More annual reports from Audio Pixels Holdings Limited:
2023 ReportAudio Pixels Holdings Limited
ACN 094 384 273
ANNUAL REPORT
2015
www.audiopixels.com.au
CORPORATE DIRECTORY
Directors
Fred Bart (Chairman)
Ian Dennis
Cheryl Bart AO
Company Secretary
Ian Dennis
Registered Off ice
Israel Corporate Off ice
Level 12
75 Elizabeth Street
SYDNEY NSW 2000
Australia
3 Pekris Street
Rehovot
ISRAEL 76702
Telephone: +61 2 9233 3915
Facsimile: +61 2 9232 3411
Email:
iandennis@audiopixels�com�au
Telephone: + 972 73 232 4444
+ 972 73 232 4455
Facsimile:
danny@audiopixels�com
Email:
Bankers
St George Bank
Level 13
182 George Street
SYDNEY NSW 2000
Australia
Website
www�audiopixels�com�au
Auditor
Deloitte Touche Tohmatsu
Chartered Accountants
Eclipse Tower
Level 19
60 Station Street
Parramatta NSW 2150
Australia
Share Registry
Computershare Investor Services Pty Limited
Level 3
60 Carrington Street
Sydney NSW 2000
GPO Box 7045
Sydney NSW 1115
Australia
Telephone: 1300 855 080 or
Facsimile:
+61 3 9415 5000 outside Australia
1300 137 341
4826 Designed and Produced by RDA Creative www.rda.com.au
CONTENTS
Directors’ Report ����������������������������������������������������������������������������������������������������������������������������������������������������������������� 2
Auditor’s Independence Declaration ��������������������������������������������������������������������������������������������������������������������������� 9
Independent Audit Report �������������������������������������������������������������������������������������������������������������������������������������������� 10
Directors’ Declaration ������������������������������������������������������������������������������������������������������������������������������������������������������ 12
Consolidated Statement of Profit or Loss and Other Comprehensive Income �������������������������������������������� 13
Consolidated Statement of Financial Position �������������������������������������������������������������������������������������������������������� 15
Consolidated Statement of Changes in Equity ������������������������������������������������������������������������������������������������������� 16
Consolidated Statement of Cash Flows �������������������������������������������������������������������������������������������������������������������� 17
Notes To and Forming Part of the Financial Statements ������������������������������������������������������������������������������������� 18
ASX Additional Information ������������������������������������������������������������������������������������������������������������������������������������������ 43
Twenty Largest Ordinary Shareholders ��������������������������������������������������������������������������������������������������������������������� 44
1
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 DIRECTOR’S REPORT
The Directors of Audio Pixels Holdings Limited submit herewith the financial report of the company for the financial year
ended 31 December 2015. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:
The names and particulars of the directors of the company during or since the end of the financial year are:
Name
Fred Bart
Ian Dennis
Cheryl Bart
AO
Particulars
Chairman and Chief Executive Officer. A director since 5 September 2000. He has been Chairman and
Managing Director of numerous private companies since 1980, specialising in manufacturing, property
and marketable securities. Mr Bart is also Chairman of Immunovative Therapies Limited, an Israeli
company involved in the manufacture of cancer vaccines for the treatment of most forms of cancer.
He is a member of the Australian Institute of Company Directors, a member of the Audit Committee
and a member of the Nomination and Remuneration Committee.
Non executive director and Company Secretary. Ian is a chartered accountant with experience as
director and secretary in various public listed and unlisted technology companies. He has been
involved in the investment banking industry and stockbroking industry for the past twenty eight years.
Prior to that, Ian was with KPMG, Chartered Accountants in Sydney. Appointed to the Board on
5 September 2000. He is a member of the Australian Institute of Company Directors and Chairman of
the Audit Committee and Nomination and Remuneration Committee.
Non executive director. Appointed to the Board on 26 November 2001. Cheryl Bart is a lawyer and
company director. She is non‑executive director of SG Fleet Australia Limited, Football Federation
of Australia (FFA), Ted X Sydney and the Australian Himalayan Foundation. She is immediate past
director of ABC (Australian Broadcasting Corporation), SA Power Networks (formerly ETSA Utilities),
Spark Infrastructure Limited, and the Local Organising Committee of the 2015 Australian Asian Cup.
She is a fellow of the Australian Institute of Company Directors, Patron of SportsConnect and a
member of Chief Executive Women. She is a member of the Audit Committee and a member of the
Nominations and Remuneration Committee.
Directorships of Other Listed Companies
Directorships of other listed companies held by directors in the 3 years immediately before the end of the financial year are
as follows:
Name
Fred Bart
Ian Dennis
Cheryl Bart
Company
Electro Optic Systems Holdings Limited
Electro Optic Systems Holdings Limited
Spark Infrastructure Group Limited
SG Fleet Australia Limited
Principal Activities
Period of directorship
Since May 2000
Since May 2000
November 2005 to May 2015
Since February 2014
The principal activity of the Company is an investment in Audio Pixels Limited of Israel. Audio Pixels Limited is engaged in
the development of digital speakers.
Results
The net loss for the financial year ended to 31 December 2015 was $1,840,940 (31 December 2014 ‑ $2,796,787).
Dividends
The directors recommend that no dividend be paid and no amount has been paid or declared by way of dividend since the
end of the previous financial year and up to the date of this report.
2
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 DIRECTOR’S REPORT
Review of Operations
This reporting period the company continued its efforts
advancing the transition of its cumulative research and
development efforts into a mass‑produced product.
The core of activities centers on the many aspects needed
to ensure successful component fabrication as dictated by
the fourth, and final phase, of our four‑phase commercial
product development plan.
The company has already begun to receive production
verification wafers. These wafers allow our development
teams to examine, test and validate characteristics,
progress and compliance of the MEMs chips during and
throughout the fabrication process in order to ensure,
to the maximum extent possible, successful fabrication of
Phase‑IV chips.
Among the batches of wafers were structures that were
specifically designed to allow greater characterization
of the electrical properties of our structures. Among the
many development objectives prescribed for Phase‑III,
was the investigation of the precise electrical
characteristics required to meet the exacting conditions
of our patented matrix control system.
In order to obtain the level of control needed to play
complex music, our proprietary control system calls for the
pixels to operate within precisely defined voltage regimes.
The influencing factors on these regimes extend beyond
the most advanced computational modeling available and
therefore actual measurements are required. It should be
noted that Phase‑III chips were extremely close to meeting
the requirements, however slight variances predominantly
attributable to manufacturing tolerances, unveiled
that further optimization is required to ensure reliable
pixel control.
The electrical optimization processes involved the use of
a variety of advanced thinfilm coatings, principal among
them a technique called ALD (Atomic Layer Deposition).
The ALD technique uses a chemical reaction to achieve
controlled growth of sub‑nanometer thickness films.
The ALD process uses a range of materials of differing
properties in order to attain and improve the desired
electrical characteristics (while at the same time increasing
the product’s long‑term reliability). ALD is routinely used in
a wide range of commercial applications including memory
and logic devices, sensors, LED‘s, and in many MEMs
applications. Our team has successfully tested a wide variety
of ALD coatings enabling refinement of both the design
and the fabrication processes as to ensure that Phase‑IV
chips will meet the company’s exacting standards.
As has been well documented Audio Pixels is
the first, and so far only company that has successfully
implemented DSR (Digital Sound Reconstruction) in a
commercially viable manner. DSR utilizes a series of short
impulses to construct the desired sound. The absence
of any particular frequency from these building blocks,
in turn prevents the loudspeakers from reproducing
those frequencies. Ensuring our elements produce the
expected spectrum of frequencies serves to provide
yet another level of assurance as to the anticipated
performance of our Phase‑IV chips. For this reason the
team has undertaken a massive engineering project
to extend the thinfilm coating program in order to
successfully obtain invaluable impulse response
measurements of individual pixels.
In parallel the company continued its close collaboration
with its development partners. The company has completed
an extensive design review of the integrated mixed signal
driver and together with ICSense has advanced Generation‑2
design to tape‑out. Fabrication of the ASIC controller will
begin shortly and proceed in accordance with the prescribed
Phase‑IV production schedule.
Our patent portfolio continues its organic growth now
approaching 70 patents grants. When compared to
comparable MEMs undertakings we are on record pace
to achieve our objective of introducing an industry
altering technology to the world. Our fab’s have been
able to maintain Phase‑IV schedules even though
we have increased the number of fabricated wafers
100‑fold and staggered fabrication into a half‑dozen
independent batches. These are among the many
activities that when combined with the on schedule
delivery of our second‑generation ASIC and chip package
serve to build Management’s confidence that Phase‑IV
is well on track toward producing publicly demonstrable
engineering samples within the early part of the 3rd
quarter of this year.
Further information concerning the operations and
financial condition of the entity can be found in the
financial report and in releases made to the Australian
Stock Exchange (ASX) during the year.
Changes in State of Affairs
There was no significant change in the state of affairs of
the company or the consolidated entity other than that
referred to in the financial statements or notes thereto.
3
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 DIRECTOR’S REPORT
Significant Events After
Balance Date
There has not been any matter or circumstance that has
arisen since the end of the financial year which is not
otherwise dealt with in this report or in the financial
statements, that has significantly affected or may
significantly affect the operations of the company or the
consolidated entity, the results of those operations or the
state of affairs of the company or the consolidated entity
in subsequent financial years.
Future Developments
The consolidated entity will continue to focus on the
development of its digital speaker technology.
Environmental Regulations
In the opinion of the directors the company and the
consolidated entity is in compliance with all applicable
environmental legislation and regulations.
Indemnification and Insurance
of Officers and Auditors
During the financial year, the company paid a premium in
respect of a contract insuring the Directors and Officers
of the Company and any related body corporate against a
liability incurred as such a Director or Officer to the extent
permitted by the Corporations Act 2001. The contract
of insurance prohibits disclosure of the nature of the
coverage provided and the amount of the premium.
The Company has agreed to indemnify the current
Directors, Company Secretary and Executive Officers
against all liabilities to other persons that may arise from
their position as Directors or Officers of the Company
and its controlled entities, except where to do so would
be prohibited by law. The agreement stipulates that the
Company will meet the full amount of any such liabilities,
including costs and expenses.
The Company has not, during or since the financial year
indemnified or agreed to indemnify an auditor of the
company or of any related body corporate against any
liability incurred as such an auditor.
Directors’ Interests and Benefits
The relevant interest of each director in the share capital of
the Company as notified by the directors to the Australian
Stock Exchange in accordance with Section 205G(1) of the
Corporations Act as at the date of this report are:
Name
Fred Bart
Ian Dennis
Cheryl Bart
Ordinary Shares
5,441,250
570,050
500,000
There has been no movement in Directors shareholdings
during the 2015 year.
Remuneration Report (Audited)
Since the end of the previous financial year no director
of the company has received or become entitled to
receive any benefit (other than a benefit included in
the aggregate amount of remuneration received or due
and receivable by directors as shown in the financial
statements) because of a contract made by the company
or related corporation with the director or with a firm
of which the director is a member, or with a company
in which the director has a substantial financial interest.
There are no employment contracts for any of
the directors.
This report outlines the remuneration arrangements in
place for Directors and key management personnel of
the Company.
The Directors are responsible for remuneration policies
and packages applicable to the Board members of
the Company. The entire Board makes up the Nomination
and Remuneration Committee. The broad remuneration
policy is to ensure the remuneration package properly
reflects the person’s duties and responsibilities.
There are currently no performance based incentives
to directors or executives based on the performance of
the Company. There are no employment contracts in place
with any Director of the Company. There are standard
employment contracts for the three executives of
Audio Pixels Limited in Israel including at will employment
and a notice period of three months for termination.
4
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 DIRECTOR’S REPORT
Remuneration Report (Cont.)
The key management personnel of Audio Pixels Holdings Limited during the year were:
Fred Bart
Cheryl Bart
Ian Dennis
Chairman and Chief Executive Officer
Non executive director
Non executive director and company secretary
Danny Lewin
CEO and director of Audio Pixels Limited
Yuval Cohen
Chief Technical Officer of Audio Pixels Limited
Shay Kaplan
Chief Scientist of Audio Pixels Limited
The Directors fees are not dependent on the earnings of the company and the consequences of the Company’s
performance on shareholder wealth. On 24 September 2010, the maximum total directors fees were increased to a
total of $250,000 per annum in line with the increased activities of the company. The actual directors fees paid were
within the approved limit of $250,000 per annum approved by shareholders at the Annual General Meeting held on
24 September 2010.
The table below sets out summary information about the company’s earnings and movements in shareholder wealth for
the last 5 financial years.
Year ended
31 December
2015
$
Year ended
31 December
2014
$
Year ended
31 December
2013
$
Year ended
31 December
2012
$
Year ended
31 December
2011
$
Revenue
Net profit /(loss) before tax
Net profit/(loss) after tax
25,073
(1,840,940)
(1,840,940)
181,583
(2,796,787)
(2,796,787)
304,536
(2,147,576)
(2,147,576)
161,986
(2,615,412)
(2,615,412)
269,534
(2,931,907)
(2,930,697)
Year ended
31 December
2015
$
Year ended
31 December
2014
$
Year ended
31 December
2013
$
Year ended
31 December
2012
$
Year ended
31 December
2011
$
9.86
8.45
0.00
3.80
9.86
0.00
5.60
3.80
0.00
6.00
5.60
0.00
4.60
6.00
0.00
Share price at start of
year/period
Share price at end of
year/period
Dividend Paid
The aggregate compensation of the key management personnel of the company is set out below:
Short‑term employee benefits
Post employment benefits
31 December
2015
$
31 December
2014
$
693,742
150,410
844,152
690,224
143,625
833,849
5
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 DIRECTOR’S REPORT
Remuneration Report (Cont.)
The following table sets out each key management personnel’s equity holdings (represented by holdings of fully paid
ordinary shares in Audio Pixels Holdings Limited).
Balance at
1/1/15
No.
5,441,250
500,000
570,050
1,709,092
1,928,971
881,604
Granted as
remuneration
No.
Received on
exercise of
options
No.
Net other
change
No.
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
Balance at
31/12/15
No.
5,441,250
500,000
570,050
1,709,092
1,928,971
881,604
Mr Fred Bart
Mrs Cheryl Bart
Mr Ian Dennis
Mr Danny Lewin
Mr Yuval Cohen
Mr Shay Kaplan
Convertible Note Issued to Key Management Personnel
On 22 June 2015, shareholders approved the issue of a convertible note of $1.5m to 4F Investments Pty Limited,
company controlled by Mr Fred Bart. The terms of the issue were as follows:
Face Value:
Date of issue:
Interest rate:
Term:
Listing status:
Security:
Conversion terms:
$1,500,000
26 June 2015
8% payable quarterly
12 months
Unlisted
Unsecured
Convertible to ordinary shares based on the lower of the five day volume weighted average
share price of Audio Pixels Holdings Limited on the date of the agreement ($9.68) or the five
day volume weighted average share price of Audio Pixels Holdings Limited immediately prior
to conversion.
Transactions with Related Entities
During the year ended 31 December 2015, the Company paid a total of $107,857 (year ended 31 December 2014 ‑ $107,734)
to 4F Investments Pty Limited, a company associated with Mr Fred Bart in respect of directors fees and superannuation for
Mr Fred Bart and Mrs Cheryl Bart.
During the year ended 31 December 2015, the Company paid interest of $62,137 on a convertible note to 4F Investments
Pty Limited, a company associated with Mr Fred Bart. The convertible note of $1.5m was issued on 26 June 2015 following
shareholder approval at an Extraordinary General Meeting.
6
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 DIRECTOR’S REPORT
Remuneration Report (Cont.)
During the year ended 31 December 2015, the Company paid a total of $41,063 (year ended 31 December 2014 ‑ $41,016)
to Dennis Corporate Services Pty Limited, a company associated with Mr Ian Dennis in respect of directors fees
and superannuation.
During the year, the Company paid $30,000 (31 December 2014 ‑ $30,000) to Dennis Corporate Services Pty Limited,
a company associated with Mr Ian Dennis in respect of consulting fees for company secretarial and accounting services.
On 8 May 2014, the company entered into a lease in respect of office premises at Level 12, 75 Elizabeth Street Sydney for a
period of forty eight months to 30 March 2018. The company recharges 20% ($13,559) of the rent to Electro Optic Systems
Holdings Limited, a company of which Fred Bart and Ian Dennis are directors, 20% ($13,559) to 4F Investments Pty Limited,
a company controlled by Fred Bart and 40% ($27,818) to another tenant who is a shareholder in the company.
The following table sets out the remuneration of each key management personnel of the Company:
Short Term
Post Employment
Total
December 2015
Fred Bart
Cheryl Bart
Ian Dennis
Danny Lewin
Yuval Cohen
Shay Kaplan
December 2014
Fred Bart
Cheryl Bart
Ian Dennis
Danny Lewin
Yuval Cohen
Shay Kaplan
Directors fees/
Salary
$
Non‑monetary
$
Superannuation
$
61,000
37,500
67,500*
141,260
156,042
135,050
598,352
61,000
37,500
67,500*
139,369
153,941
133,238
592,548
‑
‑
‑
33,798
28,012
33,580
95,390
‑
‑
‑
30,195
29,135
38,346
97,676
5,794
3,563
3,563
‑
‑
‑
12,920
5,718
3,516
3,516
‑
‑
‑
12,750
Social
Security
$
‑
‑
‑
44,722
49,476
42,292
137,490
‑
‑
‑
42,597
47,178
41,100
130,875
$
66,794
41,063
71,063
219,780
233,530
211,922
844,152
66,718
41,016
71,016
212,161
230,254
212,684
833,849
* The amounts disclosed for Ian Dennis include directors fees of $37,500 and consulting fees of $30,000.
Audit Committee
The Audit Committee was formally constituted on 29 August 2014 with all three directors appointed to the Audit Committee.
Ian Dennis was appointed chair of the Audit Committee.
7
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 DIRECTOR’S REPORT
Directors’ Meetings
During the year the company held three meetings of directors, two meetings of the Audit Committee and no meetings of
the Nomination and Remuneration Committee. The attendances of the directors at meetings of the Board were:
Board of directors
Audit committee
Nomination and
Remuneration committee
Directors
Mr Fred Bart
Mrs Cheryl Bart
Mr Ian Dennis
Held
Attended
Held
Attended
Held
Attended
3
3
3
3
3
3
2
2
2
2
2
2
‑
‑
‑
‑
‑
‑
All current board members are on the Audit Committee and the Nomination and Remuneration Committee.
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 4 to the financial statements.
The directors are satisfied that the provision of non‑audit services, during the year, by the auditor (or by another person
or firm on the auditor’s behalf ) is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
The directors are of the opinion that the services disclosed in Note 4 to the financial statements do not compromise the
external auditors’ independence, based on a resolution of directors, for the following reasons:
All non‑audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor, and
None of the services undermine the general principles relating to auditor independence as set out in Code of Conduct
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 9.
Signed in accordance with a resolution of directors made pursuant to s.298(2) of the Corporations Act 2001.
On behalf of the Directors
I A Dennis
Director
Dated at Sydney this 26 day of February 2016
8
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273
9
9
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 12 to 43.
10
10
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 4 to 7
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273
11
11
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 DIRECTORS’ DECLARATION
The directors declare that:
(a) in the directors’ opinion, there are reasonable grounds to believe the company will be able to pay its debts as and when
they become due and payable;
(b) in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations
Act 2001, including compliance with accounting standards and give a true and fair view of the financial position and
performance of the company and the consolidated entity;
(c) the directors have been given the declarations required by s.295A of the Corporations Act 2001; and
(d) the attached financial statements are in compliance with International Financial Reporting Standards, as stated in
Note 1 to the financial statements.
Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001. On behalf
of the Directors
I A Dennis
Director
Dated at Sydney this 26 day of February 2016.
12
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2015
Consolidated
Year ended
31 December
2015
$
Consolidated
Year ended
31 December
2014
$
Note
Revenue
2
25,073
181,583
Administrative expenses
Amortisation
Depreciation
Directors fees
Exchange gains
Interest paid
Fair value movement of derivative liability
Marketing
Property expenses
(Loss) on sale of property
(949,316)
(76,993)
(70,615)
(136,000)
1,640,986
(370,764)
334,000
(22,270)
‑
‑
(845,106)
(67,601)
(74,483)
(136,000)
1,107,313
‑
‑
‑
(36,226)
(63,391)
Research and development expenses
(2,215,041)
(2,862,876)
(Loss) before income tax
Income tax benefit
(Loss) for the year
2
3
(1,840,940)
(2,796,787)
‑
‑
(1,840,940)
(2,796,787)
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit and loss
Exchange differences arising on translation of foreign operations
14
(1,609,923)
(738,709)
Other comprehensive (loss) for the year, net of tax
(1,609,923)
(738,709)
Total comprehensive (loss) for the year
(3,450,863)
(3,535,496)
Notes to the financial statements are included on pages 18 to 42.
13
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2015
Consolidated
Year ended
31 December
2015
Consolidated
Year ended
31 December
2014
Note
(1,840,940)
(2,796,787)
(3,450,863)
(3,535,496)
(Loss) attributable to:
Owners of the company
Total comprehensive (loss) attributable to:
Owners of the company
Earnings per share
Basic and diluted (cents per share)
18
(7.16)
(10.88)
Notes to the financial statements are included on pages 18 to 42.
14
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2015
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
Goodwill
Intangible asset
Property, plant and equipment
Trade and other receivables
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Borrowings
Provisions
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Equity attributable to owners of the company
TOTAL EQUITY
Consolidated
December
2015
$
Consolidated
December
2014
$
Note
5
6
7
8
9
6
10
11
12
13
14
15
1,523,016
43,726
1,566,742
1,875,504
79,200
1,954,704
2,166,391
2,124,068
712,524
165,578
6,837
3,051,330
4,618,072
470,230
2,902,956
524,907
3,898,093
3,898,093
710,346
147,300
6,117
2,987,831
4,942,535
353,008
‑
418,685
771,693
771,693
719,979
4,170,842
37,398,942
37,398,942
(24,141,281)
(22,531,358)
(12,537,682)
(10,696,742)
719,979
719,979
4,170,842
4,170,842
Notes to the financial statements are included on pages 18 to 42.
15
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2015
December 2015 ‑
Consolidated
Equity
Settled
Option
Reserve
$
Issued
Capital
$
Exchange
translation
reserve
$
Minority
Acquisition
Reserve
$
Accumulated
Losses
$
Total
$
Balance at 1 January 2015
37,398,942
4,512,898
(1,505,564)
(25,538,692)
(10,696,742)
4,170,842
Other comprehensive
income for the year
(Loss) for the year
‑
‑
‑
‑
(1,609,923)
‑
‑
‑
‑
(1,609,923)
(1,840,940)
(1,840,940)
Balance at 31 December 2015
37,398,942
4,512,898
(3,115,487)
(25,538,692)
(12,537,682)
719,979
December 2014 ‑
Consolidated
Equity
Settled
Option
Reserve
$
Issued
Capital
$
Exchange
translation
reserve
$
Minority
Acquisition
Reserve
$
Accumulated
Losses
$
Total
$
Balance at 1 January 2014
37,398,942
4,512,898
(766,855)
(25,538,692)
(7,899,955)
7,706,338
Other comprehensive
income for the year
(Loss) for the year
‑
‑
‑
‑
(738,709)
‑
‑
‑
‑
(738,709)
(2,796,787)
(2,796,787)
Balance at 31 December 2014
37,398,942
4,512,898
(1,505,564)
(25,538,692)
(10,696,742)
4,170,842
Notes to the financial statements are included on pages 18 to 42.
16
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2015
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest paid
Interest received
Consolidated
Year ended
31 December
2015
$
Consolidated
Year ended
31 December
2014
$
Notes
‑
153,682
(3,221,890)
(4,080,390)
(133,808)
25,073
‑
44,020
Net cash (used by) operating activities
16
(3,330,625)
(3,882,688)
Cash flows from investing activities
Payment for property, plant and equipment
Receipts from sale of property
Net cash inflows/(outflows) from investing activities
Cash flows from financing activities
Convertible note
Net cash provided by financing activities
Net (decrease) in cash and cash equivalents held
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate fluctuations on the balances of cash held in
foreign currencies
Cash and cash equivalents at the end of the financial year
5
(75,696)
‑
(75,696)
(39,930)
1,436,609
1,396,679
3,000,000
3,000,000
(406,321)
1,875,504
53,833
1,523,016
‑
‑
(2,486,009)
4,271,573
89,940
1,875,504
Notes to the financial statements are included on pages 18 to 42.
17
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
1. Summary of Significant
Accounting Policies
event that they are not converted to ordinary shares,
the consolidated entity has $3,000,000 due on convertible
notes in May and June 2016.
Statement of compliance
The financial report is a general purpose financial
report which has been prepared in accordance with
the Corporations Act 2001, Accounting Standards and
Interpretations, and complies with other requirements
of the law. Accounting Standards include Australian
equivalents to International Financial Reporting Standards
(“A‑IFRS”). Compliance with A‑IFRS ensures that the
financial statements and notes comply with International
Financial Reporting Standards (“IFRS”). For the purposes
of preparing the consolidated financial statements,
the Company is a for profit entity.
The financial statements were authorised for issue by the
Directors on 26 February 2016.
Basis of preparation
The financial report has been prepared on the
basis of historical cost, except for the revaluation of
investment property. Cost is based on the fair values of the
consideration given in exchange for assets. All amounts
are expressed in Australian dollars.
(a) Borrowings
Borrowings are recorded initially at fair value, net of
transaction costs. Subsequent to initial recognition,
borrowings are measured at amortised cost with any
difference between the initial recognised amount and the
redemption value being recognised in profit or loss over
the period of the borrowing using the effective interest
rate method.
(b) Going concern
The financial report has been prepared on the going
concern basis which assumes continuity of normal
business activities and the realisation of assets and the
settlement of liabilities in the ordinary course of business.
The consolidated entity incurred a net loss during
the year of $1,840,940 (2014: $2,796,787) and as at
31 December 2015 had net current liabilities of $2,231,351
(2014: net current assets of $1,183,011). Net cash used
by operating activities was $3,330,625 (2014: $3,882,688).
As at 31 December 2015, the consolidated entity had
cash of $1,523,016 (2014: $1,875,504) of which $32,841
(2014 ‑ $29,744) is restricted as it secures future lease
payments. The cash will become unrestricted if the
contracts are concluded or renegotiated. Further, in the
In the opinion of the directors, the ability of the company
and consolidated entity to continue as going concerns
and pay their debts as and when they become due and
payable is dependent upon:
the ability of the company to raise capital from
existing or new shareholders to fund continued
development and enable the repayment of
convertible note to the extent that they are not
converted to ordinary shares;
the completion of the development stage of the
technology; and
the future trading prospects of the consolidated
entity including obtaining commercial contracts.
If the company and the consolidated entity are unable
to achieve successful outcomes in relation to the
above matters, significant uncertainty would exist as to
the ability of the company and the consolidated entity to
continue as going concerns and therefore, they may be
required to realise their assets and extinguish their liabilities
other than in the normal course of business and at amounts
different from those stated in the financial report.
No adjustments have been made to the financial
report relating to the recoverability and classification
of recorded asset amounts or to the amounts and
classification of liabilities that might be necessary should
the company and the consolidated entity not continue as
going concerns.
(c) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand,
cash in banks and investments in money market
instruments maturing within less than 3 months at the
date of acquisition, net of outstanding bank overdrafts.
Bank overdrafts are shown within borrowings in current
liabilities in the Statement of Financial Position.
(d) Employee benefits
Provision is made for benefits accruing to employees
in respect of wages and salaries, annual leave, and long
service leave when it is probable that settlement will be
required and they are capable of being measured reliably.
Provisions made in respect of short term employee
benefits are measured at their nominal values using
the remuneration rate expected to apply at the time
of settlement.
18
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
1. Summary of Significant
Accounting Policies (Cont.)
Provisions made in respect of long term employee
benefits are measured as the present value of the
estimated future cash outflows to be made by the
consolidated entity in respect of services provided by
employees up to the reporting date.
Defined contribution plans ‑ Contributions to defined
benefit contribution superannuation plans are expensed
when incurred.
(e) Financial assets
Financial assets are classified into loans and receivables.
The classification depends on the nature and purpose of
the financial assets and is determined at the time of the
initial recognition.
Loans and receivables
Trade receivables, loans and other receivables are
recorded at amortised cost less impairment.
(f) Financial instruments issued by
the company
Debt and equity instruments
Debt and equity instruments are classified as either
liabilities or as equity in accordance with the substance of
the contractual arrangement.
Transaction costs on the issue of
equity instruments
Transaction costs arising on the issue of equity
instruments are recognised directly in equity as a
reduction of the proceeds of the equity instruments to
which the costs relate. Transaction costs are the costs
that are incurred directly in connection with the issue of
those equity instruments and which would not have been
incurred had those instruments not been issued.
Interest
Interest is classified as an expense consistent with the
Statement of Financial Position classification of the
related debt.
(g) Foreign currency
Foreign currency transactions
All foreign currency transactions during the financial
year are brought to account using the exchange rate in
effect at the date of the transaction. Foreign currency
monetary items at reporting date are translated at the
exchange rate existing at reporting date. Non‑monetary
assets and liabilities carried at fair value and historic cost
that are denominated in foreign currencies are translated
at the rates prevailing at the date when the fair value
was determined.
Exchange differences are recognised in profit and loss in
the period they arise.
Foreign operations
On consolidation, the assets and liabilities of the consolidated
entity’s overseas operations are translated at exchange rates
prevailing at the reporting date. Income and expense
items are translated at the average exchange rates for
the period unless exchange rates fluctuate significantly.
Exchange differences arising, if any, are recognised in the
foreign currency translation reserve, and recognised in
profit and loss on disposal of the foreign operation.
(h) Goods and Services Tax
Revenues, expenses and assets are recognised net of the
amount of goods and services tax (GST), except:
i. where the amount of GST incurred is not recoverable
from the taxation authority, it is recognised as part of
the cost of acquisition of an asset or as part of an item
of expense; or
ii.
for receivables and payables which are recognised
inclusive of GST.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables.
Cash flows are included in the Statement of Cash Flows
on a gross basis. The GST component of cash flows
arising from investing and financing activities which is
recoverable from, or payable to, the taxation authority is
classified as operating cash flows.
(i) Goodwill
Goodwill arising in a business combination is recognised
as an asset at the date that control is acquired
(the acquisition date). Goodwill is measured as the excess
of the sum of the consideration transferred, the amount
of any non‑controlling interests in the acquiree, and the
fair value of the acquirer’s previously held equity interest
in the acquiree (if any) over the net of the acquisition‑date
amounts of the identifiable assets acquired and the
liabilities assumed.
19
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
1. Summary of Significant
Accounting Policies (Cont.)
If, after reassessment, the Group’s interest in the fair
value of the acquiree’s identifiable net assets exceeds the
sum of the consideration transferred, the amount of any
non‑controlling interests in the acquiree and the fair value
of the acquirer’s previously held equity interest in the
acquiree (if any), the excess is recognised immediately in
profit or loss as a bargain purchase gain.
Goodwill is not amortised but is reviewed for
impairment at least annually. For the purpose of
impairment testing, goodwill is allocated to each of
the Group’s cash‑generating units expected to benefit
from the synergies of the combination. Cash‑generating
units to which goodwill has been allocated are tested
for impairment annually, or more frequently when there
is an indication that the unit may be impaired. If the
recoverable amount of the cash‑generating unit is less
than its carrying amount, the impairment loss is allocated
first to reduce the carrying amount of any goodwill
allocated to the unit and then to the other assets of
the unit pro‑rata on the basis of the carrying amount of
each asset in the unit. An impairment loss recognised for
goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of
goodwill is included in the determination of the profit or
loss on disposal.
(j) Impairment of assets
At each reporting date, the entity reviews the carrying
amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any).
Where the asset does not generate cash flows that are
independent from other assets, the entity estimates the
recoverable amount of the cash‑generating unit to which
the asset belongs.
If the recoverable amount of an asset (or cash‑generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash‑generating unit) is reduced to its
recoverable amount. An impairment loss is recognised in
profit or loss immediately.
Where an impairment loss subsequently reverses, the
carrying amount of the asset (cash‑generating unit)
is increased to the revised estimate of its recoverable
amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount
that would have been determined had no impairment
loss been recognised for the asset (cash‑generating
unit) in prior years. A reversal of an impairment loss is
recognised in profit or loss immediately.
(k) Income Tax
Current tax
Current tax is calculated by reference to the amount of
income taxes payable or recoverable in respect of the
taxable profit or tax loss for the period. It is calculated
using tax rates and tax laws that have been enacted or
substantively enacted by reporting date. Current tax
for current and prior periods is recognised as a liability
(or asset) to the extent that it is unpaid (or refundable).
Deferred tax
Deferred tax is recognised on temporary differences
between the carrying amount of assets and liabilities in
the financial statements and the corresponding tax base
of those items.
In principle, deferred tax liabilities are recognised for
all taxable temporary differences. Deferred tax assets
are recognised to the extent that it is probable that
sufficient taxable amounts will be available against which
deductible temporary differences or unused tax losses
and tax offsets can be utilised. However, deferred tax
assets and liabilities are not recognised if the temporary
differences giving rise to them arise from the initial
recognition of assets and liabilities (other than as a result
of business combination) which affects neither taxable
income nor accounting profit.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the period(s) when
the assets and liability giving rise to them are realised or
settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted by reporting date.
The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from
the manner in which the entity expects, at the reporting
date, to recover or settle the carrying amount of its assets
and liabilities.
Deferred tax assets and liabilities are offset when they
relate to income taxes levied by the same taxation
authority and the company intends to settles its current
tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or
income in profit or loss, except when it relates to items
credited or debited directly to equity, in which case
the deferred tax is also recognised directly in equity,
or where it arises from the initial accounting for a business
combination, in which case it is taken into account in the
determination of goodwill or excess.
20
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
1. Summary of Significant
Accounting Policies (Cont.)
(l) Intangible assets
Intangible assets acquired in a
business combination
Intangible assets acquired in a business combination are
identified and recognised separately from goodwill where
they satisfy the definition of an intangible asset and their
fair value can be measured reliably. Subsequent to initial
recognition, intangible assets acquired in a business
combination are reported at cost less accumulated
amortisation and accumulated impairment losses, on the
same basis as intangible assets acquired separately.
The intangible assets are written off on a straight line
basis over 14 years. Expenditure on research activities
is recognised as an expense in the period in which it
is incurred.
(m) Leasing
Leases are classified as finance leases whenever the terms
of the lease transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are classified as
operating leases.
The Group as lessor
Income from operating leases is recognised on a
straight‑line basis over the term of the relevant lease.
Initial direct costs incurred in negotiating and arranging
an operating lease are added to the carrying amount of
the leased asset and recognised on a straight‑line basis
over the lease term.
The Group as lessee
Operating lease payments are recognised as an expense
on a straight‑line basis over the lease term, except where
another systematic basis is more representative of the
time pattern in which economic benefits from the leased
asset are consumed. Contingent rentals arising under
operating leases are recognised as an expense in the
period in which they are incurred. In the event that lease
incentives are received to enter into operating leases,
such incentives are recognised as a liability. The aggregate
benefit of incentives is recognised as a reduction of rental
expense on a straight‑line basis, except where another
systematic basis is more representative of the time
pattern in which economic benefits from the leased asset
are consumed.
(n) Payables
Trade payable and other accounts payable are
recognised when the entity becomes obliged to make
future payments resulting from the purchase of goods
and services.
(o) Provisions
Provisions are recognised when the entity has a present
obligation as a result of a past event, the future sacrifice
of economic benefits is probable, and the amount of the
provision can be measured reliably.
When some or all of the economic benefits required to
settle a provision are expected to be recovered from a
third party, the receivable is recognised as an asset if it
is virtually certain that recovery will be received and the
amount of the receivable can be measured reliably.
The amount recognised as a provision is the best estimate
of the consideration required to settle the present
obligation, taking into account the risks and uncertainties
surrounding the obligation. Where a provision is measured
using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of
those cash flows.
(p) Basis of consolidation
The consolidated financial statements incorporate
the financial statements of the Company and entities
controlled by the Company. Control is achieved when
the Company:
Has power over the investee;
Is exposed, or has rights, to variable returns from its
involvement with the investee; and
Has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an
investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control
listed above.
Consolidation of a subsidiary begins when the
Company obtains control over the subsidiary and ceases
when the Company loses control of the subsidiary.
Specifically, income and expenses of a subsidiary
acquired or disposed of during the year are included in
the consolidated statement of profit or loss and other
comprehensive income from the date the Company
gains control until the date when the Company ceases to
control the subsidiary.
21
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
1. Summary of Significant
Accounting Policies (Cont.)
(q) Property, plant and equipment
Fixtures and equipment are stated at cost less
accumulated depreciation and accumulated
impairment losses.
Depreciation is recognised so as to write off the cost or
valuation of assets less their residual values over their
useful lives, using the straightline method. The estimated
useful lives, residual values and depreciation method are
reviewed at each year end, with the effect of any changes
in estimate accounted for on a prospective basis.
Assets and disposal groups are classified as held for sale
if their carrying amount will be recovered principally
through a sale transaction rather than through
continuing use. This condition is regarded as met only
when the sale is highly probable and the non‑current
asset (or disposal group) is available for immediate
sales in the present condition. Management must be
committed to the sale, which should be expected to
qualify as a completed sale within one year from the date
of classification. Non‑current assets (and disposal groups)
classified as held for sale are measured at the lower of their
previous carrying amount and fair value less costs to sell.
The following estimated useful lives are used in the
calculation of depreciation:
Computers and related equipment
5 to 15 years
Leasehold improvements
Office furniture and equipment
3 to 5 years
5 to 15 years
(r) Financial liabilities
Classification as debt or equity
The component parts of compound instruments
(convertible notes) issued by the Group are classified
separately as financial liabilities and equity in accordance
with the substance of the contractual arrangements
and the definitions of a financial liability and an
equity instrument.
Conversion options that will be settled by the exchange of
a fixed amount of cash or another financial asset for a fixed
number of the Company’s own equity instruments is an
equity instrument. Conversion options that will be settled
by the exchange by the exchange of a fixed amount of
cash or another financial asset for a variable number of
the Company’s own equity instruments is a derivative
liability instrument. The conversion option classified as a
derivative liability instrument’s value is estimated at fair
value on issue. The derivative liability is then accounted for
at fair value through profit or loss.
The face borrowing or liability component is determined
by deducting the amount of the conversion option
liability component from the fair value of the instrument
as a whole. This is recognised as an amortised cost basis
using the effective interest method until extinguished
upon conversion or at the instrument’s maturity date.
Transaction costs that relate to the issue of the convertible
notes are allocated to the liability and equity components
in proportion to the allocation of the gross proceeds.
Transaction costs relating to the equity component are
recognised directly in equity. Transaction costs relating
to the liability component are included in the carrying
amount of the liability component and are amortised
over the lives of the convertible notes using the effective
interest method.
(s) Revenue Recognition
Revenue comprises interest income. Interest income
received is recognised on an accrual basis.
(t) Application of New and Revised
Accounting Standards
The Group has adopted all of the new and revised
Standards and Interpretations issued by the Australian
Accounting Standards Board (the AASB) that are relevant
to their operations and effective for the current year.
New and revised Standards and amendments thereof
and Interpretations effective for the current year that are
relevant to the Group include:
Annual Improvements 2010‑2012 and 2011‑2013 Cycles:
AASB 2014‑1 Amendments to Australian Accounting
Standards Part A ‑ Annual Improvements
2010‑2012 and 2011‑2013 Cycles makes various
amendments to Australian Accounting Standards.
Most notably, items that will impact disclosure
requirements under AASB 8 Operating Segments,
AASB 119 Employee Benefits, and AASB 124 Related
Party Disclosure.
AASB 2014‑1 Amendments to Australian Accounting
Standards Part C ‑ Materiality
The application of the above has not had any material
impact on the amounts recognised in the consolidated
financial statements.
22
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
1. Summary of Significant Accounting Policies (Cont.)
(t) Application of New and Revised Accounting Standards (Cont.)
Standards and Interpretations in issue not yet adopted
At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not
yet effective.
Standard/Interpretation
AASB 9 Financial Instruments, and the relevant amending standards
AASB 16 Leases
AASB 2014‑4 Amendments to Australian Accounting Standards ‑
Clarification of Acceptable Methods of Depreciation and Amortisation
AASB 15 Revenue from Contracts with Customers AASB 2014‑5
Amendments to Australian Accounting Standards arising from AASB 15
and AASB 2015‑8 Amendments to Australian Accounting Standards ‑
Effective Date of AASB 15
AASB 2015‑1 Amendments to Australian Accounting Standards ‑ Annual
Improvements to Australian Accounting Standards 2012‑2014 Cycle
AASB2015‑2 Amendments to Australian Accounting Standards ‑
Disclosure Initiative: Amendments to AASB101
AASB2015‑3 Amendments to Australian Accounting Standards arising
from the withdrawal of AASB1031 Materiality
Effective for annual
reporting periods
beginning on or
after
Expected to be
initially applied in
the financial year
ending
1 Jan 2018
1 Jan 2019
1 Jan 2016
31 Dec 2018
31 Dec 2019
31 Dec 2016
1 Jan 2018
31 Dec 2018
1 Jan 2016
31 Dec 2016
1 Jan 2016
31 Dec 2016
1 Jan 2016
31 Dec 2016
The directors are still assessing the impact of AASB 15 and AASB 16. The directors anticipate that the adoption of all other
Standards and Interpretations in future periods will have no material financial impact on the financial statements of the
company or the consolidated entity but may change disclosures made.
(u) Share based payments
Equity‑settled share‑based payments are measured at fair value at the date of the grant. Fair value is measured by use of
a Black‑Scholes Option Pricing model. The expected life used in the model has been adjusted, based on management
best estimates, for the effects of non‑transferability, exercise restrictions and behavioural considerations. The fair value
determined at the grant date of the equity‑settled share based payments is expensed on a straight‑line basis over the
vesting period, based on the consolidated entity’s estimate of shares that will eventually vest.
23
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
1. Summary of Significant
Accounting Policies (Cont.)
(v) Critical accounting judgements
In the application of the consolidated entity’s accounting
policies, management is required to make judgements,
estimates and assumptions about carrying values of
assets and liabilities that are not readily apparent from
other sources. The estimates and associated assumptions
are based on historical experience and various other
factors that are believed to be reasonable under the
circumstance, the results of which form the basis of
making these judgements. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised
if the revision affects only that period, or in the period of
the revision and future periods if the revision affects both
current and future periods.
Key sources of estimation uncertainty
The following are the key assumptions concerning
the future, and other key sources of estimation uncertainty
at the balance sheet date, that have a significant risk of
causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year:
Intangible asset/Goodwill
The directors made a critical judgement in relation to the
value of the intangible asset included in Note 8 and the
impairment model used in accessing the carrying amount
of the goodwill (see Note 7).
Deferred tax
The directors made a critical judgement in relation to
not recognising the deferred tax balances described
in Note 3(b). The directors do not currently consider its
probable that sufficient taxable amounts will be available
against which deductible temporary differences can
be utilised.
24
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
2. (Loss) from Operations
(a) Revenue
Interest received ‑ other entities
Management fees ‑ other
Rental income
Total revenue
(b) Expenses
Loss on sale of property
Amortisation
Depreciation
Interest paid
Fair value movement in derivative liability
Employee benefits expense:
Other employee benefits
Superannuation
3. Income Taxes
(a) Income tax recognised in profit or loss
Tax expense comprises:
Tax expense/(income) ‑ prior year
Deferred tax expense/(income)
Total tax expense/(income)
The prima facie income tax expense on pre‑tax accounting profit reconciles to the
income tax expense in the financial statements as follows:
(Loss) from operations
Amortisation
Convertible note adjustments
Loss on sale of property
Consolidated
Year ended
31 December
2015
$
Consolidated
Year ended
31 December
2014
$
25,073
‑
‑
25,073
‑
76,993
70,615
370,764
(334,000)
1,506,529
12,920
1,519,449
44,020
1,600
135,963
181,583
63,391
67,601
74,483
‑
‑
1,464,298
12,750
1,477,048
‑
‑
‑
‑
‑
‑
(1,840,940)
(2,796,787)
76,993
(200,192)
‑
67,601
‑
63,391
(1,964,139)
(2,665,795)
25
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
3. Income Taxes (Cont.)
Income tax expense calculated at 30%
Effect of different tax rates of subsidiaries operating in other jurisdictions
Deferred tax benefit not brought to account
31 December
2015
$
31 December
2014
$
(589,242)
145,329
443,913
‑
(799,739)
175,310
624,429
‑
The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on
taxable profits under Australian tax law and 25% under Israeli law. There has been no change in the corporate tax rate when
compared with the previous reporting period.
(b) Unrecognised deferred tax balances
The following deferred tax assets have not been bought to account as assets:
Tax losses ‑ revenue
Tax losses ‑ capital
Temporary differences
(c) Franking account balance
Adjusted franking account balance
(d) Israeli Tax Ruling
2,861,471
168,030
(131,227)
2,898,274
2,417,588
168,038
(104,671)
2,480,955
86,721
86,721
On July 16th 2012 a Tax Ruling was issued by the Israeli Tax Authorities (ITA) under which the ITA confirmed that the Merger
carried out between Audio Pixels Ltd, a private Israeli company (P.C 513853606) and Audio Pixels Holdings Limited, a public
Australian company, complies with the conditions stipulated in Section 103T of the Israeli Ordinance. Consequently,
the transfer of the rights by the transferring rights holders in exchange for the issuance of shares in the Australian company
is not taxable at the date of the Merger pursuant to the provisions of Section 103T of the Israeli Ordinance.
26
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
4. Remuneration of Auditors
(i) Auditor of the parent entity
Audit or review of the financial statements
Taxation service
(ii) Network firm of the parent entity auditor
Audit or review of the financial statements
Taxation service
The auditor of Audio Pixels Holdings Limited is Deloitte Touche Tohmatsu.
5. Cash and Cash Equivalents
Cash on hand and at bank
Weighted average interest rate received on cash
6. Trade and Other Receivables
Current
GST receivable
Prepayments and other debtors
Non Current
Other debtors
Other debtors comprise security deposits with government bodies.
31 December
2015
$
31 December
2014
$
35,125
3,000
38,125
19,410
4,270
23,680
32,300
2,500
34,800
17,614
5,594
23,208
1,523,016
1,875,504
0.97%
1.97%
6,973
36,753
43,726
8,116
71,084
79,200
6,837
6,117
27
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
7. Goodwill
Being goodwill acquired on the acquisition of Audio Pixels Limited. The goodwill
is allocated to the cash generating unit of digital speakers by Audio Pixels Limited
of Israel.
Balance at 1 January
Net foreign currency exchange
Balance at 31 December
31 December
2015
$
31 December
2014
$
2,166,391
2,124,068
2,124,068
42,323
2,166,391
1,992,314
131,754
2,124,068
The recoverable amount of this cash generating unit is determined based on a fair value less costs of disposal calculation
which uses cash flow projections based on financial budgets approved by the directors covering an 11 year period, with a
growth rate reflecting the expected future growth in the product market, and a discount rate of 24% per annum. The cash
flow projections used in the impairment model extend beyond 5 years as the intangible assets generating the cash flows
within relate to new technology and hence reflect a longer operating cycle and time to market. Cash flow projections
during the budget period are based on the same expected gross margins and raw materials price inflation during the
budget period and factor in a probability of the viability of the product. The directors believe that any reasonable possible
change in the key assumptions on which recoverable amount is based would not cause the aggregate carrying value to
exceed the aggregate recoverable amount of the cash generating unit. Movements in the value of the goodwill are a result
of the retranslation of the goodwill from the functional currency of the cash generating unit to which it is attributed.
8. Intangible Asset
Being the independent valuation of In Process Research and Development
determined at the acquisition date of 24 September 2010 by Ernst & Young, Israel in
their report dated 17 August 2011.
Exchange differences on translation
Less accumulated amortisation
868,000
868,000
190,618
(346,094)
712,524
111,447
(269,101)
710,346
28
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
9. Property, Plant and Equipment
Computers and related equipment ‑ at cost
Less accumulated depreciation
Leasehold improvements ‑ at cost
Less accumulated depreciation
Office furniture and equipment ‑ at cost
Less accumulated depreciation
31 December
2015
$
31 December
2014
$
356,676
(327,468)
29,208
226,429
(222,338)
4,091
973,609
(841,330)
132,279
296,039
(274,730)
21,309
199,132
(198,722)
410
829,720
(704,139)
125,581
Total net book value of Property, Plant and Equipment
165,578
147,300
Cost
Computers and related equipment
Balance at 1 January
Additions
Net foreign currency exchange differences
Balance as at 31 December
Leasehold improvements
Balance at 1 January
Additions
Net foreign currency exchange differences
Balance as at 31 December
296,039
25,755
34,882
356,676
199,132
3,831
23,466
226,429
255,609
17,997
22,433
296,039
183,065
‑
16,067
199,132
29
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
9. Property, Plant and Equipment (Cont.)
Office furniture and equipment
Balance at 1 January
Additions
Net foreign currency exchange differences
Balance as at 31 December
Accumulated depreciation
Computers and related equipment ‑ at cost
Balance as at 1 January
Net foreign currency exchange differences
Depreciation expense
Balance at 31 December
Leasehold improvements
Balance as at 1 January
Net foreign currency exchange differences
Depreciation expense
Balance at 31 December
Office furniture and equipment
Balance as at 1 January
Net foreign currency exchange differences
Depreciation expense
Balance at 31 December
10. Trade and Other Payables
Current
Trade payables and accruals
The payables are non interest bearing and have an average credit period of 30 days.
31 December
2015
$
31 December
2014
$
829,720
46,110
97,779
973,609
(274,730)
(33,508)
(19,230)
(327,468)
(198,722)
(23,428)
(188)
742,611
21,933
65,176
829,720
(237,415)
(21,530)
(15,785)
(274,730)
(182,604)
(16,031)
(87)
(222,338)
(198,722)
(704,139)
(85,994)
(51,197)
(841,330)
(591,080)
(54,448)
(58,611)
(704,139)
470,230
353,008
30
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
31 December
2015
$
31 December
2014
$
11. Borrowings
On 4 May 2015, the Company announced its intention to issue two convertible notes of $1,500,000 each at a coupon rate
of 8% per annum, raising $3,000,000. One convertible note was issued to an unrelated party on 28 May 2015 and one
convertible note was issued to 4F Investments Pty Limited, a company associated with Mr Fred Bart. The convertible note
to 4F Investments Pty Limited received shareholder approval at an Extraordinary General Meeting held on 22 June 2015
and was issued on 26 June 2015. The two convertible notes have a term of 12 months, are unsecured, not listed and are
convertible to ordinary shares based on the lower of the five day volume weighted average share price of Audio Pixels
Holdings Limited on the date of the agreement ($9.68) or the five day volume weighted average share price of Audio
Pixels Holdings Limited immediately prior to conversion.
Borrowings ‑ Convertible note
Carrying amount at start of period
Face value of notes issued
Derivative liability ‑ fair value initially recognised
Add ‑ accrued interest expense
Current Liability at end of period
Derivative liability
Fair value initially recognised
Fair value movement to the end of the reporting period
Derivative liability
Total borrowings
12. Provisions
Employee benefits
‑
3,000,000
(501,517)
2,498,483
236,956
2,735,439
501,517
(334,000)
167,517
2,902,956
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
524,907
418,685
31
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
13. Issued Capital
Issued and paid up capital
Fully paid Ordinary Shares
Balance at the beginning of the financial year
Balance at the end of the financial year
Fully paid Ordinary Shares
Balance at the beginning of the financial year
Balance at the end of the financial year
31 December
2015
$
31 December
2014
$
37,398,942
37,398,942
37,398,942
37,398,942
Number
Number
25,707,047
25,707,047
25,707,047
25,707,047
Fully paid ordinary shares carry one vote per share and carry the rights to dividends.
Changes in the Corporations Law abolished the authorised capital and par value concept in relation to share capital from
1 July 1998. Therefor the company does not have a limited amount of authorised capital and issued shares do not have a
par value.
14. Reserves
Foreign currency translation
Balance at the beginning of the financial year
Translation of foreign operations
Balance at end of financial year
Foreign currency translation
(1,505,564)
(1,609,923)
(3,115,487)
(766,855)
(738,709)
(1,505,564)
Exchange differences relating to the translation of the results and net assets of the Group’s foreign operations from their
functional currencies to the Group’s presentation currency (i.e. Australian dollars) are recognised directly in other comprehensive
income and accumulated in the foreign currency translation reserve. Exchange differences previously accumulated in the
foreign currency translation reserve are reclassified to profit and loss on the disposal of the foreign operation.
Equity settled option reserve
Balance at the beginning of the financial year
Balance at end of financial year
The above equity‑settled option reserve relates to share options granted by the Company.
Minority acquisition reserve
Balance at the beginning of the financial year
Balance at end of financial year
4,512,898
4,512,898
4,512,898
4,512,898
(25,538,692)
(25,538,692)
(25,538,692)
(25,538,692)
The minority interest reserve comprises amounts related to the acquisition of a
minority interest shareholding in a subsidiary company in a prior period.
Total Reserves
(24,141,281)
(22,531,358)
32
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
15. Accumulated Losses
Balance at the beginning of the financial year
(Loss) for the year attributable to owners of the company
Balance at the end of the financial year
16. Notes to the Statement of Cash Flows
(a) Reconciliation of cash and cash equivalents
31 December
2015
$
31 December
2014
$
(10,696,742)
(1,840,940)
(7,899,955)
(2,796,787)
(12,537,682)
(10,696,742)
For the purposes of the statement of cash flows, cash includes cash on hand and at call deposits with banks or financial
institutions, investments in money market instruments maturing within less than 3 months at the date of acquisition.
Cash and cash equivalents at the end of the financial year as shown in the statement of cash flows is reconciled to the
related items in the statement of financial position as follows:
Cash and cash equivalents
1,523,016
1,875,504
b) Restricted cash
Cash held as security for future lease payments
32,841
29,744
(c) Reconciliation of (loss) for the period to net cash flows from operating activities
(Loss) after related income tax
Loss on sale of property
Amortisation
Convertible note adjustments
Depreciation
Foreign exchange gains
Changes in assets and liabilities
(Increase)/decrease in assets
Current trade and other receivables
Non‑current trade and other receivables
Increase /(decrease) in liabilities
Provisions
Current trade payables
(1,840,940)
(2,796,787)
‑
76,993
(97,044)
70,615
63,391
67,601
‑
74,483
(1,798,447)
(1,028,397)
35,474
(720)
106,222
117,222
53,230
(45)
(1,158)
(315,006)
Net cash (used in) operating activities
(3,330,625)
(3,882,688)
33
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
17. Related Party Transactions
(a) Directors
The Directors of Audio Pixels Holdings Limited in office during the year were Fred Bart, Ian Dennis and Cheryl Bart.
(b) KMP Remuneration
The aggregate compensation of the key management personnel of the company is set out below:
Short‑term employee benefits
Post employment benefits
31 December
2015
$
31 December
2014
$
693,742
150,410
844,152
690,224
143,625
833,849
The remuneration above relates to directors fees, consultancy fees and superannuation paid to entities associated with
Fred Bart, Cheryl Bart and Ian Dennis and the remuneration of the three senior executives of Audio Pixels Limited in Israel.
(c) Transactions with related entities
During the year ended 31 December 2015, the Company paid a total of $107,857 (year ended
31 December 2014 ‑ $107,734) to 4F Investments Pty Limited, a company associated with Mr Fred Bart in respect of
directors fees and superannuation for Mr Fred Bart and Mrs Cheryl Bart.
During the year ended 31 December 2015, the Company paid a total of $41,063 (year ended 31 December 2014 ‑ $41,016)
to Dennis Corporate Services Pty Limited, a company associated with Mr Ian Dennis in respect of directors fees
and superannuation.
During the year ended 31 December 2015, the Company paid interest of $62,137 on a convertible note to 4F Investments
Pty Limited, a company associated with Mr Fred Bart. The convertible note of $1.5m was issued on 26 June 2015 following
shareholder approval at an Extraordinary General Meeting.
During the year, the Company paid $30,000 (31 December 2014 ‑ $30,000) to Dennis Corporate Services Pty Limited,
a company associated with Mr Ian Dennis in respect of consulting fees for company secretarial and accounting services.
On 8 May 2014, the company entered into a lease in respect of office premises at Level 12, 75 Elizabeth Street Sydney for a
period of forty eight months to 30 March 2018. The company recharges 20% ($21,104) of the rent to Electro Optic Systems
Holdings Limited, a company of which Fred Bart and Ian Dennis are directors, 20% ($21,104) to 4F Investments Pty Limited,
a company controlled by Fred Bart and 40% ($32,208) to another tenant who is a shareholder in the company.
18. Earnings per Share
Basic (loss) per share
Diluted (loss) per share (b)
(Loss) (a)
(7.16 cents)
(10.88 cents)
(7.16 cents)
(10.88 cents)
(1,840,940)
(2,796,787)
Weighted average number of Ordinary Shares
25,707,047
25,707,047
(a) (Loss) used in the calculation of basic earnings per share are the same as the net (loss) in the Statement of profit or loss
and other comprehensive income.
(b) There are potential ordinary shares to be issued in relation to the convertible notes of $3m which expire
in May and June 2016. The convertible note holders have the option of receiving their $3m back with interest or converting
their convertible notes into ordinary shares based on the lower of the five day volume weighted average share price of
Audio Pixels Holdings Limited on the date of the agreement ($9.68) or the five day volume weighted average share price
of Audio Pixels Holdings Limited immediately prior to conversion. As at the date of this report, the directors are unable to
determine the number of potential ordinary shares, if any, that could be issued from the convertible notes.
34
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
19. Segment Information
AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that
are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess
performance.
The identification of the Group’s reportable segments has not changed from those disclosed in the previous 2014 report.
The Group’s reportable segments in 2014 were property investment and digital speakers. Following disposal of the
investment property, the group now only has one segment being digital speakers.
The consolidate entity operates in Australia and Israel.
Products and services within each segment
Property Investment
The parent company had a commercial strata property in Australia which was sold during the previous financial year.
The company derived rental revenue from the property.
Digital speakers
The subsidiary company in Israel is developing a digital speaker and has not reached the stage of having any revenue.
Segment Revenues
Property investment
Digital speakers
Total of all segments
Unallocated interest revenue
Total
Segment Results
Property investment
Digital speakers
Total of all segments
Unallocated
(Loss) before income tax
Income tax gain/(expense)
(Loss) for the period
31 December
2015
31 December
2014
‑
25,073
25,073
‑
25,073
135,963
‑
135,963
45,620
181,583
‑
(1,840,940)
(1,840,940)
‑
36,436
(2,878,843)
(2,842,407)
45,620
(1,840,940)
(2,796,787)
‑
‑
(1,840,940)
(2,796,787)
35
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
19. Segment Information (Cont.)
The consolidated entity had one customer who provided 100% of the property investment rental income for the year
ended 31 December 2014.
Segment Assets and Liabilities
Property investment
Digital speakers
Total all segments
Unallocated *
Consolidated
Assets
Liabilities
31 December
2015
$
31 December
2014
$
31 December
2015
$
31 December
2014
$
‑
4,618,072
4,618,072
‑
4,618,072
‑
3,058,915
3,058,915
1,883,620
4,942,535
‑
3,898,093
3,898,093
‑
‑
771,693
771,693
‑
3,898,093
771,693
*The unallocated amount in 2014 represents cash and GST receivable.
Assets used jointly by reportable segments are allocated on the basis of the revenue earned by the individual reportable segments.
Other Segment Information
Depreciation and amortisation
of segment assets
Acquisition of segment assets
31 December
2015
$
31 December
2014
$
31 December
2015
$
31 December
2014
$
Property investment
Digital speakers
Total all segments
Unallocated
Consolidated
‑
147,608
147,608
‑
‑
142,084
142,084
‑
147,608
142,084
Information on Geographical Segments
Geographical Segments
31 December 2015
Australia
Israel
Total
31 December 2014
Australia
Israel
Total
36
Revenue
from External
Customers
$
25,073
‑
25,073
181,574
9
181,583
‑
75,696
75,696
‑
75,696
Segment
Assets
$
1,123,793
3,494,279
4,618,072
1,471,032
3,471,503
4,942,535
‑
39,930
39,930
‑
39,930
Acquisition
of Segment
Assets
$
‑
75,696
75,696
‑
39,930
39,930
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
20. Financial Risk Management Objectives and Policies
The consolidated entity’s principal financial instruments comprise receivables, payables, cash and short term deposits.
Due to the small size of the group significant risk management decisions are taken by the board of directors. These risks
include market risk (including fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity
risk. The Directors do not plan to eliminate risk altogether, rather they plan to identify and respond to risks in a way that
creates value for the company and its shareholders. Directors and shareholders appreciate that in order for the consolidated
entity to compete and grow, a long term strategy needs to involve risk taking for reward.
The consolidated entity does not use derivative financial instruments to hedge these risk exposures.
Risk Exposures and Responses
(a) Interest rate risk
The Group’s exposure to market interest rates relates primarily to the consolidated entity’s cash holdings and short term deposits.
At balance date, the consolidated entity had the following mix of financial assets exposed to Australian interest rate risk that
are not designated in cash flow hedges:
Financial assets
Cash and cash equivalents
31 December
2015
$
31 December
2014
$
1,523,016
1,875,504
The Group constantly analyses its interest rate exposure. Within this analysis consideration is given to potential renewals of
existing positions, alternative financing and the mix of fixed and variable interest rates.
At 31 December 2015, if interest rates had moved, as illustrated in the table below, with all other variables held constant,
post tax (loss) and equity would have been affected as follows:
Judgements of reasonably
possible movements
Post Tax Profit
Higher/(Lower)
Equity
Higher/(Lower)
Consolidated entity
+1% (100 basis points)
‑0.5% (50 basis points)
31 December
2015
$
31 December
2014
$
31 December
2015
$
31 December
2014
$
15,278
(7,567)
18,695
(9,438)
15,278
(7,567)
18,695
(9,438)
The movements in profits are due to higher/lower interest rates on cash and cash equivalents balances. The cash and cash
equivalents balances were lower in December 2015 than in December 2014 and accordingly the sensitivity is lower.
37
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
20. Financial Risk Management Objectives and Policies (Cont.)
(b) Foreign currency risk
The consolidated entity has a foreign currency risk since the acquisition of Audio Pixels Limited. Audio Pixels Limited
operates in Israel and all transfer of funds to Audio Pixels Limited are denominated in US dollars. The consolidated entity
does not hedge its US dollar exposure.
The carrying amounts of the Group’s foreign currency (US$) denominated monetary assets and monetary liabilities at the
end of the reporting period are as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Liabilities
Assets
31 December
2015
$
31 December
2014
$
31 December
2015
$
31 December
2014
$
‑
‑
‑
‑
374,202
330,415
442,702
36,753
‑
456,829
43,540
‑
All US$ denominated financial instruments were translated to A$ at 31 December 2015 at the exchange rate of 0.7298
(2014: 0.8158).
At 31 December 2015 and 31 December 2014, had the Australian Dollar moved, as illustrated in the table below, with all
other variables held constant, post tax loss and equity would have been affected as follows:
Judgements of reasonably
possible movements
Post Tax Loss
Higher/(Lower)
Equity
Higher/(Lower)
Consolidated
AUD/USD +10%
AUD/USD ‑5%
2015
$
2014
$
2015
$
2014
$
264,234
(152,977)
318,745
(184,537)
264,234
(152,977)
318,745
(184,537)
Management believes the balance date risk exposures are representative of risk exposure inherent in financial instruments.
(c) Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to
the Group. The consolidated entity has adopted a policy of only dealing with creditworthy counterparties which are
continuously monitored. Rental revenue is due in advance.
The credit risk on liquid funds is limited because the counterparties are major banks with high credit‑ratings assigned by
international credit agencies.
38
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
20. Financial Risk Management Objectives and Policies (Cont.)
(d) Liquidity risk management
The consolidated entity’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due. The consolidated entity’s investments in money market instruments all have a
maturity of less than 3 months.
Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate risk
management framework for the management of the consolidated entity’s short, medium and long term funding and liquidity
requirements. The consolidated entity manages liquidity by maintaining adequate cash reserves by continuously monitoring
forecast and actual cash flows and managing maturity profiles of financial assets.
The following tables detail the consolidated entity’s remaining contractual maturity for its non‑derivative financial assets.
The tables have been drawn up based on the undiscounted contractual maturities of the financial assets including interest
that will be earned on these assets except where the consolidated entity anticipates that the cash flow will occur in a
different period.
Weighted
average effective
interest rate
%
0.00
0.97
0.00
1.97
31 December 2015
Non interest bearing
Fixed rate instruments
31 December 2014
Non interest bearing
Fixed rate instruments
Less than
1 month
$
301,248
1,222,995
355,586
1,523,002
1‑3 months
$
3 months
to 1 year
$
‑
2,454
‑
6,168
‑
11,044
‑
27,756
1‑5 years
$
‑
58,900
‑
‑
All financial liabilities are expected to be settled under commercial terms of within 3 months.
(e) Commodity price risk
The consolidated entity has no exposure to commodity price risk.
(f) Other price risks
The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the
financial statements approximate their fair values.
39
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
21. Financial Instruments
Fair value of financial instruments
This note provides information about how the Group determines fair values of various financial assets and financial liabilities.
Financial assets
Prior to its sale the Strata Title property held for resale was the only asset in the Group measured at fair value. The fair value
determined at 31 December 2013 was $1,500,000. The fair value hierarchy was Level 3.
Movement schedule
Balance at the beginning of the financial year
Proceeds of sale received
Total gains/(losses) in profit/(loss)
Balance at end of financial year
Financial liabilities
31 December
2015
$
31 December
2014
$
‑
‑
‑
‑
1,500,000
(1,436,609)
(63,391)
‑
The convertible note derivative liability is valued as sold call options with a strike price of $9.68 using the Black‑Scholes
option pricing model. An input into the Black‑Scholes option pricing model is the expected share price volatility over the
remaining term of the options. The expected share price volatility used in the option valuation at reporting date was 55%
which was based on historical share price volatility.
The fair value of the derivative liability is sensitive to changes in share price volatility. Increases in volatility increase the fair
value of the derivative liability and vice versa.
The fair value hierarchy was Level 3. A movement schedule is included in Note 11.
22. Subsequent Events
The Directors are not aware of any significant events since the end of the financial year and up to the date of this report.
40
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
23. Parent Entity Disclosures
Financial position
Assets
Current assets
Non‑current assets
Total assets
Liabilities
Current liabilities
Non‑current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
(Accumulated losses)/Retained earnings
Total equity
Financial performance
Profit for the period
Other comprehensive income
24. Controlled Entity
Name of Entity
Parent Entity
31 December
2015
$
31 December
2014
$
18,717,654
2,428,209
14,598,637
2,428,209
21,145,863
17,026,846
2,998,985
‑
22,593
‑
2,998,985
18,146,878
22,593
17,004,253
37,398,942
37,398,942
(21,025,794)
(21,025,794)
1,773,730
631,105
18,146,878
17,004,253
1,142,625
777,010
‑
‑
1,142,625
777,010
Country of
Incorporation
31 December
2015
%
31 December
2014
%
Audio Pixels Holdings Limited
Australia
Controlled Entity
Audio Pixels Limited
Israel
100.00
100.00
41
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
25. Leases
Operating leases ‑ leasing arrangements (the Company as lessee)
On 8 May 2014, the parent company entered into a lease in respect of office premises at Level 12, 75 Elizabeth Street
Sydney for a period of forty eight months from 31 March 2014 to 30 March 2018. The company recharges 20% of the rent to
Electro Optic Systems Holdings Limited, a company of which Fred Bart and Ian Dennis are directors, 20% to 4F Investments
Pty Limited, a company controlled by Fred Bart and 40% to another tenant who is a shareholder in the company.
Non‑cancellable operating lease payables
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
31 December
2015
$
31 December
2014
$
87,516
109,395
‑
87,516
196,911
‑
196,911
284,427
The Company recovers 80% of the lease payments from director related entities who sublease space from the company on
a month to month basis.
26. Contingent Liability
The parent company has been advised of a potential derivative action in Israel by an individual shareholder of BE4 Limited
(a company with no financial interest in Audio Pixels Holdings Limited), an Israeli company in bankruptcy proceedings.
At the date of this report the parent company has not been formally served. The Directors do not believe the Company has
a case to answer, and is prepared to vigorously defend any action if commenced.
27. Commitments
The subsidiary company, Audio Pixels Limited of Israel has entered into various purchase orders and commitments of
$907,993 with various strategic partners which will become payable once qualified products are delivered to the company.
28. Additional Company Information
Audio Pixels Holdings Limited is a listed public company, incorporated and operating in Australia.
Registered Office and Principal Place of Business
Level 12
75 Elizabeth Street
Sydney NSW 2000
Australia
Tel: (02) 9233 3915
Fax: (02) 9232 3411
www.audiopixels.com.au
The Company has 11 (2014: 11) employees in Israel.
42
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 ASX ADDITIONAL INFORMATION
Additional information required by the Australian Stock Exchange Listing Rules and not disclosed elsewhere in this report.
Home Exchange
The Company’s ordinary shares are quoted on the Australian Stock Exchange Limited under the trading symbol “AKP”.
The Home Exchange is Sydney. The Company also has a Level 1 American Depositary Receipts (ADR) program and
quotation on the OTC market in the United State of America under the code “ADPXY” which is under the NASDAQ
International Designation program.
Substantial Shareholders
At 22 February 2016 the following substantial shareholders were registered:
Fred Bart Group
Voting Rights
Ordinary Shares
Percentage of total
Ordinary Shares
5,441,250
21.17%
At 22 February 2016 there were 1,317 holders of fully paid ordinary shares.
Rule 74 of the Company’s Constitution stipulates the voting rights of members as follows:
“Subject to any rights or restrictions for the time being attached to any class or classes of shares and to this Constitution:
(a) on a show of hands every person present in the capacity of a Member or a proxy, attorney or representative (or in more
than one of these capacities) has one vote; and
(b) On a poll every person present who is a Member or proxy, attorney or representative has member present has:
(i)
For each fully paid share that the person holds or represents ‑ one vote; and
(ii)
For each share other than a fully paid share that the person holds or represents ‑ that proportion of one vote that
the amount paid (not credited) on the shares bears to the total amount paid and payable on the share (excluding
amounts credited).”
Other Information
In accordance with Listing Rule 4.10.19, the Company has used the cash and assets in a form readily convertible to cash that
it had at the time of admission in a way consistent with its business objectives.
Distribution of Shareholdings
At 22 February 2016 the distribution of ordinary shareholdings were:
Range
1‑1,000
1,001 ‑ 5,000
5,001 ‑ 10,000
10,001 ‑ 100,000
100,001 and over
There were 58 ordinary shareholders with less than a marketable parcel.
There is no current on‑market buy‑back.
Ordinary
Shareholders
Number of
Shares
560
395
196
132
34
1,317
268,558
1,054,175
1,679,567
4,210,696
18,494,051
25,707,047
43
Annual Report 2015 | Audio Pixels Holdings Limited ACN 094 384 273 CORPORATE DIRECTORY
TWENTY LARGEST ORDINARY SHAREHOLDERS
At 22 February 2016 the 20 largest ordinary shareholders held 64.44% of the total issued fully paid quoted ordinary shares
of 25,707,047.
Fully Paid
Ordinary Shares
Percentage of
Total
Directors
Fred Bart (Chairman)
Shareholder
Ian Dennis
Cheryl Bart AO
1. Meitav Dash Trusts Limited
2. Landed Investments (NZ) Limited
3. Fred Bart
Company Secretary
4. Link Traders (Aust) Pty Limited
Ian Dennis
5. Kam Superannuation Fund Pty Limited
6. HSBC Custodian Nominees (Australia) Pty Limited
Registered Off ice
7. Bart Superannuation Pty Limited
Israel Corporate Off ice
9. Ian Dennis and Caroline Dennis
8. Lee K Lau
Level 12
75 Elizabeth Street
SYDNEY NSW 2000
10. Cheryl Bart
Australia
11. Meitav Dash Trusts Limited
Continue reading text version or see original annual report in PDF format above