid:27)lso, any cumulative decline in fair value previously recognised in other comprehensive income is reclassified into profit or loss at this point. (g) (cid:32)mpairment of assets (cid:27)t the end of each reporting period, the Company assesses (cid:74)hether there is any indication that an asset may be impaired. The assessment (cid:74)ill include considering external sources of information and internal sources of information, including dividends received from subsidiaries, associates or (cid:61)oint ventures deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset(cid:5)s fair value less costs to sell and value in use to the asset(cid:5)s carrying amount. (cid:27)ny excess of the asset(cid:5)s carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance (cid:74)ith another (cid:45)tandard (e.g. in accordance (cid:74)ith the revaluation model in (cid:27)(cid:27)(cid:45)(cid:28) 116(cid:23) Property, Plant and (cid:31)quipment). (cid:27)ny impairment loss of a revalued asset is treated as a revaluation decrease in accordance (cid:74)ith that other (cid:45)tandard. (cid:49)here it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to (cid:74)hich the asset belongs. Impairment testing is performed annually for good(cid:74)ill and intangible assets (cid:74)ith indefinite lives. (h) Trade and Other Receivables Trade and other receivables include amounts due from customers for goods sold and services performed in the ordinary course of business. Receivables expected to be collected (cid:74)ithin 12 months of the end of the reporting period are classified as current assets. (cid:27)ll other receivables are classified as non-current assets. Page 38 AdAlta Limited Annual Report 2018 32 ADALTA LTD ABN 92 120 332 925 NOTES TO THE F(cid:32)NANC(cid:32)AL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 1 SUMMARY OF S(cid:32)(cid:30)N(cid:32)F(cid:32)CANT ACCOUNT(cid:32)N(cid:30) (cid:39)OL(cid:32)C(cid:32)ES (Continued) (i) Employee Benefits Short(cid:10)term employee benefits (cid:38)iabilities for (cid:74)ages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled (cid:74)ithin 12 months of the reporting date are recognised in current liabilities in respect of employees(cid:5) services up to the reporting date and are measured at the amounts expected to be paid (cid:74)hen the liabilities are settled. The Company(cid:5)s obligations for short-term employee benefits such as (cid:74)ages, salaries and sic(cid:62) leave are recognised as a part of current trade and other payables in the statement of financial position. Long(cid:10)term employee benefits The liability for annual leave and long service leave not expected to be settled (cid:74)ithin 12 months of the reporting date are recognised in non-current liabilities, provided there is an unconditional right to defer settlement of the liability. The liability is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the pro(cid:61)ected unit credit method. Consideration is given to expected future (cid:74)age and salary levels, experience of employee departures and periods of service. (cid:31)xpected future payments are discounted using mar(cid:62)et yields at the reporting date on national government bonds (cid:74)ith terms to maturity and currency that match, as closely as possible, the estimated future cash outflo(cid:74)s. ((cid:58)) (cid:39)rovisions Provisions are recognised (cid:74)hen the Company has a legal or constructive obligation, as a result of past events, for (cid:74)hich it is probable that an outflo(cid:74) of economic benefits (cid:74)ill result and that outflo(cid:74) can be reliably measured. Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period. ((cid:59)) Cash and Cash E(cid:65)uivalents Cash and cash equivalents include cash on hand, deposits available on demand (cid:74)ith ban(cid:62)s, other short-term highly liquid investments (cid:74)ith original maturities of 12 months or less, and ban(cid:62) overdrafts. (cid:28)an(cid:62) overdrafts are reported (cid:74)ithin short-term borro(cid:74)ings in current liabilities in the statement of financial position. (l) Revenue Revenue is recognised (cid:74)hen it is probable that the economic benefit (cid:74)ill flo(cid:74) to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. Interest revenue is recognised on a proportional basis ta(cid:62)ing into account the interest rates applicable to the financial assets. Income from the Research and Development tax incentive is recognised on an accrual basis in the year to (cid:74)hich the incentive relates. (cid:27)ll revenue is stated net of the amount of goods and services tax. Page 39 AdAlta Limited Annual Report 2018 33 ADALTA LTD ABN 92 120 332 925 NOTES TO THE F(cid:32)NANC(cid:32)AL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 1 SUMMARY OF S(cid:32)(cid:30)N(cid:32)F(cid:32)CANT ACCOUNT(cid:32)N(cid:30) (cid:39)OL(cid:32)C(cid:32)ES (Continued) (m) Trade and Other (cid:39)ayables Trade and other payables represent the liabilities for goods and services received by the Company that remain unpaid at the end of the reporting period. The balance is recognised as a current liability (cid:74)ith the amounts normally paid (cid:74)ithin 30 days of recognition of the liability. (n) (cid:30)oods and Services Ta(cid:72) ((cid:30)ST) Revenues, expenses and assets are recognised net of the amount of G(cid:45)T, except (cid:74)here the amount of G(cid:45)T incurred is not recoverable from the (cid:27)ustralian Taxation (cid:41)ffice ((cid:27)T(cid:41)). Receivables and payables are stated inclusive of the amount of G(cid:45)T receivable or payable. The net amount of G(cid:45)T recoverable from, or payable to, the (cid:27)T(cid:41) is included (cid:74)ith other receivables or payables in the statement of financial position. Cash flo(cid:74)s are presented on a gross basis. The G(cid:45)T component of cash flo(cid:74)s arising from investing or financing activities (cid:74)hich are recoverable from, or payable to, the (cid:27)T(cid:41) are presented as operating cash flo(cid:74)s included in receipts from customers or payments to suppliers. (o) Comparative Figures (cid:49)hen required by (cid:27)ccounting (cid:45)tandards, comparative figures have been ad(cid:61)usted to conform to changes in presentation for the current financial year. (p) Critical Accounting Estimates and Judgements The Directors evaluate estimates and (cid:61)udgements incorporated into the financial statements based on historical (cid:62)no(cid:74)ledge and best available current information. (cid:31)stimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and (cid:74)ithin the Company. (cid:34)ey Estimates (i) (cid:19)nvi(cid:45)(cid:42)n(cid:40)ental (cid:22)ss(cid:48)es (cid:28)alances disclosed in the financial statements and notes thereto are not ad(cid:61)usted for any pending or enacted environmental legislation, and the Directors understanding thereof. (cid:27)t the current stage of the Company(cid:5)s development and its current environmental impact the Directors believe such treatment is reasonable and appropriate. (ii) (cid:28)a(cid:51)ati(cid:42)n (cid:28)alances disclosed in the financial statements and the notes hereto, related to taxation are based on the best estimates of Directors. These estimates ta(cid:62)e into account both the financial performance and position of the Company as they pertain to current income tax legislation and the Directors understanding thereof. No ad(cid:61)ustment has been made for pending or future tax legislation. The current income tax position represents that Directors(cid:5) best estimate, pending an assessment by the (cid:27)ustralian Taxation (cid:41)ffice. Page 40 AdAlta Limited Annual Report 2018 34 ADALTA LTD ABN 92 120 332 925 NOTES TO THE F(cid:32)NANC(cid:32)AL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 1 SUMMARY OF S(cid:32)(cid:30)N(cid:32)F(cid:32)CANT ACCOUNT(cid:32)N(cid:30) (cid:39)OL(cid:32)C(cid:32)ES (Continued) ((cid:65)) Standards and (cid:32)nterpretations in issue not yet adopted (cid:27)t the date of authorisation of the financial statements, the (cid:45)tandards and Interpretations listed belo(cid:74) (cid:74)ere in issue but not yet effective. The Company is currently assessing the impact on the financial statements from the adoption of these standards. Standard (cid:12) (cid:32)nterpretation (cid:27)(cid:27)(cid:45)(cid:28)9 (cid:5)(cid:32)inancial Instruments(cid:5) (cid:27)(cid:27)(cid:45)(cid:28)15 (cid:5)Revenue from Contracts (cid:74)ith Customers(cid:5) (cid:27)(cid:27)(cid:45)(cid:28) 2014-10 (cid:5)(cid:27)mendments to (cid:27)ustralian (cid:27)ccounting (cid:45)tandards - (cid:45)ale or Contribution of (cid:27)ssets bet(cid:74)een an investor and its (cid:27)ssociate or (cid:36)oint (cid:48)enture(cid:5) (cid:27)(cid:27)(cid:45)(cid:28) 16 (cid:5)(cid:38)eases(cid:5) (cid:27)(cid:27)(cid:45)(cid:28) 2016-1 (cid:5)(cid:27)mendments to (cid:27)ustralian (cid:27)ccounting (cid:45)tandards - Recognition of Deferred Tax (cid:27)ssets for (cid:47)nrealised (cid:38)osses(cid:5) (cid:27)(cid:27)(cid:45)(cid:28) 2016-2 (cid:5)(cid:27)mendments to (cid:27)ustralian (cid:27)ccounting (cid:45)tandards - Disclosure Initiative(cid:23) (cid:27)mendments to (cid:27)(cid:27)(cid:45)(cid:28) 107(cid:5) Application date of standard 1 (cid:36)anuary 2018 1 (cid:36)anuary 2018 1 (cid:36)anuary 2018 E(cid:72)pected to be initially applied in the financial year ended 30 (cid:36)une 2019 30 (cid:36)une 2019 30 (cid:36)une 2019 1 (cid:36)anuary 2019 1 (cid:36)anuary 2017 30 (cid:36)une 2020 30 (cid:36)une 2018 1 (cid:36)anuary 2017 30 (cid:36)une 2018 (r) Operating Segments The Company only operates in one segment. (s) Earnings per Share (cid:16)asic ea(cid:45)nin(cid:35)s (cid:43)e(cid:45) s(cid:36)a(cid:45)es (cid:28)asic earnings per share is calculated by dividing the profit attributable to the o(cid:74)ners of (cid:27)d(cid:27)lta (cid:38)imited, excluding any costs of servicing equity other than ordinary shares, by the (cid:74)eighted average number of ordinary shares outstanding during the financial year, ad(cid:61)usted for bonus elements in ordinary shares issued during the financial year. (t) Capital Ris(cid:59) Management The Company(cid:79)s ob(cid:61)ectives (cid:74)hen managing capital are to safeguard its ability to continue as a going concern, so that it can continue to fund research and development pro(cid:61)ect activities. The Company monitors capital on the basis of (cid:74)or(cid:62)ing capital requirements and during the year, the Company(cid:5)s strategy, (cid:74)hich (cid:74)as unchanged from 2016, (cid:74)as to maintain a current account balance sufficient to meet the Company(cid:5)s day to day expenses (cid:74)ith the balance held in accounts (cid:74)ith higher interest rates. Page 41 AdAlta Limited Annual Report 2018 35 ADALTA LTD ABN 92 120 332 925 NOTES TO THE F(cid:32)NANC(cid:32)AL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 2(cid:11) RE(cid:45)ENUE AND OTHER (cid:32)NCOME R & D Tax incentive (cid:8) Grant Income Total revenue 2018 $ 2017 $ 2,020,175 (cid:8)(cid:8)19,724 - 2,020,175 1,777,030 19,724 19,724 1,796,754 (cid:8)The 2018 R & D Tax incentive is sub(cid:61)ect to approval of the (cid:41)verseas (cid:32)inding application lodged (cid:74)ith (cid:27)usIndustry on 20 (cid:39)arch 2018. 3(cid:11) TA(cid:47) E(cid:47)(cid:39)ENSE (a) Tax expense Current tax Deferred tax Income tax expense (b) Tax reconciliation - - - - - - Profit (loss) before income tax expense (3,854,894) (2,832,517) Prima facie tax payable at 27.5(cid:3) (2017(cid:23)27.5(cid:3)) Non deductible expenses Non assessable income Temporary differences (cid:28)enefits of tax losses not brought into account (1,060,096) 1,323,658 (555,548) 1,682 290,304 - (778,942) 1,142,978 (488,683) (45,841) 170,488 - (c) The Company has revenue losses of approximately (cid:2)2,065,000 for (cid:74)hich no deferred tax asset has been recognised. (d) The Company has no fran(cid:62)ing credits currently available for future offset. (cid:17)(cid:11) EARN(cid:32)N(cid:30)S (cid:39)ER SHARE (a) (cid:38)oss used to calculate basic (cid:31)P(cid:45) (3,854,894) (2,832,517) (b) (cid:49)eighted average number of ordinary shares outstanding during the year used in calculating basic and diluted (cid:31)P(cid:45). Number of shares 101,287,250 Number of shares 90,035,620 The 3,734,472 options (2017(cid:23) 969,427) are not considered to be dilutive. 5(cid:11) CASH AND CASH E(cid:40)U(cid:32)(cid:45)ALENTS Cheque account Cash reserve account (cid:45)avings - bonus Term Deposit 26,154 1,139,562 1,139,972 - 2,306,048 20,189 275,009 929,419 5,000,000 6,224,617 AdAlta Limited Annual Report 2018 36 Page 42 ADALTA LTD ABN 92 120 332 925 NOTES TO THE F(cid:32)NANC(cid:32)AL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 (cid:19)(cid:11) TRADE AND OTHER RECE(cid:32)(cid:45)ABLES CURRENT (cid:45)undry receivable - R&D tax incentive (cid:8) Trade receivables Good and services tax Prepaid expenses (cid:27)ccrued income 2018 $ 2017 $ 2,020,175 - 60,481 49,644 - 2,130,300 1,777,030 - 39,009 23,192 23,442 1,862,673 (cid:8)The 2018 R & D Tax incentive is sub(cid:61)ect to approval of the (cid:41)verseas (cid:32)inding application lodged (cid:74)ith (cid:27)usIndustry on 20 (cid:39)arch 2018. 7(cid:11) (cid:39)LANT AND E(cid:40)U(cid:32)(cid:39)MENT Computer soft(cid:74)are (cid:38)ess accumulated depreciation (cid:41)ffice equipment (cid:38)ess accumulated depreciation Total plant and e(cid:65)uipment (cid:39)ovements in carrying amounts (cid:39)ovements in the carrying amounts for each class of plant and equipment. (a) Office E(cid:65)uipment (cid:28)alance at beginning of year (cid:27)dditions Disposals (cid:38)oss on sale Depreciation expense (cid:28)alance at end of year OTHER ASSETS NON(cid:10)CURRENT (cid:45)ecurity Deposit(cid:12)(cid:28)ond TRADE AND OTHER (cid:39)AYABLES CURRENT (cid:27)ccrued expenses Trade creditors P(cid:27)(cid:51)G and super payable 8(cid:11) 9(cid:11) - - - 10,049 (10,049) - - - 3,142 - - (3,142) - 1,241 (1,241) - 6,908 (6,908) - - 282 6,745 (1,000) (592) (5,435) - 2,600 2,600 2,600 2,600 169,955 74,587 40,607 285,149 254,504 10,406 21,005 285,915 AdAlta Limited Annual Report 2018 37 Page 43 ADALTA LTD ABN 92 120 332 925 NOTES TO THE F(cid:32)NANC(cid:32)AL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 10(cid:11) (cid:39)RO(cid:45)(cid:32)S(cid:32)ONS CURRENT Provision for annual leave Provision for long service leave 11(cid:11) (cid:32)SSUED CA(cid:39)(cid:32)TAL (cid:32)ully paid ordinary shares (a) Ordinary Shares (cid:27)t beginning of reporting period Issued on exercise of options Issued on exercise of options in accordance (cid:74)ith (cid:38)imited Recourse (cid:38)oan (cid:27)greements executed Issue of ordinary shares Conversion of Preference (cid:45)hares Conversion of Convertible Notes (cid:27)t the end of the reporting period 2018 $ 2017 $ 28,983 52,185 81,168 11,153 47,444 58,597 17,573,527 17,560,338 17,573,527 17,560,338 No(cid:11) 101,110,890 146,544 588,411(cid:8) No(cid:11) 12,418,223 1,110,874 - - - - 101,845,845 40,000,000 21,594,477 25,987,316 101,110,890 (cid:41)rdinary shares entitle the holder to participate in dividends and the proceeds on (cid:74)inding up of the Company in proportion to the number of and amounts paid on the shares held. (cid:41)n a sho(cid:74) of hands, every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to one vote. Incremental costs directly attributable to the issue of the ne(cid:74) shares or options are sho(cid:74)n in equity as a deduction, net of tax, from the proceeds. (cid:8)(cid:41)rdinary shares issued pursuant to (cid:38)imited Recourse (cid:38)oan (cid:27)greement executed (cid:74)ith eligible employees. (b) Series A (cid:39)reference Shares (cid:27)t beginning of reporting period Conversion to (cid:41)rdinary (cid:45)hares (cid:27)t the end of the reporting period No(cid:11) No(cid:11) 2,999,998 (2,999,998) - - - - The conversion ratio for each Preference (cid:45)hare (cid:74)as ad(cid:61)usted as provided in the relevant subscription agreement and for the (cid:45)hare (cid:45)plit. (cid:27)ccordingly, 2,999,998 Preference (cid:45)hares converted to 21,594,477 (cid:41)rdinary (cid:45)hares. AdAlta Limited Annual Report 2018 38 Page 44 ADALTA LTD ABN 92 120 332 925 NOTES TO THE F(cid:32)NANC(cid:32)AL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 11(cid:11) (cid:32)SSUED CA(cid:39)(cid:32)TAL (continued) (c) Convertible Notes (cid:27)t beginning of reporting period Conversion to (cid:41)rdinary (cid:45)hares (cid:27)t the end of the reporting period 2018 $ 2017 $ No(cid:11) No(cid:11) 2,660,000 (2,660,000) - - - - (cid:27)ll Convertible Notes ((cid:74)hich (cid:74)ere issued at a price of (cid:2)1.00) converted to 25,987,316 (cid:41)rdinary (cid:45)hares (based on the terms of the relevant Convertible Note deed and the effect of the (cid:45)hare (cid:45)plit). (d) Options on issue E(cid:72)piry date 16 (cid:41)ctober 2020 1 November 2020 14 November 2021 30 (cid:45)eptember 2021 30 (cid:45)eptember 2022 12(cid:11) RESER(cid:45)ES Share Based (cid:39)ayment Reserve (cid:27)t beginning of reporting period Recognised during the year (cid:27)t the end of the reporting period 12(cid:11) RESER(cid:45)ES (continued) Number of options 234,472 600,000 2,500,000 200,000 200,000 3,734,472 3,908 168,958 172,866 3,908 - 3,908 The Company has established an (cid:31)mployee (cid:45)hare (cid:41)ption Plan (cid:74)here employees, Directors and (cid:41)fficers of the Company are issued (cid:74)ith options over ordinary shares of (cid:27)d(cid:27)lta (cid:38)imited. The options, issued for no consideration, are in general exercisable at a fixed price at commencement date, unless other(cid:74)ise stated and ending on the expiry date and are sub(cid:61)ect to the achievement of certain milestones, unless other(cid:74)ise stated. (cid:41)n 10 (cid:39)ay 2016 the (cid:28)oard approved changes to the (cid:31)(cid:45)(cid:41)P in alignment (cid:74)ith a publicly listed company, capping the (cid:31)(cid:45)(cid:41)P at 5(cid:3) of capital issued. The (cid:41)ptions cannot be transferred and are not quoted on the (cid:27)(cid:45)(cid:50). Details of options as at the beginning and end of the reporting date and movements during the year are set out belo(cid:74)(cid:23) Page 45 AdAlta Limited Annual Report 2018 39 k ADALTA LTD ABN 92 120 332 925 NOTES TO THE F(cid:32)NANC(cid:32)AL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 12(cid:11) RESER(cid:45)ES (continued) E(cid:72)piry Date E(cid:72)ercise (cid:39)rice No(cid:11) at the start of year (cid:30)ranted in the year E(cid:72)ercised E(cid:72)pired No(cid:11) at the 01-(cid:36)ul-18 21-(cid:45)ep-18 01-Nov-18 01-(cid:36)ul-19 01-Nov-19 01-Nov-20 16-(cid:41)ct-20 14-Nov-2021 14-Nov-2021 14-Nov-2021 14-Nov-2021 30-(cid:45)ep-2021 30-(cid:45)ep-2022 (cid:2)0.17 (cid:8) (cid:2)0.17 (cid:8) (cid:2)0.17 (cid:8) (cid:2)0.17 (cid:8) (cid:2)0.17 (cid:8) (cid:2)0.17 (cid:2)0.17 (cid:2)0.25 (cid:2)0.50 (cid:2)0.75 (cid:2)1.00 (cid:2)0.31 (cid:2)0.31 145,976 20,569 73,272 129,913 365,225 234,472 - - - - - - - - - - 600,000 1,150,000 650,000 350,000 350,000 200,000 200,000 (145,976) (20,569) (73,272) (129,913) (365,225) - - - - - 969,427 3,500,000 (734,955) end of year - - - - - 234,472 600,000 1,150,000 650,000 350,000 350,000 200,000 200,000 3,734,472 - - - - - - - - - - - (cid:49)eighted average exercise price (cid:2)0.17 (cid:8) (cid:2)0.15 (cid:8) N(cid:27) (cid:2)0.40 50(cid:3) of options designated (cid:74)ith (cid:8) have an exercise price of (cid:2)0.0002 if exercised (cid:74)ithin 3 months of vesting (cid:74)ith the exercise price of the remaining 50(cid:3) being (cid:2)0.09 if exercised (cid:74)ithin 12 months of vesting other(cid:74)ise the exercise price is (cid:2)0.17. The (cid:74)eighted average remaining contractual life of options on issue at 30 (cid:36)une 2018 is 1,161 days. AdAlta Limited Annual Report 2018 40 Page 46 ADALTA LTD ABN 92 120 332 925 NOTES TO THE F(cid:32)NANC(cid:32)AL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 13(cid:11) RELATED (cid:39)ARTY TRANSACT(cid:32)ONS Related (cid:39)arties The Company(cid:5)s main related parties are as follo(cid:74)s(cid:23) (cid:36)ohn Chiplin (cid:31)li(cid:77)abeth (cid:39)cCall (cid:36)ames (cid:49)illiams (cid:45)amantha Cobb Paul (cid:39)ac(cid:38)eman Robert Peach Cameron (cid:36)ones Non (cid:31)xecutive Director (a(cid:43)(cid:43)(cid:42)inte(cid:32) (cid:7)(cid:12) (cid:25)a(cid:52) (cid:8)(cid:6)(cid:7)(cid:10)) Non (cid:31)xecutive Director (a(cid:43)(cid:43)(cid:42)inte(cid:32) (cid:7)(cid:12) (cid:18)ece(cid:40)be(cid:45) (cid:8)(cid:6)(cid:7)(cid:6)) Non (cid:31)xecutive Director (a(cid:43)(cid:43)(cid:42)inte(cid:32) (cid:7)(cid:12) (cid:18)ece(cid:40)be(cid:45) (cid:8)(cid:6)(cid:7)(cid:6)) (cid:39)anaging Director & C(cid:31)(cid:41) (a(cid:43)(cid:43)(cid:42)inte(cid:32) (cid:8)(cid:14) (cid:23)(cid:48)ne (cid:8)(cid:6)(cid:6)(cid:13)) Chairman & Non-(cid:31)xecutive Director (a(cid:43)(cid:43)(cid:42)inte(cid:32) (cid:7)(cid:12) (cid:15)(cid:43)(cid:45)il (cid:8)(cid:6)(cid:7)(cid:11)) Non (cid:31)xecutive Director (a(cid:43)(cid:43)(cid:42)inte(cid:32) (cid:7)(cid:10) (cid:26)(cid:42)ve(cid:40)be(cid:45) (cid:8)(cid:6)(cid:7)(cid:12)) Company (cid:45)ecretary (a(cid:43)(cid:43)(cid:42)inte(cid:32) (cid:9)(cid:7) (cid:25)a(cid:52) (cid:8)(cid:6)(cid:7)(cid:13)) The Company had no other (cid:62)ey management personnel during the period. (a) (cid:34)ey management personnel (cid:27)ny person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any Director ((cid:74)hether executive or other(cid:74)ise) of that entity, is considered (cid:62)ey management personnel. Remuneration of (cid:59)ey management personnel Short(cid:10)term employee benefits Salary (cid:4) fees $ Other $ 60,771 45,000 45,000 45,000 45,000 - - - - - (cid:39)ost(cid:10) employment benefits Superannuation $ Share(cid:10) based payment Options $ 4,229 - - - - 3,396 - - 2,264 22,963 Total $ 68,396 45,000 45,000 47,264 67,963 260,000 500(cid:9)771 66,300 (cid:19)(cid:19)(cid:9)300 30,999 35(cid:9)228 32,415 61,038 389,714 (cid:19)(cid:19)3(cid:9)337 2018 Non(cid:10)e(cid:72)ecutive Directors Paul (cid:39)ac(cid:38)eman (cid:36)ames (cid:49)illiams (cid:38)iddy (cid:39)cCall (cid:36)ohn Chiplin Robert Peach E(cid:72)ecutive Directors (cid:45)amantha Cobb Total AdAlta Limited Annual Report 2018 41 Page 47 ADALTA LTD ABN 92 120 332 925 13(cid:11) RELATED (cid:39)ARTY TRANSACT(cid:32)ONS (continued) Short(cid:10)term employee benefits Salary (cid:4) fees $ Other $ (cid:39)ost(cid:10) employment benefits Superannuation $ Share(cid:10) based payment Options $ 60,108 38,650 38,650 41,503 28,125 - - - - - - - - - - 2017 Non(cid:10)e(cid:72)ecutive Directors Paul (cid:39)ac(cid:38)eman (cid:36)ames (cid:49)illiams (cid:38)iddy (cid:39)cCall (cid:36)ohn Chiplin Robert Peach(cid:8) E(cid:72)ecutive Directors (cid:45)amantha Cobb Total (cid:4)(cid:15)(cid:43)(cid:43)(cid:42)inte(cid:32) (cid:7)(cid:10) (cid:26)(cid:42)ve(cid:40)be(cid:45) (cid:8)(cid:6)(cid:7)(cid:12) 218,135 (cid:17)25(cid:9)171 67,500 (cid:19)7(cid:9)500 27,680 27(cid:9)(cid:19)80 Total $ 60,108 38,650 38,650 41,503 28,125 313,315 520(cid:9)351 - - - - - - - (cid:45)hare options (cid:74)ere issued to (cid:62)ey management personnel as remuneration during the financial year as set out in the follo(cid:74)ing table. 502,938 share options (cid:74)ere exercised by (cid:62)ey management personnel during the year (2017(cid:23) 903,303). 2018 (cid:45)amantha Cobb Paul (cid:39)ac(cid:38)eman (cid:36)ames (cid:49)illiams (cid:38)iddy (cid:39)cCall (cid:36)ohn Chiplin Robert Peach Total 2017 (cid:45)amantha Cobb Paul (cid:39)ac(cid:38)eman (cid:36)ames (cid:49)illiams (cid:38)iddy (cid:39)cCall (cid:36)ohn Chiplin Robert Peach Total Balance at 1 July No(cid:11) 356,394 146,544 (cid:30)ranted as compensation No(cid:11) E(cid:72)ercised Balance at 30 June No(cid:11) 1,750,000 (356,394) 1,750,000 30,000 (146,544) 30,000 - - - - - - 20,000 200,000 - - - - - - 20,000 200,000 502(cid:9)938 2(cid:9)000(cid:9)000 (502(cid:9)938) 2(cid:9)000(cid:9)000 Balance at 1 July No(cid:11)(cid:7) (cid:30)ranted as compensation No(cid:11)(cid:7) 790,751 366,363 - - 249,127 - 1(cid:9)(cid:17)0(cid:19)(cid:9)2(cid:17)1 - - - - - - (cid:10) Page 48 E(cid:72)ercised(cid:7) Balance at 30 June No(cid:11)(cid:7)(cid:7) 356,394 146,544 - - - - (434,357) (219,819) - - (249,127) - (903(cid:9)303) 502(cid:9)938 AdAlta Limited Annual Report 2018 42 ADALTA LTD ABN 92 120 332 925 1(cid:17)(cid:11) 15(cid:11) CONT(cid:32)N(cid:30)ENT L(cid:32)AB(cid:32)L(cid:32)AT(cid:32)ES (cid:4) CONT(cid:32)N(cid:30)ENT ASSETS The Directors are not a(cid:74)are of any matters or circumstances (cid:74)hich may give rise to a contingent liability or asset. E(cid:45)ENTS AFTER THE RE(cid:39)ORT(cid:32)N(cid:30) (cid:39)ER(cid:32)OD (cid:41)n 13th (cid:36)uly 2018 the Company announced a placement of 14,166,667 fully paid ordinary shares at a price of (cid:2)0.30 per share to raise (cid:2)4.25m. Directors intend to ta(cid:62)e up a total of 522,450 shares, the issue of (cid:74)hich (cid:74)ill be sub(cid:61)ect to shareholder approval at the (cid:27)nnual General (cid:39)eeting. (cid:41)n 16th (cid:36)uly, eligible shareholders (cid:74)ere offered the opportunity to subscribe for up to (cid:2)15,000 per shareholder of ne(cid:74) fully paid ordinary shares in (cid:27)d(cid:27)lta, free of bro(cid:62)erage and commission, under a (cid:45)hare Purchase Plan ((cid:45)PP) at the same price as the Placement. (cid:41)n 15 (cid:27)ugust 2018, the Company announced the Placement of 1,592,011 fully paid ordinary shares to eligible shareholders at a price of (cid:2)0.30 per share to raise (cid:2)477,603. (cid:41)ther(cid:74)ise, there has not been any matter or circumstance that has arisen subsequent to the end of the financial year that has significantly affected, or may significantly affect, the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years. 1(cid:19)(cid:11) COMM(cid:32)TMENTS FOR E(cid:47)(cid:39)END(cid:32)TURE a) Lease commitments The Company has a lease agreement (cid:74)ith Collins (cid:45)treet (cid:28)usiness Centre at the business address of (cid:38)evel 14, 330 Collins (cid:45)treet (cid:39)elbourne. This lease terminates on 30 (cid:45)eptember 2018. (cid:39)ayable (cid:74) minimum lease payments Not later than 12 months (cid:28)et(cid:74)een 12 months and 5 years Total 2018 $ 8,060 - 8,060 2017 $ 18,200 - 18,200 b) Capital commitments The Company has no capital commitments. c) Other commitments The Company is currently not contracted to significant expenditure. 17(cid:11) F(cid:32)NANC(cid:32)AL R(cid:32)S(cid:34) MANA(cid:30)EMENT The Company does not have any complex financial instruments or derivatives. a) Terms(cid:9) conditions and accounting policies The Company(cid:5)s accounting policies, including the terms and conditions of each class of financial asset, financial liability and equity instrument, both recognised and unrecognised at the balance sheet date, are as follo(cid:74)s(cid:23) AdAlta Limited Annual Report 2018 43 Page 49 ADALTA LTD ABN 92 120 332 925 17(cid:11) F(cid:32)NANC(cid:32)AL R(cid:32)S(cid:34) MANA(cid:30)EMENT (Continued) Accounting (cid:39)olicies Terms and Conditions Statement of Financial (cid:39)osition Notes Recognised Financial (cid:32)nstruments i) Financial assets Cheque account Cash reserve (cid:45)avings Term Deposit R & D tax incentive Trade receivables Goods & services tax paid ii) Financial liabilities Trade and other creditors 5 5 5 5 6 6 6 9 iii) (cid:19)(cid:44)(cid:48)it(cid:52) (cid:41)rdinary shares 11 (cid:45)eries (cid:27) preference shares 11 Convertible Notes 11 Carried at face value. Carried at face value. Carried at face value. Carried at face value. Recognised on an accrual basis. The cheque account is at call (cid:74)ith an interest rate of 0.00(cid:3) (2017(cid:23) 0.00(cid:3)). The cash reserve account is at call (cid:74)ith an interest rate of 0.01(cid:3) (2017(cid:23) 1.05(cid:3)). The savings bonus account is at call (cid:74)ith an interest rate of 0.5(cid:3) (2017(cid:23) 1.54(cid:3)). The term deposit has an interest rate of 2.60(cid:3). The incentive is claimed annually under an (cid:27)ustralia Taxation (cid:41)ffice mechanism (cid:74)hich designed to promote research and development. Recognised on an accrual basis. Recognised on an accrual basis. Normal invoice terms are 14-30 days. (cid:28)usiness activity statements are lodged on a quarterly basis. (cid:38)iabilities are recognised for amounts to be paid in the future for goods and services received, (cid:74)hether or not billed to the company. The ma(cid:61)ority of costs are invoiced on a quarterly basis and hence liabilities accrue for up to 90 days. Trade liabilities are normally settled on 14- 30 day terms. (cid:41)rdinary share capital is recognised at the fair value of the consideration received by the company. Details of the shares issued and the terms and conditions of the options outstanding over ordinary shares at balance date are set out in Note 11. (cid:45)eries (cid:27) Preference share capital is recognised at the fair value of the consideration received. Convertible notes are recognised at the fair value of the consideration received by the company . Details of the (cid:45)eries (cid:27) Preference shares issued and the terms and conditions at balance date are set out in Note 11. Details of the convertible notes issued and the terms and conditions at balance date are set out in Note 11. Page 50 ADALTA LTD ABN 92 120 332 925 17(cid:11) F(cid:32)NANC(cid:32)AL R(cid:32)S(cid:34) MANA(cid:30)EMENT (Continued) b) The carrying value of financial assets and liabilities appro(cid:72)imates their fair value c) Financial ris(cid:59) management The Company(cid:5)s activities expose it to a variety of financial ris(cid:62)s(cid:24) mar(cid:62)et ris(cid:62) (fair value interest rate ris(cid:62) and price ris(cid:62)), credit ris(cid:62), liquidity ris(cid:62) and cash flo(cid:74) interest rate ris(cid:62). The Company(cid:5)s overall ris(cid:62) management program focuses on the unpredictability of financial mar(cid:62)ets and see(cid:62)s to minimise potential adverse effects on the financial performance of the Company. (i) (cid:25)a(cid:45)(cid:38)et (cid:45)is(cid:38) The Company is not exposed to either equity securities price ris(cid:62) or commodity price ris(cid:62). The Company has an exposure to foreign currency ris(cid:62) because several contracts relating to cost of services are denominated in foreign currencies. (cid:49)hen the service agreement is signed the Company see(cid:62)s to loc(cid:62)-in a foreign exchange rate to minimise the ris(cid:62)s associated (cid:74)ith fluctuating currency mar(cid:62)ets. (ii) (cid:17)(cid:45)e(cid:32)it (cid:27)is(cid:38) The maximum credit ris(cid:62) is total current assets of (cid:74)hich the vast ma(cid:61)ority is either in the form of cash or amounts receivable from the (cid:27)ustralian Taxation (cid:41)ffice in the form of the Research and Development tax incentive and G(cid:45)T refundable. (iii) (cid:24)i(cid:44)(cid:48)i(cid:32)it(cid:52) (cid:27)is(cid:38) Prudent liquidity ris(cid:62) management implies maintaining sufficient cash and short term assets to enable the Company to settle its liabilities. (cid:49)ith no long term debt or contractual commitments the Company(cid:5)s exposure to liquidity ris(cid:62) is minimal. (iv) (cid:17)as(cid:36) (cid:34)l(cid:42)(cid:50) an(cid:32) (cid:34)ai(cid:45) val(cid:48)e inte(cid:45)est (cid:45)ate (cid:45)is(cid:38) (cid:27)s the Company has no interest-bearing liabilities, cash out flo(cid:74)s are not exposed to changes in mar(cid:62)et interest rates. The Company maintains a current cheque account balance sufficient to meet day to day expenses (cid:74)ith the balance of cash held in accounts designed to maximise interest income. AdAlta Limited Annual Report 2018 45 Page 51 ADALTA LTD ABN 92 120 332 925 18(cid:11) D(cid:32)(cid:45)(cid:32)DENDS No dividends (cid:74)ere paid or declared since the start of the financial year and no recommendation for payment of dividends has been made. 2018 $ 2017 $ 19(cid:11) AUD(cid:32)TORS REUMERAT(cid:32)ON Audit services (cid:27)uditors of the Company (cid:28)utler (cid:45)ettineri ((cid:27)udit) Pty (cid:38)td Other Services (cid:28)utler (cid:45)ettineri ((cid:27)udit) Pty (cid:38)td 20(cid:11) CASH FLOW (cid:32)NFORMAT(cid:32)ON (a) Reconciliation of Cash 24,943 21,092 - - 8,000 8,000 2018 $ $$ 2017 $ Cash at the end of financial year as included in the statement of cash flo(cid:74)s is reconciled to the related items in the statement of financial position as follo(cid:74)s Cheque account Cash reserve account (cid:45)avings - bonus Term Deposit 26,514 1,139,562 1,139,972 - 2,306,048 20,189 275,009 929,419 5,000,000 6,224,617 (b) Reconciliation of cash flow from operations with profit after income ta(cid:72) (cid:38)oss attributable to members Non-cash flo(cid:74)s in profit(cid:23) Depreciation (cid:38)oss on sale of plant and equipment Prior year receivables classified as capital (Increase) (cid:12) decrease in receivables Increase (cid:12) (decrease) in payables Increase (cid:12) (decrease) in provisions (cid:45)hares based payments recognised (3,854,894) (2,832,517) 3,142 - - (267,627) (766) 22,571 168,958 5,435 592 (65,220) (965,426) 107,118 23,195 - Net cash provided by (used in) operating activities (3,928,616) (3,726,823) AdAlta Limited Annual Report 2018 46 Page 52 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ADALTA LIMITED Report on the Financial Report Opinion We have audited the financial report of AdAlta Limited (the Company), which comprises the statement of financial position as at 30 June 2018, the statement of profit and loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of AdAlta Limited, is in accordance with the Corporations Act 2001, including: i) giving a true and fair view of the Company’s financial position as at 30 June 2018 and of its financial performance for the year then ended; and ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We have conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under the Auditor’s in those Standards are Responsibilities for the Audit of the Financial Report section of our report. further described We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our ethical requirements in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the date of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matter How our audit addressed the key audit matter Intellectual Property Rights and Obligations arising from Research and Development Agreements The Company has in place multiple agreements with research and development providers whereby certain services and facilities are supplied in exchange for payment. To enable the delivery of these services and facilities, the Company’s intellectual property is made available to the research and development providers. Management have written specific clauses into the Research and Development Agreements to protect the Company’s intellectual property rights and also exercise their judgment in interpreting the agreements and the recognition of any potential liabilities and/or commitments arising therefrom. Equity and Capital Structure Refer note 11 During the year, the company successfully issued various options of which some have been exercised and fully paid ordinary shares issued. Research and Development Tax Incentive Refer notes 2 and 6 Management utilise key assumptions, judgements and estimates in determining the R&D Tax Incentive disclosed in note 2 and 6 which is material to the financial statements. Our audit procedures included obtaining copies of major agreements and reviewing them to determine if any commitments, provisions or payables needed to be accounted for and disclosed in line with the applicable Australian Accounting Standards. Furthermore, we reviewed the agreements to ensure clauses were present to protect the intellectual property rights of AdAlta Limited. Our audit procedures included an examination of each conversion to, and issue of, fully paid ordinary shares during the year as shown in note 11. We also assessed whether or not share-based payments should have been recognised in relation to the Employee Share Option Plan. Further, we reconciled the third party share registry to information announced to the public. Our audit procedures included an evaluation of the assumptions, methodologies and conclusions used by the Company in preparing the R&D Tax Incentive application. We also focused on the adequacy of financial report disclosures regarding these assumptions as disclosed at note 1. Key Audit Matter Deferred Taxation Refer note 3 The Company relies on the use of an expert to prepare the Company income tax return and taxation disclosures which are material to the financial statements. Further, management utilise key assumptions, judgements and estimates in calculating the deferred tax disclosed in note 1. How our audit addressed the key audit matter Our audit procedures included an evaluation of the assumptions, methodologies and conclusions used by the company in preparing their estimate of deferred taxes. In accordance with Australian Auditing Standards, we relied on the work of management's expert with respect to the assumptions used in the calculation of deferred taxes. This included examining the qualifications, objectivity and experience of management's expert. We also focused on the adequacy of financial report disclosures regarding these assumptions as disclosed at note 1. Other information The directors are responsible for the other information. The other information comprises the information in the Company’s annual report for the year ended 30 June 2018, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with the Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: (cid:120) Identify and assess risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. (cid:120) Obtain and understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. (cid:120) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. (cid:120) Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. (cid:120) Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh public interest benefits of such communication. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included on pages 15 to 21 of the directors’ report for the year ended 30 June 2018. In our opinion, the Remuneration Report of AdAlta Limited, for the year ended 30 June 2018, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BUTLER SETTINERI (AUDIT) PTY LTD MARIUS VAN DER MERWE Director Perth Date: 5 September 2018 ADALTA LTD ABN 92 120 332 925 ADALTA LTD ABN 92 120 332 925 SHAREHOLDER INFORMATION SHAREHOLDER (cid:32)NFORMAT(cid:32)ON Additional information required by Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 5 September 2018. (cid:27)dditional information required by (cid:27)ustralian (cid:45)toc(cid:62) (cid:31)xchange (cid:38)td and not sho(cid:74)n else(cid:74)here in this report is as follo(cid:74)s. The information is current as at 5 (cid:45)eptember 2018. (a) Distribution of equity securities Analysis of numbers of equity security holders by size of holding: (a) Distribution of e(cid:65)uity securities (cid:27)nalysis of numbers of equity security holders by si(cid:77)e of holding(cid:23) 1 1 1,001 1,001 5,001 5,001 10,001 10,001 100,001 100,001 - 1,000 - 1,000 - 5,000 - 5,000 - 10,000 - 10,000 - 100,000 - 100,000 and over and over Number of holders Number of holders Number of units Number of units 9 9 67 64 100 99 301 298 75 79 422 (cid:17)22 1,184 1,184 204,279 195,410 857,116 847,696 13,155,358 12,899,516 102,275,725 103,138,267 117,082,073 117(cid:9)082(cid:9)073 % Issued Share (cid:3) (cid:32)ssued Share Capital 0.00(cid:3) 0.17(cid:3) 0.73(cid:3) 11.07(cid:3) 88.09(cid:3) 100(cid:11)00(cid:3) Capital 0.00% 0.17% 0.73% 11.07% 88.09% 100.00% The number of shareholders holding less than a mar(cid:62)etable parcel of shares are 15, (cid:74)ith total 10,451, amounting to 0.01(cid:3) of Issued Capital. The number of shareholders holding less than a marketable parcel of shares are 13, with total 7,224, amounting to 0.01% of Issued Capital. (b) Voting rights (b) (cid:45)oting rights Each fully paid ordinary share carries voting rights of one vote per share. (cid:31)ach fully paid ordinary share carries voting rights of one vote per share. The names of the twenty largest holders of quoted ordinary shares are: The names of the t(cid:74)enty largest holders of quoted ordinary shares are(cid:23) (cid:39)osition Holder Name Position Holder Name 10 6 7 8 9 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10 YUUWA CAPITAL LP (cid:51)(cid:47)(cid:47)(cid:49)(cid:27) C(cid:27)PIT(cid:27)(cid:38) (cid:38)P HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED (cid:34)(cid:45)(cid:28)C C(cid:47)(cid:45)T(cid:41)D(cid:51) N(cid:41)(cid:39)IN(cid:31)(cid:31)(cid:45) ((cid:27)(cid:47)(cid:45)TR(cid:27)(cid:38)I(cid:27)) (cid:38)I(cid:39)IT(cid:31)D CITYCASTLE PTY LTD CIT(cid:51)C(cid:27)(cid:45)T(cid:38)(cid:31) PT(cid:51) (cid:38)TD NATIONAL NOMINEES LIMITED N(cid:27)TI(cid:41)N(cid:27)(cid:38) N(cid:41)(cid:39)IN(cid:31)(cid:31)(cid:45) (cid:38)I(cid:39)IT(cid:31)D (cid:39)(cid:31)(cid:47)R(cid:45) (cid:34)(cid:41)(cid:38)DING(cid:45) PT(cid:51) (cid:38)TD MEURS HOLDINGS PTY LTD (cid:38)(cid:27) TR(cid:41)(cid:28)(cid:31) (cid:47)NI(cid:48)(cid:31)R(cid:45)IT(cid:51) (cid:25)P&(cid:39) (cid:39)(cid:31)(cid:47)R(cid:45) (cid:45)(cid:47)P(cid:31)R(cid:27)NN(cid:47)(cid:27)TI(cid:41)N (cid:27)(cid:12)C(cid:26) (cid:39)R R(cid:41)(cid:28)IN (cid:28)(cid:31)(cid:27)(cid:47)(cid:39)(cid:41)NT & (cid:39)(cid:45) (cid:34)(cid:31)(cid:38)(cid:31)N LA TROBE UNIVERSITY (cid:45)(cid:34)ING(cid:38)(cid:31)R (cid:45)(cid:27)(cid:39)(cid:27)NT(cid:34)(cid:27) C(cid:41)(cid:28)(cid:28) MR ROBIN BEAUMONT & MS HELEN (cid:48)(cid:31)DD(cid:31)R(cid:31)DDI(cid:31) PT(cid:51) (cid:38)I(cid:39)IT(cid:31)D SHINGLER SAMANTHA COBB (cid:25)(cid:43)(cid:47)IDDIT(cid:51) (cid:45)(cid:32) (cid:27)(cid:12)C(cid:26) (cid:28)(cid:27)R(cid:31) (cid:45)(cid:47)P(cid:31)R PT(cid:51) (cid:38)TD VEDDEREDDIE PTY LIMITED (cid:25)(cid:28)(cid:27)(cid:38)(cid:38)(cid:27)RD R(cid:31)(cid:27)D (cid:45)(cid:32) (cid:27)(cid:12)C(cid:26) 11 (cid:43)(cid:47)T(cid:28)(cid:38)(cid:47)(cid:31)(cid:28)(cid:41)(cid:50) PT(cid:51) (cid:38)TD BARE SUPER PTY LTD (cid:36)(cid:41)NTR(cid:27) (cid:34)(cid:41)(cid:38)DING(cid:45) PT(cid:51) (cid:38)TD 12 13 (cid:36)(cid:41)(cid:34)N C(cid:34)IP(cid:38)IN 11 QUTBLUEBOX PTY LTD 14 (cid:39)IC(cid:34)(cid:27)(cid:31)(cid:38) (cid:32)(cid:41)(cid:38)(cid:31)(cid:51) JONTRA HOLDINGS PTY LTD 12 15 13 JOHN CHIPLIN 16 (cid:39)R D(cid:27)NI(cid:31)(cid:38) NG(cid:47) & 14 MICHAEL FOLEY (cid:39)I(cid:45)(cid:45) (cid:38)I (cid:38)(cid:27)N C(cid:34)(cid:31)N 17 P(cid:27)(cid:47)(cid:38) (cid:39)(cid:27)C(cid:38)(cid:31)(cid:39)(cid:27)N 15 CSIRO 18 (cid:36)(cid:27)(cid:39)(cid:31)(cid:45) & (cid:39)(cid:27)R(cid:51)-(cid:27)NN(cid:31) (cid:37)(cid:27)(cid:38)(cid:41)(cid:37)(cid:31)RIN(cid:41)(cid:45) 16 MR DANIEL NGU & 19 DR(cid:27)C(cid:41)(cid:45)(cid:31)RP(cid:31)N(cid:45) IN(cid:48)(cid:31)(cid:45)T(cid:39)(cid:31)NT(cid:45) PT(cid:51) (cid:38)TD MISS LI LAN CHEN 17 PAUL MACLEMAN 20 T T NIC(cid:34)(cid:41)(cid:38)(cid:38)(cid:45) PT(cid:51) (cid:38)TD 18 JAMES & MARY-ANNE KALOKERINOS (cid:25)(cid:45)(cid:47)P(cid:31)R(cid:27)NN(cid:47)(cid:27)TI(cid:41)N (cid:27)CC(cid:41)(cid:47)NT(cid:26) Total 19 DRACOSERPENS INVESTMENTS PTY LTD Total (cid:32)ssued Capital 20 T T NICHOLLS PTY LTD Total Total Issued Capital C(cid:45)IR(cid:41) Holding Holding 54,059,848 54,059,848 11,485,363 11,485,363 5,361,856 5,361,856 4,467,314 4,428,111 3,333,333 3,333,333 3,041,330 1,888,559 3,041,330 1,443,843 1,888,559 1,000,000 1,443,843 967,423 1,000,000 967,423 898,116 842,372 810,883 705,057 614,621 511,839 439,636 379,595 364,911 333,334 92(cid:9)910(cid:9)030 117(cid:9)082(cid:9)073 898,116 842,372 810,883 705,057 614,621 511,839 439,636 379,595 364,911 333,334 92,949,233 117,082,073 % Issued (cid:3) (cid:32)ssued Share Share Capital Capital 46.17% 9.81% 4.58% 3.78% 2.85% 46.17(cid:3) 9.81(cid:3) 4.58(cid:3) 3.78(cid:3) 2.85(cid:3) 2.60(cid:3) 1.61(cid:3) 1.23(cid:3) 0.85(cid:3) 0.83(cid:3) 2.60% 1.61% 1.23% 0.85% 0.83% 0.77(cid:3) 0.72(cid:3) 0.69(cid:3) 0.60(cid:3) 0.52(cid:3) 0.44(cid:3) 0.38(cid:3) 0.32(cid:3) 0.31(cid:3) 0.28(cid:3) 79(cid:11)35(cid:3) 100(cid:11)00(cid:3) 0.77% 0.72% 0.69% 0.60% 0.52% 0.44% 0.38% 0.32% 0.31% 0.28% 79.39 100.00% % AdAlta Limited Annual Report 2018 53 (cid:39)age 5(cid:19) Page 56 ADALTA LTD ADALTA LTD ABN 92 120 332 925 ABN 92 120 332 925 (c) Substantial shareholders (c) Substantial shareholders The names of substantial shareholders (cid:74)ho have notified the Company in accordance (cid:74)ith section The names of substantial shareholders who have notified the Company in accordance with section 671(cid:28) of the (cid:17)(cid:42)(cid:45)(cid:43)(cid:42)(cid:45)ati(cid:42)ns (cid:15)ct (cid:8)(cid:6)(cid:6)(cid:7) are(cid:23) 671B of the Corporations Act 2001 are: (cid:39)osition Position Shareholder Shareholder 1 1 2 2 (cid:51)(cid:47)(cid:47)(cid:49)(cid:27) C(cid:27)PIT(cid:27)(cid:38) (cid:38)P YUUWA CAPITAL LP P(cid:38)(cid:27)TIN(cid:47)(cid:39) IN(cid:48)(cid:31)(cid:45)T(cid:39)(cid:31)NT (cid:39)(cid:27)N(cid:27)G(cid:31)(cid:39)(cid:31)NT PLATINUM INVESTMENT MANAGEMENT (cid:38)I(cid:39)IT(cid:31)D ((cid:34)(cid:31)(cid:38)D (cid:28)(cid:51) (cid:34)(cid:45)(cid:28)C C(cid:47)(cid:45)T(cid:41)D(cid:51) N(cid:41)(cid:39)IN(cid:31)(cid:31)(cid:45) LIMITED (HELD BY HSBC CUSTODY NOMINEES ((cid:27)(cid:47)(cid:45)TR(cid:27)(cid:38)I(cid:27)) (cid:38)I(cid:39)IT(cid:31)D) (AUSTRALIA) LIMITED) Number of Number of Shares Shares 54,059,848 54,059,848 11,333,400 11,333,400 (cid:3) (cid:32)C % IC 46.17(cid:3) 46.17% 9.68(cid:3) 9.68% (d) Un(cid:65)uoted e(cid:65)uity securities(cid:23) (d) Unquoted equity securities: Number Number 234,472 234,472 600,000 600,000 1,150,000 1,150,000 650,000 650,000 350,000 350,000 350,000 350,000 200,000 200,000 200,000 200,000 Num Num ber ber of of Holders Holders 3 3 3 3 3 3 4 4 2 2 2 2 1 1 1 1 Class Class (cid:8) + (cid:47)nlisted options exercisable Unlisted options exercisable at (cid:2)0.17 expiring 1(cid:12)11(cid:12)2020 at $0.17 expiring 1/11/2020 (cid:47)nlisted options exercisable Unlisted options exercisable at (cid:2)0.17 expiring 16(cid:12)10(cid:12)2020 at $0.17 expiring 16/10/2020 (cid:47)nlisted options exercisable at (cid:2)0.25 and Unlisted options exercisable at $0.25 and expiring 14(cid:12)11(cid:12)2021 expiring 14/11/2021 (cid:47)nlisted options exercisable at (cid:2)0.50 and Unlisted options exercisable at $0.50 and expiring 14(cid:12)11(cid:12) 2021 expiring 14/11/ 2021 (cid:47)nlisted options exercisable at 75 cents and Unlisted options exercisable at 75 cents and expiring 14(cid:12)11(cid:12)2021 expiring 14/11/2021 (cid:47)nlisted options exercisable at 1 dollar and Unlisted options exercisable at 1 dollar and expiring 14(cid:12)11(cid:12) 2021 expiring 14/11/ 2021 (cid:47)nlisted options exercisable at 31 cents and Unlisted options exercisable at 31 cents and expiring 30(cid:12)09(cid:12)2021 expiring 30/09/2021 (cid:47)nlisted options exercisable at 31 cents and Unlisted options exercisable at 31 cents and expiring 30(cid:12)09(cid:12)2022 expiring 30/09/2022 Holders of more than Holders of more than 20(cid:3) 20% David (cid:39)cGibney (117,236) David McGibney (117,236) (cid:28)rian Richardson (58,618) Brian Richardson (58,618) (cid:36)ohn (cid:49)est(cid:74)ic(cid:62) (58,618) John Westwick (58,618) (cid:45)teve (cid:32)elstead (200,000) Steve Felstead (200,000) (cid:28)rian Richardson (200,000) Brian Richardson (200,000) (cid:36)ohn (cid:49)est(cid:74)ic(cid:62) (200,000) John Westwick (200,000) (cid:45)amantha Cobb (750,000) Samantha Cobb (750,000) (cid:39)ichael (cid:32)oley (200,000) Michael Foley (200,000) Robert Peach (200,000) Robert Peach (200,000) (cid:45)amantha Cobb (500,000) Samantha Cobb (500,000) (cid:39)ichael (cid:32)oley (100,000) Michael Foley (100,000) Paul (cid:39)ac(cid:38)eman (30,000) Paul MacLeman (30,000) (cid:36)ohn Chiplin (20,000) John Chiplin (20,000) (cid:45)amantha Cobb (250,000) Samantha Cobb (250,000) (cid:39)ichael (cid:32)oley (100,000) Michael Foley (100,000) (cid:45)amantha Cobb (250,000) Samantha Cobb (250,000) (cid:39)ichael (cid:32)oley (100,000) Michael Foley (100,000) Dallas (cid:34)artman (200,000) Dallas Hartman (200,000) Dallas (cid:34)artman (200,000) Dallas Hartman (200,000) (e) Use of funds (e) Use of funds (cid:45)ince admission the Company has used its cash in a (cid:74)ay consistent (cid:74)ith its business ob(cid:61)ectives. Since admission the Company has used its cash in a way consistent with its business objectives. AdAlta Limited Annual Report 2018 54 (cid:39)age 57 Page 57 AdAlta Limited Annual Report 2018 55 

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