CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
ANNUAL REPORT
FOR THE YEAR ENDED 30 JUNE 2019
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
CORPORATE DIRECTORY
DIRECTORS
Mr. Niall Cairns (Executive Chairman)
Mr. King Nelson
Mr. Craig Cooper
COMPANY SECRETARY
Mr. Jarrod White
CHIEF FINANCIAL OFFICER
Mr. Jarrod White
REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS
Suite 303, Level 3
15 Lime Street
Sydney NSW 2000
Telephone: (02) 9874 8761
Email: info@CardieX.com
Website: www.CardieX.com
SHARE REGISTRY
Link Market Services
Level 12, 680 George Street
Sydney NSW 2000
Telephone: (02) 8280 6000
Website: www.linkmarketservices.com
AUDITORS
BDO East Coast Partnership
Level 11, 1 Margaret Street
Sydney NSW 2000
Telephone: (02) 9251 4100
Facsimile: (02) 9240 9821
Website: www.bdo.com.au
CORPORATE ACCOUNTANT
Traverse Accountants
Suite 305, Level 3
35 Lime Street
Sydney NSW 2000
Website: www.traverseaccountants.com.au
STOCK EXCHANGE LISTING
CardieX Limited’s shares are listed on the Australian Securities Exchange (ASX code: CDX).
1
TABLE OF CONTENTS
Chairman’s Report
CEO’s Report and Operational Update
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Page
Page
3
5
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12
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16
Page
21
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Page
22
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Page
23
Page
25
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26
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27
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65
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66
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69
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CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
Chairman’s Report
Dear Fellow Shareholders,
It gives me great pleasure to present the 2019 Annual Report for CardieX Limited, my first as Chairman and a
transformational year it has been. We have focused on instilling a new growth mindset within the Company,
securing key partnerships and taking the strides forward required to create a world-class global healthcare
company. We are doing this from the strong technology base that is provided by our world leading FDA approved
SphygmoCor®, which is enabling us to address the needs of large (multi-billion dollar) global healthcare markets
and build a CardieX ecosystem for long term value creation.
The transformation is being led by our CEO and Managing Director, Craig Cooper, with significant progress made
and clear milestones achieved. This includes instilling a new growth mindset and can-do attitude, which has been
embraced by the continuing CardieX team. Enhancing the team we have been able to attract a number of highly
experienced and capable executives with great track records and expertise. Importantly, we now have global
expertise, reach and track records across multiple markets (USA, China, Europe and Australia). This provides us
with confidence that we have the team and culture to execute on the CardieX strategy.
Over the last 18 months the CardieX team has delivered significant progress and achievement of milestones
throughout the year and post year end. They have included:
• Establishing a China operation, which has been instrumental in driving partnerships and positioning for
growth in our traditional ATCOR business.
• China FDA approval for the Oscar 2, in partnership with SunTech, with first revenues expected before
•
Christmas 2019.
inHealth investment (current interest 7.5%, with an option to move to 50.5%), a leading US telehealth
company that is part of a fast growing $25 billion market. Strong year-on-year growth is being generated
from partnerships with NYSE listed Anthem (one of the largest US healthcare insurers), American Well
and GEMDC (a leading global electronics and medical device group). In addition, inHealth has the
potential to be a significant distribution channel for CardieX’s medical and consumer devices/solutions.
• Blumio joint venture positions CardieX in the global multi-billion-dollar market for Ambulatory Blood
Pressure Monitoring (“ABPM”) for medical grade applications based on a unique new radar-based sensor
technology. The Macquarie University trial and the US Deborah study have both produced great results
further validating the technology and our investment.
The Mobvoi Joint Development Agreement (JDA). Mobvoi is Google’s official partner in China and one of
the fastest growing consumer wearable electronic companies. They have a focus on consumer health
applications using existing sensor technology. We see this JDA as a significant step towards having our
technology in the wearables market globally. As announced, there are a number of milestones to be
achieved, which if achieved will lead to significant revenue in FY2020.
•
In addition to the above significant achievements we remain focused on growing our exisiting ATCOR business.
Though the core SphygmoCor® technology remains the focus, we are significantly redefining and enhancing the
business model, market opportunities, outlook and reach. The new product and software strategy expands ATCOR
into new high-growth markets, both professional/medical and consumer. Our new growth mindset is targeting a
minimum 20% increase in sales for FY2020 and it is pleasing to be able to report that the results for the first months
are on track to achieve this growth and we look forward to updating the market on future business progress.
The 2019 financial year delivered on its transformational promise and I wish to thank all of our CardieX team, our
shareholders and my fellow Board members, Craig Cooper and King Nelson, for their efforts and support over the
last two years. Also, I wish to extend deep appreciation to our retired Chairman, Donal O’Dwyer, who over 14 years
steered your company through many challenging times and commenced the transformation in 2017.
3
CARDIEX LIMITED
(FORMERLY ATCOR MEDICAL HOLDINGS LIMITED)
ABN 81 113 252 234
AND CONTROLLED ENTITIES
Looking forward I am confident that the CardieX team will continue to deliver on key milestones, significant growth
and value creation as we execute on the CardieX vision in the years ahead.
Niall Cairns
Executive Chairman
CardieX Limited
4
CARDIEX LIMITED
(FORMERLY ATCOR MEDICAL HOLDINGS LIMITED)
ABN 81 113 252 234
AND CONTROLLED ENTITIES
Chief Executive Officer’s Report
My Fellow Shareholders,
It has been a very rewarding year for us at CardieX and a year of significant progress whereby we transitioned
from a pure medical device business to a multi-platform provider of consumer and medical device software/SaaS
based solutions – all based on CardieX’s unique, market leading, and patented software algorithms and technology.
Our key mission to improve the lives and lifespans of patients globally through better preventative health solutions
has been at the forefront of our business activities, and we continue to significantly expand our footprint across
new high-growth global health markets.
Our core medical business ATCOR remains focused on developing, marketing and distributing medical
technologies that measure patient risk for hypertension, cardiovascular disease and other related vascular
disorders.
Growing sales of the ATCOR division is a key priority for us and our vision is to have an ecosystem of devices and
solutions all “powered by ATCOR”. To this end, we are focused on establishing multiple partnerships and licensing
agreements to incorporate SphygmoCor® into the next generation of medical devices, wearable solutions, and
smart devices.
We’ve also significantly expanded CardieX’s global footprint and are immensely proud of what we have achieved
since our corporate rebranding. We’ve transitioned from having one business segment in medical devices to now
having exposure to three high growth healthcare sectors in medical devices, wearable technologies, and digital
and consumer health. Across all three of these business verticals our focus has been on establishing major
strategic partnerships and driving significant value for shareholders.
Looking ahead, our focus is on growing revenue in our existing markets, new OEM and licensing partnerships, key
executive recruitment, and new device and digital solutions – further expanding and building on our current market
position.
We expect the year ahead to be another exciting one with the Company looking to secure further lucrative
partnerships as we also continue to execute on our aggressive sales plan for 2020 - which we anticipate will see a
return to profitability for our core ATCOR medical device division.
I would like to thank my fellow Board members and management and staff at CardieX who have worked tirelessly
to realise our vision as we continue to grow shareholder value.
I’m personally very much looking forward to the year ahead.
Craig Cooper
CEO & Managing Director
CardieX Limited
5
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
OPERATIONAL UPDATE
Execution of Major Strategic Repositioning
Following the announcement of the Company’s major strategic repositioning in March 2018, significant internal
changes were made across the year including key appointments, expansion into new high-growth global health
markets and the investment in leading US digital and telehealth company inHealth Medical.
The Company has taken significant steps forward to create a world-class health technology company and has
aligned itself with top-tier global health companies at the cutting edge of technology and innovation. Across the
year, Cardiex launched its operations in China, secured key high-profile partnerships and established a local
presence to accelerate its China growth strategy – rapidly accelerating its vision of implementing central blood
pressure and related health technologies in the world’s largest population market.
With a new sales and marketing strategy driven by new senior appointments, CardieX continues to make major
progress to execute on its long-term growth strategy and create a leading healthcare company servicing the global
healthcare markets.
ATCOR Medical
Overview: 100% owned subsidiary. FDA approved devices and software services for measuring central blood
pressure as a key determinant of cardiovascular and hypertension risk.
Strategic Value: ATCOR is the only FDA approved technology for measuring central waveforms in order to
measure hypertension and related vascular disorders and risk. Global policy is shifting towards the measurement
of central blood pressure and arterial stiffness in order to drive better global health outcomes.
ATCOR is the gold standard in measurement of these indices and is looking to expand its market through
partnerships, licensing, OEM integration, and next generation devices and software solutions.
Highlights:
• Announcement of material and significant increase in sales targets for ATCOR Medical for FY2020 driven
by expansion of addressable market to general practitioners, clinicians, and healthcare providers
combined with new pricing and lead generation initiatives across digital and offline sales platforms;
• National Medical Products Administration (“NMPA”, formerly the Chinese FDA) approval for Oscar 2 with
ATCOR’s “SphygmoCor® Inside” received by JV partner SunTech Medical. Oscar 2 is an Ambulatory
Blood Pressure Monitor for the 24-hour patient monitoring of central and peripheral blood pressure;
• Oscar 2 now approved for sale in the USA, Europe, and China, Oscar 2 is the only available ABPM
solution in China currently with “SphygmoCor® inside” and provides a unique market differentiation for
ABPM devices in this significant market device segment;
•
Forecast 3x increase in revenues in FY2020 from device and software sales related to Oscar 2 driven
mainly by NMPA approval in China and expanded sales effort in that market;
• New CardieX corporate website and change of registered office. New ATCOR Medical website forecast
completion Q1, FY2020 to help drive aggressive new sales targets and lead- generation for FY2020 and
beyond;
• Major steps taken in global business development and corporate partnerships as the Company moves
towards its software and SaaS strategy to enable medical and consumer wearables “powered by ATCOR”;
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CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
OPERATIONAL UPDATE
• New product strategy announced across consumer and home medical devices “powered by ATCOR”
to rapidly drive sales and expand into new high-growth global health markets;
• Unique and proprietary feature and product offerings incorporating ATCOR’s SphygmoCor®
technology in partnership with global medical and consumer device companies (see: “Product Strategy”
below);
• Expansion of pharmaceutical trial contract with Bayer AG for an additional ~$AUD500K. Revenues
have commenced, and expansion of trial has now increased to ~70 sites globally;
•
•
•
The SphygmoCor® System is used in the top 20 hospitals as featured in the prestigious US News
2018-2019 Best Hospitals Honor Roll list. The Best Hospitals Honour Roll list ranks the top 20 hospitals
in the United States;
Initiation of an API-based OEM strategy targeting patient monitors, ambulatory blood pressure
monitoring (BPM), home BPM, and smart wearable partnerships;
Focus on expansion of the core ATCOR business into new markets and expanding integration of
SphygmoCor® technology with OEM partnerships and other joint venture initiatives – vision is to have
an end-to-end integration of the SphygmoCor® technology into multiple devices and markets all
“powered by ATCOR”.
• Relocation of ATCOR’s Asia-Pacific sales operation to the USA, after 15 years in North Ryde, Sydney’s
ATCOR Medical’s research and development team have moved to a more tech-focused space in the
City of Sydney’s Barangaroo district.
•
Increased sales targets for ATCOR’s key XCEL cardiovascular management device starting in FY2020.
Minimum sales target increase of 20% in FY2020 with a return to profitability for the ATCOR Medical
group company in that year;
• New partnerships and chip integrations in an expanding portfolio of devices in medical and consumer
devices “powered by ATCOR”. Target of (2) new OEM partnerships in FY2020 with an additional home
consumer device launch before Q2, FY2021. Material revenue impacts from each of these initiatives
to accrue through FY2021; and
• Strong revenue start to FY2020 year with significant YOY increase in July sales over previous years.
Blumio
Overview: 50/50 partnership under a Joint Development Agreement (JDA) to develop non-invasive radar-based
sensor for detecting blood pressure (BP) and central blood pressure (cBP) using CardieX technology.
7.5% direct ownership by CardieX in Blumio via Convertible Note increasing to 10% on satisfaction of certain
milestones under the JDA.
Strategic Value: The development of a non-invasive blood pressure monitoring sensor is considered to be one of
the holy grails of medical technology which could displace and disrupt a $USD45B industry (CNBC).
A combined BP and cBP sensor using Blumio and CardieX technology is initially focused on the global market for
24-hour ambulatory blood pressure monitoring (ABPM). Initial revenue model to be based on licensing/sale of
reference design and technology for the sensor.
7
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
OPERATIONAL UPDATE
Highlights:
• Achievement of successful measurement of central blood pressure using CardieX algorithm and Blumio
Sensor via Macquarie University study further validating commercial opportunity for the group – and a
significant milestone under the parties Joint Development Agreement (JDA);
• CardieX currently working on desktop app for Blumio/CDX algorithm as next milestone under the JDA –
scheduled for completion in Q1, FY2020;
• Results of validation trials between CardieX and Blumio announced at global IEEE Conference further
advancing and strengthening CardieX’s wearables and direct-to- consumer health strategy;
•
Initiation of 200-person Deborah study by Blumio to further develop Blumio’s continuous, non-invasive
blood pressure sensor. The Deborah study continues with anticipated completion late Q1 FY2020 - with
full data analysis to commence by Blumio at that stage. Forecast availability of commercial reference
design still on target for end of Q2/beginning of Q3; and
• Potential in Q4 FY2020 for initial revenues from chip and reference design sales related to the Blumio
sensor and JDA.
inHealth Medical (inHealth)
Major step forward in CardieX’s digital and consumer health strategy in agreement to acquire majority interest in
inHealth Medical Services, Inc in November 2018. With the companies to jointly pursue significant opportunities in
telehealth, digital and online patient care and health coaching – a US$25 billion industry.
Overview: Agreement allowing CardieX to invest in the telehealth services company in three tranches via a
Convertible note to acquire a 50.5% shareholding.
Strategic Value: inHealth provides digital telehealth solutions and health services that drive better health outcomes
for its healthcare, private practice, and insurance partners.
Partnering with inHealth provides the opportunity to leverage inHealth’s channels for CardieX’s cardiovascular
devices as well as giving ATCOR a digital health solution as part of a full cardiovascular health program.
Highlights:
• Delivering initial revenue and patient growth via multi-year Anthem telehealth services contract.; (NYSE
listed Anthem Inc (NYSE: ANTM) is a S&P 500 Company with US$65 billion market cap and one of the
largest health insurers in United States);
•
inHealth executes major 5-year co-marketing agreement with Anthem to jointly promote the services of
inHealth across Anthem’s customer network with a focus on Blue Cross Blue Shield Association of health
insurance providers;
• Signed multi-year contract to provide telehealth services to one of the world’s largest electronics and
medical device companies (GEMDC). Rollout to clinician partnerships is underway. Additional information
will be provided to the market when appropriate regarding this contract;
• CardieX converts Tranche 1 of convertible note for 7.70% of inHealth. Tranche 2 debt of $USD3M still
remains in place and is due and repayable (with interest) by inHealth to CardieX by 31 July 2020 (Maturity
Date) unless converted to equity by CardieX (at its option) on or before the Maturity Date;
8
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
OPERATIONAL UPDATE
•
If converted, Tranche 2 would increase CardieX’s shareholding in inHealth to 41.33%. CardieX also holds
a further option to acquire shares or invest further new capital to increase its shareholding to 50.5% of
inHealth;
• CardieX and inHealth announce landmark US study and collaboration on cardiovascular disease,
hypertension, and telehealth utilising ATCOR Medical’s SphygmoCor® technology;
• CardieX and inHealth announce collaboration on pilot program with leading Chinese telemedicine platform
Health160 to investigate the deployment of inHealth’s telehealth solutions in China, ~140M patient
interactions to date through their platform;
•
•
inHealth, Kaiser Permanente, and California State University Long Beach (CSULB) combine for one of
the largest diabetes lifestyle intervention studies to be undertaken using inHealth’s telehealth services.
Kaiser Permanente is one of the largest managed healthcare organisations in the USA; and
Launched hypertension pilot trial in Florida using SphygmoCor technology with collaboration from some
of the leading research institutes in the USA. This is the first consumer trial of ATCOR technology aimed
at showing a combined patient outcome with SphygmoCor technology and health coaching – further
advancing CardieX’s portfolio of health solutions.
Initial growth generated by inHealth since January 2019 and key achievements include:
•
inHealth practitioner sessions have increased 5X from December 2018;
• Revenue and margins per session are as forecast;
• Sales team being expanded to drive Private Practice growth; and
• GEMDC exclusive multi-year agreement signed and planned for implementation.
Chinese Operations, Business Development and Key Partnerships
Local operations and initial team established in China, rapidly accelerating CardieX’s vision of implementing central
blood pressure and related health technologies in the world’s largest population market. CardieX’s senior executive
team have completed a successful product and partnership roadshow in China and there are multiple
SphygmoCor® OEM partnerships under discussion – with NDAs executed.
CardieX’s China team reports directly to ZiHan (Zi) LI, VP of Corporate Development at CardieX. Zi previously
spearheaded the greater China market expansion efforts for Masimo (NASDAQ: MASI USD$8 Billion), where he
aggressively developed a renewed presence and growth in Masimo’s patient monitoring space, rapidly growing
their China operations threefold within three years.
Hypertension is a significant and growing market in China. The Company is focused on boosting growth in China
by building on existing in-hospital customer base and launching new technology partnerships to integrate ATCOR’s
cutting-edge central blood pressure technology in China’s rapidly growing health market and through providing
digital health and wearable solutions in partnership with leading Chinese digital and smart wearable companies.
Post-year end CardieX entered into a multi-year Agreement to co-develop consumer wearable applications in
partnership with Mobvoi Information Technology Co. Ltd (“Mobvoi”), Google’s official operating partner in China for
the development of smart-wearable solutions for Google’s Wear OS platform.
Mobvoi is one of the fastest growing AI and consumer electronic companies in China in the smart wearables
segment and CardieX will be the exclusive development partner in respect to the development of applications and
features related to “smart heart health” and related functions which will be derived from CardieX’s unique
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CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
OPERATIONAL UPDATE
algorithms. Development activities and commercial execution of the agreement will be undertaken by ATCOR
based on SphygmoCor® cardiovascular and hypertension algorithms and patents.
Business model, revenues, and commercialisation under the Agreement to be driven by a combination of licensing,
royalty and subscription services and are forecast to be revenue accretive to CardieX in FY2021.
Oversubscribed $5.5 Million Placement for inHealth Acquisition Completed
Completion of oversubscribed $5.5 million placement for the acquisition of inHealth, strong support from
preeminent Australian fund managers SG Hiscock and CVC Limited.
Cornerstone position from CEO Craig Cooper and Directors Niall Cairn taking $2.5 million of the placement, with
Chairman Donal O’Dwyer and CFO/Company Secretary Jarrod White also participating.
New Appointments and Board Restructure
To position CardieX for long-term growth and expansion into new markets, new appointments and senior executive
team changes were made. Board restructure and new appointments to support CardieX’s repositioning as a global
health technology provider with ongoing restructure focused on new growth opportunities.
•
Former Senior Vice President of Marketing for Masimo Chris Dax appointed as VP of Operations to drive
revenue and sales growth for ATCOR Medical. Chris has extensive pharmaceutical, biotech and medical
device, commercial and general management experience with a proven track record of exceeding
business and sales objectives;
• Doug Kurschinski promoted to Executive VP and Health of Global Sales of ATCOR Medical Division.
Doug was previously Senior Vice President and General Manager of ATCOR Medical where he led the
US sales team;
•
Former Masimo, Inc Executive ZiHan Li joins as Director of Corporate Development to head CardieX’s
Asian strategy with a focus on the Chinese market. ZiHan is driving the commercialisation of CardieX’s
cardiovascular technologies into new devices and technologies and is focused on expanding the
opportunity for CardieX’s products;
• Senior med-tech executive Antony Sloan appointed to the role of Global Head of Marketing and
Communications at CardieX. Antony’s previous roles include VP of Marketing and Communications at
global powerhouse Masimo (NASDAQ: MASI: USD$8 Billion). Antony is responsible for developing
marketing and sales initiatives to support CardieX’s sales and growth plans;
•
Former Johnson & Johnson (NASDAQ: JNJ: USD$344 Billion) healthcare executive Rhonda Welch was
appointed to the new role of Vice President of Global Marketing to manage new product initiatives and
clinical strategy earlier this year and has recently made an internal move to the role of Vice President of
Health Economics. In this role, Rhonda is focused on health insurance reimbursement clinical trial
management, and overseeing the Company’s initiatives to drive market and healthcare service adoption
of CardieX’s core technologies and health services;
• Sean Merritt, PhD former Director of Research and Product at Cercacor, and Algorithm Engineer at
Masimo was appointed Director of Product Innovation. Sean will support CardieX as the Company rapidly
moves forward with new product development and partnerships in both consumer and clinical device
markets;
10
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
OPERATIONAL UPDATE
• Niall Cairns appointed Executive Chairman, previously non-executive director and joined the Board of
inHealth. A Sydney-based growth investor, Niall has a 25-year track record of value creation restructuring
and has assisted the growth of over 50 companies. Niall is a director and shareholder of C2 Ventures Pty
Ltd, CardieX’s largest shareholder; and
• Search has commenced for new Non-Executive Director to support and assist with the strategic growth
of the company.
Trials and Healthcare Policy Initiatives
• Clinical abstract detailing extraction of central pressure waveforms from Blumio sensor using CardieX
technology accepted for presentation at upcoming 2019 Asia-Pacific Congress on Hypertension;
•
First Healthcare & Insurance Economics Report on CardieX ‘s central pressure technology anticipated
Q2;
• Establishment of Hypertension Steering Committee headed by Rhonda Welch and Chis Dax together with
key opinion leaders and medical advisors;
• New USA health guidelines announced which significantly increase CardieX’s addressable market with
upwards of 45% of US adults now considered to have hypertension and being at risk for cardiovascular
disease;
• ATCOR Medical’s SphygmoCor® technology used for central blood pressure monitoring in a clinical study
published by the Clinical and Experimental Hypertension Journal. Clinical study led by the prestigious
Shanghai Jiatong School of Medicine in China; and
• CardieX wins major contract to supply SphygmoCor® system for international pharmaceutical trial to
assess heart failure treatment. AstraZeneca AB group are managing the trial which is seen as the first
phase of a larger commercial opportunity for CardieX group.
Corporate
The Company’s corporate website was updated to www.cardiex.com to reflect the change of name of the Company
to CardieX and its new strategic direction. This follows the Company’s change of listing code in June 2018 from
ACG to CDX.
Receipt of Subscription Proceeds from C2 Ventures
• Receipt of subscription proceeds of $1,500,000 from C2 Ventures, a related party of CEO Craig Cooper
and Executive Chairman Niall Cairns; and
•
•
Funds used to further execute against strategic direction of the Company.
Corporate Conferences and Investor Relations Programme
CardieX attended several conferences during the year including CES2019, A4M World Congress, ASN Kidney
Week 2018, American College of Sports Medicine Annual Meeting, ACPM Preventative Medicine 2018, and the
Renal Physicians 2018 Annual Meeting.
CardieX also conducted several roadshows across major Australian cities and held several investor presentations
for investor broker and institutional networks.
11
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
DIRECTORS’ REPORT
The Directors of CardieX Limited (the “Company”) submit the financial report of the Company for the year ended
30 June 2019, which comprises the results of CardieX Limited and the entities it controlled during the period (the
“Group”).
Review of Operations
The loss for the Group after income tax amounted to $2,979,278 (30 June 2018: $2,961,225).
The Group has generated total revenue of $4,062,091, up from $4,022,554 in the previous year.
Principal Activities
During the year the principal continuing activities of the Group consisted of designing, manufacturing and marketing
medical devices for use in cardiovascular health management.
Dividends
No dividends were paid or declared by the Group since the end of the previous financial year and the Directors do
not recommend dividends be paid for the year ended 30 June 2019.
Significant Changes in the State of Affairs
There were no significant changes in the state of affairs of the Group not outlined in the Review of Operations.
Likely Developments and Expected Results of Operations
Further information on likely developments in the operations of the Group and the expected results of operations
have not been included in this annual financial report because the directors believe it would be likely to result in
unreasonable prejudice to the Group.
Matters Subsequent to Year End
Subsequent to balance date the Group announced the following material events:
• Chris Dax was appointed as the President of ATCOR Medical;
• Antony Sloan was appointed as the Global Head of Marketing and Communications;
• Rhonda Welch was appointed to the newly created position of VP of Health Economics; and
•
The Company entered into a multi-year Agreement to co-develop consumer wearable applications in
partnership with Mobvoi Information Technology Co. Ltd (“Mobvoi”), Google’s official operating partner in
China for the development of smart-wearable solutions for Google’s Wear OS platform.
No other significant subsequent event has arisen that significantly affects the operations of the Group.
12
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (CONT.)
Directors
The following persons held office as Directors of CardieX Limited at any time during or since the end of the financial
year:
Mr. Niall Cairns (appointed Executive Chairman 27 February 2019)
Mr. King Nelson
Mr. Craig Cooper
Mr. Donal O’Dwyer (resigned 27 February 2019)
Company Secretary and Chief Financial Officer
Mr. Jarrod White
Information on Directors
Mr. Niall Cairns
Non-executive Director and Executive Chairman
Qualifications:
Appointed:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Mr. King Nelson
Non-executive Director
Qualifications:
Appointed:
Experience and expertise:
B.Ec, CA and FAICD
20 December 2017, appointed Chairman on 27 February 2019
Mr Cairns is a Sydney based technology growth investor with over 25
years of track record of value creation, restructuring, and exits in both
listed and unlisted companies having assisted in driving the global
growth of over 50 companies in sectors as diverse as digital media,
Agtech, Medtech, consumer Internet, and SaaS based businesses.
Niall is currently the Chairman of ComOps Limited and a non-
executive director of Chant West Holdings and Tru-Test Limited.
Tru-Test Corporation Limited, Kestrel Growth Companies Limited,
Chant West Holdings Limited and ComOps Limited.
None.
•
•
•
Chairman of the Board.
Chairman of the audit and risk committee.
Member of remuneration and nomination committee.
BA, MBA
13 November 2015
King was elected to the Board in November 2015. He brings more
than 30 years of diverse experience and expertise with medical
devices. He is a former President and CEO of Uptake Medical
Corporation, a company focused on treatments for emphysema and
lung cancer. Previously, he served as president and CEO of
Kerberos Proximal Solutions, which was acquired by FoxHollow
Technologies, and as president and CEO of VenPro, a heart valve
business acquired by Medtronic. Both these companies specialized
in devices for the cardiovascular system. Prior to that, he spent 19
years with Baxter International and American Hospital Supply
Corporation in roles of increasing responsibility that included division
president for Dade Diagnostics, Bentley Labs, and Baxter’s Perfusion
Services.
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
None.
Uptake Medical Corporation
•
•
Chair of remuneration and nomination committee.
Member of audit and risk committee.
13
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (CONT.)
Mr. Craig Cooper
Executive Director, Chief Executive Officer
Qualifications:
Appointed:
Experience and expertise:
B.Ec, LLB (Hons)
1 December 2017
Mr Cooper was appointed as Chief Executive Officer effective 1
December 2017. Mr Cooper has founded multiple successful health,
digital media, technology, and wellness businesses – and was also
the co-founder of the telecommunications company Boost Mobile -
one of the leading mobile phone business in the USA. He is
recognised as a global expert and thought leader in mobile and
wireless technology as well as digital health and med-tech-related
businesses. His venture capital funds have raised over A$1 billion in
capital and have funded some of the most significant global digital
media technology companies including Buzzfeed and The Huffington
Post.
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
None.
None.
None.
Meetings of Directors
The number of meetings of the Group’s Board of Directors and of each Board Committee held during the financial
year ended 30 June 2019 and the number of meetings attended by each Director were:
Director
Niall Cairns
King Nelson
Craig Cooper
Donal O’Dwyer
Directors Meetings
Held Whilst in Office
Attended
7
7
7
4
7
6
7
4
Directors’ Interests
Information on the Directors’ and their associates’ interests in shares and options of the Company at 30 June 2019
can be found in the Remuneration Report on page 16.
Shares Issued on the Exercise of Options
During the financial year ended 30 June 2019, there were no shares issued to Directors on the exercise of options.
Environmental Regulations
The Group’s operations are not regulated by any significant environmental regulation under a law of the
Commonwealth or of a state or territory.
Indemnity and Insurance of Directors and Officers
During the financial year the Group paid premiums in respect of a contract insuring Directors and Executives
against a liability incurred in the ordinary course of business.
14
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
DIRECTORS’ REPORT (CONT.)
Proceedings on Behalf of the Company
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any
proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for
all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Corporate Governance Statement
A copy of the Corporate Governance Statement has not been disclosed within the Annual Report but is available
on the website http://www.CardieX.com in accordance with the ASX Listing Rule 4.10.3.
Declaration by Directors
Before it approved the Company’s 2019 financial statements, the Board was satisfied that the financial records
have been properly maintained and that the financial statements comply with the appropriate accounting standards
and give a true and fair view of the financial position and performance of the Group, and their opinion has been
formed on the basis of a sound system of risk management and internal control which is operating effectively.
Non-audit Services
The Directors received the Auditor’s Independence Declaration under s.307 of the Corporations Act 2001, which
is set out on page 21. The external auditor did not provide non-audit services to the Company during the year
ended 30 June 2019.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor
of the Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
Officers of the Company who are former partners of BDO
There are no officers of the Company who are former partners of BDO.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is
set out on page 21.
15
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
REMUNERATION REPORT
This report outlines the remuneration arrangements in place for Directors and executives of CardieX Limited. The
information in this report has been audited as required by 308(3C) of the Corporations Act 2001.
Principles used to determine the nature and amount of remuneration
Non-executive directors
Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of,
the directors. Non-executive directors’ fees and payments are reviewed annually by the Board. The Board also
refers to external surveys to ensure non-executive directors’ fees and payments are appropriate and in line with
the market. The Chairman’s fees are determined independently to the fees of non-executive directors based on
comparative roles in the external market. The Chairman is not present at any discussions relating to determination
of his own remuneration. Non-executive directors are entitled to receive share options, following approval by the
shareholders of CardieX Limited.
Non-executive directors’ fees are determined within an aggregate directors’ fee pool limit, which is periodically
recommended for approval by shareholders. The pool was increased to $360,000 at the 2015 shareholder meeting,
excluding share-based payments that are subject to separate shareholder approval.
Executives
The objective of the Group’s executive reward framework is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework aligns executive reward with achievement of strategic
objectives and the creation of value for shareholders.
The Board ensures that executive reward satisfies the following key criteria for good reward governance practices:
•
•
•
•
•
competitiveness and reasonableness;
acceptability to shareholders;
performance linkage / alignment of executive compensation;
transparency; and
capital management.
Alignment to shareholders’ interests:
•
•
•
has Company growth as a core component of plan design;
focuses on sustained long-term growth in shareholder wealth; and
attracts and retains high calibre executives.
Alignment to program participants’ interests:
rewards capability and experience;
•
reflects competitive reward for contribution to growth in Company value;
•
provides a clear structure for earning rewards; and
•
provides recognition for contribution.
•
The Chief Executive Officer has been issued with 24 million performance rights in the year that will vest across 3
equal tranches subject to incremental improvements in the Company’s share price. All other directors and key
management personnel are on fixed remuneration as befitting their non-executive status.
Details of the nature and amount of each element of the emoluments of each Director of CardieX Limited are set
out below.
Directors
Names and positions held of key management personnel in office at any time during the financial year are:
Mr. Niall Cairns
Mr. King Nelson
Mr. Craig Cooper
Mr. Donal O’Dwyer
Executive Director and Chairman (appointed as Chairman 27 February 2019)
Non-executive Director
CEO and Executive Director
Non-executive Director and Chairman (resigned 27 February 2019)
16
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
REMUNERATION REPORT (CONT.)
Key Management Personnel Compensation
Salary and
directors fees
Share Based
Payment Benefits
Post-Employment
Benefits
2019
Niall Cairns
King Nelson
Craig Cooper
Donal O’Dwyer2
Total Compensation
2018
Donal O’Dwyer
Niall Cairns
King Nelson
Craig Cooper
David Brookes1
Duncan Ross1
Michael O’Rourke1
Total Compensation
$
$
84,000
30,270
419,255
33,486
567,011
50,228
28,000
27,955
225,863
18,949
179,830
9,513
540,338
64,702
64,702
431,769
-
561,173
-
-
-
4,466
-
-
-
4,466
$
-
-
-
3,181
3,181
4,772
-
-
-
3,551
13,439
904
22,666
Total
$
148,702
94,972
851,024
36,667
1,131,365
55,000
28,000
27,955
230,329
22,500
193,269
10,417
567,470
1. Ceased to be key management personnel in FY2018.
2. Ceased to be key management personnel in FY2019.
Shares Held by Key Management Personnel and Their Associates
Donal O’Dwyer
Niall Cairns
King Nelson
Craig Cooper
Total
Balance
01 July 2018
12,178,627
78,000,000
153,846
75,000,000
165,332,473
Share split
Additions
Balance
30 June 2019
-
12,178,6274
54,616,7693
132,616,769
-
153,846
62,616,7693
137,616,769
117,233,538
282,566,011
-
-
-
-
-
3. A total of 54,616,769 shares acquired by Mr Cairns and Mr Cooper in the year are indirectly held by C2 Ventures, in
which Mr Cairns and Mr Cooper are directors. These shares are subject to the Restriction Agreement and Deed of
Undertaking as approved by members at the Extraordinary General Meeting held on 28 May 2018.
4. Held at date of resignation.
17
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
REMUNERATION REPORT (CONT.)
Shares Held by Key Management Personnel and Their Associates
Donal O’Dwyer
Niall Cairns
King Nelson
Craig Cooper
David Brookes
Duncan Ross
Michael O’Rourke
Total
Balance
01 July 2017
6,067,517
3,000,0001
153,846
-1
1,469,264
4,603,052
10,641,396
25,935,075
Share split
Additions
Balance
6,111,110
75,000,0002
-
75,000,0002
555,555
-
30 June 2018
12,178,627
78,000,000
153,846
75,000,000
2,024,8193
4,603,0523
925,925
11,567,3213
157,592,590
183,527,665
-
-
-
-
-
-
-
-
1.
2.
Shares held at date of appointment.
Shares acquired by Mr Cairns and Mr Cooper in the year are indirectly held by C2 Ventures, in which Mr Cairns and
Mr Cooper are directors. These shares are subject to the Restriction Agreement and Deed of Undertaking as
approved by members at the Extraordinary General Meeting held on 28 May 2018.
3. Held at date of resignation and ceased to be key management personnel in FY2018.
Options Held by Key Management Personnel and Their Associates
Niall Cairns
King Nelson
Craig Cooper
Donal O’Dwyer
Total
Balance
01 July 2018
37,500,000
450,000
37,500,000
3,150,000
78,600,000
Share split
Additions
Balance
1,500,000
1,500,000
-
-
30 June 2019
39,000,0005
1,950,000
37,500,0005
3,150,0004
3,000,000
81,600,000
-
-
-
-
-
4. Held at date of resignation.
5. Directors Mr Cairns and Mr Cooper hold 37,500,000 options indirectly through C2 Ventures Pty Limited, of which
they are both directors.
18
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
REMUNERATION REPORT (CONT.)
Options Held by Key Management Personnel and Their Associates
Donal O’Dwyer
Niall Cairns
King Nelson
Craig Cooper
David Brookes
Duncan Ross
Michael O’Rourke
Total
Balance
01 July 2017
650,000
-1
450,000
-1
450,000
3,100,000
450,000
5,100,000
Share split
Additions
Balance
2,500,000
37,500,0002
-
37,500,0002
-
-
-
30 June 2018
3,150,000
37,500,000
450,000
37,500,000
450,0003
3,100,0003
450,0003
77,500,000
82,600,000
-
-
-
-
-
-
-
-
1. Options held at date of appointment.
2. Options acquired by Mr Cairns and Mr Cooper in the year are indirectly held by C2 Ventures, in which Mr Cairns
and Mr Cooper are directors. These options are subject to the Restriction Agreement and Deed of Undertaking as
approved by members at the Extraordinary General Meeting held on 28 May 2018.
3. Held at date of resignation.
4. Options acquired by key management personnel and their associates in the year related are free attaching options
on shares purchased.
Performance Rights Held by Key Management Personnel and Their Associates
Mr Craig Cooper holds 36 million performance rights which vest subject to a set of Milestones as follows:
Number of
performance rights
Will vest if 30 Day
VWAP exceeds:
Tranche 2
Tranche 3
Tranche 4
Tranche 5
Tranche 6
8 million
8 million
4 million
4 million
12 million
$0.08
$0.12
$0.08
$0.12
$0.15
Expiry Date of
Performance
Milestone
28/05/2021
28/05/2021
06/03/2022
06/03/2022
06/03/2022
Employment Agreements
Remuneration and other terms of employment for the CEO and the other key management personnel are
formalised in employment agreements. Each of these agreements provide for the provision of performance related
cash bonuses, other benefits including health insurance and car allowances, and participation, when eligible, in the
Cardiex Limited Employee Share Option Plan. Other major provisions of the agreements relating to remuneration
are set out below.
All contracts with executives may be terminated early by either party with variable notice periods, subject to
termination payments as detailed below.
Craig Cooper – Chief Executive Officer
• Agreement commenced on 1 December 2017.
• Base salary of US$300,000 per annum.
• Reimbursement for reasonable expenses incurred in running the US business, paid on a monthly basis
up to US$5,000 per month.
19
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
REMUNERATION REPORT (CONT.)
Niall Cairns – Executive Chairman and Director
• Agreement commenced with an effective date of 1 March 2018.
• Monthly consulting fee for strategic review and consulting services of AU$7,000 per month.
• Reimbursement for reasonable expenses incurred.
Loans to Directors and Key Management Personnel
There were no loans made to directors or key management personnel of the Company and the Group during the
period commencing at the beginning of the financial year and up to the date of this report.
Signed in accordance with a resolution of the Board of Directors, made pursuant to s.298(2) of the
Corporations Act 2001.
______________
Niall Cairns
Executive Chairman
Sydney, 27 September 2019
20
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY GRANT SAXON TO THE DIRECTORS OF CARDIEX LIMITED
As lead auditor of CardieX Limited for the year ended 30 June 2019, I declare that, to the best of my
knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of CardieX Limited and the entities it controlled during the period.
Grant Saxon
Partner
BDO East Coast Partnership
Sydney, 27 September 2019
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation.
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR YEAR ENDED 30 JUNE 2019
Sales revenue
Other revenue
Other income
Total income
Cost of sales
Bad debts expense
Inventory impairment expense
Marketing and sales expense
Product development and regulatory expense
Occupancy expense
Administration expense
Share based payments
Depreciation
Interest expense
Foreign exchange gain/(loss)
Loss before income tax expense
Income tax expense
Loss attributable to members of the parent entity
Other comprehensive income
Items that will be reclassified subsequently to profit or
loss when specific conditions are met:
Exchange differences on translating foreign operations
Total comprehensive loss for the period
Basic loss per share (cents)
Diluted loss per share (cents)
Note
2
2
3
5
7
7
2019
$
3,907,093
154,998
4,062,091
831,957
4,894,048
(804,401)
(32,705)
(55,792)
(2,144,126)
(1,476,796)
(296,087)
(2,135,301)
(864,714)
(116,515)
(99,447)
152,558
(2,979,278)
-
2018
$
4,006,091
16,463
4,022,554
418,368
4,440,922
(881,770)
(133,308)
(58,572)
(2,433,348)
(1,543,420)
(216,528)
(1,712,510)
(4,466)
(61,174)
(15,348)
(341,703)
(2,961,225)
-
(2,979,278)
(2,961,225)
(35,917)
423,940
(3,015,195)
(2,537,285)
(0.5)
(0.5)
(1.0)
(1.0)
These financial statements should be read in conjunction with the accompanying notes.
22
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019
Note
2019
$
2018
$
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventory
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Financial assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Contract liabilities
Provisions
Financial liabilities
Contract lease liabilities
Borrowings
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
Financial liabilities
Contract lease liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
4,980,826
1,014,967
218,930
741,751
6,956,474
613,351
44,183
5,597,966
6,255,500
2,736,517
1,113,219
490,362
1,774,152
6,114,250
97,079
-
202,578
299,657
13,211,974
6,413,907
498,448
861,884
346,119
3,350,920
97,498
-
5,154,869
21,741
778,202
306,227
1,106,170
6,261,039
6,950,935
986,724
188,503
409,203
-
-
185,000
1,769,430
48,264
-
-
48,264
1,817,694
4,596,213
8
9
10
11
13
17
14
15
16
18
19
16
18
19
23
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019 (CONT.)
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Note
20
21
23
2019
$
2018
$
51,500,876
46,832,833
1,613,332
1,571,498
(46,163,273)
(43,808,118)
6,950,935
4,596,213
These financial statements should be read in conjunction with the accompanying notes.
24
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED 30 JUNE 2019
Shares on
Issue
Note
Reserves Accumulated
Total
$
$
losses
$
$
Balance at 1 July 2017
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with equity holders in their
capacity as owners.
Capital placement
Share issue costs
Options issued
Options expired
41,126,573
2,327,448
(42,125,535)
1,328,486
-
-
-
-
(2,961,225)
(2,961,225)
423,940
-
423,940
423,940
(2,961,225)
(2,537,285)
6,237,056
(530,796)
-
-
-
-
98,752
-
-
-
6,237,056
(530,796)
98,752
(1,278,642)
1,278,642
-
5,706,260
(1,179,890)
1,278,642
5,805,012
Balance at 30 June 2018
46,832,833
1,571,498
(43,808,118)
4,596,213
Balance at 1 July 2018
Loss for the year
Other comprehensive loss
Total comprehensive income for the year
Transactions with equity holders in their
capacity as owners.
46,832,833
1,571,498
(43,808,118)
4,596,213
-
-
-
-
(2,979,278)
(2,979,278)
(35,917)
-
(35,917)
(35,917)
(2,979,278)
(3,015,195)
Capital placement
20
3,002,200
Shares issued on conversion of convertible
notes
Share issue costs
Share based payments
Options issued
-
-
-
1,630,780
(251,937)
63,000
801,714
-
-
-
-
-
-
-
3,002,200
1,630,780
(251,937)
864,714
-
-
Rights and options exercised / expired
224,000
(848,123)
624,123
Convertible notes issued
Balance at 30 June 2019
-
124,160
-
124,160
51,500,876
1,613,332
(46,163,273)
6,950,935
These financial statements should be read in conjunction with the accompanying notes.
25
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF CASH FLOWS FOR YEAR ENDED 30 JUNE 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Other income
Interest received
Interest paid
Note
2019
$
2018
$
4,646,020
(7,124,656)
(2,478,636)
185,239
2,624
-
4,316,651
(6,959,455)
(2,642,804)
603,369
16,463
(15,348)
Net cash used in operating activities
24
(2,290,773)
(2,038,320)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments to acquire property, plant and equipment
Payments for intangible assets
Payments for convertible notes
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from shares issued
Share issue costs
Finance lease payments
Net proceeds from convertible notes
Net cash provided by financing activities
Net increase in cash held
Cash and cash equivalents at beginning of financial year
Effects of foreign currency exchange
(203,849)
(45,415)
(1,916,386)
(2,165,650)
4,502,199
(251,937)
(49,530)
2,500,000
6,700,732
2,244,309
2,736,517
-
(4,916)
-
(202,578)
(207,494)
4,834,825
(530,796)
-
-
4,304,029
2,058,215
677,917
385
Cash and cash equivalents at end of financial year
8
4,980,826
2,736,517
These financial statements should be read in conjunction with the accompanying notes.
26
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial report includes the consolidated financial statements and notes of CardieX Limited and controlled
entities (‘Consolidated Group’ or ‘Group’). The separate financial statements and notes of CardieX Limited as an
individual parent entity (‘Company’) have not been presented within the financial report as permitted by the
Corporations Act 2001. CardieX Limited is a for-profit entity.
The financial statements were authorised for issue on 27 September 2019 by the directors of the Company.
Basis of Preparation
The financial report is a general purpose financial report that has been prepared in accordance with Australian
Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the
Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a
financial report containing relevant and reliable information about transactions, events and conditions to which
they apply. Compliance with Australian Accounting Standards ensures that the financial statements and notes
also comply with International Financial Reporting Standards. Material accounting policies adopted in the
preparation of this financial report are reported below. They have been consistently applied unless stated
otherwise. All applicable new accounting standards have been adopted for the year ended 30 June 2019 unless
otherwise stated and their adoption did not have a significant impact on the financial performance or position of
the consolidated entity.
The financial report has been prepared on an accruals basis and is based on historical costs, modified, where
applicable, by the measurement at fair value of selected non-current assets, financial assets and financial
liabilities.
Accounting Policies
a.
Going Concern
The financial statements have been prepared on the going concern basis, which contemplates continuity
of normal business activities and the realisation of assets and the discharge of liabilities in the normal
course of business.
At the date of signing, the Directors have assessed that there is a material uncertainty related to going
concern that may cast significant doubt over the ability of the Group to continue as a going concern given
that the Group incurred a loss after tax of $2,979,278 (2018: $2,961,225) and had net cash outflows from
operating activities of $2,433,581 for the year ended 30 June 2019 (2018: $2,038,320). As a result of these
conditions the Group may be unable to realise its assets and discharge its liabilities in the normal course
of business.
The Directors believe that there are reasonable grounds that the Group will be able to continue as a going
concern, after consideration of the following factors:
•
•
•
The Group has cash and cash equivalents of $4,980,826 as at 30 June 2019 (2018: $2,736,517).
As at that date, the Group had net current assets of $1801,605 (2018: $4,344,820) and net assets
of $6,950,935 (2018: $4,596,213). The Group has performed a cash flow forecast and determined
that it has adequate cash resources in place to fund its operations for the next 12 months, subject
to additional capital raisings taking place.
If required, the Group has the ability to continue to raise additional funds on a timely basis
pursuant to the Corporations Act 2001. The Group has raised in excess of $5.5 million in the
previous 12-month reporting period and the Directors have no reason to believe that it will not
be able to continue to source equity or alternative funding if required; and
The Group has the ability to scale back a significant portion of its development activities if
required.
27
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
a.
b.
Going Concern (Cont.)
Accordingly, the Directors believe that the Group will be able to continue as a going concern, and that it is
appropriate to adopt the going concern basis in the preparation of the financial report.
Principles of Consolidation
A controlled entity is any entity CardieX Limited has the power to control the financial and operating policies
of so as to obtain benefits from its activities.
A list of controlled entities is contained in Note 12 to the financial statements. All controlled entities have a
30 June 2019 financial year-end for this current year.
As at the reporting date, the assets and liabilities of all controlled entities have been incorporated into the
consolidated financial statements as well as their results for the year ended.
All inter-company balances and transactions between entities in the Group, including any unrealised profits
or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed
where necessary to ensure consistencies with those policies applied by the Company.
Where controlled entities have entered or left the Group during the year, their operating results have been
included/excluded from the date control was obtained or until the date control ceased.
c.
Revenue Recognition
To determine whether to recognise revenue and what price, the Company follows a 5-step process:
1.
2.
3.
4.
5.
Identifying the contract with a customer
Identifying the performance obligations
Determining the transaction price
Allocating the transaction price to the performance obligations
Recognising revenue when/as performance obligation(s) are satisfied.
Total transaction price for a contract is allocated amongst the various performance obligations based on
their relative stand-alone selling prices. The transaction price for a contract excludes any amounts collected
on behalf of third parties.
Revenue is recognised either at a point in time or over time, when (or as) the Company satisfies
performance obligations by transferring the promised goods or services to its customers.
The Company recognises contract liabilities for consideration received in respect of unsatisfied
performance obligations and reports these amounts as other liabilities in the statement of financial position.
Similarly, if the Company satisfies a performance obligation before it receives the consideration, the
Company recognises either a contract asset or a receivable in its statement of financial position, depending
on whether something other than the passage of time is required before the consideration is due.
The Company has identified the following revenue streams:
Sale of goods
Sale of goods revenue is recognised at the point of sale, which is where the customer has taken delivery
of the goods, the control is transferred to the customer and there is a valid sales contract. Amounts
disclosed as revenue are net of sales returns and trade discounts.
Lease income
The Group earned lease income from both finance and operating lease of goods, and continues to
recognise related income in line with AASB 16 Leases.
28
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
c.
Revenue Recognition (Cont.)
For operating leases the lease income and interest in relation to the goods are recognised over time per
the terms set in the contract with the customer.
For goods sold on a finance lease, income is recognised at the point of sale, which is where the customer
has taken delivery of the goods, the control is transferred to the customer and there is a valid sales contract.
Any associated interest income is recognised over the life of the lease in line with the terms set in the
contract with the customer.
Service income
Service income is recognised over time in line with management’s assessment of the performance
obligations under each contract.
Freight income
Freight income is recognised when the control is transferred to the customer and there is a valid sales
contract.
Royalty income
Royalty income is recognised when entitled under royalty agreements.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
d.
Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any
accumulated depreciation and impairment losses.
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful lives to
the Group commencing from the time the asset is held ready for use.
The useful lives used for depreciable assets are:
Class of Fixed Asset
Manufacturing plant and equipment
Furniture, fixtures and equipment
Devices leased to customers
Useful lives
3 – 10 years
3 – 5 years
3 – 4 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance
sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These
gains and losses are included in the Statement of Profit or Loss and Other Comprehensive Income.
e.
Impairment of Assets
At each reporting date, the Group reviews the carrying values of its tangible assets to determine whether
there is any indication that those assets have been impaired. If such an indication exists, the recoverable
amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is
compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable
amount is expensed to the Statement of Profit or Loss and Other Comprehensive Income.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
29
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
f.
Financial Instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when the Company becomes a party to the
contractual provisions of the financial instrument and are measured initially at fair value adjusted by
transactions costs, except for those carried at fair value through profit or loss, which are measured initially
at fair value. Subsequent measurement of financial assets and financial liabilities are described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset
expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial
liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and subsequent measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are
measured at the transaction price in accordance with AASB 9, all financial assets are initially measured
at fair value adjusted for transaction costs (where applicable).
Hybrid contracts
If a hybrid contract contains a host that is a financial asset, the policies applicable to financial assets are
applied consistently to the entire contract.
Subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets, other than those designated and effective
as hedging instruments, are classified into the following categories upon initial recognition:
•
•
•
•
financial assets at amortised cost
financial assets at fair value through profit or loss (FVPL)
debt instruments at fair value through other comprehensive income (FVOCI)
equity instruments at fair value through other comprehensive income (FVOCI)
Classifications are determined by both:
•
•
the entity’s business model for managing the financial asset
the contractual cash flow characteristics of the financial assets
All income and expenses relating to financial assets that are recognised in profit or loss are presented
within finance costs, finance income or other financial items, except for impairment of trade receivables
which is presented within other expenses.
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not
designated as FVPL):
•
•
they are held within a business model whose objective is to hold the financial assets and collect
its contractual cash flows
the contractual terms of the financial assets give rise to cash flows that are solely payments of
principal and interest on the principal amount outstanding
After initial recognition, these are measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The Company’s cash and cash
equivalents, trade and most other receivables fall into this category of financial.
30
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
f.
Financial Instruments (Cont.)
Financial assets at fair value through profit or loss (FVPL)
Financial assets that are held within a business model other than ‘hold to collect’ or ‘hold to collect and sell’
are categorised at fair value through profit and loss. Further, irrespective of business model, financial
assets whose contractual cash flows are not solely payments of principal and interest are accounted for at
FVPL. All derivative financial instruments fall into this category, except for those designated and effective
as hedging instruments, for which the hedge accounting requirements apply.
Debt instruments at fair value through other comprehensive income (Debt FVOCI)
Financial assets with contractual cash flows representing solely payments of principal and interest and
held within a business model of collecting the contractual cash flows and selling the assets are accounted
for at FVOCI. Any gains or losses recognised in OCI will be recycled upon derecognition of the asset.
Equity instruments at fair value through other comprehensive income (Equity FVOCI)
Investments in equity instruments that are not held for trading are eligible for an irrevocable election at
inception to be measured at FVOCI. Under this category, subsequent movements in fair value are
recognised in other comprehensive income and are never reclassified to profit or loss. Dividend income is
taken to profit or loss unless the dividend clearly represents return of capital.
Impairment of Financial assets
AASB 9’s new impairment model use more forward looking information to recognize expected credit losses
- the ‘expected credit losses (ECL) model’. The application of the new impairment model depends on
whether there has been a significant increase in credit risk.
The Company considers a broader range of information when assessing credit risk and measuring
expected credit losses, including past events, current conditions, reasonable and supportable forecasts
that affect the expected collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
•
•
financial instruments that have not deteriorated significantly in credit quality since initial
recognition or that have low credit risk (‘Stage 1’) and
financial instruments that have deteriorated significantly in credit quality since initial recognition
and whose credit risk is not low (‘Stage 2’).
‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.
‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’
are recognised for the second category. Measurement of the expected credit losses is determined by a
probability-weighted estimate of credit losses over the expected life of the financial instrument.
Trade and other receivables and contract assets
The Company makes use of a simplified approach in accounting for trade and other receivables as well as
contract assets and records the loss allowance at the amount equal to the expected lifetime credit losses.
In using this practical expedient, the Company uses its historical experience, external indicators and
forward-looking information to calculate the expected credit losses using a provision matrix.
The Company assess impairment of trade receivables on a collective basis as they possess credit risk
characteristics based on the days past due.
All financial assets, except for those at fair value through profit or loss (FVPL) and equity investments at
fair value through other comprehensive income (equity FVOCI), are subject to review for impairment at
least at each reporting date to identify whether there is any objective evidence that a financial asset or a
group of financial assets is impaired.
31
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
f.
Financial Instruments (cont.)
Financial assets at fair value through other comprehensive income
The Company recognises 12 months expected credit losses for financial assets at FVOCI. As most of these
instruments have a high credit rating, the likelihood of default is deemed small. However, at each reporting
date the Company assesses whether there has been a significant increase in the credit risk of the
instrument.
In assessing these risks, the Company relies on readily available information such as the credit ratings
issued by the major credit rating agencies for the respective asset. The Company only holds simple
financial instruments for which specific credit ratings are usually available. In the unlikely event that there
is no or only little information on factors influencing the ratings of the asset available, the Company would
aggregate similar instruments into a portfolio to assess on this basis whether there has been a significant
increase in credit risk.
In addition, the Company considers other indicators such as adverse changes in business, economic or
financial conditions that could affect the borrower’s ability to meet its debt obligation or unexpected changes
in the borrowers operating results.
Should any of these indicators imply a significant increase in the instrument’s credit risk, the Company
recognises for this instrument or class of instruments the lifetime expected credit losses.
Classification and measurement of financial liabilities
As the accounting for financial liabilities remains largely unchanged from AASB 139, the Company’s
financial liabilities were not impacted by the adoption of AASB 9. However, for completeness, the
accounting policy is disclosed below.
The Company’s financial liabilities include borrowings, trade and other payables and derivative financial
instruments.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs
unless the Company designated a financial liability at fair value through profit or loss. Subsequently,
financial liabilities are measured at amortised cost using the effective interest method except for derivatives
and financial liabilities designated at FVPL, which are carried subsequently at fair value with gains or losses
recognised in profit or loss (other than derivative financial instruments that are designated and effective as
hedging instruments).
Employee Benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by
employees to balance date. Employee benefits that are expected to be settled within one year have been
measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later
than one year have been measured at the present value of the estimated future cash flows to be made for
those benefits. Those cash flows are discounted using market yields on national government bonds with
terms to maturity that match the expected timing of the cash flows.
Leases
AASB 16 was issued in February 2016 for adoption from January 2019. The Group has decided to early
adopt the standard from 1 July 2018. It has resulted in almost all the Group’s leases being recognised on
the statement of financial position as right-of-use assets, as the distinction between operating and finance
leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial
liability to pay rentals are recognised. The only exceptions are short-term and low-value leases.
g.
h.
32
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
h.
Leases (cont.)
The Group has applied AASB 16 using the modified retrospective approach and therefore the comparative
information has not been restated and continues to be reported under the preceding standard, AASB 117
Leases.
Where a lease is identified at inception, the Group recognises a right-of-use asset and a lease liability at
the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the
ignition amount of the lease liability adjusted for any lease payments made at or before the commencement
date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying
asset or to restore the underlying asset or the site on which it is location, less any leased incentives
received.
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group
recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements
in which it is the lessee, except for short-term leases (defined at leases with a lease term of 12 months or
less) and leases of low value assets. For these leases, the Group recognises the lease payments as an
operating expense son a straight-line basis over the term of the lease unless another systematic basis is
more representative of the time pattern in which economic benefits from the leased assets are consumed.
The Group used the following practical expedients when applying AASB 16 to leases previously classified
as operating leases under AASB117.
• Applied the exemption not to recognise right-of-use assets and liabilities for leases with less than
12 months of lease term.
• Excluded initial direct costs from measuring the right-of-use asset at the date of initial acquisition.
• Used hindsight when determining the lease term if the contract contains options to extend or
terminate the lease.
i.
Equity-Settled Compensation
There has been no equity based compensation with the exception of that described in Note 20. The capital
subscribed to as per this note was acquired at fair value at the time of purchase.
Options issues have their fair value determined with reference to an approved valuation methodology, such
as the Black-Scholes valuation method. On issue, the fair value of an option is taken to the Income
Statement as equity settled compensation, with a corresponding credit to the options reserve. This is then
disclosed as other comprehensive income in the Statement of Comprehensive Income to show other net
profit position of the Group from a third party perspective.
Shares have their value determined using the direct method of share price at date of issue multiplied by
the number of shares issued.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term
highly liquid investments with original maturities of three months or less.
Trade and Other Receivables
Trade receivables are recognised when the control of ownership of the underlying sales transactions have
passed to the customer in the ordinary course of business. Trade receivables are recognised initially at the
amount of consideration that is unconditional unless they contain significant financing components, when
they are recognised at fair value. The group holds the trade receivables with the objective to collect the
contractual cash flows and therefore measures them subsequently at amortised cost using the effective
interest method.
j.
k.
33
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
k.
l.
m.
n
Trade and Other Receivables (Cont.)
The Group has adopted AASB 9 from 1 July 2018. The Group’s trade and other receivables at year end
and now assessed under the new impairment requirements which use an 'expected credit loss' ('ECL')
model to recognise an allowance. Impairment is measured using a 12 month ECL method unless the credit
risk on a financial asset has increased significantly since initial recognition in which case the lifetime ECL
method is adopted.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost includes all expenses directly
attributable to the manufacturing process as well as suitable portions of related production overheads,
based on normal operating capacity. Costs are assigned using the first in, first out cost formula. Net
realisable value is the estimated selling price in the ordinary course of business less any applicable selling
expenses.
Trade and Other Payables
Liabilities for creditors and other amounts are carried at amortised cost, which is the present value of the
consideration to be paid in the future for goods and services received, whether or not billed to the Group.
The carrying period is dictated by market conditions but is generally less than 30 days.
Provisions
The Group’s provisions consist of short-term and long-term employee benefits.
Short-term employee benefits
Short-term employee benefits are benefits, other than termination benefits, that are expected to be settled
wholly within 12 months after the end of the period in which the employees render the related service.
Examples of such benefits include wages and salaries, non-monetary benefits and accumulating sick leave.
Short-term employee benefits are measured at the undiscounted amounts expected to be paid when the
liabilities are settled.
Other long-term employee benefits
The Group’s liabilities for annual leave and long service leave are included in other long term benefits as
they are not expected to be settled wholly within 12 months after the end of the period in which the
employees render the related service. They are measured at the present value of the expected future
payments to be made to employees. The expected future payments incorporate anticipated future wage
and salary levels, experience of employee departures and periods of service, and are discounted at rates
determined by reference to market yields at the end of the reporting period on high quality corporate bonds
that have maturity dates that approximate the timing of the estimated future cash outflows. Any re-
measurements arising from experience adjustments and changes in assumptions are recognised in profit
or loss in the periods in which the changes occur. The Group presents employee benefit obligations as
current liabilities in the statement of financial position if the Group does not have an unconditional right to
defer settlement for at least 12 months after the reporting period, irrespective of when the actual settlement
is expected to take place.
o.
Income Tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based
on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and
liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior
periods, where applicable.
CardieX Limited and its wholly owned Australian controlled entities have implemented the tax consolidation
legislation as of July 1, 2005.
34
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
o.
p.
q.
Income Tax (Cont.)
The head entity, CardieX Limited, and the controlled entities in the tax consolidated group account for their
own current and deferred tax amounts. These amounts are measured as if each entity in the tax
consolidated group continues to be a standalone taxpayer in its own right.
Finance Costs
Finance costs directly attributable to the acquisition, construction or production of assets that necessarily
take a substantial period of time to prepare for their intended use or sale, are added to the cost of those
assets, until such time as the assets are substantially ready for their intended use or sale.
All other finance costs are recognised in the period in which they are incurred.
Right of Use Asset
The right-of-use asset is initially measured at cost, which comprised the initial amount of the lease liability
adjusted for any lease payments made at or before the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying
or the site on which it is located, less any lease incentives received.
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group
recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements
in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or
less) and leases of low value assets. For these leases, the Group recognises the lease payments as an
operating expenses on a straight line basis over the term of the lease unless another systematic basis is
more representative of the time pattern in which economic benefits from the leased assets are consumed.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement
date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The
estimated useful lives of right-of-use assets are determined on the same basis as those of property and
equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liability.
r.
Lease Liabilities
The lease liability is initially measured at the present value of fixed lease payments that are not yet paid at
the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be
readily determined, the Group’s incremental borrowing rate.
Variable lease payments are only included in measuring the lease liability if they depend on a rate. In such
cases, the initial measurement of the lease liability assumed the variable element will remain unchanged
throughout the lease term.
Subsequently, the lease liability is measured at amortised cost using the effective interest method. It is
remeasured when there is a change in further lease payments arising from a change in the market rate.
Refer to Note 19 for further details.
s.
Goods and Services Tax (GST)
Revenue, expenses and assets are recognised net of the amount of GST, except where the amount of
GST incurred is not recoverable from the Australian 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.
35
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
s.
t.
Goods and Services Tax (GST) (Cont.)
Cash flows are presented in the Statement of Cash Flows on a gross basis, except for the GST components
of investing and financing activities, which are disclosed as operating cash flows. There is provision made
in the Statement of Cash Flows to disclose the applicable GST refunds/payments that have been remitted
to the ATO to accurately show the cash position of CardieX Limited.
Foreign Currency Translation
Functional currency
Items included in the financial statements of the Group’s operations are measured using the currency of
the primary economic environment in which it operates (‘the functional currency’).
The functional currency of the Company and controlled entities registered in Australia is Australian dollars
(AU$).
The functional currency of the AtCor Medical Inc is United States dollars (US$).
Foreign currency transactions are translated into the functional currency using the exchange rates ruling
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at the end of the reporting period. Foreign exchange gains and
losses resulting from settling foreign currency transactions, as well as from restating foreign currency
denominated monetary assets and liabilities, are recognised in profit or loss, except when they are deferred
in other comprehensive income as qualifying cash flow hedges or where they relate to differences on
foreign currency borrowings that provide a hedge against a net investment in a foreign entity.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates
at the date when fair value was determined.
Presentation currency
The financial statements are presented in Australian dollars, which is the Group’s presentation currency.
Functional currency balances are translated into the presentation currency using the exchange rates at the
balance sheet date. Value differences arising from movements in the exchange rate is recognised in the
statement of comprehensive income.
u.
Issued Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of tax, from the proceeds.
v.
Foreign Currency Translation Reserve
Foreign currency translation reserve comprises foreign currency translation differences arising on the
translation of financial statements of the Group’s foreign entities into $AUD.
w.
Earnings Per Share
Basic earnings per share is calculated by dividing the profit or loss attributable to the owners of the Group
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take
into account the after income tax effect of interest and other financial costs associated with dilutive potential
ordinary shares and the weighted average number of shares assumed to have been issued for no
consideration in relation to the dilutive potential ordinary shares.
36
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
x.
y.
Comparative Figures
Comparative figures have been derived from the financial statements for CardieX Limited for the year
ended 30 June 2019, and changes in presentation are made where necessary to comply with accounting
standards.
Critical Accounting Judgements. Estimates and Assumptions
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually
evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and
expenses. Management bases its judgements, estimates and assumptions on historical experience and
on other various factors, including expectations of future events, management believes to be reasonable
under the circumstances. The resulting accounting judgements and estimates will seldom equal the related
actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next
financial year are discussed below.
Share-based payment transactions
The consolidated entity 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 is determined
by using either the Binomial or 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.
Revenue from contracts with customers involving sale of goods
When recognising revenue in relation to the sale of goods to customers, the key performance obligation of
the consolidated entity is considered to be the point of delivery of the goods to the customer, as this is
deemed to be the time that the customer obtains control of the promised goods and therefore the benefits
of unimpeded access.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is
based on the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to
allocate an overall expected credit loss rate for each group. These assumptions include recent sales
experience and historical collection rates.
Provision for impairment of inventories
The provision for impairment of inventories assessment requires a degree of estimation and judgement.
The level of the provision is assessed by taking into account the recent sales experience, the ageing of
inventories and other factors that affect inventory obsolescence.
Estimation of useful lives of assets
The consolidated entity determines the estimated useful lives and related depreciation and amortisation
charges for its property, plant and equipment and finite life intangible assets. The useful lives could change
significantly as a result of technical innovations or some other event. The depreciation and amortisation
charge will increase where the useful lives are less than previously estimated lives, or technically obsolete
or non-strategic assets that have been abandoned or sold will be written off or written down.
Employee benefits provision
As discussed in note 1, the liability for employee benefits expected to be settled more than 12 months from
the reporting date are recognised and measured at the present value of the estimated future cash flows to
be made in respect of all employees at the reporting date. In determining the present value of the liability,
estimates of attrition rates and pay increases through promotion and inflation have been taken into account.
37
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
y.
Critical Accounting Judgements. Estimates and Assumptions (cont.)
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences where management considers
that it is probable that future taxable profits will be available to utilise those temporary differences.
Significant judgement is required on the part of management and the Board to determine the amount of
deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable
profits over the future years together with future tax planning strategies. Management and the Board have
determined not to raise any deferred tax assets which are estimated at $9,765,832 during the full year
ended 30 June 2018 so as to enable the Board to determine more reliably the probability of utilising these
tax assets in the foreseeable future.
Impairment – general
The Group assesses impairment at the end of each reporting period by evaluating conditions and events
specific to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets
are reassessed using value‐in‐use calculations which incorporate various key assumptions.
Platform and product development costs
Platform and development costs have been expensed in the year in which incurred. These amounts have
not been capitalised on the basis that the directors consider that the expenditures do not meet the
recognition criteria of development costs as defined by AASB 138 Intangible Assets.
z.
New Accounting Standards and Interpretations Adopted
AASB 9: Financial Instruments
The consolidated entity has adopted AASB 9 from 1 July 2018. The standard introduced new classification
and measurement models for financial assets.
A financial asset shall be measured at amortised cost if it is held within a business model whose objective
is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely
principal and interest.
A debt investment shall be measured at fair value through other comprehensive income if it is held within
a business model whose objective is to both hold assets in order to collect contractual cash flows which
arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its
fair value.
All other financial assets are classified and measured at fair value through profit or loss unless the entity
makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that
are not held-for-trading or contingent consideration recognised in a business combination) in other
comprehensive income ('OCI').
Despite these requirements, a financial asset may be irrevocably designated as measured at fair value
through profit or loss to reduce the effect of, or eliminate, an accounting mismatch.
For financial liabilities designated at fair value through profit or loss, the standard requires the portion of
the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would
create an accounting mismatch).
New impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance.
Impairment is measured using a 12-month ECL method unless the credit risk on a financial instrument has
increased significantly since initial recognition in which case the lifetime ECL method is adopted. For
receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss
allowance is available.
The adoption of AASB 9 did not have any significant impact on the financial performance or position of the
Group as at 30 June 2019 or on opening accumulated losses 1 July 2018.
38
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
z.
New Accounting Standards and Interpretations Adopted (Cont.)
Refer to the respective notes for further details on the company’s accounting policies on financial
instruments.
AASB 15: Revenue from Contracts with Customers
The consolidated entity has adopted AASB 15 from 1 July 2018. The standard provides a single
comprehensive model for revenue recognition.
The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised
goods or services to customers at an amount that reflects the consideration to which the entity expects to
be entitled in exchange for those goods or services. The standard introduced a new contract-based
revenue recognition model with a measurement approach that is based on an allocation of the transaction
price. Credit risk is presented separately as an expense rather than adjusted against revenue.
The adoption of AASB 15 did not have any significant impact on the financial performance or position of
the Group as at 30 June 2019 or on opening accumulated losses 1 July 2018.
Refer to Note 1.c. for further details on the Group’s revenue recognition policy.
AASB 16: Leases
The Group has adopted AASB 16 Leases 1 July 2018. On transition to AASB 16, the Group recognised
$428,567 of right-of-use assets and $403,725 of lease liabilities. The Group have recognised an additional
depreciation charge of $57,926 in relation to depreciation of the right-of-use asset, and additional finance
costs of $24,693 due to interest expense on the lease liability. After amortisation the balance of leased
assets totalled $370,386 as at balance date. No adjustment was required from comparative information as
all operating leases commenced in the current financial year.
When measuring lease liabilities, the Group discounted lease payments using its incremental borrowing
rate at date of initial application of AASB 16. The rate applied was 12.27%.
Operating cashflows have increased and financing cashflows decreased by $49,530 as repayment of the
principal portion of the lease liabilities will be classified as cashflows from financing activities.
Impact on Earnings Per Share is nil.
aa.
New and Revised Accounting Standards not yet mandatory or early adopted
As at 30 June 2019, the group has adopted all new and revised mandatory accounting standards
applicable.
39
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 2: REVENUE
Sales revenue
Sale of goods
Other revenue
Interest received
Total revenue
NOTE 3: OTHER INCOME
R&D tax concession from the Australian Tax Office
Other
NOTE 4: EXPENSES
Loss before income tax includes the following specific
expenses:
Depreciation on plant and equipment
Depreciation on right of use assets
Employee benefit expense
Share based payments
Rental expense relating to operating leases
Research and development
NOTE 5: INCOME TAX EXPENSE
Loss from continuing operations before income tax
expense
Prima facie tax benefit on loss from ordinary activities
before income tax at 27.5% (2018: 27.5%):
Add tax effect of:
— Other non-allowable items
Subtotal
Less tax effect of:
—
—
Items not assessable for taxation
Items deductible for taxation but not accounting
Differences in overseas tax rates
Benefit of tax losses and temporary differences not
recognised
Income tax expense
40
2019
$
3,907,093
3,907,093
154,998
4,062,091
801,771
30,186
831,957
2018
$
4,006,091
4,006,091
16,463
4,022,554
418,368
-
418,368
58,589
57,926
61,174
-
3,868,101
3,723,253
864,714
249,297
674,586
4,466
198,828
790,143
(2,979,278)
(2,961,225)
(819,301)
(814,337)
576,075
(243,226)
(434,416)
(130,004)
119,182
(688,464)
-
291,553
(522,784)
(115,052)
(166,603)
130,597
673,842
-
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 5: INCOME TAX EXPENSE (CONT.)
The Group has carried forward tax losses, calculated according to Australian income tax legislation of $38,449,011
(2018: $35,512,116), which will be deductible from future assessable income provided that income is derived,
and:
a) The Company and its controlled entities carry on a business of, or a business that includes software
development in Australia; and
b) No change in tax legislation adversely affects the Group and its controlled entities in realising the benefit
from the deduction for the losses.
The benefit of these losses will only be recognised where it is probable that future taxable profit will be available
against which the benefits of the deferred tax asset can be utilised. Deferred tax assets are estimated but not
recognised at $10,573,478 at 30 June 2019 (2018: $9,765,832).
CardieX Limited and its wholly-owned Australian controlled entities are consolidated for income tax purposes.
The accounting policy in relation to this legislation is set out in note 1(o).
As at the date of this report the entities in the tax consolidation group had not entered into a tax sharing agreement.
No compensation has been received or paid for any current tax payable or deferred tax assets relating to tax
losses assumed by the parent entity since implementation of the tax consolidation regime.
NOTE 6: AUDITOR REMUNERATION
Remuneration of the auditor of the Group for:
Audit services for the financial year - PWC
Audit services for the financial year - BDO
Total:
NOTE 7: LOSS PER SHARE
a. Reconciliation of loss:
Loss after tax
b. Weighted average number of ordinary shares
outstanding during the year used in calculating loss
per share
c. Basic loss per share
d. Diluted loss per share
2019
$
-
94,000
94,000
2018
$
48,307
60,000
108,307
(2,979,278)
(2,961,225)
No.
No.
607,756,877
294,429,146
Cents
(0.5)
(0.5)
Cents
(1.0)
(1.0)
41
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 8: CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Total
NOTE 9: TRADE AND OTHER RECEIVABLES
CURRENT
Trade receivables
Less: Provision for doubtful debts (a)
Other receivables
Total receivables
2019
$
4,980,826
4,980,826
1,153,453
(138,485)
1,014,967
-
2018
$
2,736,517
2,736,517
1,222,078
(108,859)
1,113,219
-
1,014,967
1,113,219
Impaired trade receivables
(a)
Trade receivables and other receivables are non-interest bearing and are generally on 30 to 60 day terms.
The Group has adopted AASB 9 from 1 July 2018. The Group’s trade and other receivables at year end are now
assessed under the new impairment requirements which use an 'expected credit loss' ('ECL') model to recognise
an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a financial asset
has increased significantly since initial recognition in which case the lifetime ECL method is adopted.
As at 30 June 2019 current trade receivables of the Group with a nominal value of $108,859 (2018: $53,600) were
fully impaired.
At 1 July
Provision for impairment recognised during the year
108,859
32,705
Receivables written off during the year as uncollectible
(3,079)
At 30 June
138,485
16,842
133,308
(41,291)
108,859
(b)
Fair value, foreign exchange and credit risk
Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair
value. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of
receivables mentioned above. Refer to Note 26 for more information on the risk management policy of the Group,
the credit quality and foreign currency risk of the Group’s trade receivables.
(c)
Interest rate risk
Detail regarding interest rate risk exposure is disclosed in Note 26.
NOTE 10: INVENTORY
Raw materials and stores - at cost
Finished goods at cost
Provision for inventory impairment
223,079
71,818
(75,966)
218,930
334,506
214,428
(58,572)
490,362
A charge of $55,792 was taken to write-off obsolete inventories in the year ended 30 June 2019 (2018: $58,572).
42
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 11: OTHER CURRENT ASSETS
Prepayments
Contract assets
2019
$
114,228
92,879
2018
$
63,232
159,252
Amounts due from related parties
-
1,500,000
R&D Tax Incentive
Other
NOTE 12: CONTROLLED ENTITIES
Controlled Entities Consolidated
431,532
103,112
741,751
-
51,668
1,774,152
PARENT ENTITY:
CardieX Limited
Australia
Country of
Incorporation
Percentage
Owned (%)*
2019
2018
SUBSIDIARIES OF CARDIEX LIMITED
AtCor Medical Pty Limited
AtCor Medical Inc
* Percentage of voting power is in proportion to ownership
NOTE 13: PLANT AND EQUIPMENT
Australia
USA
100
100
100
100
Manufacturing
plant and
equipment
Furniture,
fixtures and
equipment
Devices
leased to
customers
$
$
$
Year ended 30 June 2018
Opening net book amount
Additions
Exchange differences
Depreciation charge
88,528
469
2,437
54,526
878
189
(26,207)
(31,038)
Closing net book amount
65,227
24,555
6,368
3,569
1,289
(3,929)
7,297
At 30 June 2018
Cost
508,679
677,143 14,433
Accumulated depreciation
(443,452)
(652,588)
(7,136)
Net book amount
65,227
24,555 7,297
Property
under lease
(right-of use
asset)
$
-
-
-
-
-
-
-
-
Total
$
149,422
4,916
3,915
(61,174)
97,079
1,200,255
(1,103,176)
97,079
43
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 13: PROPERTY, PLANT AND EQUIPMENT (CONT.)
Manufacturing
plant and
equipment
Furniture,
fixtures and
equipment
Devices
leased to
customers
$
$
$
Year ended 30 June 2019
Opening net book amount
65,227
24,555 7,297
Property
under lease
(right-of use
asset)
$
-
Total
$
97,079
-
-
(22,831)
42,396
110,571
93,279
428,567
632,417
314
(26,227)
109,213
56
(9,276)
91,356
-
371
(58,181)
(116,515)
370,386
613,351
Additions
Exchange differences
Depreciation charge
Closing net book amount
At 30 June 2019
Cost
Accumulated depreciation
(466,283)
(694,264)
508,679
803,477
105,668
(14,312)
428,567
1,846,391
(58,181)
1,233,041
Net book amount
42,396
109,213
91,356
370,386
613,351
NOTE 14: TRADE AND OTHER PAYABLES
Trade creditors
Other payables
NOTE 15: CONTRACT LIABILITIES
Contract liabilities
2019
$
354,939
143,509
498,448
861,884
861,884
2018
$
728,958
257,766
986,724
188,503
188,503
The above contract liabilities relates to contracts where payments have been received, but revenue has not yet
been recognised.
NOTE 16: PROVISIONS
CURRENT
Employee provisions
NON-CURRENT
Employee provisions
346,119
409,203
21,741
367,860
48,264
163,292
44
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 17: FINANCIAL ASSETS
NON-CURRENT FINANCIAL ASSETS
Blumio convertible note
inHealth investment
inHealth convertible note
Total
Blumio Inc
2019
$
870,743
343,974
4,383,249
5,597,966
2018
$
202,578
-
202,578
In March 2018, the Company entered into a convertible note purchase agreement for the acquisition of a
Convertible Note (the “Blumio Note”) issued by Blumio Inc, payable in two instalments. The full principal balance
of US$600,000 payable under the Blumio Note agreement was met on 14 March 2019.
Both the debt and derivative components of the Blumio Note are measured as a single instrument at amortised
cost, accruing interest at 6% per annum. The term of the Blumio Convertible Note continues until a fundraising
event of more than $8,000,000 occurs at which point the investment will convert into shares in the Blumio at a
20% discount to the price of the fundraising.
As at 30 June 2019, the total convertible note asset was $870,743 made up of $855,503 of payments and
$15,240 in interest.
At 30 June 2019, review of available information on Blumio did not indicate that the Blumio Convertible Note
investment was impaired.
inHealth Medical Services
On 31 January 2019, the Company exercised in full its option under the agreement to purchase US$3,000,000 of
inHealth Medical Services “Tranche 2” Convertible Note (the “inHealth Note”) securities.
Both the debt and derivative components of the inHealth Note are measured as a single instrument at amortised
cost, accruing interest at 6% per annum.
By 30 June 2019, the Company has paid US$650,000 to inHealth under the Agreement for the Tranche 2 Notes.
The Company considers that it has wholly acquired all Tranche 2 Notes available under the Agreement and all
rights conferred to those Notes under the Agreement.
As at 30 June 2019, the total convertible loan asset was $4,383,249 made up of the initial $4,265,746 principal
and $117,503 in interest.
In addition, at 30 June 2019 the Company had converted $343,974 to shares from “Tranche 1” of the Convertible
Note.
At 30 June 2019, management did not consider the inHealth Convertible Note investment or shares in inHealth to
be impaired based on fair value estimates of inHealth’s enterprise value.
45
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 17: FINANCIAL ASSETS (CONT.)
Impairment of Financial Assets
Value in use was determined by discounting the future cash flows generated from the continuing use of the
inHealth unit and was based on the following key assumptions:
Revenue growth in approved forecast for the year ended 30 June 20201
Revenue growth in approved forecast for the year ended 30 June 2021
Annual average revenue growth 2020 - 2023
Average inflation per annum
Average price growth per annum2
Average cost growth per annum
Pre-tax discount rate
505%
73%
163%
1.95%
-
4.25%
21.1%
1) Revenue only commenced in January 2019; and
2) No price growth was factored into future cash flow estimates as it is too dependent on future
negotiations that have not yet been contemplated.
NOTE 18: FINANCIAL LIABILITIES
CURRENT
Balance due on convertible note purchased
2019
$
3,350,920
2018
$
-
On 31 January 2019, the Company exercised in full its option under the inHealth Convertible Note Purchase
Term Sheet Agreement to purchase US$3,000,000 of InHealth’s “Tranche 2” Convertible Note securities (“T2
Notes”). At 30 June 2019, US$2,350,000 remains unpaid on the purchase price. The full balance was settled by
August 2019.
NON-CURRENT
Convertible note liabilities
778,202
4,129,122
-
-
In January 2019, C2 Ventures Pty Ltd applied to the Company for 2,500,000 convertible notes at $1 per note.
The convertible notes issued by the Group have been split into the debt liability and a derivative component.
The debt liability has been valued at amortised cost and the derivative component of convertible notes issued
has been calculated as the residual value of the notes once the fair value of the debt has been deducted from
the face value of the notes.
Key terms of the convertible notes per the Convertible Note Deed (the “Deed”) are as follows:
Term:
36 months
Drawdown date:
23 January 2019
Funds received:
AU$2,500,000
Interest payable:
6% per annum, accrued daily, capitalised quarterly
Conversion:
Convertible to fully paid ordinary shares at a $0.03 per convertible note
46
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 18: FINANCIAL LIABILITIES (CONT.)
At issue date, the convertible note was split as follows:
Host debt liability
Derivative reserve
On 6 March 2019, 1,638,503 notes were converted to shares.
NOTE 19: CONTRACT LEASE LIABILITIES
CURRENT
Contract lease liabilities
NON-CURRENT
Contract lease liabilities
TOTAL LEASE LIABILITIES
(a) Maturity analysis
Lease payments
Finance charges
Less than 6
months
6 months to 1
year
$
$
71,982
69,662
(23,558)
(20,588)
Net present values
48,424
49,074
NOTE 20: ISSUED CAPITAL
$
778,202
124,160
902,362
2019
$
97,498
306,257
403,725
2018
$
-
-
-
1 to 5 years
5+ years
$
357,776
(62,044)
295,732
$
10,742
(247)
10,496
Total
$
510,161
(106,436)
403,725
2019
2018
No of Shares
$ No of Shares
$
(a) Ordinary shares
695,502,228
51,500,876
531,018,793
46,832,833
At the beginning of reporting period
531,018,793
46,832,833
233,630,539
41,126,573
Placements in the year
100,000,000
3,000,000
220,958,254
4,674,906
Shares issued subject to restriction
agreements
Shares issued in lieu of payment to key
executives
54,616,769
1,630,780
75,000,000
1,500,000
9,800,000
287,000
1,430,000
62,150
Shares issued on exercise of options
66,666
2,200
Cost of raising capital
(251,937)
-
-
-
(530,796)
Closing balance at reporting date
695,502,228
51,500,876
531,018,793
46,832,833
Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the
number of shares held. At the shareholders meetings each ordinary share is entitled to one vote when a poll is
called, otherwise each shareholder has one vote on a show of hands.
47
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 20: ISSUED CAPITAL (CONT.)
2019
2018
No of Rights
$
No of Rights
(b) Rights on Issue
At the beginning of reporting period
24,000,000
4,466
-
$
-
Issued under Performance Rights Plan
20,000,000
159,859
24,000,000
4,466
Rights converted during the year
(8,000,000)
(224,000)
Rights vesting expense during the year
-
290,650
-
-
-
-
Closing balance at reporting date
36,000,000
230,975
24,000,000
4,466
The terms of the performance rights on issue at 30 June 2019 are as follows (further details at Note 22):
Tranche
2
3
4
5
6
Number of performance
rights
8,000,000
8,000,000
4,000,000
4,000,000
12,000,000
Will vest if 30 day
VWAP exceeds:
$0.08
$0.12
$0.08
$0.12
$0.15
Throughout the period the 8,000,000 Tranche 1 performance rights vested when the 30 day VWAP exceeded $0.05
in March 2019.
(c) Options on Issue
2019
2018
No of Options
$ No of Options
$
At the beginning of reporting period
150,050,958
1,059,508
17,233,333
2,243,864
Options issued to broker in November 2017
Placement
Options expired and transferred to
accumulated losses (Note 22)
Free attaching options (1 for 2) as part of
Entitlements Issue
Free attaching options (1 for 2) as attaching
to placement
Free attaching options issued subject to
restriction agreement*
Options issued to broker in May 2018
placement
Options vesting expense
Options issue to key management
personnel
Options issue to employees
-
-
-
-
-
-
-
3,000,000
15,300,000
-
-
-
-
-
-
2,500,000
31,517
(4,680,000)
(1,278,642)
28,099,975
59,397,650
37,500,000
-
-
-
10,000,000
62,769
63,475
129,404
92,896
-
-
-
-
-
-
-
-
Expired and lapsed employee options
(7,043,333)
(558,693)
Closing balance at reporting date
161,307,625
786,590
150,050,958
1,059,508
48
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 20: ISSUED CAPITAL (CONT.)
Fair value of options granted
The weighted average assessed fair value at grant date of options granted during the year ended 2019 was ¢2.97
cents per option as no options were issued during the year (2018: ¢1.28). The fair value at grant date is determined
using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the
impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected
dividend yield and the risk free interest rate for the term of the option.
The model inputs for options granted and accrued during the year ended 30 June 2019 included:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Number issued
Exercise price
Term
Share price at grant date
Share price volatility
Expected dividend yield
Risk-free interest rate
Options
Granted
30 Nov 2017
2,500,000
$0.038
4 years
$0.028
60%
-
2.16%
Options
Accrued at 30
Jun 2018
10,000,000
$0.050
3.5 years
$0.020
74%
-
2.30%
Options
Granted
15 Jan 2019
15,300,000
0.050
5 years
$0.041
89%
-
1.91%
Options
Granted
26 Feb 2019
3,000,000
0.050
5 years
$0.060
88%
-
1.74%
The expected price volatility is based on the historic volatility (based on the remaining life of the options),
adjusted for any expected changes to future volatility due to publicly available information.
Capital Management
Management controls the capital of the Group in order to maintain a good debt to equity ratio, provide the
shareholders with adequate returns and ensure that the group can fund its operations and continue as a going
concern.
The Group’s capital includes ordinary share capital, shares and financial liabilities, supported by financial assets.
There are no externally imposed capital requirements.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its
capital structure in response to changes in these risks and in the market. These responses include the
management of debt levels, distribution to shareholders and share issues.
NOTE 21: RESERVES
Share-based payments reserve
Derivative reserve
Foreign currency translation reserve
2019
$
2018
$
1,017,565
1,063,974
124,160
471,607
1,613,332
-
507,524
1,571,498
49
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 21: RESERVES (CONT.)
Share-based payments reserve
The based-payments reserve records the fair value of options and performance rights on issue.
Derivative reserve
The derivative reserve records the issue date value of the derivative financial instruments recognised in equity. In
FY19, the increase in the derivative reserve resulted from the issue of convertible notes. The value of the
derivative component of convertible notes issued has been calculated as the residual value of the notes once the
fair value of the debt has been deducted from the face value of the notes.
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of
foreign operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net
investments in foreign operations.
Share-based
payments reserve
Foreign currency
translation reserve
Derivative
reserve
Balance at 1 July 2017
Additions during the year
Transfers to accumulated losses
Balance at 30 June 2018
Convertible notes issued
Share based payments
Rights and options exercised / expired
Other comprehensive loss
Balance at 30 June 2019
$
2,243,864
98,752
(1,278,642)
1,063,974
-
801,714
(848,123)
-
1,017,565
$
83,584
423,940
-
507,524
-
-
(35,917)
471,607
NOTE 22: SHARE BASED PAYMENTS
(a)
Employee Share Option Plan (ESOP)
Total
$
2,327,448
522,692
(1,278,642)
1,571,498
$
-
-
-
-
124,160
124,160
801,714
(848,123)
(35,917)
-
-
124,160
1,613,332
The CardieX Employee Option Plan was approved by shareholders at the 2005 annual general meeting and
amendments were approved at the 2006 & 2008 annual general meetings. All staff are eligible to participate in
the plan at the discretion of the directors (including executive directors) following recommendations from the
remuneration committee, a sub-committee of the CardieX Limited Board of Directors.
Options are granted under the plan for no consideration. Options are granted for a 5-year period, and 33.3% of
each new tranche vests and is exercisable after each of the first 3 anniversaries of the date of grant.
Options granted under the plan carry no dividend or voting rights.
When exercisable, each option is convertible into 1 ordinary share.
The exercise price of options is no less than the weighted average price at which the Company’s shares are
traded on the Australian Stock Exchange during the 5 trading days immediately before the options are granted.
50
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 22: SHARE BASED PAYMENTS (CONT.)
Set out below are summaries of options granted under the plan:
2019:
Grant
Date
Expiry date
Exercise
price
Balance at
start of the
year
Number
Granted
during the
year
Number
Exercised
during the
year
Number
29-Aug-13
29-Aug-18
$0.139
2,998,333
31-Oct-13
31-Oct-18
$0.181
2,100,000
28-Aug-14
28-Aug-19
$0.112
1,825,000
20-Aug-15
20-Aug-20
$0.256
2,430,000
13-Nov-15
13-Nov-19
$0.261
2,000,000
13-Nov-15
13-Nov-20
$0.250
1,000,000
12-Feb-16
12-Feb-21
$0.199
200,000
-
-
-
-
-
-
-
15-Jan-19
15-Jan-24
$0.050
-
15,300,000
Total
12,553,333
15,300,000
Weighted average exercise price
$0.194
$0.050
Expired/
Forfeited
during the
year
Number
(2,998,333)
(2,100,000)
Balance at
end of the
year
Number
Exercisable
at end of the
year
Number
-
-
-
-
(850,000)
975,000
975,000
(895,000)
1,535,000
1,535,000
-
-
2,000,000
2,000,000
1,000,000
1,000,000
(200,000)
-
-
15,300,000
-
-
(7,043,333)
20,810,000
5,510,000
$0.092
$0.162
$0.101
-
-
-
-
-
-
-
-
-
-
1,945,000 options were forfeited during 2019 due to terminating employment, (2018: 500,000) and 5,098,333
options expired (2018: 4,180,000) in the same period. No options were exercised during 2019 (2018: NIL).
2018:
Grant Date Expiry date
Exercise
price
Balance at
start of the
year
Number
Granted
during the
year
Number
Exercised
during the
year
Number
Expired/
Forfeited
during the
year
Number
Balance at
end of the
year
Number
Exercisable
at end of the
year
Number
23-Aug-12
23-Aug-17
$0.075
2,455,000
5-Oct-12
5-Oct-17
$0.075
200,000
26-Oct-12
26-Oct-17
$0.084
1,400,000
19-Nov-12
19-Nov-17
$0.085
125,000
29-Aug-13
29-Aug-18
$0.139
2,998,333
31-Oct-13
31-Oct-18
$0.181
2,100,000
28-Aug-14
28-Aug-19
$0.112
1,825,000
24-Mar-15
24-Mar-20
$0.194
350,000
20-Aug-15
20-Aug-20
$0.256
2,430,000
13-Nov-15
13-Nov-19
$0.261
2,000,000
13-Nov-15
13-Nov-20
$0.250
1,000,000
12-Feb-16
12-Feb-21
$0.199
350,000
Total
17,233,333
Weighted average exercise price
$0.17
-
-
-
-
-
-
-
-
-
-
-
-
-
-
51
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,455,000)
(200,000)
(1,400,000)
(125,000)
-
-
-
-
-
-
-
-
-
-
-
2,998,333
2,998,333
2,100,000
2,100,000
1,825,000
1,825,000
(350,000)
-
-
-
-
-
2,430,000
1,620,000
2,000,000
2,000,000
1,000,000
666,667
(150,000)
200,000
133,333
(4,680,000)
12,553,333 11,343,333
$0.09
$0.19
$0.19
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 22: SHARE BASED PAYMENTS (CONT.)
Performance rights
(b)
The CardieX Option and Performance Rights Plan (was approved by shareholders at the extraordinary general
meeting held on 28 May 2018.
During 2019, 20,000,000 performance rights were issued under the following terms:
Tranche
4
5
6
Number of performance
rights
4,000,000
4,000,000
12,000,000
Will vest if 30 day
VWAP exceeds:
$0.08
$0.12
$0.15
(a)
(b)
(c)
the Performance Rights will be issued for no consideration and if they vest and are exercised, the
resulting Shares will be fully paid ordinary shares in the capital of the Company issued on the same
terms and conditions as the Company’s existing ordinary shares.
no individual has previously received securities under this scheme as this is the first time the
Company has proposed an issue of securities under the Scheme; and
no loans or other financial assistance have or will be made by the Company in connection with the
issue of the relevant Performance Rights.
(c)
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of
employee benefit expense were as follows:
Rights issued under Option and Performance Rights Plan
Options issued under Employee Share Option Plan
Shares issued to employee
Other options issued
NOTE 23: ACCUMULATED LOSSES
Opening balance at 1 July
Losses for the year
Transfer from share-based payments reserve
Closing balance at 30 June
2019
$
431,769
240,541
63,000
129,404
864,714
2018
$
4,466
-
-
-
4,466
(43,808,118)
(42,125,535)
(2,979,278)
624,123
(2,961,225)
1,278,642
(46,163,273)
(43,808,118)
52
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 24: CASH FLOW INFORMATION
Reconciliation of Cash Flow from Operations with Loss after
Income Tax
Loss after income tax
Non-cash flows in profit:
Depreciation and amortisation
Inventory impairment expense
Share based payments expense
Bad debts expense
Interest income on convertible notes
Unrealised foreign exchange difference
Other expenses
Changes in current assets and liabilities:
Decrease in trade and other receivables
Increase in inventories
(Increase) in other operating assets
Increase in trade and other payables and provisions
2019
$
2018
$
(2,979,278)
(2,961,225)
116,515
55,792
864,714
32,705
(128,080)
(93,235)
116,007
(402,052)
215,640
-
(89,501)
61,174
58,572
26,482
133,308
-
491,910
-
108,664
(85,301)
-
128,096
Net cash used in operating activities
(2,290,773)
(2,038,320)
NOTE 25: NON-CASH INVESTING AND FINANCING ACTIVITIES
Balance at 1 July 2017
Changes in liabilities from cash financing
activities
Net cash from/(used in) financing activities
Changes in liabilities from non-cash financing
activities
Acquisition of property, plant and equipment by
means of finance leases
Interest charges
Allocated to reserve
Converted to shares
Balance at 30 June 2018
Contract lease
liabilities
Convertible note
liabilities
Total
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
53
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 25: NON-CASH INVESTING AND FINANCING ACTIVITIES (CONT.)
Balance at 1 July 2018
Changes in liabilities from cash financing
activities
Contract lease
liabilities
Convertible note
liabilities
$
-
$
-
Total
$
-
Net cash from/(used in) financing activities
(49,530)
2,500,000
2,450,470
Changes in liabilities from non-cash financing
activities
Acquisition of property, plant and equipment by
means of finance leases
Interest charges
Allocated to reserve
Converted to shares
428,562
24,693
-
428,562
33,142
57,835
(388,751)
(388,751)
(1,366,189)
(1366,189)
Balance at 30 June 2019
403,725
778,202
1,181,927
NOTE 26: CAPITAL AND FINANCIAL RISK MANAGEMENT
Capital management
The group’s objectives when managing the Company’s share capital, reserves and accumulated losses, which
represents the group’s capital, are to:
•
•
safeguard their ability to continue as a going concern, so that they can continue to provide returns for
shareholders and benefits for other stakeholders; and
sustain future product development.
Financial risk management
The Group's activities expose it to a variety of financial risks: market risk (primarily currency risk), credit risk, and
liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses
different methods to measure different types of risk to which it is exposed. These methods include sensitivity
analysis in the case of foreign exchange risk and aging analysis for credit risk.
Financial risk management is carried out by the Chief Financial Officer (CFO) and overseen by the Audit & Risk
Committee, a subcommittee of the Board of Directors.
(a)
Market risk
Foreign exchange risk
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are
denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity
analysis and cash flow forecasting.
The Group operates internationally and is exposed to foreign exchange risk arising from currency exposures to
the US Dollar and the Euro.
54
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 26: CAPITAL AND FINANCIAL RISK MANAGEMENT (CONT.)
The Group’s exposure to foreign currency exchange risk at the reporting date was as follows:
Cash and Cash Equivalents
Trade Receivables
Trade Payables
30 June 2019
30 June 2018
In USD
172,041
643,898
(186,323)
In EUR
434,484
107,881
(1,208)
In USD
83,952
1,062,768
(437,188)
In EUR
40,865
226,063
(14,136)
Sensitivity
Based on the financial instruments held at 30 June 2019, had the Australian dollar weakened/strengthened by
10% against the US dollar with all other variables held constant, the Group’s pre-tax result for the year would
have varied by $81,617/($89,778) (2018: $47,762/($58,375)). Had the Australian dollar weakened/strengthened
by 10% against the Euro with all other variables held constant, the Group’s pre-tax result for the year would have
varied by $79,721/($87,694) (2018: $36,283/($44,346)).
Credit risk
(b)
Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and
financial institutions, as well as credit exposures to customers, including outstanding receivables and committed
transactions. The Group has no significant concentrations of credit risk. For banks and financial institutions, only
independently rated and reputable parties are accepted. The Group has policies in place to ensure that sales of
products and services are made to customers with an appropriate credit history. Terms of trade provided to
creditworthy customers are between 30 and 90 days, whilst customers deemed higher risk arrange a letter of
credit or prepay for goods. The maximum exposure to credit risk at the reporting date is the carrying amount of
the financial assets.
Liquidity risk
(c)
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability
of funding through an adequate amount of committed credit facilities and the ability to close out market positions.
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the
maturity profiles of financial assets and liabilities.
Fair value estimation
(d)
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or
for disclosure purposes. The carrying value less impairment provision of trade receivables and payables are
assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities
approximates their carrying values.
55
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 27: SEGMENT REPORTING
Description of segments
(a)
In the 2019 financial year, the Group operated in one operating segment, being sales of cardiovascular devices
and services to hospitals, clinics, research institutions and pharmaceutical companies.
Management has determined the reporting segments based on the reports reviewed by the Board of Directors
that are used to make strategic decisions. The Board generally considers the business from a geographical
perspective and has identified three reportable segments by geographic area.
Geographic areas are:
-
-
-
Americas (includes global pharmaceutical trials business)
Europe (includes Middle East and Africa)
Asia Pacific (includes Asia & Australia/NZ)
(b)
Segmental information provided to the Board
Inter-
segment
eliminations/
2019
Americas
Europe
Asia Pacific
unallocated Consolidated
$
$
Sales to external customers
2,933,713
502,594
Intersegment sales
Total sales revenue
-
-
2,933,713
502,594
Other revenue/income
-
-
Total segment revenue/income
2,933,713
502,594
$
470,786
98,923
569,709
154,998
724,707
$
-
$
3,907,093
(98,923)
-
(98,923)
3,907,093
-
154,998
(98,923)
4,062,091
Segment result
(1,724,691)
185,368
(2,217,878)
777,923
(2,979,278)
Unallocated revenue less
unallocated expenses
Loss before income tax
Income tax expense
Loss for the year
Segment assets
Segment liabilities
-
(2,979,278)
-
(2,979,278)
14,255,517
31,291,658
-
-
59,989,317
(61,032,860)
13,211,974
53,867,830
(78,898,449)
6,261,039
56
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 27: SEGMENT REPORTING (CONT.)
Inter-
segment
eliminations/
2018
Americas
Europe
Asia Pacific
unallocated Consolidated
Sales to external customers
2,746,127 706,346 553,618
$
$
$
$
-
$
4,006,091
Intersegment sales
Total sales revenue
-
-
1,525,347
(1,525,347)
-
2,746,127 706,346 2,078,965
(1,525,347)
4,006,091
Other revenue/income
-
-
434,831
-
434,831
Total segment revenue/income
2,746,127 706,346
2,513,796
(1,525,347)
4,420,922
Segment result
(1,494,774)
(70,081)
(994,830)
(406,098)
(2,965,783)
Unallocated revenue less
unallocated expenses
Loss before income tax
Income tax expense
Loss for the year
4,558
(2,961,225)
-
(2,961,225)
Segment assets
Segment liabilities
18,492,094
33,016,707
-
-
58,751,024
(70,829,211)
6,413,907
55,911,613
(87,110,626)
1,817,694
(c)
Notes to and forming part of the segment information
Inter-segment transfers
Segment revenues, expenses and results include transfers between segments. The group transfer inventory and
finished goods between its group companies. Such transfers are priced on an ''arm’s-length'' basis and are
eliminated on consolidation.
Segment revenue
There was no significant concentration of revenue attributable to one customer in 2019 (2018: $NIL).
(d)
Disaggregation of revenue
Revenue is disaggregated by the country in which the customer is located as this depicts how the nature, amount,
timing and uncertainty of our revenue and cash flows are affected by economic factors.
57
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 27: SEGMENT REPORTING (CONT.)
2019
Sale of goods
Lease income
Service income
Freight income
Royalty income
Total sales revenue
Other revenue/income
Total revenue/income
2018
Sale of goods
Lease income
Service income
Freight income
Royalty income
Total sales revenue
Other revenue/income
Total revenue/income
Americas
Europe
Asia Pacific Consolidated
$
$
$
$
1,562,355
497,536
359,112
2,419,003
686,805
594,075
90,478
-
-
373
4,685
-
-
25,580
2,104
83,990
686,805
620,028
97,267
83,990
2,933,713
502,594
470,786
3,907,093
-
-
154,998
154,998
2,933,713
502,594
625,784
4,062,091
Americas
Europe
Asia Pacific Consolidated
$
$
$
$
1,634,746
688,688
477,609
2,801,043
578,662
501,182
31,537
-
2,760
12,149
2,749
3,086
4,239
415
-
68,269
584,508
517,570
34,701
68,269
2,746,127
706,346
553,618
4,006,091
-
-
16,463
16,463
2,746,127
706,346
570,081
4,022,554
NOTE 28: RELATED PARTY TRANSACTIONS
Subsidiaries
The group’s principal subsidiaries at 30 June 2019 are set out below. Unless otherwise stated, they have share
capital consisting solely of ordinary shares that are held directly by the group, and the proportion of ownership
interests held equals the voting rights held by the group. The country of incorporation or registration is also their
principal place of business.
Name of entity
AtCor Medical Pty Ltd
AtCor Medical, Inc. (Delaware C Corp)
Country of
incorporation
Australia
USA
Percentage owned
2019
100%
100%
2018
100%
100%
58
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 28: RELATED PARTY TRANSACTIONS (CONT.)
Key Management Personnel Compensation
Salary and
directors fees
Share Based
Payment Benefits
Post-Employment
Benefits
2019
Niall Cairns
King Nelson
Craig Cooper
Donal O’Dwyer2
Total Compensation
2018
Donal O’Dwyer
Niall Cairns
King Nelson
Craig Cooper
David Brookes1
Duncan Ross1
Michael O’Rourke1
Total Compensation
$
$
84,000
30,270
419,255
33,486
567,011
50,228
28,000
27,955
225,863
18,949
179,830
9,513
540,338
64,702
64,702
431,769
-
561,173
-
-
-
4,466
-
-
-
4,466
$
-
-
-
3,181
3,181
4,772
-
-
-
3,551
13,439
904
22,666
Total
$
148,702
94,972
851,024
36,667
1,131,365
55,000
28,000
27,955
230,329
22,500
193,269
10,417
567,470
1. Ceased to be key management personnel in FY2018.
2. Ceased to be key management personnel in FY2019.
Shares Held by Key Management Personnel and Their Associates
Donal O’Dwyer
Niall Cairns
King Nelson
Craig Cooper
Total
Balance
01 July 2018
12,178,627
78,000,000
153,846
75,000,000
165,332,473
Share split
Additions
Balance
30 June 2019
-
12,178,6274
54,616,7693
132,616,769
-
153,846
62,616,7693
137,616,769
117,233,538
282,566,011
-
-
-
-
-
3. A total of 54,616,769 shares acquired by Mr Cairns and Mr Cooper in the year are indirectly held by C2 Ventures, in
which Mr Cairns and Mr Cooper are directors. These shares are subject to the Restriction Agreement and Deed of
Undertaking as approved by members at the Extraordinary General Meeting held on 28 May 2018.
4. Held at date of resignation.
59
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 28: RELATED PARTY TRANSACTIONS (CONT.)
Shares Held by Key Management Personnel and Their Associates
Donal O’Dwyer
Niall Cairns
King Nelson
Craig Cooper
David Brookes
Duncan Ross
Michael O’Rourke
Total
Balance
01 July 2017
6,067,517
3,000,0001
153,846
-1
1,469,264
4,603,052
10,641,396
25,935,075
Share split
Additions
Balance
6,111,110
75,000,0002
-
75,000,0002
555,555
-
30 June 2018
12,178,627
78,000,000
153,846
75,000,000
2,024,8193
4,603,0523
925,925
11,567,3213
157,592,590
183,527,665
-
-
-
-
-
-
-
-
1.
2.
Shares held at date of appointment.
Shares acquired by Mr Cairns and Mr Cooper in the year are indirectly held by C2 Ventures, in which Mr Cairns and
Mr Cooper are directors. These shares are subject to the Restriction Agreement and Deed of Undertaking as
approved by members at the Extraordinary General Meeting held on 28 May 2018.
3. Held at date of resignation and ceased to be key management personnel in FY2018.
Options Held by Key Management Personnel and Their Associates
Niall Cairns
King Nelson
Craig Cooper
Donal O’Dwyer
Total
Balance
01 July 2018
37,500,0005
450,000
37,500,0005
3,150,000
78,600,000
Share split
Additions
Balance
1,500,000
1,500,000
-
-
3,000,000
30 June 2019
39,000,000
1,950,000
37,500,000
3,150,0004
81,600,000
-
-
-
-
-
4. Held at date of resignation.
5. Directors Mr Cairns and Mr Cooper hold 37,500,000 options indirectly through C2 Ventures Pty Limited, of which
they are both directors.
60
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 28: RELATED PARTY TRANSACTIONS (CONT.)
Options Held by Key Management Personnel and Their Associates
Donal O’Dwyer
Niall Cairns
King Nelson
Craig Cooper
David Brookes
Duncan Ross
Michael O’Rourke
Total
Balance
01 July 2017
650,000
-1
450,000
-1
450,000
3,100,000
450,000
5,100,000
Share split
Additions
Balance
2,500,000
37,500,0002
-
37,500,0002
-
-
-
30 June 2018
3,150,000
37,500,000
450,000
37,500,000
450,0003
3,100,0003
450,0003
77,500,000
82,600,000
-
-
-
-
-
-
-
-
1. Options held at date of appointment.
2. Options acquired by Mr Cairns and Mr Cooper in the year are indirectly held by C2 Ventures, in which Mr Cairns
and Mr Cooper are directors. These options are subject to the Restriction Agreement and Deed of Undertaking as
approved by members at the Extraordinary General Meeting held on 28 May 2018.
3. Held at date of resignation.
4. Options acquired by key management personnel and their associates in the year related are free attaching options
on shares purchased.
Performance Rights Held Key Management Personnel and Their Associates
Mr Craig Cooper holds 36 million performance rights which vest subject to a set of Milestones as follows:
Number of
performance rights
Will vest if 30 Day
VWAP exceeds:
Tranche 2
Tranche 3
Tranche 4
Tranche 5
Tranche 6
8 million
8 million
4 million
4 million
12 million
$0.08
$0.12
$0.08
$0.12
$0.15
Expiry Date of
Performance
Milestone
28/05/2021
28/05/2021
06/03/2022
06/03/2022
06/03/2022
Throughout the period the 8,000,000 Tranche 1 performance rights vested when the 30 day VWAP exceeded
$0.05 in March 2019.
Employment Agreements
Remuneration and other terms of employment for the CEO and the other key management personnel are
formalised in employment agreements. Each of these agreements provide for the provision of performance related
cash bonuses, other benefits including health insurance and car allowances, and participation, when eligible, in the
Cardiex Limited Employee Share Option Plan. Other major provisions of the agreements relating to remuneration
are set out below. All contracts with executives may be terminated early by either party with variable notice periods,
subject to termination payments as detailed below.
Craig Cooper – Chief Executive Officer
• Agreement commenced on 1 December 2017.
• Base salary of US$300,000 per annum.
• Reimbursement for reasonable expenses incurred in running the US business, paid on a monthly basis
up to US$5,000 per month.
61
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 28: RELATED PARTY TRANSACTIONS (CONT.)
Niall Cairns – Non-Executive Director
• Agreement commenced with an effective date of 1 March 2018.
• Monthly consulting fee for strategic review and consulting services of AU$7,000 per month.
• Reimbursement for reasonable expenses incurred.
Convertible Notes Issued to Directors and Their Associates
In January 2019, C2 Ventures Pty Ltd, a related party Mr Niall Cairns and Mr Craig Cooper, applied to the
Company for 2,500,000 convertible notes at $1 per note. Key terms of the convertible notes per the Convertible
Note Deed (the “Deed”) are as follows:
Term:
36 months
Currency:
AUD
Drawdown date:
23 January 2019
Funds received:
$2,500,000
Interest payable:
6% per annum, accrued daily, capitalised quarterly
Conversion:
Convertible to fully paid ordinary shares at a $0.03 per convertible note
On 3 March 2019, 1,638,503 convertible notes were converted to ordinary shares at $1 per note.
Loans to Directors and Key Management Personnel
At 30 June 2019 there were no loans to Directors or Key Management Personnel.
NOTE 29: MATTERS SUBSEQUENT TO YEAR END
Subsequent to balance date the Group announced the following material events:
• Chris Dax was appointed as the President of ATCOR Medical;
• Antony Sloan was appointed as the Global Head of Marketing and Communications;
• Rhonda Welch was appointed to the newly created position of VP of Health Economics;
•
The Company entered into a multi-year Agreement to co-develop consumer wearable applications in
partnership with Mobvoi Information Technology Co. Ltd (“Mobvoi”), Google’s official operating partner in
China for the development of smart-wearable solutions for Google’s Wear OS platform.
No other significant subsequent event has arisen that significantly affects the operations of the Group.
62
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 30: PARENT ENTITY DISCLOSURES
2019
$
2018
$
Financial position
Assets
Total current assets
Total assets
Liabilities
Total current liabilities
Total liabilities
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
Financial performance
Loss for the year
Other comprehensive income
Total comprehensive loss
857,664
26,889,597
3,505,895
16,343,616
57,958,165
1,141,725
(48,553,910)
10,545,981
(942,754)
-
(942,754)
1,508,603
23,834,293
1,270,305
17,672,116
53,387,892
1,001,205
(48,226,920)
6,162,177
(638,021)
-
(638,021)
Explanation of loss in 2019 Financial Year
(a)
The increase in loss in the parent entity is primarily due to an increase in share based payments expense.
(b)
No guarantees have been entered into by the parent entity during 2019 or 2018.
Guarantees entered into by the parent entity
Contingent liabilities of the parent entity
(c)
The parent entity did not have any contingent liabilities as at 30 June 2019 or 30 June 2018.
NOTE 31: CAPITAL COMMITMENTS
Balance due on convertible note purchased
(a)
At 30 June 2019, the parent entity had a contractual commitment to pay the balance of US$2,350,000 under the
Convertible Note Purchase Agreement with inHealth Medical Services Inc. This obligation was completed on 30
August 2019.
(b)
Operating lease payable commitments
Total lease expenditure contracted at reporting date but
not recognised in the financial statements
Payable no later than one year
Payable later than one, not later than five years
Total lease expenditure payable
63
2019
$
3,948
13,818
17,776
2018
$
107,506
-
107,506
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019
NOTE 31: CAPITAL COMMITMENTS (CONT.)
Leases now fall under AASB 16 and are presented in Note 19. Operating leases in the comparative period reflect
lease disclosures under AABS 117. In the current year the Group has no short-term lease commitments, and one
low-value lease commitment. Operating lease commitments includes contracted amounts for various offices and
plant and equipment under non-cancellable operating leases expiring within one to five years with, in some
cases, options to extend. The leases have various clauses. On renewal, the terms of the leases are renegotiated.
NOTE 32: COMPANY DETAILS
The registered office of the Company is:
CardieX Limited
Suite 303, Level 3
15 Lime Street
Sydney NSW 2000
The principal place of business is:
CardieX Limited
Suite 303, Level 3
15 Lime Street
Sydney NSW 2000
64
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1.
the financial statements and notes, as set out on pages 22 to 64, are in accordance with the Corporations
Act 2001 and:
a.
b.
comply with Accounting Standards and the Corporations Regulations 2001; and
give a true and fair view of the financial position as at 30 June 2019 and of the performance for the
year ended on that date of the Company and Consolidated Group.
2.
3.
4.
5.
the Company has included in note 1 to the financial statements an explicit and unreserved statement of
compliance with International Financial Reporting Standards;
the Directors have been given the declaration required by Section 295A of the Corporations Act from the
Chief Executive Officer for the financial year ended 30 June 2019;
in the Director’s opinion there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable; and
the remuneration disclosures included on pages 16 to 20 of the Directors’ Report (as part of the Audited
Remuneration Report) for the year ended 30 June 2019, comply with section 300A of the Corporations Act
2001.
This declaration is made in accordance with a resolution of the Board of Directors.
_______________________
Niall Cairns
Executive Chairman
Sydney, 27 September 2019
65
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of CardieX Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of CardieX Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2019, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the group’s
ability to continue as a going concern and therefore the group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Valuation of Investments - Impairment
Key audit matter
How the matter was addressed in our audit
Included in Financial Assets of the Group, are
Our procedures included, amongst others:
investments in Convertible Notes issued by Blumio and
inHealth Medical Inc.
The investments are at their initial stage and as such,
the determination of the recoverable amount involves
Reviewing the discounted cash flow analysis
and evaluating the Group's assumptions and
estimates used to determine the recoverable
amount of its assets;
significant judgements such as the future profitability
Performing sensitivity analysis to stress test
and cash flows of the business and the discount and
the key assumptions used in determining the
growth rates applied to the future cash flows.
recoverable amount;
Consequently, we considered this a key audit matter.
Reviewing the relevant agreements and legal
Refer to Note 17 of the financial report for key
disclosures relating to the Financial Assets.
documentation to determine the nature of
contractual obligations for the investee to
repay the funds; and
Assessing the adequacy of the Group’s
disclosures in Note 17 in relation to the
impairment testing performed.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2019, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2019.
In our opinion, the Remuneration Report of CardieX Limited, for the year ended 30 June 2019, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO East Coast Partnership
Grant Saxon
Partner
Sydney, 27 September 2019
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
ADDITIONAL INFORMATION FOR PUBLIC LISTED COMPANIES
Additional information required by the ASX Listing Rules and not disclosed elsewhere in this report is set out
below.
Distribution Schedule of Equity Securities as at 24 September 2019
Spread of Holdings
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
No. of Holders
573
823
147
107
73
1,723
Shares
657,940,238
35,983,085
1,188,794
379,770
10,343
695,502,230
Unmarketable parcels
There were 480 shareholders holding less than a marketable parcel totalling 3,728,663 shares as at 24 September
2019.
Top 20 Holdings as at 24 September 2019
Holder Name
C2 VENTURES PTY LIMITED
MR PAUL COZZI
CITICORP NOMINEES PTY LIMITED
CB CO PTY LTD
MR PAUL JOSEPH COZZI
CAMPBELL KITCHENER HUME & ASSOCIATES PTY LTD
DRUMNADROCHIT FUTURES PTY LTD
MRS JANE GREENSLADE
MR DARRYL PATTERSON & MRS MARGARET STEWART PATTERSON
CPO SUPERANNUATION FUND PTY LTD
CALAMA HOLDINGS PTY LTD
DUNDRUM INVESTMENTS PTY LTD
PONDEROSA INVESTMENTS (WA) PTY LTD
ANNLEW INVESTMENTS PTY LTD
SYMINGTON PTY LTD
MR DONALD O'DWYER & MRS JUDITH O'DWYER
PEHILA PTY LTD
PROF MICHAEL FRANCIS O'ROURKE
BNP PARIBAS NOMINEES PTY LTD
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
TOTAL
Balance at
24 Sep 2019
%
137,616,769
19.79
59,479,957
17,768,606
15,470,000
13,973,617
11,570,923
10,068,574
9,996,504
8,596,340
7,330,000
7,325,353
7,250,392
7,250,000
7,050,000
6,894,649
6,594,902
5,896,951
5,670,370
5,127,845
4,950,000
8.55
2.55
2.22
2.01
1.66
1.45
1.44
1.24
1.05
1.05
1.04
1.04
1.01
0.99
0.95
0.85
0.82
0.74
0.71
355,881,752
51.17
69
CARDIEX LIMITED
ABN 81 113 252 234
AND CONTROLLED ENTITIES
ADDITIONAL INFORMATION FOR PUBLIC LISTED COMPANIES
Substantial Shareholders
The names of substantial shareholders who have notified the Company in accordance with Section 671B of the
Corporations Act 2001 are:
Holder Name
Number of Ordinary Fully Paid
Shares Held
% Held of Issued Ordinary
Capital
C2 VENTURES PTY LIMITED
PAUL COZZI
137,616,769
73,453,574
19.79
10.56
The name of the Company Secretary is:
Jarrod Travers White
Registered Office and Principal Place of Business
Suite 303, Level 3
15 Lime Street
Sydney NSW 2000
Telephone: (02) 9874 8761
Email: info@CardieX.com
Website: www.CardieX.com
70