Atomo Diagnostics Limited
(formerly known as Atomo Diagnostics Pty Limited)
ABN 37 142 925 684
Reissued Annual Financial Report
30 June 2019
Atomo Diagnostics Limited
Contents
Directors' report
Lead auditor's independence declaration
Reissued consolidated statement of profit or loss and other comprehensive income
Reissued consolidated statement of financial position
Reissued consolidated statement of changes in equity
Consolidated statement of cash flows
Reissued notes to the financial statements
Directors' declaration
Independent auditor's report
1
4
5
6
7
8
9
36
37
Atomo Diagnostics Limited
Directors' report
For the financial year ended 30 June 2019
The Directors present their reissued report together with the reissued consolidated financial statements of Atomo
Diagnostics Limited (the "Company"), and its subsidiaries ("the Group") for the financial year ended 30 June 2019 and
the auditor’s report thereon. This reissued directors’ report, has been revised and reissued as a result of the re-
issuance of the financial report as described in Note 2 (a) to the reissued financial statements.
1 Directors
The Directors of the Company at any time during or since the end of the financial year are:
Directors
John Perry Keith (Chairman)
John Michael Kelly (Chief Executive Officer)
George Alexander Sidis
Curt Harold Labelle
Doris-Ann Williams
Connie Bernadette Carnabuci
Paul Alexander Kasian
Appointed
2 December 2011
1 April 2010
1 April 2010
21 October 2016
6 April 2017
4 February 2020
4 February 2020
Resigned
3 February 2020
22 January 2020
The Company Secretary is Gillian Maria Nairn who was appointed on 4 February 2020. Robert Joseph Snoch was
appointed as Company Secretary from 8 December 2016 until 4 February 2020.
2
Principal activities
The principal activities of the Group during the course of the year were development and sale of medical
devices.
There were no significant changes in the nature of the activities of the Group during the year.
3 Review of operations
The loss for the Group for the financial year ended 30 June 2019 amounted to $5,055,112 (2018: net loss
$4,900,173).
4 Significant changes in the state of affairs
In the opinion of the Directors, there were no significant changes in the state of affairs of the Group that
occurred during the financial year under review.
5
Environmental regulation
The Group's operations are not subject to significant environmental regulations under both Commonwealth and
State legislation. The Board believes that the Group has adequate systems in place for the management of its
environmental requirements and is not aware of any breach of those environmental requirements as they apply
to the Group during the financial year covered by this report.
6 Dividends
No dividends were paid or declared by the Company during or since the end of the financial year (2018: Nil).
1 Atomo Diagnostics Limited
Directors' report (continued)
For the financial year ended 30 June 2019
7 Matters subsequent to the end of the financial year
1. On the 21st January 2020, ASIC (and under the Corporations Act) gazetted for a month that the Company will
change from a proprietary company to that of a public company. As such, on or about the 21st February 2020,
the Company became a public company;
2. On 19 December 2019, the shareholders of the company approved a 1:8 split of the company’s share capital;
3. On 19 December 2019, the shareholders of the company approved the conversion of all Ord+ Shares into
Ordinary Shares to be effective at the time that the company becomes a public company. On or around the 21st
February 2020, all Ord+ shares were converted into Ordinary Shares on a 1 for 1 basis;
4. Between the months of September 2019 and November 2019, the Group raised $16 million through the issue
of non-redeemable converting notes. These notes are interest bearing and convertible at the earlier of the
occurrence of a significant equity raising transaction, or 12 months from the date of issue. Of this $16 million, a
non-cash portion of $1.76m has been issued to Global Health Investment Fund LLC in satisfaction of the first
repayment of their loan (as described in Note 14);
5. On 28 February 2020, holders of 17,872,992 Options (post-share split basis) had accepted an early cashless
exercise offer presented by the Group, resulting in the issue of 8,592,043 Ordinary Shares; and
6. On 28 February 2020, the Global Health Investment Fund exercised 21,818,184 Options (post-share split
basis) on a cashless basis resulting in the issue of 10,868,183 Ordinary Shares.
Other than the matters discussed above, there has not arisen in the interval between the end of the financial
year and the date of this report any item, transaction or event of a material and unusual nature likely, in the
opinion of the Directors of the Group, to affect significantly the operations of the Group, the results of those
operations, or the state of affairs of the Group, in future financial years.
8
Likely developments and expected results of operations
Further information about likely developments in the operations of the Group and the expected results of those
operations in future financial years has not been included in this report because disclosure of the information
would be likely to result in unreasonable prejudice to the Group.
9 Shares under option
As at the date of this report, the following options over unissued ordinary shares in the Company have been
issued and not yet exercised:
Expiry date
Exercise price
Number of options
2 years from date of vesting
24 November 2020
6 April 20201
6 April 2022
15 September 2022
11 April 2023
$0.03
$0.16
$0.16
$0.16
$0.16
$0.16
2,469,632
5,000,000
3,600,000
6,800,000
800,000
4,800,000
23,469,632
No shares or interest in the Company or a controlled entity have been issued during or since the end of the year
as a result of the exercise of an option over unissued shares or interests.
2 Atomo Diagnostics Limited
Reissued consolidated statement of profit or loss and other comprehensive income*
For the financial year ended 30 June 2019
In AUD
Revenue
Cost of sales
Gross profit
Other income
Employee benefits expenses
Depreciation and amortisation
Research and development expense
Inventory obsolescence expense
Occupancy expenses
Other expenses
Results from operating activities
Finance income
Finance costs
Net finance income
Loss before income tax
Income tax benefit
Loss for the year
Other comprehensive income
Foreign currency translation differences
Total comprehensive income for the year
Reissued
Reissued
Note
2019
2018
4
4
5(a)
5(b)
5(c)
5(c)
5(c)
11(a)
539,736
(443,419)
96,317
287,250
(227,897)
59,353
519,947
1,047,079
(2,104,304)
(560,607)
(1,335,561)
(78,206)
(78,364)
(1,589,210)
(5,129,988)
22,333
(752,995)
(730,662)
(1,789,357)
(329,248)
(2,878,853)
(560,791)
(74,600)
(1,581,875)
(6,108,292)
3,886
(1,095,767)
(1,091,881)
(5,860,649)
(7,200,173)
805,538
(5,055,112)
2,300,000
(4,900,173)
(28,223)
(5,083,335)
(15,029)
(4,915,202)
The notes on pages 9 to 35 are an integral part of these financial statements
* Refer to note 2 (a) for the background to the error which led to the reissue of the financial statements for the year
ended 30 June 2019.
5 Atomo Diagnostics Limited
Reissued consolidated statement of financial position*
As at 30 June 2019
In AUD
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Employee benefits
Total current liabilities
Non-current liabilities
Borrowings
Employee benefits
Total non-current liabilities
Total liabilities
Net liability
Equity
Share capital
Foreign currency translation reserve
Share based payment reserve
Accumulated losses
Total deficiency in equity
Reissued
Reissued
Restated
Note
2019
2018
2017
6(a)
7
8
11(b)
9
10
12
13
14
13
14
16(a)
1,855,706
582,005
787,718
771,177
3,996,606
1,153,296
900,396
2,053,692
6,050,298
1,993,596
403,040
258,493
3,300,000
5,955,129
8,276,556
426,497
677,829
1,000,000
10,532,434
908,601
892,341
1,800,942
7,756,071
473,709
862,295
1,336,004
11,868,438
1,049,876
3,928,101
74,369
5,052,346
1,042,438
2,771,153
69,209
3,882,800
753,533
2,889,401
70,422
3,713,356
6,410,560
58,978
6,469,538
11,521,885
8,718,111
43,641
8,761,752
12,644,552
8,074,417
32,846
8,107,263
11,820,619
(5,471,587)
(4,888,481)
47,819
17,110,055
(55,493)
585,105
(23,111,254)
(5,471,587)
13,194,931
(27,270)
-
(18,056,142)
(4,888,481)
13,216,029
(12,241)
-
(13,155,969)
47,819
The notes on pages 9 to 35 are an integral part of these financial statements
* Refer to note 2 (a) for the background to the error which led to the reissue of the financial statements for the year ended 30
June 2019.
6
Atomo Diagnostics Limited
Reissued consolidated statement of changes in equity*
For the financial year ended 30 June 2019
In AUD
Share
capital
Accumulated
losses
Foreign currency
translation reserve
Share based
payment reserve
Total deficiency in
equity
Restated balance at 1 July 2017
13,216,029
(13,155,969)
Loss for the year
Other comprehensive income
Total other comprehensive income
Total comprehensive income for the year
Transactions with owners, recorded directly in equity
Capital raising costs
Share buy back
Total transactions with owners
-
-
-
-
8,902
(30,000)
(21,098)
(4,900,173)
-
-
(4,900,173)
-
-
-
(12,241)
-
(15,029)
(15,029)
(15,029)
-
-
-
Reissued balance at 30 June 2018
13,194,931
(18,056,142)
(27,270)
Reissued balance at 1 July 2018
13,194,931
(18,056,142)
Loss for the year
Other comprehensive income
Total other comprehensive income
Total comprehensive income for the year
-
-
-
-
(5,055,112)
-
-
(5,055,112)
Transactions with owners, recorded directly in equity
Ordinary shares issued during the year
Capital raising costs
Equity-settled share based payments
Total transactions with owners
3,923,122
(7,998)
-
3,915,124
-
-
-
-
(27,270)
-
(28,223)
(28,223)
(28,223)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
585,105
585,105
47,819
(4,900,173)
(15,029)
(15,029)
(4,915,202)
8,902
(30,000)
(21,098)
(4,888,481)
(4,888,481)
(5,055,112)
(28,223)
(28,223)
(5,083,335)
3,923,122
(7,998)
585,105
4,500,229
Reissued balance at 30 June 2019
17,110,055
(23,111,254)
(55,493)
585,105
(5,471,587)
The notes on pages 9 to 35 are an integral part of these financial statements
* Refer to note 2 (a) for the background to the error which led to the reissue of the financial statements for the year ended 30 June 2019.
7
Atomo Diagnostics Limited
Consolidated statement of cash flows
For the financial year ended 30 June 2019
In AUD
Note
2019
2018
Cash flows from operating activities
Receipts from customers
Receipts from grant donors
Payments to suppliers and employees
Cash used in operations
Interest received
Interest paid
Income tax (R&D rebate received)
Net cash used in operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Payments for transaction costs
Net cash from financing activities
Net (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at end of the year
477,023
390,725
(5,429,490)
(4,561,742)
22,333
(633,439)
3,334,361
(1,838,487)
(739,915)
(73,442)
(813,357)
2,442,315
(7,998)
2,434,317
(217,527)
1,993,596
79,637
1,855,706
425,555
826,407
(6,181,480)
(4,929,518)
3,886
(634,685)
-
(5,560,317)
(552,587)
(90,047)
(642,634)
-
-
-
(6,202,951)
8,276,556
(80,009)
1,993,596
6(b)
9
10
16(a)
16(a)
6(a)
6(a)
The notes on pages 9 to 35 are an integral part of these financial statements
8 Atomo Diagnostics Limited
Reissued notes to the financial statements
For the financial year ended 30 June 2019
1
Corporate information
Atomo Diagnostics Limited (the "Company") is a company domiciled in Australia. The address of the Company's registered office is
Level 2, 701-703 Parramatta Road, Leichhardt, NSW 2040. These consolidated financial statements comprise the Company and its
subsidiaries (collectively the "Group" and individually "Group companies").
The Group is a for-profit entity and primarily involved in the development and sale of medical devices.
Basis of preparation
2
(a) Reissued financial statements
The previously issued financial statements of the Group for the year ended 30 June 2019 dated 24 October 2019 have been withdrawn
and are replaced by financial statements dated 2 March 2020. The financial report has been reissued due to the warrants issued to third
party lenders not previously being recognised as a liability measured at fair value with changes recorded in profit and loss.
As a result, the financial statements have been impacted as follows:
Note
Reissued
Previously
issued
2019
8,555,542
2,835,353
6,903,412
9,738,765
(3,688,467)
Restated
and
Reissued
2018
11,489,264
3,882,800
8,761,752
12,644,552
(4,888,481)
Previously
issued
2018
9,470,979
1,111,647
9,514,620
10,626,267
(2,870,195)
Restated
2017
10,963,818
3,713,356
8,107,263
11,820,619
47,819
Previously
issued
2017
9,100,363
823,995
9,133,209
9,957,164
1,911,274
2019
10,338,661
5,052,346
6,469,538
11,521,885
(5,471,587)
(752,995)
(5,860,649)
(5,055,112)
(23,111,254)
(988,161)
(6,095,816)
(5,290,278)
(21,328,134)
(1,095,767)
(7,200,173)
(4,900,173)
(18,056,142)
(940,937)
(7,045,343)
(4,745,343)
(16,037,856)
(1,626,848)
(6,147,733)
(5,148,490)
(13,155,969)
(624,274)
(5,145,559)
(4,145,916)
(10,266,568)
Borrowings
Current Liabilities
Non-current liabilities
Total liabilities
Net assets/(liabilities)
Finance costs
Loss before tax
Loss after tax
Accumulated losses
14
5 (c)
(b) Statement of compliance
In the opinion of the Directors, the Company is not publically accountable. The consolidated financial statements are Tier 2 general
purpose financial statements which have been prepared in accordance with Australian Accounting Standards - Reduced Disclosure
Requirements ("AASBs") adopted by the Australian Accounting Standards Board ("AASB") and the Corporations Act 2001.
The financial statements were approved by the Board of Directors and authorised for issue on the same date as the signing of the
Directors' declaration.
(c)
Basis of measurement
The financial statements have been prepared on a historical cost basis, except for derivative financial instruments which have been
recognised at fair value through profit and loss.
(d) Functional and presentation currency
The financial statements are presented in Australian dollars, which is the Group's functional currency.
9
Atomo Diagnostics Limited
Reissued notes to the financial statements
For the financial year ended 30 June 2019
(e) Use of judgements and estimates
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of
the Group’s accounting policies and the reported amounts of assets, liabilities, income, expenses and disclosure of contingent liabilities.
Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised prospectively.
The specific judgements, estimates and assumptions that have the most significant effect on the amounts recognised in the
consolidated financial statements are:
Impairment of intangible assets
The Group tests intangible assets for impairment for each reporting period or more frequently if events or changes in circumstances
indicate it has suffered any impairment, in accordance with the accounting policy stated in Note 3(r). The recoverable amount of a cash
generating unit ("CGU") is determined based on value-in-use calculations whereby cash flows are projected and extrapolated over a five
year period with growth rates that do not exceed the long-term average growth rate for the market in which the Group operates. The
discount rate used reflects the Group's pre-tax weighted average cost of capital.
Share-based payments
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at
the date at which they are granted. The fair value of options is determined by using the Black-Scholes model taking into account the
terms and conditions upon which the instruments were granted.
The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying
amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.
Derivative financial instruments
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at
the date at which they are granted. The fair value of options is determined by using the Black-Scholes model taking into account the
terms and conditions upon which the instruments were granted.
(f) Going concern
The financial report has been prepared on the going concern basis of accounting, which assumes the Group will be able to continue
trading, realise assets and settle liabilities in the ordinary course of business for a period of at least one year from the date of signing
these financial statements.
The Group recorded a loss for the year ended 30 June 2019 of $5,055,112 and had cash outflows from operating activities of
$1,838,487. As at 30 June 2019, the Group also had a net asset deficiency of $5,471,587. Further, the Group recorded a loss for the
half-year ended 31 December 2019 of $2,259,765, net liabilities of $7,570,735 and had cash outflows from operating activities of
$2,173,075.
At 31 December 2019, the Group had cash available of $12,440,269. Forecasts have been prepared which indicate that the Group will
have adequate cash to continue its operations, particularly because converting notes were issued between September 2019 and
November 2019, in the amount of $16,048,378 (refer to note 23). The converting notes will mandatorily convert into shares at the
converting date (being the earlier of 12 months from issue or a "Conversion Event" and will therefore, not result in a cash outflow.
Accordingly, the Directors believe the Group will have sufficient cash reserves to be able to fulfil all obligations as and when they fall
due for the foreseeable future, being at least twelve months from the date of approval of these financial statements.
10 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
3
Significant accounting policies
The Group has consistently applied the following accounting policies to all periods in these financial
statements.
(a) Principles of consolidation
Business combinations
(i)
The Group accounts for business combinations using the acquisition method when control is transferred to
the Group, unless it
is a combination involving entities or businesses under common control. The
consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net
assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is
recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the
issue of debt or equity securities.
The consideration transferred does not
relationships. Such amounts are generally recognised in profit or loss.
include amounts related to the settlement of pre-existing
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. The financial statements of subsidiaries are included in the consolidated
financial statements from the date on which control commences until the date on which control ceases.
(iii) Loss of control
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary,
and any related non-controlling interest and other components of equity. Any resulting gain or loss is
recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when
control is lost.
(iv) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are
eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of
impairment.
(b) Changes in accounting policies
The Group has initially applied AASB 15 and AASB 9 from 1 July 2018. A number of other new standards are
also effective from 1 July 2018 but they do not have a material effect on the Group's financial statements.
Due to the transition methods chosen by the Group in applying these standards, comparative information
throughout these financial statements has not been restated to reflect the requirements of the new
standards.
11 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
(b) Changes in accounting policies (continued)
AASB 15 Revenue from Contracts with Customers
AASB 15 establishes a comprehensive framework for determining whether, how much, and when revenue
is recognised. It replaced AASB 118 Revenue , AASB 111 Construction Contracts and related interpretation.
Under AASB 15, revenue is recognised when a customer obtains control of the goods or services.
Determining the timing of the transfer control - a point in time or over time - requires judgement.
The Group has adopted AASB 15 using the cumulative effect method (without practical expedients) with the
effect of initially applying this standard recognised at the date of initial application (i.e. 1 July 2018).
Accordingly, the information presented for the year ended 30 June 2018 has not been restated - i.e. it is
presented, as previously reported under AASB 118, AASB 111 and related interpretations. Additionally, the
disclosure requirements in AASB 15 have not generally been applied to comparative information.
The adoption of AASB 15 has not had a material impact on either the consolidated statement of financial
position, consolidated statement of profit & loss, consolidated statement of changes in equity or the
consolidated statement of cash flows.
AASB 9 Financial Instruments
AASB 9 replaces the provisions of AASB 139 Financial Instruments: Recognition and Measurement that
relate to recognition, classification and measurement of financial assets and financial liabilities, de-recognition
of financial
instruments, impairment of financial assets and hedge accounting. The adoption of AASB 9
Financial Instruments form 1 July 2018 resulted in changes in accounting policies however, no adjustments
were required to the amounts recognised in the financial statements in the previous periods. The application
of AASB 9 has had no impact on the classification and measurement of the Group's financial assets and
liabilities.
(c) Foreign currency
(i)
Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency of the Group at exchange rates at
the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the
functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are
measured at fair value in a foreign currency are translated to the functional currency at the exchange rate
when the fair value was determined. Foreign currency differences are generally recognised in profit or loss.
Non-monetary items that are measured based on historical cost in a foreign currency are not translated.
(ii)
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on
acquisition, are translated into the functional currency at the exchange rates at the reporting date. The
income and expenses of foreign operations are translated into the functional currency at the exchange rates
at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income ("OCI") and accumulated in the
translation reserve, except to the extent that the translation difference is allocated to non-controlling interest
("NCI").
12 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
(d) Revenue (Policy applicable from 1 July 2018)
The Group has initially applied AASB 15 from 1 July 2018. Revenue is measured based on the consideration
specified in a contract with a customer. The Group recognises revenue when it transfers control over a good
or service to a customer.
The following table provides information about the nature and timing of the satisfaction of performance
obligation in contracts with customers,
including significant payments terms, and the related revenue
recognition policies.
Revenue recognition AASB15
(Applicable from 1 July 2018
Revenue recognition AASB118
(applicable before 1 July 2018)
Since none of the contracts permit
the customer to return an item,
revenue is recognised for all the
goods once the goods have been
released by QA and are available
for
Atomo’s
warehouse.
collection
at
Revenue was recognised when
the goods were delivered to the
customers'
premises, which
was taken to be the point in
time at which the customer
accepted the goods and the
related risks and rewards of
ownership transferred.
Nature and timing of satisfaction of
performance obligations, including
significant payment terms
Revenue is measured based on the
consideration specified in a contract
with
Group
recognises revenue when it transfers
control over a good or service to a
customer.
customer.
The
a
It
is
and
then
(QA).
Invoices
Customers obtain control of the HIV
self-testing kits when the goods are
by Quality
ready
released
Assurance
the
responsibility of the customer to make
the necessary arrangements for freight
and the collection of goods from
Atomo’s warehouse.
are
generated once the goods are released
by QA and ready for collection by the
customer. Invoices are usually payable
within 30 to 75 days, dependent on
The
the
contracts do not allow the customers
to return the goods as the testing kits
have a set shelf-life and have gone
to
through vigorous
delivery.
testing prior
agreement.
contracted
13 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
(e) Revenue (Policy applicable prior to 1 July 2018)
Revenue is measured at the fair value of the consideration received or receivable. The Group recognises
revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits
will flow to the entity and specific criteria have been met for each of the Group's activities as described
below. The Group bases its estimates on historical results, taking into consideration the type of customer,
the type of transaction and the specifics of each arrangement.
(i)
Sale of goods
Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the
consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is
recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the
significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration
is probable, the associated costs and possible return of goods can be estimated reliably, there is no
continuing management involvement with the goods, and the amount of revenue can be measured reliably.
If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is
recognised as a reduction of revenue as the sales are recognised. The timing of the transfers of risks and
rewards varies depending on the individual terms of the contract of sale.
(ii) Grant income
Grant income is recognised at fair value in the statement of profit or loss when there is reasonable assurance
that they will be received and the Group will comply with the conditions associated with the grant.
(f) Employee benefits
(i)
Short-term employee benefits
Short-term employee benefits are benefits (other than termination benefits) that are expected to be settled
within 12 months of the end of the financial year in which employees render the related service. Short-term
employee benefits include salaries and wages plus related on-costs such as payroll tax, superannuation and
workers compensation insurance and are measured at the undiscounted amounts expected to be paid when
the obligation is settled.
(ii)
Other long-term employee benefits
Other long-term employee benefits includes employees' long service leave and annual leave entitlements
not expected to be settled within 12 months of the end of the financial year in which employees render the
related service. Other long-term employee benefits are measured at the present value of the expected
future payments to be made to employees. Expected future payments incorporate anticipated future wage
and salary levels, duration of service and employee departures and are discounted at rates determined by
reference to market yields at the end of the reporting period on corporate bonds that have maturity dates
that approximate the terms of the obligations. Any re-measurements for changes in assumptions of
obligations for long-term employee benefits are recognised in profit or loss in the periods in which the
changes occur.
(iii)
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions
into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for
contributions to employees' defined contribution plans are recognised as an expense as the related service is
provided. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in
future payments is available.
14 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
(f) Employee benefits (continued)
(iv)
Share-based payment arrangements
The grant date fair value of options granted to employees (equity-settled) is recognised as an employee
expense, with a corresponding increase in equity, over the period in which the employees become entitled
to the options. The amount recognised as an expense is adjusted to reflect the number of options for which
the related service and non-market performance conditions are expected to be met, such that the amount
ultimately recognised is based on the number of options that meet the related service and non-market
performance conditions at the vesting date.
(g) Finance income and finance costs
Finance income comprises interest income, dividend income and foreign currency gains. Interest income is
recognised in profit or loss as it accrues using the effective interest method.
Finance costs comprise interest expense on borrowings, foreign currency losses, fair value changes on
warrants giving rise to a financial liability and impairment losses recognised on financial assets. Borrowing
costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are
recognised in profit or loss using the effective interest method.
(h)
(i)
Foreign currency gains and losses are reported on a net basis as either finance income or finance cost
depending on whether foreign currency movements are in a net gain or net loss position.
Income tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent
that it relates to a business combination, or items recognised directly in equity or in other comprehensive
income.
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and
any adjustment to tax payable or receivable in respect of previous years. It is measured using tax rates
enacted or substantively enacted at the reporting date. Current tax also includes any tax liability arising from
dividends.
Current tax assets and liabilities are offset only if certain criteria are met.
15 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
Income tax (continued)
(h)
(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognised for temporary differences on the initial recognition of assets or liabilities in a transaction that is
not a business combination and that affects neither accounting nor taxable profit or loss, or on taxable
temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, tax credits and deductible temporary differences,
to the extent that it is probable that future taxable profits will be available against which they can be utilised.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised; such reductions are reversed when the probability of
future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it
has become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when
they reverse, using tax rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that could follow the manner in which the
Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if certain criteria are met.
Inventories
Inventories are measured at the lower of cost and net realisable value. The costs of inventories is based on
the first-in, first-out principle. Net realisable value is the estimated selling price in the ordinary course of
business less the estimated costs of completion and the estimated costs necessary to make the sale.
Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive
obligation that can be estimated reliably and if it is probable that an outflow of economic benefits will be
required to settle the obligation. Provisions are determined by discounting the expected future cash flows at
a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to
the liability. The unwinding of the discount is recognised as a finance cost.
(i)
(j)
16 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
(k) Goods and Services Tax (GST)
Revenues, expenses and purchased assets are recognised net of the amount of GST, except where the
amount of GST incurred is not recoverable from the Tax Office.
In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of an item of the expense.
Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are
presented in the statement of cash flows on a gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash flows.
(l)
(i)
Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost
less accumulated depreciation and
accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of
the asset.
If significant parts of an item of property, plant and equipment have different useful lives, they are accounted
for as separate items (major components) of property, plant and equipment.
Any gain and loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated
with the expenditure will flow to the Group.
(iii)
Depreciation
Depreciation is calculated based on the cost of property, plant and equipment less their estimated residual
values using the straight-line basis over their estimated useful lives, and is generally recognised in profit or
loss. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is
reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not
depreciated.
The estimated useful lives of property, plant and equipment are as follows:
• Plant and equipment
• Software
2-5 years
4 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
(m) Leases
(i) Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease.
At inception or on reassessment of an arrangement that contains a lease, the Group separates payments and
other consideration required by such an arrangement into those for the lease and those for other elements
on the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable to
separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair
value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed
finance charge on the liability is recognised using the Group’s incremental borrowing rate.
17 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
(m) Leases (continued)
Lease payments
(ii)
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term
of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the
term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance expense and the
reduction of the outstanding liability. The finance lease is allocated to each period during the lease term so as
to produce a constant periodic rate of interest on the remaining balance of the liability.
(n)
(i)
Intangible assets
Recognition and measurement
Computer software
Computer software comprises computer application system software and licenses. Costs incurred in
developing products or systems and costs incurred in acquiring software and licenses that will contribute to
future period financial benefits through revenue generation and/or cost reduction are capitalised to computer
software. Costs capitalised include external direct costs of materials and services, direct payroll and payroll-
related costs.
Patents, trademarks and licences
Other intangible assets, including patents, trademarks and licences that are acquired by the Group and have
finite useful lives are measured at cost less any accumulated amortisation and impairment losses.
Research and development
Expenditure on research activities is recognised in profit or loss as incurred.
Development expenditure is capitalised only if the expenditure can be measured reliably, the product or
process is technically and commercially feasible, future economic benefits are probable, and the Group
intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it
is recognised in profit or loss as incurred. Subsequent to initial recognition, development expenditure is
measured at cost less accumulated amortisation and any accumulated impairment losses.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the
including expenditure on internally generated
specific asset to which it relates. All other expenditure,
goodwill and brands, is recognised in profit or loss as incurred.
(iii) Amortisation
Amortisation is calculated based on the cost of intangible assets less their estimated residual values using
the straight-line method over their estimated useful lives, and is generally recognised in profit or loss.
The estimated useful lives of intangible assets are as follows:
• Patents and trademarks
• Other intangibles
10-20 years
10 years
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
(o) Nature and purpose of reserves
The foreign currency translation reserve comprises all foreign currency differences arising from the
translation of the financial statements of foreign operations.
18 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
(p) Financial instruments - AASB 9 (Policy applicable from 1 July 2018)
AASB 9 replaces the provisions of AASB 139 that relate to the recognition, classification and measurement
of the financial assets and financial liabilities, de-recognition of financial instruments, impairment of financial
assets and hedge accounting. In accordance with the transitional provisions in AASB 9, comparative figures
have not been restated.
Classification and measurement - non derivative financial assets and financial liabilities
On 1 July 2018 (the date of initial application of AASB 9), the Group's management has assessed which
business models apply to the financial assets held by the Group and has classified its financial instruments
into the appropriate AASB 9 categories.
Financial assets classified as held-to-maturity and loans and receivables under AASB 139 that were
measured at amortised cost continue to be measured at amortised cost under AASB 9 as they are held
within a business model to collect contractual cash flows and these cash flows consist solely of payments of
principal and interest on the principal amount outstanding.
In relation to the impairment of financial assets, AASB 9 requires an expected credit loss model as opposed
to an incurred credit loss model under AASB 139. The expected credit loss model requires the Group to
account for expected credit losses and changes in those expected credit losses at each reporting date to
reflect changes in credit risk since initial recognition of the financial assets. Consequently, it is no longer
necessary for a credit even to have occurred before credit losses are recognised.
The Group has one type of financial assets (trade and other receivables) that are subject to AASB 9's new
expected credit loss model.
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at
FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition.
Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest
expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised
cost using the effective interest method. Interest expense and foreign exchange gains and losses are
recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.
Warrants at fair value through profit and loss
The warrants and derivatives embedded in the converting notes are initially measured at fair value through
profit and loss and any net gains and losses are recognised in profit and loss.
These liabilities will be derecognised when the warrants are exercised and the converting notes have been
converted into ordinary shares, respectively. The difference between the carrying amount and the
consideration paid (including any non-cash assets transferred or liabilities assume) is recognised in profit and
loss.
Apart from the above, the application of AASB 9 has had no impact on the classification and measurement of
the Group's financial assets and liabilities.
The table below illustrates the classification and measurement of financial assets and financial liabilities
under AASB 9 and AASB 139 at the date of initial application, 1 July 2018.
19 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
(p) Financial instruments - AASB 9 (Policy applicable from 1 July 2018) (continued)
1 July 2018
Trade and other
receivables
Trade and other payables
Measurement
Measurement
category AASB 9
category AASB 139
Loans and receivables Financial assets at
Financial liabilities at
amortised cost
amortised cost
Financial liabilities at
amortised cost
Carrying
amount
Carrying
amount
AASB 139 ($)
403,040 403,041
AASB 9 ($)
1,042,438 1,042,438
(q) Financial instruments (Policy applicable prior to 1 July 2018)
The Group classifies non-derivative financial assets into the following categories: financial assets at fair value
through profit or loss, held-to-maturity financial assets, loans and receivables and available-for-sale financial
assets. The Group classifies non-derivative financial liabilities into the other financial liabilities category.
(i) Non derivative financial assets and financial liabilities – recognition and de-recognition
The Group initially recognises loans and receivables issued on the date that they are originated. All other
financial assets and financial liabilities are recognised initially on the trade date.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset
expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in
which substantially all the risks and rewards of ownership of the financial asset are transferred or it neither
transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over
the transferred asset. Any interest in transferred financial assets that is created or retained by the Group is
recognised as a separate asset or liability.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or
expire.
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Group has a legal right to offset the amounts and intends either to settle
them on a net basis or to realise the asset and settle the liability simultaneously.
(ii) Non derivative financial assets – measurement
Financial assets at fair value through profit or loss
A financial asset is classified as at fair value through profit or loss if it is classified as held-for-trading or is
designated as such on initial recognition. Directly attributable transaction costs are recognised in profit or loss
as incurred. Financial assets at fair value through profit or loss are measured at fair value and changes
therein, which take into account any dividend income, are recognised in profit or loss.
Loans and trade receivables
These assets are initially recognised at fair value. Subsequent to initial recognition, they are measured at
amortised cost using the effective interest method, less any provision for impairment. Other receivables are
recognised at amortised cost, less any provision for impairment.
Cash and cash equivalents
Cash comprises cash on hand and cash equivalents are short-term, highly liquid investments that are readily
convertible to known cash amounts of cash and which are subject to an insignificant risk of changes in value.
In the statement of cash flows, cash and cash equivalents includes bank overdrafts (if any) that are repayable
on demand and form an integral part of the Group’s cash management.
20 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
(q) Financial instruments (Policy applicable prior to 1 July 2018) (continued)
(iii)
Non-derivative financial liabilities – measurement
Non-derivative financial liabilities are initially recognised at fair value less any directly attributable transaction
costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective
interest rate method.
(iv) Share capital
Incremental costs directly attributable to the issue of ordinary shares, net of any tax effects, are recognised
as a deduction from equity.
(v)
Financial instruments recognised at fair value through profit and loss
Warrants granted to financiers are initially measured at fair value through profit and loss and any net gains
and losses are recognised in profit and loss.
These liabilities will be derecognised when the warrants are exercised. The difference between the carrying
amount and the consideration paid (including any non-cash assets transferred or liabilities assume) is
recognised in profit and loss.
(r)
(i)
Impairment
Non-derivative financial assets
Financial assets not classified as at fair value through profit or loss are assessed at each reporting date to
determine whether there is evidence of impairment. Refer to 3(q).
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount and the present value of the estimated future cash flows discounted at the
asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance
account against loans and receivables. Interest on the impaired asset continues to be recognised. When a
subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is
reversed through profit or loss.
21 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
(r)
Impairment (continued)
(ii)
Non-financial assets
At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than
deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists,
then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows of other assets or cash
generating units ("CGUs"). Goodwill arising from a business combination is allocated to CGUs or groups of
CGUs that are expected to benefit from the synergies of the combination.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to
sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-
tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset or CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.
Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of
any goodwill allocated to the CGU, and then to reduce the carrying amount of assets in the CGU on a pro
rata basis. An impairment loss is reversed only to the extent that the asset’s carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
Segment reporting
The Group manages its operations as a single business operation and there are no parts of the Group that
qualify as operating segments under AASB 8 Operating Segments. The CEO (Chief Operating Decision
Maker or “CODM”) assesses the financial performance of the Group on an integrated basis only and
accordingly, the Group is managed on the basis of a single segment, being medical device research and
development. Information presented to the CODM on a monthly basis is categorised by type of expenditure.
New Standards and interpretations not yet adopted
AASB 16 Leases
AASB 16 removes the classification of leases as either operating lease or finance leases – for the lessee –
effectively treating all lease as finance leases. Short-term leases (less than 12 months) and leases of low-
value assets (such as personal computers) are exempt from the lease accounting requirements. There are
also changes in accounting over the life of the lease. In particular, companies will not recognise a front-
loaded pattern of expenses for most lease, even when they pay constant rentals.
AASB 16 is effective from annual reporting periods beginning on or after 1 January 2019, with early adoption
permitted for entities that also adopt AASB 15. The Group is assessing the potential
impact on its
consolidated financial statements resulting from the application of AASB 16.
(s)
(t)
22 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
4
Revenue and other income
In AUD
Revenue
Revenue from sale of goods
Revenue from freight
Other income
Grants received
Development fees
Other income
Total revenue and other income
5
Expenses
In AUD
(a) Employee benefits expenses
Salaries and wages
Contributions to defined contribution superannuation funds
Increase / (decrease) in annual leave
Increase / (decrease) in long service leave
Equity-settled share-based payments
Other employee related expenses
(b) Depreciation and amortisation expense
Depreciation expense
Amortisation expense
(c) Net finance income
Interest income
Finance income
Interest expense
Net foreign exchange loss
Finance costs
2019
2018
467,646
72,090
539,736
271,989
15,261
287,250
427,567
-
92,380
519,947
1,059,683
826,407
220,672
-
1,047,079
1,334,329
Note
2019
2018
1,315,768
118,531
5,058
15,336
585,105
64,506
2,104,304
1,570,116
133,598
(1,160)
10,796
-
76,007
1,789,357
9
10
495,220
65,387
560,607
269,247
60,001
329,248
22,333
22,333
3,886
3,886
(973,418)
(381,006)
(1,354,424)
(936,617)
(277,398)
(1,214,015)
Adjusted position in reissued financial report (refer to Note 2 for more detail)
Fair value gain/(loss) on financial liabilities
Reissued finance costs
2 (a)
601,429
(752,995)
118,248
(1,095,767)
Net finance income recognised in profit or loss
(730,662)
(1,091,881)
23 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
Cash and cash equivalents
6
(a) Cash and cash equivalents in statement of cash flows
In AUD
Cash at bank
(b) Reconciliation of cash flows from operating activities
In AUD
Loss for the year
Adjustments for:
Depreciation and amortisation
Unrealised currency translation movements
Equity-settled share-based payment transactions
Fair value (gain)/loss on financial liabilities
Finance costs
Income tax benefit
Operating profit before changes in working
capital and provisions
Change in operating assets and liabilities:
Change in trade and other receivables
Change in trade and other payables
Change in inventories
Change in employee benefits
Income tax (R&D rebates received)
Net cash from operating activities
7
Trade and other receivables
In AUD
Current
Receivables from trade customers
Other receivables
2019
2018
1,855,706
1,855,706
1,993,596
1,993,596
Note
Reissued
2019
Restated
2018
(5,055,112)
(4,900,173)
5(b)
15
11(a)
560,607
513,264
585,105
(601,429)
310,509
(805,538)
(4,492,593)
329,248
386,772
-
(118,248)
300,803
(2,300,000)
(6,301,598)
(178,965)
7,438
(529,225)
20,498
(5,172,848)
23,457
288,906
419,336
9,582
(5,560,317)
3,334,361
(1,838,487)
-
(5,560,317)
2019
2018
314,306
267,699
582,005
174,074
228,966
403,040
The carrying value of trade receivables is considered a reasonable approximation of fair value due to the
short-term nature of the balances.
8
Inventories
In AUD
Raw materials
Work in progress
Finished goods
Inventory provisioning
2019
2018
1,038,968
78,791
86,810
(416,851)
787,718
774,115
12,237
32,932
(560,791)
258,493
24 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
9
Property, plant and equipment
In AUD
Software
Plant and
equipment
Total
Cost
Balance at 1 July 2017
Additions
Balance at 30 June 2018
Balance at 1 July 2018
Additions
Balance at 30 June 2019
Accumulated depreciation
Balance at 1 July 2017
Depreciation
Balance at 30 June 2018
Balance at 1 July 2018
Depreciation
Balance at 30 June 2019
Carrying amounts
At 30 June 2018
At 30 June 2019
10 Intangible assets
In AUD
Cost
Balance at 1 July 2017
Acquisitions
Balance at 30 June 2018
Balance at 1 July 2018
Acquisitions
Balance at 30 June 2019
Accumulated amortisation
Balance at 1 July 2017
Amortisation
Balance at 30 June 2018
Balance at 1 July 2018
Amortisation
Balance at 30 June 2019
Carrying amounts
At 30 June 2018
At 30 June 2019
3,420
-
3,420
3,420
-
3,420
3,420
-
3,420
3,420
-
3,420
787,840
704,139
1,491,979
791,260
704,139
1,495,399
1,491,979
739,915
2,231,894
1,495,399
739,915
2,235,314
314,131
269,247
583,378
317,551
269,247
586,798
583,378
495,220
1,078,598
586,798
495,220
1,082,018
-
-
908,601
1,153,296
908,601
1,153,296
Patents and
trademarks
Other
intangibles
Total
914,972
89,976
1,004,948
1,004,948
73,442
1,078,390
108,197
48,454
156,651
156,651
53,531
210,182
91,358
71
91,429
91,429
-
91,429
35,838
11,547
47,385
47,385
11,856
59,241
1,006,330
90,047
1,096,377
1,096,377
73,442
1,169,819
144,035
60,001
204,036
204,036
65,387
269,423
848,297
868,208
44,044
32,188
892,341
900,396
25 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
11 Income tax
(a)
Income tax benefit
Income tax benefit comprises current and deferred tax expense and is recognised in profit or loss, except
to the extent that it relates to a business combination or items recognised directly in equity or other
comprehensive income. The components of income tax benefit comprise:
In AUD
Current tax
Deferred tax
Total income tax benefit
Reissued
2019
Restated
2018
(805,538)
-
(805,538)
(2,300,000)
-
(2,300,000)
The prima facie tax on profit before income tax is reconciled to the income tax expense as follows:
In AUD
Loss before income tax
Tax using the Company's domestic Australian tax rate of 30% (2018: 30%)
Permanent differences
Under provision of tax in prior years
Tax losses not brought into account
R&D rebate refund
Total income tax benefit
2019
2018
(5,860,649)
(7,200,173)
(1,758,195)
206,141
(34,361)
1,586,415
(771,177)
(771,177)
(2,160,052)
938,756
(68,572)
1,289,868
(2,300,000)
(2,300,000)
(b) Current tax assets
The current tax asset at 30 June 2019 of $771,177 (2018: $3,300,000) represents income tax rebates
receivable from relevant tax authorities on the Group's research and development expenditure.
(c) Deferred tax assets
Due to the uncertainty of the the Group generating sufficient taxable income to offset tax losses carried
forward, the future tax benefits of these losses has not been brought to account in these financial
statements.
12 Trade and other payables
In AUD
Current
Trade payables
Accrued expenses
Other payables
2019
2018
604,033
417,169
28,674
1,049,876
459,322
576,307
6,809
1,042,438
All amounts are short term and the carrying values are considered to be a reasonable approximation of fair
value.
26 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
13 Borrowings
In AUD
Current
Loan from Global Health Investment Fund LLC
Warrants recognised at fair value through profit and loss
Non-current
Loan from Global Health Investment Fund LLC
Loan from Grand Challenges Canada
Reissued
2019
Reissued
2018
2 (a)
1,758,376
2,169,725
3,928,101
-
2,771,153
2,771,153
6,410,560
-
6,410,560
7,464,890
1,253,221
8,718,111
Loan from Global Health Investment Fund LLC (GHIF)
In December 2015, the Company received a loan from GHIF for an amount of US$6,000,000. The principal
of the loan is repayable: (i) 20% of the Principal Drawn by 31 December 2019, (ii) a further 35% of the
Principal Drawn by 31 December 2020; and (iii) the remainder of the loan by 31 December 2021. Interest
is payable at the rate of 7% annually in arrears at 31 December each year. Security is provided by a
floating charge over the revolving assets (inventory, negotiable instruments and plant and equipment) of
the Company and fixed charge over all other collateral (all other property).
The loan agreement requires certain performance commitments including (i) making products and
services available to disadvantaged patients on a tiered pricing structure. This commitment also applies to
partners, distributors of the Company or assignee of Intellectual property; and (ii) until full repayment of
the loan, dividends or distributions paid by the Company cannot exceed 50% of the cumulative retained
profits of the Company.
GHIF also has an option to receive up to 2,727,273 shares in the Company at an exercise price of
US$0.55. The option exercise period expires on 31 December 2021. If GHIF holds 2,000,000 shares or
more, it shall have the right to appoint a Board member. The impact of this warrant is recognised at fair
value through profit and loss.
Refer to note 2 (a) to the financial statements for further detail.
27 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
14 Employee benefits
In AUD
Current
Liability for annual leave
Non-current
Liability for long service leave
2019
2018
74,369
74,369
69,209
69,209
58,978
58,978
43,641
43,641
15 Share-based payment arrangements
Employee share option plan (equity-settled)
In November 2016, the Group established an Employee Share Option Plan ("ESOP") that allows Directors
and certain key management personnel and employees to purchase shares in the Company. The holders
of vested options are entitled to purchase one share for each option held at an exercise price of $1.25 per
share ($0.16 per share post share-split). Options granted to employees vest in three tranches: (i) 25% on
grant date, (ii) 25% on the first anniversary of the grant date, and (iii) 50% on the second anniversary of
the grant date.
Options granted to Directors vest in two tranches: (i) 50% on the first anniversary of the grant date, and
(ii) 50% on the second anniversary of the grant date. Certain options carry performance related conditions
in order for these options to vest. None of these conditions have been met at the end of the current
financial reporting period.
The Group has determined the fair value of the equity instruments granted by using the Black-Scholes
valuation method. This method is considered to be the most effective in determining the appropriate
value of the share options.
During the financial year, options with an exercise price equal to the market price of the underlying shares
were issued. The value of these options, relative to each employee's service period during the current
financial year, being $585,105 (as shown in Note 5(a)), have been recognised as share based payments
within employee expenses. This amount includes the value of options issued in previous years and not
recognised at that time (as the exercise price of the options exceeded the market value of the underlying
shares at the time of the grant).
As at the date of this report, the following options over unissued ordinary shares in the Company have
been issued and not yet exercised:
Expiry date
Exercise price
Number of options
2 years from date of vesting
24 November 2020
6 April 20201
6 April 2022
15 September 2022
11 April 2023
$0.03
$0.16
$0.16
$0.16
$0.16
$0.16
2,469,632
5,000,000
3,600,000
6,800,000
800,000
4,800,000
23,469,632
No shares or interest in the Company or a controlled entity have been issued during or since the end of
the year as a result of the exercise of an option over unissued shares or interests.
28 Atomo Diagnostics Limited
Notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
16 Capital and reserves
(a) Share capital
In number of shares
In issue at 1 July
Issued during the year
Conversion of debt
Share buy-back
In issue at 30 June
in AUD
In issue at 1 July
Issued during the year
Conversion of debt
Share buy-back
Capital raising costs
In issue at 30 June
Ordinary shares
2019
2018
Class B shares
Ord+ Shares
Total
2019
2018
2019
2018
2019
2018
28,428,647
-
-
-
28,428,647
28,458,647
-
-
(30,000)
28,428,647
4,555,993
-
1,423,853
-
5,979,846
4,555,993
-
-
-
4,555,993
-
1,953,852
-
-
1,953,852
8,638,938
-
-
-
(7,998)
8,630,940
8,660,036
-
-
(30,000)
8,902
8,638,938
4,555,993
-
1,480,807
-
-
6,036,800
4,555,993
-
-
-
-
4,555,993
-
2,442,315
-
-
-
2,442,315
-
-
-
-
-
-
-
-
-
-
-
32,984,640
1,953,852
1,423,853
-
36,362,345
33,014,640
-
-
(30,000)
32,984,640
13,194,931
2,442,315
1,480,807
-
(7,998)
17,110,055
13,216,029
-
-
(30,000)
8,902
13,194,931
29 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
16 Capital and reserves (continued)
(a) Share capital (continued)
Ordinary shares
The Company does not have authorised capital or par value in respect of its issued shares. All issued
shares are fully paid. The holders of these shares are entitled to receive dividends as declared from time
to time, and are entitled to one vote per share at general meetings of the Company.
Class B shares
B Class shares have the same rights as existing ordinary voting shares and are subject to the terms of the
Investors Agreements and the Company's Constitution, save for the special terms that will attach to B
Class shares which are as follows:
(i) Upon winding-up of the Company, each B Class share shall convert into 1.2 ordinary shares;
(ii) In the event of sale of all the shares in the Company for a total consideration of not more than
US$20,000,000, each B Class share shall convert into 1.2 ordinary shares with effect immediately prior to
the sale. If the sale price is more than US$20,000,000 then the B Class shares shall convert into ordinary
shares on a 1 for 1 basis;
(iii) In the event of listing of the Company’s shares on a securities exchange at an initial price implying a
total company market capitalisation of not more than US$20,000,000, each B Class share shall convert
into 1.2 ordinary shares with effect immediately prior to the sale. If the initial price implies a total company
market capitalisation of more than US$20,000,000 then the B class shares shall convert into ordinary
shares 1 for 1; and
(iv) For any period when a B Class shareholder holds a minimum of 2 million shares in the Company
(whether B class or ordinary shares), the shareholder shall have the right to appoint a Director to the
board.
Ord+ shares
Ord+ shares have the same rights as existing ordinary voting shares and are subject to the terms of the
Investors Agreements and the Company's Constitution, save for the special terms that will attach to Ord+
shares which are as follows:
(i) The shares will be issued with an accompanying entitlement to bonus shares which are to be issued in
the event that the subsequent capital activity occurs at a price less than $1.50 per ordinary share; and
(ii) The bonus shares entitlement will apply in respect of the next capital activity that has one of the
following characteristics:
1)
2)
if the company issues further ordinary shares for a price less than $1.50 per share (other than in
response to the exercise of existing share options or warrants), with an aggregate issue offer value
in excess of $3,000,000; or
if an agreement is made by which all of the ordinary shares in the Company are to be sold at an
average price of less that $1.50 per share.
On or around 21st February 2020, all Ord+ shares were converted to Ordinary Shares on a 1 for 1 basis.
(b) Dividends
No dividends were paid or declared by the Company during the year (2018: Nil).
30 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
16 Capital and reserves (continued)
(c) Dividend franking account
In AUD
Franking credits available to shareholders of Atomo Diagnostics Limited for
subsequent financial years based on a tax rate of 30% (2018: 30%)
2019
2018
-
-
The ability to utilise the franking credits is dependent upon the ability to declare dividends.
(d) Capital management
The Group's objectives when managing capital are to safeguard its ability to continue as a going concern
so that it can continue to provide returns for shareholders and benefits for other stakeholders, maintain
sufficient financial flexibility to pursue its growth objectives and maintain an optimal capital structure to
reduce the cost of capital.
17 Parent entity information
As at, and throughout, the financial year ended 30 June 2019 the parent entity of the Group was Atomo
Diagnostics Limited.
Statement of profit or loss and other comprehensive income
In AUD
Loss for the year
Other comprehensive income
Total comprehensive income
Statement of financial position
In AUD
Assets
Total current assets
Total non-current assets
Total assets
Liabilities
Total current liabilities
Total non-current liabilities
Total liabilities
Total net assets
Equity
Share capital
Share based payment reserve
Retained earnings
Total equity
Parent
Reissued
Reissued
2019
2018
(3,701,142)
-
(3,701,142)
(3,548,997)
-
(3,548,997)
7,139,760
1,927,679
9,067,439
8,002,768
1,800,942
9,803,710
3,849,182
3,194,605
6,422,270
8,750,101
9,616,875 12,599,283
(549,436)
(2,795,573)
17,110,055 13,194,931
-
(15,990,504)
(2,795,573)
585,105
(18,244,596)
(549,436)
The parent entity did not have any contingent liabilities or capital commitments as at 30 June 2019 or 30
June 2018, other than those disclosed at Note 21. The parent entity had not entered into a deed of cross
guarantee as at 30 June 2019 or 30 June 2018.
31 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
18 Group entities
Set out below is a list of material subsidiaries of the Group.
Parent entity
Atomo Diagnostics Limited
Subsidiaries
Atomo Australia Pty Limited
Atomo Limited
19 Related parties
(a) Key management personnel compensation
Country of incorporation
Ownership interest
2019
2018
Australia
Australia
United Kingdom
100%
100%
100%
100%
Key management personnel ("KMP") are defined as those persons having authority and responsibility for
planning, directing and controlling the activities of the Group, directly and indirectly, and include the
Directors, executive and non-executive, as well as certain other senior executives.
The totals of remuneration of the KMP of the Company included within employee expenses are as
follows:
In AUD
Key management personnel compensation
2019
2018
306,600
301,125
No remuneration was provided to the non-executive Directors.
Short term employee benefits
Short term employee benefits include fees and benefits paid to the executive Directors and other KMP as
well as all salary, fringe benefits and cash bonuses awarded to the non-executive Directors.
Post-employment benefits
Post-employment benefits are the cost of superannuation contributions made during the year.
Other long term benefits
Other long term benefits represent long service leave and long-term annual leave benefits accrued during
the year.
(b) Key management personnel transactions
Directors of the Company represent 44% (2018: 41%) of the controlling interest in the shares of the
Company as at 30 June 2019.
32 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
19 Related parties (continued)
(c) Other related party transactions
Transactions between related parties are on normal commercial terms and conditions and no more
favourable than those available to other parties, unless stated otherwise.
The following transactions occurred with related parties:
In AUD
2019
2018
A company jointly controlled by George Sidis, a non-executive
Director of the Company, provided the following services:
Purchase of inventory
Research and development
Plant and equipment
Other services
At the end of the year the following amounts were shown
owing to related parties in trade payables:
399,676
1,242,145
599,357
168,332
2,409,510
19,489
2,503,461
548,701
199,758
3,271,409
392,073
392,073
355,631
355,631
20 Segment reporting
The Group manages its operations as a single business operation and there are no parts of the Group that
qualify as operating segments under AASB 8 Operating Segments. The CEO (Chief Operating Decision
Maker or “CODM”) assesses the financial performance of the Group on an integrated basis only and
accordingly, the Group is managed on the basis of a single segment, being medical device research and
Information presented to the CODM on a monthly basis is categorised by type of
development.
expenditure.
21 Commitments and contingencies
(a) Capital expenditure commitments
Capital expenditure commitments committed for:
In AUD
Process tooling and blister production (MacTec)
2019
2018
-
-
500,000
500,000
(b) Contingencies
During the 2016 financial year, the Group received a grant from The NSW Health Medial Devices Fund for
$1.8 million to support development and validation of AtomoRapid HIV Self Test project. The project has
detailed budget and completion milestones. The funding is classified as a grant, however, if the Group
achieves a result greater than $500,000 EBITDA for the project, then repayments of the grant and an
amount of imputed capitalised interest will be required. It is not foreseen that the Group will earn EBITDA
greater than $500,000 for the project.
33 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
22 Financial risk management
The main risks of that the Group is exposed to through its financial instruments are liquidity risk and
market risk consisting of interest rate risk and foreign currency risk. The Group's financial instruments
consist mainly of deposits with banks,
instruments, short-term investments,
borrowings and accounts receivable and payable. The totals for each category of financial instrument is as
follows:
In AUD
Financial assets
Cash and cash equivalents
local money market
2018
2019
1,855,706
1,855,706
1,993,596
1,993,596
Financial liabilities
Borrowings
10,338,661 11,489,264
10,338,661 11,489,264
23 Events after the reporting period
1. On the 21st January 2020, ASIC (and under the Corporations Act) gazetted for a month that the
Company will change from a proprietary company to that of a public company. As such, on or about the
21st February 2020, the Company became a public company;
2. On 19 December 2019, the shareholders of the company approved a 1:8 split of the company’s share
capital;
3. On 19 December 2019, the shareholders of the company approved the conversion of all Ord+ Shares
into Ordinary Shares to be effective at the time that the company becomes a public company. On or
around the 21st February 2020, all Ord+ shares were converted into Ordinary Shares on a 1 for 1 basis;
4. Between the months of September 2019 and November 2019, the Group raised $16 million through
the issue of non-redeemable converting notes. These notes are interest bearing and convertible at the
earlier of the occurrence of a significant equity raising transaction, or 12 months from the date of issue. Of
this $16 million, a non-cash portion of $1.76m has been issued to Global Health Investment Fund LLC in
satisfaction of the first repayment of their loan (as described in Note 14);
5. On 28 February 2020, holders of 17,872,992 Options (post-share split basis) had accepted an early
cashless exercise offer presented by the Group, resulting in the issue of 8,592,043 Ordinary Shares; and
6. On 28 February 2020, the Global Health Investment Fund exercised 21,818,184 Options (post-share
split basis) on a cashless basis resulting in the issue of 10,868,183 Ordinary Shares.
Other than the matters discussed above, there has not arisen in the interval between the end of the
financial year and the date of this report any item, transaction or event of a material and unusual nature
likely, in the opinion of the Directors of the Group, to affect significantly the operations of the Group, the
results of those operations, or the state of affairs of the Group, in future financial years.
34 Atomo Diagnostics Limited
Reissued notes to the consolidated financial statements (continued)
For the financial year ended 30 June 2019
24 Auditor's remuneration
In AUD
Audit and assurance related services
KPMG Australia
Audit of financial statements
Total audit and assurance services
Other services
KPMG Australia
Taxation advisory services
Total other services
Total auditors' remuneration
2019
2018
58,000
58,000
40,000
40,000
13,250
13,250
26,550
26,550
71,250
66,550
35