Annual Report
2 0 2 0
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
CORPORATE DIRECTORY
DIRECTORS
Mr. Niall Cairns (Executive Chairman)
Mr. King Nelson
Mr. Craig Cooper
Mr Jarrod White (appointed 21 May 2020)
JOINT COMPANY SECRETARIES
Mr. Jarrod White
Mr. Philip Leighfield
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 Audit Pty Ltd
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
4
Page
10
Page
15
Page
19
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Page
20
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
21
Page
23
Page
24
Page
25
Page
68
Page
69
Page
72
2
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
Chairman’s Report
My Fellow Shareholders,
It is a pleasure to present the 2020 Annual Report for CardieX Limited.
This past year has been challenging as we all adapt to a new personal and business environment. Notwithstanding
those challenges we finished the year strongly, as shown by our June quarterly cash flow report and the strength
shown by our core ATCOR business which continues to perform as we move into 2021.
We have commenced the 2021 year in a position of strength - which has been further bolstered by our recent
$2.5m equity raising. Our focus remains on executing on our product plan with multiple new product releases
planned over the course of the next year as we target new medical and consumer technology markets in excess
of $US500b globally. More details are included in the following letter from our CEO, as well as the Operations
Update.
Over the last year our executive team and management have continued to deliver on our strategic plan including
multiple new partners, customers, and product development initiatives – all of which are driving the future value of
our Company. I would like to thank all staff for their continuing efforts in this regard. I would also like to thank my
fellow board members Craig Cooper (Director & CEO), King Nelson (independent US based Director), and our
newly appointed Director Jarrod White (Director & CFO).
I have great confidence for the years ahead as we continue to drive value for all our shareholders, and I would like
to personally thank you for your ongoing support.
Best regards and keep healthy,
Niall Cairns
Executive Chairman
CardieX Limited
3
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
Chief Executive Officer’s Report
My Fellow Shareholders,
It has been a significant year for us at CardieX as we continued our transition 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.
Importantly, we have made significant progress in regards to new product development and partnerships that form
the ecosystem of our focus on remote patient monitoring and telehealth, clinician SaaS solutions, and consumer
digital health – all representing multi-billion-dollar market opportunities for your Company.
Our core medical sales business, ATCOR, continues to perform strongly year-on-year with a focus on developing,
marketing, and distributing medical technologies that measure patient risk for hypertension, cardiovascular disease
and other related vascular disorders.
ATCOR’s Clinical Trial Services team also continues to outperform with new contracts with major pharmaceutical
companies such as AstraZeneca and Bayer AG – a strong sign that the current COVID-19 environment is not
materially impacting the critical-need sector of cardiovascular health trials.
ATCOR.X, a newly created division of ATCOR, is expanding and developing out our core “vital signs” technology
into new markets including connected fitness, smart devices, and wearables – sectors that I believe will be a
significant opportunity for us over the coming years with the health wearable segment forecast to grow to $US37b
by 2025. The immediate focus of the ATCOR.X being to drive the successful execution of our partnership with
Mobvoi, Google’s in-country wearable partner in China, and to implement multiple new wearable partnerships for
your Company over the course of 2021.
And finally, our partnerships and investments in inHealth (telehealth and lifestyle therapeutics) and Blumio
(wearable radar sensors) continue to drive value for us as they each make progress on executing against their
respective business plans. Most important in this regard is Blumio’s recent announcement of their partnership with
semiconductor company Infineon, which can only add to the value of our partnership with that company going
forward.
This next year will be the most significant year for the Company since I became your CEO. The last two years have
been about repositioning your Company to take advantage of new market opportunities that are unique to our FDA-
cleared vital signs technology. Going into this next year I couldn’t be more excited and energized about our new
product development and the impact we are poised to make on global health solutions.
I would like to thank my fellow Board members and management and staff at CardieX who have worked tirelessly
to realise our vision as we continue to grow shareholder value. The last year has been a difficult one for many of
us personally but we have been lucky to have a strong, cohesive team that shares our collective vision for the
Company as we continue to execute on our business plan.
My best regards,
Craig Cooper
CEO & Managing Director
CardieX Limited
4
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
Review of Operations
The Company operates sales, development, and marketing activities in 6 key market sectors:
1. The sale and marketing of XCEL and Oscar 2 medical devices for the management and diagnosis of
cardiovascular disease, hypertension, and other vascular disorders ($US2.5b mkt size: 2025);
2. The provision of clinical trial services to research and pharmaceutical companies and institutions;
3. Development of consumer & medical wearable technologies ($US37.6b mkt size: 2025);
4. Technology licensing;
5. Digital health including telehealth, SaaS, and clinician and consumer digital portals and apps ($US509b
mkt size: 2025); and
6. The development of home vital signs monitors incorporating the company’s patented & FDA-cleared
SphygmoCor® technology.
All our product and development activity is founded in our core arterial waveform technology – known as
SphygmoCor®. CardieX is the only company that has FDA clearance for measuring central blood pressure, arterial
stiffness, and other proprietary cardiovascular parameters non-invasively in adults. The Company’s SphygmoCor®
technology currently has more than 4,500 installations globally and is used by leading research and pharmaceutical
companies, such as Bayer, AstraZeneca, GSK and others.
The Company provides an update on business operations throughout the year as follows:
Wearable Sensor Technology Development
CardieX’s strategy is to integrate its FDA (US Food and Drug Administration) cleared SphygmoCor® technology
into the spectrum of smart wearable devices for consumer and medical settings. This involves a complex and
significant technology and engineering effort in order to extract waveforms from a wearable plethysmogram (“PPG”)
based or otherwise) sensor that correlate well with those extracted by its current FDA-cleared device, which is
considered the gold standard for measuring an aortic arterial pressure waveform with cardiovascular features.
In April, 2020, CardieX subsidiary ATCOR completed a major milestone in the development of its wearable sensor
technology and derived a series of unique heart and arterial health features from a PPG sensor which have the
potential to significantly expand the clinical and consumer applications of the SphygmoCor® technology. As a
result, CardieX is now proceeding with the next phase of its JDA with Mobvoi, Google’s Wear OS partner in China.
The Company has also submitted a new US patent application for its proprietary technology for PPG wearable
sensors as well as a number of trademark applications for the medical and clinical data sets that the Company has
been able to extract so far.
ATCOR completed internal human studies (13 subjects, 157 signals, with an age range of 20 to 65 years, with
results distinguishing between healthy, non-healthy, young and elderly participants) and in conjunction with
Macquarie University. ATCOR has initially determined four unique and proprietary heart and arterial health
features, which are believed to have been extracted from a PPG sensor for the first time (see below). This
represented Phase 1 of the Company’s PPG program, and ATCOR’s engineering team is now working to complete
Phase 2, which includes development of multiple new clinically relevant features for blood pressure management.
Mobvoi Development Partnership
CardieX also has a Joint Development Agreement (JDA) with Mobvoi for the development of novel and proprietary
health technologies, applications and features to be integrated into Mobvoi’s next generation smart wearables.
Mobvoi is Google’s official Wear OS partner in China. As a technology unicorn based in Beijing, Mobvoi boasts a
stable of well-known investors, including Google, Volkswagen, ZhenFund and Sequoia Capital China.
The Company’s partnership with Mobvoi is focused on the use of PPG sensors to derive unique consumer health
functions for integration into Mobvoi smartwatches.
During the last quarter, ATCOR presented the results of its PPG research and engineering efforts to Mobvoi.
CardieX is now looking at expanding the opportunities under the JDA to new markets and other applications, such
as the provision of data and related technologies to Mobvoi under a “services & subscription model”.
5
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
OPERATIONAL UPDATE
New Patent and Trademark Applications
On 1 June, CardieX submitted a US patent application in support of its wearable strategy. Provisional application
63/031,645 describes a system and method of measuring medically reliable heart & arterial health indicators from
a PPG light sensor on a wearable device when a user places their finger on the sensor. The determination of a
heart pulse with significant heart and arterial health indicators by way of the patent could previously only be
obtained either invasively or through a medical device in a clinical setting.
The biometric data captured by the PPG sensor correlates well with waveforms extracted by the Company’s gold
standard SphygmoCor® algorithms, and the derived feature set includes:
• Heart Stress;
• Heart Age;
• Exercise Capacity; and
• Heart Rate-Plus.
As the most widely used sensors on wearables, PPG sensors are incorporated into a broad range of devices from
the world’s leading technology companies, including Apple, Samsung, Garmin, Mobvoi, Fitbit and others.
The first application of the patent will likely be on Mobvoi smartwatches, but CardieX also plans to license the
technology to other wearable technology companies and include it in the Company’s own medical and consumer
wearable devices.
In parallel with product development efforts, CardieX has also applied for trademark protection for up to 20
proprietary new parameters and product/service brands in multiple geographies around the globe.
Integrating Central Blood Pressure into New Home BP Monitors
CardieX is developing a vision for its Complete BP™ solution, a powerful combination of brachial and central blood
pressure which gives clinicians and consumers alike a more complete picture of blood pressure – all from a home-
based device.
In late June 2020, as part of the development of an ATCOR home BP monitor, CardieX programmed and shipped
prototype chips to its ODM partner, who will commence integrating the Company’s central blood pressure
technology into a reference design for a standard brachial BP monitor. Further details of our device and market
strategy remain confidential. Our new device development forms a key part of our remote patient monitoring and
digital health solutions outlined below.
Strategic Partnership with Blumio Continues to Add Value
CardieX has several ongoing partnerships and development efforts, including a Co-Development Agreement (CDA)
with Silicon Valley-based Blumio that integrates the Company’s proprietary technology into the Blumio radar
sensor. The partnership comprises two main parts:
1. A Co-Development Agreement (CDA) that provides for the integration of SphygmoCor® technology into
the Blumio radar sensor, allowing for a unique and patented set of cardiovascular data features to be
extracted by the Blumio sensor; and
2. The Company’s investment in Blumio for 7.5% equity ownership with the potential to increase to 10% (for
no additional cash investment) based on the achievement of certain additional milestones.
CardieX continues to integrate its algorithms and technology into the Blumio sensor under the CDA and has met
all important milestones and technology standards to date. For its part, Blumio recently completed its first-
generation sensor development kit as one of the major milestones under the CDA. The Blumio Sensor
Development Kit consists of a radar sensor board, a wearable enclosure and a small processing unit running
algorithms that generate an arterial waveform in real-time. This is the first step towards making Blumio’s sensor
technology commercially available to device makers as the development kit enables their partners—including
CardieX—to execute product development efforts in parallel.
6
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
OPERATIONAL UPDATE
Large Global Players Partner with Blumio
Recognizing the importance of the global market opportunity for the Blumio sensor, Swiss healthcare technologies
company, Roche, selected Blumio for a pilot project to explore the feasibility of integrating Blumio’s sensor
technology into Roche's next-generation diagnostics devices. As part of this pilot project, Blumio then introduced
global semiconductor manufacturer Infineon Technologies AG into the dialogue with Roche, as Infineon currently
manufactures a key component used in diagnostics devices from Roche.
These discussions led to Blumio signing an agreement with Infineon (separate from its pilot agreement with Roche)
to co-develop a wearable, non-invasive blood pressure sensor by 2021 based on Infineon’s XENSIV™ radar
chipset. The new sensor has the potential to disrupt the $US45 billion market for wearable cardiovascular
monitoring devices by enabling continuous and precise BP measurement without a cuff.
Blumio’s partnership with Infineon will further promote the accelerated commercialization of Blumio’s technology in
one of the largest healthcare technology markets. Upon successful completion, a kit combining Infineon’s radar
chipset and development board with Blumio’s software and algorithms will be released to consumer and medical
wearable device makers to integrate into their blood pressure monitoring devices.
All boats will rise as a result of this partnership between Infineon and Blumio, and CardieX will be working hard to
further refine the integration of its SphygmoCor® technology into the Blumio sensor as development efforts
continue. Ultimately from a commercial perspective, the Company’s strategy is to continue working with Blumio in
parallel to the Infineon/Blumio efforts, so that our algorithms are supported and included in the commercial product
of the parties.
The Infineon Development Agreement and the Roche pilot project create the foundation for global development
and application of Blumio’s sensor technology through the combined networks of both Roche and Infineon.
SaaS, Digital Health, and Remote Patient Monitoring Platforms
Our digital platform consists of a full ecosystem of connected devices and digital solutions for remote patient
monitoring and consumer health including:
• ArtyNet™, a connected HIPPA compliant patient portal for clinicians to remotely manage patient health;
• Arty™, a consumer app that provides unique consumer health data based on our proprietary algorithms;
• Connected devices including wearables and home monitors that remotely connect to both Arty™ and
ArtyNet™;
• A telehealth, messaging, and data transfer platform integrated into Arty™ that provides a full suite of tools
for telehealth and remote patient monitoring; and
• A subscription-based SaaS platform.
Together, these digital health assets provide clinicians and consumers with a proprietary suite of health tools unique
to our FDA-cleared SphygmoCor® technology. Development work continues on the above with planned launch in
2021 to coincide with our new Complete BP™ device outlined above.
ATCOR ABPM Technology Recommended for MSAC Reimbursement
A recommendation in June 2020 from the High Blood Pressure Research Council (HBRCA) that Australia’s Medical
Services Advisory Committee (MSAC) and the Federal Minister for Health approve reimbursement of ambulatory
blood pressure monitoring (ABPM) through the country’s Medicare Benefits Schedule (MBS) could increase
demand for the Oscar 2 with SphygmoCor Inside ABPM in Australia. The Oscar 2 is a 24-hour ambulatory blood
pressure monitor (ABPM) by SunTech Medical that includes the Company’s SphygmoCor® technology inside. This
product is sold exclusively by ATCOR in Australia.
HBRCA recommends that reimbursement be made available for diagnosis of hypertension in patients who have
measured clinic-based blood pressure between 140/90 mmHg and 180/110 mmHg, with reimbursement up to once
every 12 months for individuals who have not commenced antihypertensive medication. The average
recommended fee is A$107.60.
HBRCA estimates that more than 700,000 ABPM procedures will be required over the first three years of coverage.
7
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
OPERATIONAL UPDATE
The Oscar 2 device adds ATCOR’s proprietary central blood pressure algorithms to a standard ABPM, providing
the benefits of central pressure waveform analysis for enhancement and individualization of patient care over
standard blood pressure monitoring.
ATCOR Support for Pharmaceutical Clinical Trials Continues Apace
ATCOR generates significant revenue each year in our clinical trials business unit. We contract with pharmaceutical
companies for the use of SphygmoCor® XCEL devices and the provision of core lab and data management
services for clinical trials — providing end-to-end service that ultimately delivers clean datasets to study sponsors.
SphygmoCor® technology has been utilized in pharma trials across the therapeutic spectrum, participating in
clinical trials for hypertension, diabetes, heart failure, psoriasis, renal disease, and many other disease states. We
are currently contracted for clinical trials that will enrol over 3,000 patients at more than 150 clinical trial sites in 20
countries across the globe.
ATCOR Technology to Feature Prominently in COVID-19 CARTESIAN Study
In a significant validation of our technology, our SphygmoCor® XCEL device was selected by the European
ARTERY Society to exclusively measure central blood pressure and augmentation index in the CARTESIAN study
— the first clinical trial to focus on the impact of COVID-19 on arterial stiffness and central hemodynamics.
The longitudinal, multicentre study will recruit individuals with recently confirmed infection by SARS-Cov-2, who
will undergo two visits – 3 to 6 months and 1 year after COVID-19 diagnosis. During each visit, assessment of
carotid-femoral pulse wave velocity and central hemodynamics will be performed.
Ancillary studies will explore additional biomarkers of accelerated vascular aging. The CARTESIAN study aims to
identify early predictors of cardiovascular events and inform better preventive care in a post-coronavirus world.
Data from this study will also drive our product development going forward as we seek to refine our medical and
consumer devices to better identify COVID-19 risk factors.
Restructuring of Agreement with and Investment in inHealth Medical Inc
After the end of Q4, CardieX announced it had restructured its partnership with and investment in inHealth Medical,
following significant developments in both businesses since partnership commenced in 2018.
Since then, the inHealth business has developed significantly. The company has signed major global corporations
as partners and clients and continued to grow its private practice, partnerships and enterprise business revenues.
In addition, inHealth appointed experienced telehealth veteran and technology leader, Harry Kim, as CEO and
Chairman, and three new executive hires have significantly enhanced the management team. Interest in US
telehealth businesses is strong, and inHealth is well-positioned to raise new capital at significantly favourable
valuations from US-based investors and strategic parties, a process the company has already launched.
CardieX and inHealth management teams agreed to restructure the partnership and investment to provide the best
capital structure to facilitate new investment, while ensuring that management and founders are appropriately
incentivized to drive growth and continued success. Key changes were reducing the outstanding convertible note
to USD2.5 million by repayment of USD0.5 million, extending the maturity date to 1 July 2021, and exchanging the
option to move to 50.5% for the issuance of 1% of the fully diluted equity of inHealth. This results in CardieX
increasing its shareholding to 8.7% and up to 37%, depending on the conversion of the convertible note and before
further capital raising.
Furthermore, CardieX and inHealth agreed to an ongoing Collaboration Agreement to develop hypertension and
cardiovascular programs for the products, solutions and markets addressed by both parties. These include the
current inHealth/CardieX “Central Blood Pressure” research project using SphygmoCor® XCEL device,
“Telemedicine to Reduce Cardiovascular Disease Risk: A Randomised Clinical Trial”, with Dr. Jeremy McConnell
from Florida, USA, as the lead investigator. Under the ongoing Collaboration Agreement, it is expected that a
number of other projects may be undertaken on a commercial arms-length basis.
COVID-19 Update on Operations
The CardieX team is spread throughout its functional HQs in Australia, the United States, and China. CardieX
management and staff have all continued to make progress tirelessly during COVID-19 restrictions – working
remotely via video-conferencing and other virtual collaboration tools without any loss in productivity. Team
members are now carefully migrating back to the office while maintaining appropriate physical distancing and mask-
wearing protocols to protect the health and safety of the entire team.
8
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
OPERATIONAL UPDATE
While restrictions slowed down certain operations, such as in-person sales calls, on-site consultations, and live
marketing events at industry conferences and trade shows, CardieX accelerated the ongoing ramp-up of its digital
marketing strategy. Highlights include:
•
eMarketing and hybrid email/phone campaigns to qualify warm leads, update our CRM database, and
offer sales promotions to existing customers and new prospects languishing in COVID-19 limbo.
•
• Addition of high-value content to both the CardieX and ATCOR websites, including recent research on
the correlation between chronic hypertension and cognitive impairment as well as articles exploring the
cardiovascular complications of COVID-19.
Launch of a new webinar series in collaboration with leading industry partner, The American Academy of
Anti-Aging Medicine (A4M). The first webinar featured noted cardiologist and anti-aging expert, Dr. Mark
Houston, discussing “New Approaches to Cardiovascular Aging—Central Pressure Waveforms & Arterial
Stiffness Assessment.” Registrations and attendance were significant and follow-up interest has been
solid to date.
Launch of a new series of video interviews, entitled “No Pressure”. In the first of this series, ATCOR Sales
Director, Ric Ruffhead, sat down with Dr. Lee Marcus, a preventive cardiologist from New York, to discuss
the challenges of practicing cardiovascular medicine at the US epicentre of COVID-19, and the likely
impact on his practice in the future.
•
Board and Management Appointments
CardieX announced the appointment of Mr. Jarrod White as a Director of CardieX in May, after the Board identified
the practical issues and restrictions imposed on international travel during the COVID-19 pandemic.
Mr. White has been the CFO and Company Secretary of CardieX since early 2018, and he will continue in both
roles with Philip Leighfield appointed as Joint Company Secretary. Mr. White’s appointment as a director is also
recognition of his significant ongoing contribution to the Company.
In addition, CardieX made several significant advances on our digital health solutions strategy. To drive and
accelerate that strategy, CardieX made several key hires in Q4:
• Dan Posnack, Director of Product Development - Digital Health;
• Sameer Molvi, Senior Engineering Program Manager;
• Scott Kolek, Senior Software Engineer;
• Ehad Akeila, Senior Firmware Engineer; and
• Rebecca Davis, UI/UX Designer.
Funding Status
In December 2019 we raised $1.5 million, (including a commitment from major shareholder C2 Ventures for $0.5
million, which is subject to shareholder approval) and in March 2020 we executed a $1.5 million R&D loan facility
with Mitchell Asset Management. Early in the new financial year (announced in late July and completed in early
August 2020) we raised $2.5 million - further increasing the Company’s cash reserves.
Outlook
Significant progress was achieved during the last year in relation to technological and commercial development as
well as product expansion of the Company’s proprietary SphygmoCor® technology. The continued development
of wearable sensor technologies in health-related devices provides a large market opportunity for CardieX in clinical
and consumer applications, as does our future product portfolio of consumer, home, and clinician-focused medical
devices and digital solutions.
The Company is set to release a number of new products over the remainder of calendar 2020 and during 2021
which will significantly expand the commercial opportunity for CardieX. Our strategy also continues to focus on
developing the first “uncalibrated”, non-invasive and cuffless wearable sensor for monitoring blood pressure and
other cardiovascular health vital signs – which is considered to one of the “Holy Grails” in wearable health
monitoring. We look forward to updating the market on further progress in this regard as well as in relation to all
our product development activities.
9
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
DIRECTORS’ REPORT
The Directors of CardieX Limited (the “Company”) submit the financial report of the Company for the year ended
30 June 2020, 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 $3,320,427 (30 June 2019 $2,979,278).
The Group has generated total revenue of $4,616,664, up from $4,062,091 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 2020.
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:
•
In July 2020, CardieX restructured its investment in inHealth and received US$0.5m of the US$3m
Convertible Note, reducing the principal investment to US$2.5m;
• CardieX signed a new Collaboration Agreement with inHealth resulting in a re-setting of the investment
relationship between the entities;
• On 27 July 2020, CardieX completed a $2.5 million placement from new strategic investors as $0.03 per
share with a 1 for 5 free attaching listed option (CDXO), resulting in the issue of 83,333,334 new Shares
and 16,666,667 Listed Options.
• On 20 August 2020, AtCor Medical Inc, a CardieX Limited subsidiary, entered into a new contract for the
lease of ATCOR devices and the provision of expanded data management services for Bayer’s “AVANTI”
trial. The extension of the contract is valued at US$420k.
No other significant subsequent event has arisen that significantly affects the operations of the Group.
10
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
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
Mr. King Nelson
Mr. Craig Cooper
Mr. Jarrod White (appointed 21 May 2020)
Joint Company Secretaries
Mr. Jarrod White
Mr. Philip Leighfield
Chief Financial Officer
Mr. Jarrod White
Information on Directors
Mr. Niall Cairns
Executive Chairman and Director
Qualifications:
Appointed:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
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.
Consolidated Financial Holdings Limited (formerly Chant West
Holdings Limited), Tambla Limited
Tru-Test Corporation Limited, Kestrel Growth Companies Limited,
Com Ops Limited
•
•
•
Chairman of the Board.
Chairman of the audit and risk committee.
Member of remuneration and nomination committee.
11
Mr. King Nelson
Non-executive Director
Qualifications:
Appointed:
Experience and expertise:
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
DIRECTORS’ REPORT (CONT.)
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. King is also currently CEO of Q’Apel Medical – a Medical
device company focused on Neurovascular disease
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.
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.
12
Mr. Jarrod White
Non-executive Director
Qualifications:
Appointed:
Experience and expertise:
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
DIRECTORS’ REPORT (CONT.)
B.Bus, CA
21 May 2020
Mr. White is a Chartered Accountant and founding Director of
Traverse Accountants Pty Ltd, a Corporate Advisory and Chartered
Accounting Firm. In conjunction with his Corporate Advisory roles at
Traverse Mr. White has been appointed Company Secretary and
Chief Financial Officer of several other listed entities that operate on
the Australian Stock Exchange and has a sound knowledge of
corporate governance and compliance. Jarrod has also been an
advisor to a wide range of capital raisings, IPO’s and reverse
takeover transactions and has a focus on working with growing
Companies in the exploration, technology and biotech space.
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
None.
High Peak Royalties Limited (ASX.HPR)
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 2020 and the number of meetings attended by each Director were:
Director
Niall Cairns
King Nelson
Craig Cooper
Jarrod White
Directors Meetings
Held Whilst in Office
Attended
5
5
5
1
5
4
5
1
Directors’ Interests
Information on the Directors’ and their associates’ interests in shares and options of the Company at 30 June 2020
can be found in the Remuneration Report on page 15.
Shares Issued on the Exercise of Options
During the financial year ended 30 June 2020, there were no shares issued 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.
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.
13
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
DIRECTORS’ REPORT (CONT.)
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 2020 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 19. The external auditor did not provide non-audit services to the Company during the year
ended 30 June 2020.
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 19.
14
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
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. Jarrod White
Executive Director and Chairman
Non-executive Director
CEO and Executive Director
Non-executive Director (appointed 21 May 2020)
15
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
REMUNERATION REPORT (CONT.)
Key Management Personnel Compensation
Salary and
directors fees
Share Based
Payment Benefits
Post-Employment
Benefits
2020
Niall Cairns
King Nelson
Craig Cooper
Jarrod White1
Total Compensation
2019
Niall Cairns
King Nelson
Craig Cooper
Donal O’Dwyer2
Total Compensation
$
179,000
26,925
446,828
8,129
660,882
84,000
30,270
419,255
33,486
567,011
$
-
-
464,297
857
465,154
64,702
64,702
431,769
-
561,173
$
-
-
-
-
-
-
-
-
3,181
3,181
1. Appointed as key management personnel on 21 May 2020.
2. Ceased to be key management personnel in FY2019.
Shares Held by Key Management Personnel and Their Associates
Total
$
179,000
26,925
911,125
8,986
1,126,036
148,702
94,972
851,024
36,667
1,131,365
Niall Cairns
King Nelson
Craig Cooper
Jarrod White
Total
Balance
01 July 2019
Additions
Balance
30 June 2020
132,616,769
21,343,4231
153,960,192
153,846
137,616,769
-
-
153,846
21,343,4231
3,257,5772
158,960,192
3,257,577
270,387,384
45,944,423
316,331,807
1. A total of 21,343,423 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.
Shares held at appointment date of 21 May 2020.
2.
16
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
REMUNERATION REPORT (CONT.)
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
Additions
Balance
30 June 2019
-
12,178,6272
54,616,7691
132,616,769
-
153,846
75,000,000
62,616,7691
137,616,769
165,332,473
117,233,538
282,566,011
1.
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.
2. Held at date of resignation and ceased to be key management personnel in FY2019.
Options Held by Key Management Personnel and Their Associates
Niall Cairns
King Nelson
Craig Cooper
Jarrod White
Total
Balance
01 July 2019
39,000,000
1,950,000
37,500,000
-
Expired
Additions
Balance
-
(450,000)
-
-
-
-
-
1,897,7283
30 June 2020
39,000,0004
1,500,000
37,500,0004
1,897,728
78,450,000
(450,000)
1,897,728
79,897,728
3. Options held at appointment date of 21 May 2020.
4. Directors Mr Cairns and Mr Cooper hold 37,500,000 options indirectly through C2 Ventures Pty Limited, of which
they are both directors.
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
Expired
Additions
Balance
1,500,000
1,500,000
-
-
30 June 2019
39,000,0005
1,950,000
37,500,0005
3,150,0006
3,000,000
81,600,000
-
-
-
-
-
5. Directors Mr Cairns and Mr Cooper hold 37,500,000 options indirectly through C2 Ventures Pty Limited, of which
they are both directors.
6. Held at date of resignation and ceased to be key management personnel in FY2019.
17
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
REMUNERATION REPORT (CONT.)
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
30/11/2021
30/11/2021
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.
Niall Cairns – Executive Chairman and Director
• Current agreement commenced with an effective date of 1 August 2019.
• Monthly consulting fee for strategic review and consulting services of US$10,000 per month.
• Reimbursement for reasonable expenses incurred.
Jarrod White – Director
•
Jarrod White is the principal of Traverse Accountants Pty Ltd, who holds an engagement with the Group
covering CFO services, Company Secretarial services, and other general accountancy services;
• Mr White will receive Directors Fees from 1 July 2020 for $30,000 per annum in addition to the arms’
length services paid to Traverse Accountants Pty Ltd.
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 s298(2) of the
Corporations Act 2001.
Niall Cairns
Executive Chairman
Sydney, 31 August 2020
18
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 2020, 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
Director
BDO Audit Pty Ltd
Sydney
31 August 2020
BDO Audit Pty Ltd ABN 33 134 022 870 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 Audit Pty Ltd 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
AND CONTROLLED ENTITIES
ABN 81 113 252 234
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR YEAR ENDED 30 JUNE 2020
Sales revenue
Fair value adjustment
Other income
Total income
Cost of sales
Bad debts expense
Inventory impairment expense
Marketing and sales expense
Product development and regulatory expense
Occupancy expense
Employee benefits expense
Administration expense
Interest expense
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
2020
$
4,292,552
324,112
4,616,664
673,726
5,290,390
(698,176)
(68,936)
-
(433,731)
(626,056)
(409,200)
(4,853,172)
(1,356,806)
(164,740)
(3,320,427)
-
2019
$
3,907,093
154,998
4,062,091
984,515
5,046,606
(804,401)
(32,705)
(55,792)
(392,517)
(304,738)
(412,602)
(4,732,815)
(1,190,867)
(99,447)
(2,979,278)
-
(3,320,427)
(2,979,278)
97,886
(35,917)
(3,222,541)
(3,015,195)
(0.46)
(0.46)
(0.46)
(0.46)
These financial statements should be read in conjunction with the accompanying notes.
20
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020
Note
2020
$
2019
$
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventory
Financial assets
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Financial assets
Other non-current assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Unearned revenue
Provisions
Financial liabilities
Lease liabilities
Borrowings
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
Financial liabilities
Lease liabilities
Borrowings
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
2,061,642
819,523
259,679
728,544
823,960
4,693,348
565,636
56,192
5,299,848
60,252
5,981,928
4,980,826
1,014,967
218,930
645,179
6,859,902
613,351
44,183
5,597,966
96,572
6,352,072
10,675,276
13,211,974
711,530
1,524,861
322,547
249,447
117,702
718,464
3,644,551
-
-
192,557
958,167
1,150,724
4,795,275
5,880,001
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
8
9
10
17
11
13
17
11
14
15
16
20
21
22
16
20
21
22
21
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020 (CONT.)
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Note
23
24
26
2020
$
2019
$
53,127,941
51,500,876
1,969,548
1,613,332
(49,217,488)
(46,163,273)
5,880,001
6,950,935
These financial statements should be read in conjunction with the accompanying notes.
22
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED 30 JUNE 2020
Shares on
Issue
Note
Reserves Accumulated
Total
$
$
losses
$
$
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
23
3,002,200
Shares issued on conversion of convertible
notes
Share issue costs
Share based payments
-
-
-
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
Balance at 1 July 2019
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with equity holders in their
capacity as owners.
51,500,876
1,613,332
(46,163,273)
6,950,935
-
-
-
-
(3,320,427)
(3,320,427)
97,886
-
97,886
97,886
(3,320,427)
(3,222,541)
Capital placement
Share issue costs
23
1,000,000
(13,238)
-
-
-
-
-
-
1,000,000
(13,238)
551,862
612,983
640,303
(88,441)
612,983
-
(266,212)
266,212
-
Shares issued on conversion of convertible
notes
Share based payments
Options expired
Balance at 30 June 2020
53,127,941
1,969,548
(49,217,488)
5,880,001
These financial statements should be read in conjunction with the accompanying notes.
23
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
CONSOLIDATED STATEMENT OF CASH FLOWS FOR YEAR ENDED 30 JUNE 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Grant income
Interest received
Note
2020
$
2019
$
5,091,611
(7,240,986)
(2,149,375)
449,203
1,321
4,646,020
(7,124,656)
(2,478,636)
185,239
2,624
Net cash used in operating activities
27
(1,698,851)
(2,290,773)
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
Proceeds from shares issued
Share issue costs
Loans received
Finance costs
Finance lease payments
Net proceeds from convertible notes
Net cash provided by financing activities
Net (decrease)/increase in cash held
Cash and cash equivalents at beginning of financial year
Effects of foreign currency exchange
(175,203)
(33,693)
(3,490,217)
(3,699,113)
1,000,000
(13,238)
1,673,770
(44,375)
(142,738)
-
2,473,419
(2,924,545)
4,980,826
5,361
(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
-
Cash and cash equivalents at end of financial year
8
2,061,642
4,980,826
These financial statements should be read in conjunction with the accompanying notes.
24
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
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 31 August 2020 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 2020 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 $3,320,427 (2019: $2,979,278) and had net cash outflows from
operating activities of $1,698,851 for the year ended 30 June 2020 (2019: $2,290,773). 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 $2,061,642 as at 30 June 2020 (2019: $4,980,826).
As at that date, the Group had net assets of $5,880,001 (2019: $6,950,935). 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 $1,000,000 in equity funding and
$1,500,000 in debt funding in the previous 12-month reporting period, as well as a further
$2,500,000 since 30 June 2020. 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.
25
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
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 2020 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 Group 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 Group satisfies performance
obligations by transferring the promised goods or services to its customers.
The Group 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. The Group recognises unearned revenue for lease
income received in advance where the benefit from the use of the underlying asset has not been
diminished. The unearned revenue is reported in the statement of financial position. Similarly, if the Group
provides benefits from the underlying asset before it receives the consideration, the Group recognises
either a contract lease 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.
26
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
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.
Government Grants
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary
to match them with the costs that they are intended to compensate.
Research and development grant income
Research and development grant income is recognised when the Group is entitled to the research and
development grant. The amount is treated as other income in the period in which the research and
development costs were incurred.
Forgivable loans
Income resulting from the forgiveness of a Government loan is recognised when realised, meaning the final
forgiveness amount has been determined and forgiveness has been issued by the Government. Until it is
reasonably certain that forgiveness will be issued, the loan amount is recognised as a financial liability
under AASB 9.
e.
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
Lease improvements
Useful lives
3 – 10 years
3 – 5 years
3 – 4 years
Life of lease
27
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
e.
Plant and Equipment (cont.)
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.
f.
g.
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.
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)
28
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
g.
Financial Instruments (Cont.)
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.
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
The Group recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement of the
loss allowance depends upon the Group's assessment at the end of each reporting period as to whether
the financial instrument's credit risk has increased significantly since initial recognition, based on
reasonable and supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-
month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime
expected credit losses that is attributable to a default event that is possible within the next 12 months.
Where a financial asset has become credit impaired or where it is determined that credit risk has increased
significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of
expected credit loss recognised is measured on the basis of the probability weighted present value of
anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
29
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
g.
Financial Instruments (Cont.)
For financial assets mandatorily measured at fair value through other comprehensive income, the loss
allowance is recognised in other comprehensive income with a corresponding expense through profit or
loss. In all other cases, the loss allowance reduces the asset's carrying value with a corresponding expense
through profit or loss.
Trade and other receivables and contract assets
The Group 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 Group uses its historical experience, external indicators and forward-
looking information to calculate the expected credit losses using a provision matrix.
The Group 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.
Financial assets at fair value through other comprehensive income
The Group 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 Group relies on readily available information such as the credit ratings issued
by the major credit rating agencies for the respective asset. The Group 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 Group 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 Group 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 Group
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 Group’s financial
liabilities were not impacted by the adoption of AASB 9. However, for completeness, the accounting policy
is disclosed below. The Group’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 Group 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).
30
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
h.
i.
j.
k.
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.
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.
Contract liabilities
Contract liabilities represent the Group's obligation to transfer goods or services to a customer and are
recognised when a customer pays consideration, or when the Group recognises a receivable to reflect its
unconditional right to consideration (whichever is earlier) before the Group has transferred the goods or
services to the customer.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of
transaction costs. They are subsequently measured at amortised cost using the effective interest method.
31
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
l.
Equity-Settled Compensation
There has been no equity based compensation with the exception of that described in Note 25. 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.
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.
m.
n.
o.
p.
q.
32
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
q.
r.
s.
t.
Provisions (Cont.)
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.
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.
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.
33
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
u.
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 21 for further details.
v.
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.
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.
w.
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.
34
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
x.
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.
y.
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.
z.
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.
aa.
ab.
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.
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.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has
had, or may have, on the Group based on known information. This consideration extends to the nature of
the products and services offered, customers, supply chain, staffing and geographic regions in which the
Group operates. Other than as addressed in specific notes, there does not currently appear to be either
any significant impact upon the financial statements or any significant uncertainties with respect to events
or conditions which may impact the Group unfavourably as at the reporting date or subsequently as a result
of the Coronavirus (COVID-19) pandemic.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value 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.
35
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
ab.
Critical Accounting Judgements. Estimates and Assumptions
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 Groupis 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, historical collection rates, the impact of the Coronavirus (COVID-19) pandemic and forward-
looking information that is available.
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 Group 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.
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 $11,158,840 during the full year
ended 30 June 2020 so as to enable the Board to determine more reliably the probability of utilising these
tax assets in the foreseeable future.
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease
liability. Judgement is exercised in determining whether there is reasonable certainty that an option to
extend the lease or purchase the underlying asset will be exercised, or an option to terminate the lease will
not be exercised, when ascertaining the periods to be included in the lease term. In determining the lease
term, all facts and circumstances that create an economical incentive to exercise an extension option, or
not to exercise a termination option, are considered at the lease commencement date. Factors considered
may include the importance of the asset to the Group’s operations; comparison of terms and conditions to
prevailing market rates;
leasehold
improvements; and the costs and disruption to replace the asset. The Group reassesses whether it is
reasonably certain to exercise an extension option, or not exercise a termination option, if there is a
significant event or significant change in circumstances.
incurrence of significant penalties; existence of significant
36
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
ab.
Critical Accounting Judgements. Estimates and Assumptions (Cont.)
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is
estimated to discount future lease payments to measure the present value of the lease liability at the lease
commencement date. Such a rate is based on what the Group estimates it would have to pay a third party
to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar
terms, security and economic environment.
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.
Functional Currency
The Group has operations in both the US and Australia, however the functional currency is deemed to be
Australian dollars as the Group is listed on the Australian stock exchange and the main operations are
located in Australia.
Functional currency of AtCor Medical Inc.
In determining that United States dollar (US$) is the functional currency of AtCor Medical Inc., management
have applied judgement to assess the currency that most faithfully represents the economic effects of the
underlying transactions, events and conditions in AMI. Management have considered the currency that
mainly influences sales prices for goods and services and labour, material and other costs of providing
goods or services.
Fair value measurement hierarchy
The consolidated entity is required to classify all assets and liabilities, measured at fair value, using a three
level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement,
being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity
can access at the measurement date; Level 2: Inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or indirectly; and Level 3: Unobservable inputs for
the asset or liability. Considerable judgement is required to determine what is significant to fair value and
therefore which category the asset or liability is placed in can be subjective.
The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models.
These include discounted cash flow analysis or the use of observable inputs that require significant
adjustments based on unobservable inputs.
ac.
New Accounting Standards and Interpretations Adopted
IFRIC 23: Uncertainty Over Income Tax Treatments
The Group has adopted IFRIC 23 from 1 July 2019, which requires entities to consider if it is probable that
the tax authority will accept an uncertain tax treatment.
At 30 June 2020, the Group has not identified any uncertain tax treatments and as a result, the adoption
of IFRIC 23 did not have a significant impact on the financial performance or position of the Group as at
30 June 2020 or on opening accumulated losses at 1 July 2019.
37
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
ab. Critical Accounting Judgements. Estimates and Assumptions (Cont.)
The Group has adopted all other new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
ad.
New and Revised Accounting Standards not yet mandatory or early adopted
As at 30 June 2020, the group has adopted all new and revised mandatory accounting standards
applicable. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have
not been early adopted.
38
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 2: REVENUE
Sales revenue
Sale of goods
Lease income
Service income
Freight income
Royalty income
Other revenue
Fair value adjustment
Total revenue
2020
$
1,895,584
1,495,974
632,099
132,231
136,664
2019
$
2,419,003
686,805
620,028
97,267
83,990
4,292,552
3,907,093
324,112
4,616,664
154,998
4,062,091
CardieX leases multiple medical devices to customers as part of pharmaceutical trials. The amounts are paid over
an accelerated term per the signed contract, and then revenue is recognised on a straight line basis based on the
amount of equipment delivered. The equipment is leased to the customer for approximately 2 years which is not
considered to be a major part of the economic life of the asset. The equipment is returned to CardieX at the end
of the lease and the equipment can continue to be used without any major modification.
LESSOR COMMITMENTS
Minimum lease commitments receivable but not recognised in the financial
statements:
Within one year
One to five years
More than five years
NOTE 3: OTHER INCOME
Consolidated
2020
$'000
2019
$'000
399,477
284,599
86,783
108,337
-
-
486,260
392,936
R&D tax concession from the Australian Tax Office
433,886
801,771
Covid-19 Stimulus benefits from the Australian Tax
Office
Foreign exchange gains
Other
154,000
33,876
51,964
673,726
-
152,558
30,186
984,515
39
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 4: EXPENSES
Loss before income tax includes the following specific
expenses:
Depreciation on plant and equipment
Depreciation on right of use assets
Share based payments
Rental expense relating to short term leases
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% (2019: 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
92,580
112,662
612,983
127,845
58,589
57,926
864,714
249,297
(3,320,427)
(2,979,278)
(913,117)
(819,301)
529,983
(383,134)
(144,413)
(211,546)
135,860
603,233
-
576,075
(243,226)
(434,416)
(130,004)
119,182
688,464
-
The Group has carried forward tax losses, calculated according to Australian income tax legislation of $40,577,600
(2019: $38,018,179), 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 $11,158,840 at 30 June 2020 (2019: $10,454,999).
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(r).
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.
40
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 6: AUDITOR REMUNERATION
Remuneration of the auditor of the Group for:
Audit services for the financial year – BDO1
Total:
2020
$
86,500
86,500
2019
$
94,000
94,000
1. The BDO entity performing the audit of the Group transitioned from BDO East Coast Partnership to BDO Audit Pty
Ltd on 1 August 2020. The disclosures include amounts received or due and receivable by BDO East Coast
Partnership and BDO Audit Pty Ltd.
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
(3,320,427)
(2,979,278)
No.
726,773,815
607,756,877
(0.46)
(0.46)
Cents
(0.46)
(0.46)
There is no dilution impact arising from outstanding convertible notes, options and performance rights.
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
2020
$
2,061,642
2,061,642
887,687
(68,164)
819,523
-
2019
$
4,980,826
4,980,826
1,153,452
(138,485)
1,014,967
-
819,523
1,014,967
41
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 9: TRADE AND OTHER RECEIVABLES (CONT.)
a)
Trade receivables and other receivables are non-interest bearing and are generally on 30 to 60 day terms.
Impaired trade receivables
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 2020 current trade receivables of the Group with a nominal value of $68,164 (2019: $138,485) were
fully impaired.
At 1 July
Provision for impairment recognised during the year
Reversed of provision upon receipt of payment
138,485
67,815
(31,570)
108,859
32,705
-
Receivables written off during the year as uncollectible
(106,566)
(3,079)
At 30 June
68,164
138,485
(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 29 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 29.
NOTE 10: INVENTORY
Raw materials and stores - at cost
Finished goods at cost
Provision for inventory impairment
267,558
68,087
(75,966)
259,679
223,078
71,818
(75,966)
218,930
There were no charges to write-off obsolete inventories in the year ended 30 June 2020 (2019: $55,792).
42
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 11: OTHER ASSETS
CURRENT
Prepayments
Contract assets
R&D tax incentive receivable
Deposits
Other
NON CURRENT
Deposits
NOTE 12: CONTROLLED ENTITIES
Controlled Entities Consolidated
2020
$
75,614
185,711
466,694
38,358
57,583
823,960
2019
$
114,228
92,879
431,532
-
6,540
645,179
60,252
96,572
Country of
Incorporation
Percentage
Owned (%)*
2020
2019
PARENT ENTITY:
CardieX Limited
SUBSIDIARIES OF CARDIEX LIMITED
AtCor Medical Pty Limited
AtCor Medical Inc
CardieX (Shanghai) Medical Technology Co., Ltd.
* Percentage of voting power is in proportion to ownership
Australia
Australia
USA
China
100
100
100
100
100
-
43
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 13: PLANT AND EQUIPMENT
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
-
370
(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)
(1,233,040)
Net book amount
42,396
109,213
91,356
370,386
613,351
Manufacturing
plant and
equipment
Furniture,
fixtures and
equipment
Devices
leased to
customers
Property
under lease
(right-of use
asset)
$
$
$
$
Total
$
Year ended 30 June 2020
Opening net book amount
42,396
109,213
91,356
370,386
613,351
Additions
Exchange differences
Depreciation charge
-
-
44,553
1,030
124,142
(1,612)
-
168,695
4,324
3,742
(25,445)
(52,438)
(30,478)
(111,791)
(220,152)
Closing net book amount
16,951
102,358
183,408
262,919
565,636
At 30 June 2020
Cost
508,680
849,061
228,199
432,890
2,018,830
Accumulated depreciation
(491,729)
(746,703)
(44,791)
(169,971) (1,453,194)
Net book amount
16,951
102,358
183,408
262,919
565,636
NOTE 14: TRADE AND OTHER PAYABLES
Trade creditors
Other payables
2020
$
537,404
174,126
711,530
2019
$
354,939
143,509
498,448
44
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 15: UNEARNED REVENUE
Unearned Revenue
2020
$
2019
$
1,524,861
861,884
1,524,861
861,884
The above unearned revenue 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
NOTE 17: FINANCIAL ASSETS
CURRENT
inHealth convertible note
NON-CURRENT
Blumio convertible note
inHealth investment
inHealth convertible note
TOTAL FINANCIAL ASSETS
322,547
346,119
-
322,547
21,741
367,860
728,544
728,544
942,373
343,974
4,013,501
5,299,848
6,028,392
-
-
870,743
343,974
4,383,249
5,597,966
5,597,966
Blumio Inc
•
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 fair
value through profit and loss (FVTPL). It is measured at FVTPL as there is an embedded conversion
feature. 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 2020, the total convertible note asset was $942,373 made up of $874,253 of payments
and $68,120 in interest.
45
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 17: FINANCIAL ASSETS (CONT.)
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” (T2) Convertible Note (the “inHealth Note”)
securities;
• Both the debt and derivative components of the inHealth Note are measured as a single instrument at
FVTPL;
• By 31 December 2019, the Company had paid the full US$3,000,000 to inHealth under the Agreement
for the T2 Notes;
• By 30 June 2020, the Company and inHealth had signed an agreement to restructure the partnership.
Key changes were reducing the outstanding convertible note to US$2,500,000 by repayment of
US$500,000, extending the maturity date to 1 July 2021, and exchanging the option to move to 50.5%
for the issuance of 1% of the fully diluted equity of inHealth (Note 31);
There is an intention for an additional US$1,000,000 to be repaid by 30 June 2021:
•
• As at 30 June 2020, the total convertible note asset was $4,742,045 made up of the initial $4,371,266
payment and $370,779 in interest. As at 30 June 2020, the Company holds 7.7% equity in inHealth
Medical Services, Inc.
NOTE 18: FAIR VALUE MEASUREMENT
Fair value measurement hierarchy
The following tables detail the Group’s assets and liabilities, measured or disclosed at fair using a three level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
•
•
•
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date;
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly; and
Level 3: Unobservable inputs for the asset or liability. Considerable judgement is required to determine
what is significant to fair value and therefore which category the asset or liability is placed in can be
subjective.
2020
Assets
Convertible notes
Shares at FVTPL
Total Assets
Liabilities
Convertible notes
Total Liabilities
Level 1
$
Level 2
$
Level 3
$
Total
$
-
-
-
-
-
5,648,418
5,648,418
343,974
343,974
6,028,392
6,028,392
249,447
249,447
249,447
249,447
-
-
-
-
-
46
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 18: FAIR VALUE MEASUREMENT (CONT.)
2019
Assets
Convertible notes
Shares at fair value through other
comprehensive income
Total Assets
Liabilities
Convertible notes
Total Liabilities
Level 1
$
Level 2
$
Level 3
$
Total
$
-
-
-
-
-
-
-
-
-
-
5,253,992
5,253,992
343,974
343,974
5,597,966
5,597,966
778,202
778,202
778,202
778,202
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables are assumed to approximate their fair value due to their short-
term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities are the current
market interest rate that is available for similar financial liabilities.
The following valuation techniques are used for instruments categorised in Level 3:
Convertible notes (Level 3) – The Group’s holding of convertible notes issued by Blumio and inHealth are classified
as loans held at FVTPL. The Group periodically reviews the fair value of the convertible notes by reviewing the
credit risk posed by the borrowers and the operations of the underlying business.
Shares in inHealth (Level 3) – The fair value of this investment was determined based on an appropriate equity
pricing model that takes into account the investee’s expected future performance and based on an appropriate
growth factor for a similar listed entity and a risk adjusted discount rate.
Balance at 1 July 2018
Purchase of investment
Conversion of convertible note to
shares
Fair value adjustment
Forex adjustment
Balance at 30 June 2019
Fair value adjustment
Forex adjustment
Balance at 30 June 2020
Shares in
Health
$
inHealth
convertible
note
$
Blumio
convertible
note
$
Total
$
-
-
4,480,661
202,578
638,195
202,578
5,118,856
343,974
(343,974)
-
-
137,133
109,429
4,383,249
270,314
88,482
4,742,045
17,865
12,105
870,743
53,798
17,832
942,373
154,998
121,534
5,597,966
324,112
106,314
6,028,392
-
343,974
-
343,974
47
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 19: IMPAIRMENT TESTING OF NON-FINANCIAL ASSETS
The recoverable amount of the consolidated entity's non-financial assets has been determined by a value-in-use
calculation using a discounted cash flow model, based on a 2 year projection period approved by management
and extrapolated for a further 3 years using a steady rate, together with a terminal value.
Key assumptions are those to which the recoverable amount of an asset or cash-generating unit is most sensitive.
The following key assumptions were used in the discounted cash flow model:
•
•
•
14.6% pre-tax discount rate;
10% per annum projected revenue growth rate;
3% per annum increase in operating costs and overheads.
The discount rate of 14.6% pre-tax reflects management’s estimate of the time value of money and the consolidated
entity’s weighted average cost of capital adjusted for the computer retailing division, the risk free rate and the
volatility of the share price relative to market movements.
Management believes the projected 10% revenue growth rate is prudent and justified, based on the revenue growth
in the prior year and outlook for the following 12 months.
Management have reduced their estimation of the increase in operating costs and overheads, due to the lower
inflation rate and also an effort by the consolidated entity to contain costs.
There were no other key assumptions for the ATCOR division.
Based on the above, it was assessed that the recoverable amount for the ATCOR division exceeded the carrying
amount of the Group’s non-financial assets, therefore there was no requirement to record any impairment.
48
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 20: FINANCIAL LIABILITIES
CURRENT
Balance due on convertible note purchased
Convertible note liabilities
2020
$
-
249,447
2019
$
3,350,920
-
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 1 July 2019, US$2,350,000 remained unpaid on the purchase price. The full balance was settled in
August 2019.
NON-CURRENT
Convertible note liabilities
Total Non-Current Financial liabilities
Total financial liabilities
2020
$
-
-
2019
$
778,202
778,202
249,447
4,129,122
In January 2019, C2 Ventures Pty Ltd applied to the Company for 2,500,000 convertible notes at $1 per note.
On 6 March 2019, 1,638,503 notes were converted to shares and a further 640,303 notes were converted to
shares on 21 November 2019. The current liability at 30 June 2020 relates to the remaining 221,194 notes to be
converted in FY2021 at $1 per note, plus $28,253 in interest.
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
At 30 June 2020, the convertible note was split as follows:
Host debt liability
Derivative reserve
$
249,447
35,718
285,165
49
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 21: LEASE LIABILITIES
CURRENT
Lease liabilities
NON-CURRENT
Lease liabilities
TOTAL LEASE LIABILITIES
(a) Maturity analysis
2020
$
2019
$
117,702
97,498
192,557
310,259
306,227
403,725
Less than 6
months
6 months to 1
year
1 to 5 years
5+ years
Lease payments
Finance charges
$
$
$
75,883
73,382
224,399
(17,574)
(13,989)
(31,842)
Net present values
58,309
59,393
192,557
$
-
-
-
NOTE 22: BORROWINGS
CURRENT
Paycheck Protection Program loan
Term loan facility
NON-CURRENT
Term loan facility
TOTAL BORROWINGS
2020
$
251,770
466,694
718,464
958,167
958,167
1,676,631
Total
$
373,664
(63,405)
310,259
2019
$
-
-
-
-
-
Paycheck Protection Program
In April 2020, the Group received a non-dilutive loan under the US Government’s Paycheck Protection Program
(PPP). The PPP is a disaster relief program in the US providing loans to small businesses for the purposes of
paying for payroll, rent and utilities. These small business loans have a loan forgiveness feature that may enable
the foregoing of repayment on a portion of the loan amount. The terms of this loan are:
•
•
1% annual interest rate;
The loan may be forgivable if more than 60% of the funds are used to cover payroll costs over a period
of 24 weeks, with the balance required to be used for rent and utilities. The forgivability of the loan will
be proportionate to the level of staff retained by the employer;
• Any outstanding amounts are repayable by April 2022.
The Group intends to apply for forgiveness in the first half of FY21.
50
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 22: BORROWINGS (CONT.)
Term Loan Facility
On 20 March 2020, the Group secured a term loan facility of $1,500,000 with Mitchell Asset Management Pty Ltd
as a prepayment of the forecast research and development (R&D) tax incentive claim for the years ended 30
June 2020 and 30 June 2021. The terms of this loan are:
1.25% fixed monthly interest rate;
FY2020 R&D tax incentive claim to be completed by 31 October 2020 and used to repay the loan;
•
•
• Any outstanding amounts are repayable by October 2021.
NOTE 23: ISSUED CAPITAL
(a) Ordinary shares
2020
2019
No of Shares
$ No of Shares
$
At the beginning of reporting period
695,502,228
51,500,876
531,018,793
46,832,833
Placements in the year
36,363,637
1,000,000
100,000,000
3,000,000
Shares issued on conversion of convertible
notes
Shares issued in lieu of payment to key
executives
Shares issued on exercise of options
Cost of raising capital
21,343,425
640,303
54,616,769
1,630,780
-
-
-
-
-
9,800,000
287,000
66,666
2,200
(13,238)
-
(251,937)
Closing balance at reporting date
753,209,290
53,127,941
695,502,228
51,500,876
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.
2020
2019
No of Rights
$
No of Rights
$
(b) Rights on Issue
At the beginning of reporting period
36,000,000
230,975
24,000,000
4,466
Issued under Performance Rights Plan
Rights converted during the year
Rights vesting expense during the year
-
-
-
-
-
20,000,000
159,859
(8,000,000)
(224,000)
464,297
-
Closing balance at reporting date
36,000,000
695,272
36,000,000
290,650
230,975
The terms of the performance rights on issue at 30 June 2020 are as follows (further details at Note 24):
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
51
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 23: ISSUED CAPITAL (CONT.)
(c) Options on Issue
2020
2019
No of Options
$ No of Options
$
At the beginning of reporting period
161,307,625
786,590
150,050,958
1,059,508
147,388
-
63,475
Options vesting expense
Options issue to key management
personnel
-
-
-
3,000,000
129,404
92,896
Options issue to employees
1,000,000
1,298
15,300,000
Expired and lapsed employee options
(3,975,000)
(266,212)
(7,043,333)
(558,693)
Free attaching options (1 for 4) as attaching
to placement
9,090,910
-
-
-
Closing balance at reporting date
167,423,535
669,064
161,307,625
786,590
Fair value of options granted
The weighted average assessed fair value at grant date of options granted during the year ended 2020 was 0.7¢
cents per option (2019: 2.97¢). 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.
Free attaching options
These options were provided to investors who participated in the Dec 2019 capital raising, where they were provided
1 option for every 4 shares with an exercise price of $0.05. The options have no value as they were not provided for
any consideration or services in return.
The model inputs for options granted and accrued during the year ended 30 June 2020 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%
Options
Granted
1 Mar 2020
1,000,000
0.050
4 years
$0.020
65%
-
0.44%
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.
52
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 23: ISSUED CAPITAL (CONT.)
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 24: RESERVES
Share-based payments reserve
Derivative reserve
Foreign currency translation reserve
2020
$
2019
$
1,364,336
1,017,565
35,719
569,493
124,160
471,607
1,969,548
1,613,332
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
FY20, 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.
Balance at 30 June 2018
Convertible notes issued
Share based payments
Rights and options exercised / expired
Other comprehensive loss
Balance at 30 June 2019
Convertible notes issued
Share based payments
Rights and options exercised / expired
Conversion of convertible notes
Other comprehensive loss
Balance at 30 June 2020
Share-based
payments reserve
Foreign currency
translation reserve
Derivative
reserve
$
$
1,063,974
507,524
$
-
Total
$
1,571,498
-
-
(35,917)
471,607
-
-
-
-
97,886
569,493
124,160
124,160
801,714
(848,123)
(35,917)
-
-
124,160
1,613,332
-
-
-
612,983
(266,212)
(88,441)
(88,441)
-
97,886
35,719
1,969,548
-
801,714
(848,123)
-
1,017,565
-
612,983
(266,212)
-
-
1,364,336
53
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 25: SHARE BASED PAYMENTS
(a)
Employee Share Option Plan (ESOP)
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.
Set out below are summaries of options granted under the plan:
2020:
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
28-Aug-14
28-Aug-19
$0.112
975,000
20-Aug-15
20-Aug-20
$0.256
1,535,000
13-Nov-15
13-Nov-19
$0.261
2,000,000
13-Nov-15
13-Nov-20
$0.250
1,000,000
15-Jan-19
15-Jan-24
$0.050
15,300,000
-
-
-
-
-
01-Mar-20
01-Apr-24
$0.050
-
1,000,000
Total
20,810,000
1,000,000
Weighted average exercise price
$0.098
$0.050
-
-
-
-
-
-
-
-
(975,000)
-
-
-
1,535,000
1,535,000
(2,000,000)
-
-
-
1,000,000
1,000,000
(1,000,000)
14,300,000
6,100,000
-
1,000,000
-
(3,975,000)
17,835,000
8,635,000
$0.171
$0.079
$0.110
1,000,000 options were forfeited during 2020 due to terminating employment, (2019: 1,945,000) and 2,975,000
options expired (2019: 5,098,333) in the same period. No options were exercised during 2020 (2019: NIL).
54
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 25: SHARE BASED PAYMENTS (CONT.)
2019:
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
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
-
-
-
-
-
-
-
-
-
-
(2,998,333)
(2,100,000)
-
-
-
-
(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
$0.098
Performance rights
(b)
The CardieX Option and Performance Rights Plan (was approved by shareholders at the extraordinary general
meeting held on 28 May 2018.
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
55
2020
$
464,297
148,686
-
-
612,983
2019
$
431,769
240,541
63,000
129,404
864,714
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 26: ACCUMULATED LOSSES
Opening balance at 1 July
Losses for the year
Transfer from share-based payments reserve
Closing balance at 30 June
NOTE 27: 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
Interest expense
Changes in current assets and liabilities:
Decrease / (increase) in trade and other receivables
(Increase) / decrease in inventories
Increase / (decrease) in trade and other payables
Increase / (decrease) in unearned revenue
Increase / (decrease) in provisions
2020
$
2020
2019
$
2019
(46,163,273)
(43,808,118)
(3,320,427)
(2,979,278)
266,212
624,123
(49,217,488)
(46,163,273)
2020
$
2019
$
(3,320,427)
(2,979,278)
220,152
-
612,983
68,936
(291,128)
136,486
100,102
(15,951)
(40,749)
191,341
662,977
(23,573)
116,515
55,792
864,714
32,705
(128,080)
(93,235)
116,007
(402,052)
215,640
(993,973)
673,381
231,091
Net cash used in operating activities
(1,698,851)
(2,290,773)
56
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 28: NON-CASH INVESTING AND FINANCING ACTIVITIES
Balance at 1 July 2018
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
Lease
liabilities
Convertible note
liabilities
Borrowings
Total
$
-
$
-
$
-
(49,530)
2,500,000
2,450,470
428,562
24,693
-
33,142
(388,751)
(1,366,189)
428,562
57,835
(388,751)
(1,366,189)
1,181,927
Balance at 30 June 2019
403,725
778,202
Lease
liabilities
$
Convertible note
liabilities Borrowings
$
Total
$
Balance at 1 July 2019
403,725
778,202
-
1,181,927
Changes in liabilities from cash
financing activities
Net cash from/(used in) financing activities
(142,738)
-
1,673,770
1,531,032
Changes in liabilities from non-cash
financing activities
Acquisition of property, plant and
equipment by means of finance leases
Interest charges
Foreign exchange
Converted to shares
-
44,676
4,596
51,560
2,861
-
-
(580,315)
-
-
-
96,236
4,596
(580,315)
Balance at 30 June 2020
310,259
249,447
1,676,631
2,233,476
57
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 29: 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.
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 2020
30 June 2019
In USD
785,161
541,829
(244,354)
In EUR
101,153
43,971
(5,685)
In USD
172,041
643,898
(186,323)
In EUR
434,484
107,881
(1,208)
Sensitivity
Based on the financial instruments held at 30 June 2020, 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
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 $20,743/($22,818) (2019: $79,721/($87,694)).
$81,617/($89,778)). Had
$143,409/($157,750)
the Australian
(2019:
varied
by
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.
58
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 29: CAPITAL AND FINANCIAL RISK MANAGEMENT (CONT.)
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.
Interest rate risk
(d)
The consolidated entity's main interest rate risk arises from long-term borrowings. Borrowings obtained at variable
rates expose the consolidated entity to interest rate risk. Borrowings obtained at fixed rates expose the
consolidated entity to fair value risk.
Fair value estimation
(e)
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.
NOTE 30: SEGMENT REPORTING
Description of segments
(a)
In the 2020 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)
59
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 30: SEGMENT REPORTING (CONT.)
(b)
Segmental information provided to the Board
Inter-
segment
eliminations/
2020
Americas
Europe
Asia Pacific
unallocated Consolidated
Sales to external customers
3,371,835
426,878
493,839
$
$
$
$
-
$
4,292,552
Intersegment sales
Total sales revenue
202,471
-
1,233,785
(1,436,256)
-
3,574,306
426,878
1,727,624
(1,436,256)
4,292,552
Other revenue/income
-
-
324,112
-
324,112
Total segment revenue/income
3,574,306
426,878
2,051,736 (1,436,256)
4,616,664
Segment result
(1,962,035)
243,800
(1,465,254)
(136,938)
(3,320,427)
Unallocated revenue less
unallocated expenses
Loss before income tax
Income tax expense
Loss for the year
Segment assets
Segment liabilities
-
(3,320,427)
-
(3,320,427)
14,816,680
-
55,328,046
(59,469,450)
10,675,276
34,152,482
-
48,266,740
(77,623,947)
4,795,275
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
-
(2,979,278)
-
(2,979,278)
Segment assets
Segment liabilities
14,255,517
31,291,658
-
-
59,989,317
(61,032,860)
13,211,974
53,867,830
(78,898,449)
6,261,039
60
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 30: SEGMENT REPORTING (CONT.)
(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 2020 (2019: $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.
2020
Sale of goods
Lease income
Service income
Freight income
Royalty income
Total sales revenue
Other revenue/income
Total revenue/income
2019
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
$
$
$
$
1,126,516
417,025
352,043
1,895,584
1,495,974
622,137
127,208
-
6,574
3,279
-
1,495,974
3,388
1,744
632,099
132,231
136,664
-
-
136,664
3,371,835
426,878
493,839
4,292,552
324,112
324,112
3,371,835
426,878
817,951
4,616,664
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
61
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 31: RELATED PARTY TRANSACTIONS
Subsidiaries
The group’s principal subsidiaries at 30 June 2020 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)
CardieX (Shanghai) Medical Technology Co., Ltd.
Key Management Personnel Compensation
Country of
incorporation
Australia
USA
China
Percentage owned
2020
100%
100%
100%
2019
100%
100%
-
2020
Niall Cairns
King Nelson
Craig Cooper
Jarrod White1
Total Compensation
2019
Niall Cairns
King Nelson
Craig Cooper
Donal O’Dwyer2
Total Compensation
Salary and
directors fees
Share Based
Payment Benefits
Post-Employment
Benefits
$
179,000
26,925
446,828
8,129
660,882
84,000
30,270
419,255
33,486
567,011
$
-
-
464,297
857
465,154
64,702
64,702
431,769
-
561,173
$
-
-
-
-
-
-
-
-
3,181
3,181
Total
$
179,000
26,925
911,125
8,986
1,126,036
148,702
94,972
851,024
36,667
1,131,365
1. Appointed as key management personnel on 21 May 2020.
2. Ceased to be key management personnel in FY2019.
62
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 31: RELATED PARTY TRANSACTIONS
Shares Held by Key Management Personnel and Their Associates
Niall Cairns
King Nelson
Craig Cooper
Jarrod White
Total
Balance
01 July 2019
Additions
Balance
30 June 2020
132,616,769
21,343,4231
153,960,192
153,846
137,616,769
-
-
153,846
21,343,4231
3,257,5772
158,960,192
3,257,577
270,387,384
45,944,423
316,331,807
1. A total of 21,343,423 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.
Shares held at appointment date of 21 May 2020.
2.
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
Additions
Balance
30 June 2019
-
12,178,6272
54,616,7691
132,616,769
-
153,846
75,000,000
62,616,7691
137,616,769
165,332,473
117,233,538
282,566,011
1.
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.
2. Held at date of resignation and ceased to be key management personnel in FY2019.
Options Held by Key Management Personnel and Their Associates
Niall Cairns
King Nelson
Craig Cooper
Jarrod White
Total
Balance
01 July 2019
39,000,000
1,950,000
37,500,000
-
Expired
Additions
Balance
-
(450,000)
-
-
-
-
-
1,897,7281
30 June 2020
39,000,0002
1,500,000
37,500,0002
1,897,728
78,450,000
(450,000)
1,897,728
79,897,728
1. Options held at appointment date of 21 May 2020.
2. Directors Mr Cairns and Mr Cooper hold 37,500,000 options indirectly through C2 Ventures Pty Limited, of which
they are both directors.
63
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 31: RELATED PARTY TRANSACTIONS (CONT.)
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
Expired
Additions
Balance
1,500,000
1,500,000
-
-
30 June 2019
39,000,0001
1,950,000
37,500,0001
3,150,0002
3,000,000
81,600,000
-
-
-
-
-
1. Directors Mr Cairns and Mr Cooper hold 37,500,000 options indirectly through C2 Ventures Pty Limited, of which
they are both directors.
2. Held at date of resignation and ceased to be key management personnel in FY2019.
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
30/11/2021
30/11/2021
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.
Niall Cairns – Non-Executive Director
• Current agreement commenced with an effective date of 1 August 2019.
• Monthly consulting fee for strategic review and consulting services of US$10,000 per month.
• Reimbursement for reasonable expenses incurred.
Jarrod White – Director
•
Jarrod White is the principal of Traverse Accountants Pty Ltd, who holds an engagement with the Group
covering CFO services, Company Secretarial services, and other general accountancy services.
64
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 31: RELATED PARTY TRANSACTIONS (CONT.)
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 6 March 2019, 1,638,503 convertible notes were converted to ordinary shares, and a further 640,303 notes
were converted on 21 November 2019, all at $0.03 per share per $1 convertible note.
The balance of the facility subject to conversion as at balance date was $221,194 representing 221,194
convertible notes.
Loans to Directors and Key Management Personnel
At 30 June 2020 there were no loans to Directors or Key Management Personnel.
NOTE 32: MATTERS SUBSEQUENT TO YEAR END
Subsequent to balance date the Group announced the following material events:
•
In July 2020, CardieX restructured its investment in inHealth and received US$0.5m of the US$3m
Convertible Note, reducing the principal investment to US$2.5m;
• CardieX signed a new Collaboration Agreement with inHealth resulting in a re-setting of the investment
relationship between the entities;
• On 27 July 2020, CardieX completed a $2.5 million placement from new strategic investors as $0.03 per
share with a 1 for 5 free attaching listed option (CDXO), resulting in the issue of 83,333,334 new Shares
and 16,666,667 Listed Options.
On 20 August 2020, AtCor Medical Inc, a CardieX Limited subsidiary, entered into a new contract for
the lease of ATCOR devices and the provision of expanded data management services for Bayer’s
“AVANTI” trial. The extension of the contract is valued at US$420k.
•
No other significant subsequent event has arisen that significantly affects the operations of the Group.
65
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 33: PARENT ENTITY DISCLOSURES
2020
$
2019
$
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
1,189,510
24,682,605
1,037,161
13,480,371
59,585,230
1,400,055
(49,783,051)
11,202,234
(1,495,352)
-
(1,495,352)
833,016
26,889,597
3,577,610
16,343,616
57,958,165
1,141,725
(48,553,909)
10,545,981
(942,754)
-
(942,754)
(a)
The increase in loss in the parent entity is primarily due to a decrease in reported grant income.
Explanation of loss in 2020 Financial Year
(b)
No guarantees have been entered into by the parent entity during 2020 or 2019.
Guarantees entered into by the parent entity
(c)
The parent entity did not have any contingent liabilities as at 30 June 2020 or 30 June 2019.
Contingent liabilities of the parent entity
NOTE 34: CAPITAL COMMITMENTS
(a)
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
2020
$
3,948
9,870
13,818
2019
$
3,948
13,818
17,776
66
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
NOTE 34: CAPITAL COMMITMENTS (CONT.)
Leases now fall under AASB 16 and are presented in Note 21. 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.
(b)
Other capital commitments
There were no other capital commitments as at 30 June 2020.
NOTE 35: 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
67
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1.
the financial statements and notes, as set out on pages 20 to 67, 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 2020 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 2020;
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 15 to 18 of the Directors’ Report (as part of the Audited
Remuneration Report) for the year ended 30 June 2020, 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, 31 August 2020
68
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
Qualified 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 2020, 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, except for the effects of the matter described in the Basis for qualified opinion section
of our report, 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 2020 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 qualified opinion
The Group's financial assets balance includes investments in convertible notes which are carried in the
statement of financial position at $6,028,392 as at 30 June 2020 as detailed in Note 17. Due to the
investees being at their development stage, there was limited evidence available to support the
carrying value of the investment. The economic uncertainty associated with the global COVID-19
outbreak has further impacted the availability of appropriate documentation to support the carrying
value of the investment. As a result of the information not being available, we were unable to obtain
sufficient appropriate audit evidence about the carrying amount of the Group's financial assets as at 30
June 2020. Consequently, we were unable to determine whether any adjustments to these amounts
were necessary.
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 (including Independence Standards) (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.
BDO Audit Pty Ltd ABN 33 134 022 870 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 Audit Pty Ltd 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.
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 qualified 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.
Key audit matters
Except for the matters described in the Basis for Qualified Opinion section and Material uncertainty
related to going concern section, we have determined that there are no other key audit matters to
communicate in our report.
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 2020, 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.
2
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:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.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 pages 15 to 18 of the directors’ report for the
year ended 30 June 2020.
In our opinion, the Remuneration Report of CardieX Limited, for the year ended 30 June 2020, 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 Audit Pty Ltd
Grant Saxon
Director
Sydney, 31 August 2020
3
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
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 28 August 2020
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
681
952
150
103
77
1,963
Shares
794,770,006
41,320,393
1,238,038
362,106
10,883
837,701,426
Unmarketable parcels
There were 268 shareholders holding less than a marketable parcel totalling 995,154 shares as at 28 August 2020.
Top 20 Holdings as at 28 August 2020
Holder Name
C2 VENTURES PTY LIMITED
MR PAUL COZZI
MR PAUL JOSEPH COZZI
CB CO PTY LTD
MR DARRYL PATTERSON & MRS MARGARET STEWART PATTERSON
ASLAN EQUITIES PTY LTD
CAMPBELL KITCHENER HUME & ASSOCIATES PTY LTD
DRUMNADROCHIT FUTURES PTY LTD
CITICORP NOMINEES PTY LIMITED
MR BILAL AHMAD
BNP PARIBAS NOMINEES PTY LTD
VELCORP INVESTMENTS PTY LTD
DUNDRUM INVESTMENTS PTY LTD
MRS JANE GREENSLADE
MR DONALD O'DWYER & MRS JUDITH O'DWYER
PEHILA PTY LTD
PROF MICHAEL FRANCIS O'ROURKE
MRS GLENIS NITA O'DONNELL
MR JAMES O'ROURKE & MS ROZLYN GAY SCOTNEY
MR PHILIP WAYNE RIECK
TOTAL
Balance at
31 Aug 2020
158,960,192
86,926,624
32,155,435
15,470,000
15,009,287
14,633,446
9,585,122
9,556,086
8,218,544
7,733,333
7,670,134
7,500,000
7,250,392
7,176,504
6,594,902
5,896,951
5,670,370
5,500,000
5,212,488
5,001,170
%
18.98
10.38
3.84
1.85
1.79
1.75
1.14
1.14
0.98
0.92
0.92
0.90
0.87
0.86
0.79
0.70
0.68
0.66
0.62
0.60
421,720,980
50.34
72
CARDIEX LIMITED
AND CONTROLLED ENTITIES
ABN 81 113 252 234
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
158,960,192
119,082,029
18.98
14.22
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
73