DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT
31 DECEMBER 2018
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONTENTS
Corporate Directory
Directors’ Report
Auditor’s Independence Declaration
Financial Report
Directors’ Declaration
Independent Auditor’s Report
Corporate Governance Statement
Additional ASX Information
CORPORATE DIRECTORY
Directors
Volker Mirgel – Non-Executive Chairman
Uzi Breier – CEO, Executive Director
John Bullwinkel – Non-Executive Director
Ashley Krongold – Non-Executive Director
Company Secretary
Ian Pamensky
Registered Office
Level 14
330 Collins Street
Melbourne VIC 3000
Auditor
BDO Audit (WA) Pty Ltd
38 Station Street
PO Box 700
Subiaco WA 6008
Share Registry
Automic Registry Services
Level 29, 201 Elizabeth Street
Sydney NSW 2000
Securities Exchange Listing
ASX Limited
Level 4 North Tower, Rialto
525 Collins Street
Melbourne VIC 3000
ASX Code – DTZ
1
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DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Your Directors present their report, together with the financial statements of Dotz Nano Limited (“the Company”) and
controlled entities (“the Group”) for the financial year ended 31 December 2018.
Directors
The names and the particulars of the Directors of the Company during or since the end of the financial year are:
Name
Volker Mirgel
Uzi Breier
John Bullwinkel
Ashley Krongold
Status
Appointed
Resigned
Non-Executive Chairman
Appointed 3 April 2018
CEO and Executive Director
Appointed 18 May 2018
-
-
Non-Executive Director
Appointed 21 March 2018
Resigned 18 May 2018
Non-Executive Director
Appointed 21 March 2018
Non-Executive Director
Appointed 31 October 2016
-
-
Interim Non-Executive Chairman
Appointed 1 February 2018
Resigned 3 April 2018
Steve Bajic
Non-Executive Director
Appointed 31 October 2016
Resigned 15 January 2019
Faldi Ismail
Non-Executive Chairman
Appointed 31 October 2016
Resigned 1 February 2018
Menashe Baruch
Non-Executive Director
Appointed 31 October 2016
Resigned 21 March 2018
Antony Sormann
Non-Executive Director
Appointed 1 February 2018
Resigned 21 March 2018
Moti Gross
CEO and Executive Director
Appointed 31 October 2016
Resigned 18 May 2018
Principal Activities
The principal continuing activities of the Group during the year is developing, manufacturing and commercialising marking,
tracing and verification solutions.
Dividends
There were no dividends paid or recommended during the financial year ended 31 December 2018 (2017: Nil).
Review and Results of operations
Dotz Nano Limited had a loss for the year of $5,736,672 (2017: $4,731,898 loss). This included a non-cash amount of
$1,451,763 share based payments (2017: $438,241).
The net assets of the Group have decreased from $2,953,375 at 31 December 2017 to $731,482 at 31 December 2018.
As at 31 December 2018, the Group's cash and cash equivalents balance was $508,572 (2017: $2,835,485) and had working
capital of $431,751 (2017: $2,445,924).
Unless otherwise stated all figures in this report are in the Company’s presentation currency US$.
The following events occurred during the year:
o
o
o
On 21 March 2018, the Company announced the appointment of Mr John Bullwinkel and Mr Uzi Breier as Non-
Executive Directors to the Board of the Company, replacing Mr Menashe Baruch, a Non-Executive Director and Mr
Antony Sormann, an Interim Non-Executive Director.
On 10 August 2018, the Company announced the terms of the agreement with the Chairman. The terms of the
agreement include a fixed annual fee of US$100,000 (inclusive of superannuation), sign-on and ongoing options.
On 14 August 2018, the Company announced the terms of the agreement with the CEO. The agreement is for a
period of 3 years commencing on 7 May 2018 and includes a fixed remuneration of US$240,000 per annum and a
company car. The fixed remuneration will be reviewed annually. Other terms of the agreement include incentive
bonuses which are at the discretion of the Board and subject to shareholder approval (if applicable) and sign-on
securities.
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DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Review and Results of operations (continued)
An incentive bonus will be payable if the following milestones are achieved by Dotz Nano Ltd (Israeli subsidiary)
(“Dotz”):
(cid:120)
(cid:120)
(cid:120)
if Dotz signs a binding sales agreement(s) valued at a total of US$500,000 prior to 31 December 2018, a bonus
cash amount equal to 25% of the base compensation (i.e. US$60,000) will be payable;
upon Dotz EBITDA reaching US$500,000 or more for the financial year ending 31 December 2019 then:
o
o
a cash bonus amount equal to 20% of the actual EBITDA (i.e. minimum US$100,000) will be payable; and
500,000 unquoted options will be issued, exercisable at AU$0.10 each expiring 5 years from issue; and
Upon Dotz EBITDA reaching US$1,000,000 or more (in accordance with annual audited financial statements)
in the financial year ending 31 December 2020, then a cash bonus amount equal to 15% of the actual EBITDA
(i.e. minimum US$150,000) will be payable.
The sign on securities are subject to prior shareholder approval, and include the following to be issued to the CEO
(or his nominees)
(cid:120)
(cid:120)
(cid:120)
1,000,000 shares on 31 December 2019 as a retention bonus provided that the CEO is still engaged by the
Company at the time;
1,500,000 shares subject to a 12-month holding lock from the date of the issue; and
2,000,000 unquoted options exercisable at AU$0.13 and expiring 5 years from issue.
At the shareholders meeting held on 8 February 2019, the 1.5 million shares and 2,000,000 unquoted options were
approved
Significant changes in the state of affairs
The following significant changes in the state of affairs occurred during the financial year:
o
o
o
o
o
o
On 5 February 2018 the Company issued of 2,777,778 ordinary shares, 500,000 Lead Manager shares and 6,000,000
unlisted Lead Manager options with exercise price of $0.30 expiring 5 February 2020.
On 10 May 2018 the Company issued 5,385,000 ordinary shares and 3,425,000 unquoted options in lieu of services
provided to the Group by employees, consultants and corporate advisors.
On 23 July 2018, the Company announced the completion of the Placement of 27,777,778 ordinary shares at $0.09
per share to raise $2.5 million.
On 16 October 2018, the Company announced that 60,949,872 ordinary shares are to be released from escrow on
31 October 2018 in accordance with ASX Listing Rule 3.10A.
On 2 November 2018, the Company issued 2,317,723 fully paid ordinary shares in lieu of cash for prior services
provided to the Company by third parties.
On 27 November 2018, the Company issued 8,900,000 unquoted options under the Employee Share Option Plan.
Significant events after the reporting period
Since the reporting date the following significant events have occurred:
o
o
o
On 14 January 2019, it was announced that the Company has secured a commercial Purchase Order (PO) of Validotz
markers from a Swiss based company providing Secured-Plastic-Packaging Solutions, valued at US$100,000.
On 16 January 2019, the Company announced the resignation of Mr Steve Bajic as a Non-Executive Director.
On 22 January 2019, the Company announced the appointment of Mr Tomer Segev as the new Chief Financial
Officer and the resignation of Mr Eran Gilboa as the Chief Financial Officer of the Group.
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DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Significant events after the reporting period (continued)
o
o
On 30 January 2019, the Company announced a $300,000 PO of Validotz security-markers in lubricants sector
expected to be realized during 2019 and 2020.
Subsequent to balance date, the Company issued the following shares and options:
(cid:120)
10,666,632 Ordinary Fully Paid Shares and 2,666,659 Unquoted Options (exercisable at AU$0.12 each on or
before 30 June 2020) on conversion of the Convertible Loans Facility (Facility). The Facility was announced on
the 9 January 2019 and funds raised under the Facility summed to AUD $0.85 million
(cid:120)
The terms of the Facility were set out as below:
o
o
o
Facility Limit AUD $1,000,000,
Simple Interest to accrue at 8% p.a.,
1:4 Options for each converted share, and
o Automatic conversion upon shareholders’ approval
(cid:120)
(cid:120)
(cid:120)
(cid:120)
2,000,000 Unquoted Options, exercisable at $0.12 each before 15 February 2024 issued to the CEO
1,500,000 Ordinary Shares issued to the CEO with 12 month holding lock to 15 February 2020 issued to the
CEO
1,000,000 Unquoted Options issued to the Chairman exercisable at $0.13 each on or before 15 February 2024
provided that Chairman is an employee or consultant of the Company at all times before the expiry date
1,000,000 Unquoted Options exercisable at nil on or before 15 February 2023 issued to an employee under
the Company’s Employee Share Option Plan. The options are subject to vesting on 9 December 2019 and
require that the option holder is an employee or consultant of the Company at all times during the period
ending on the vesting date
There were no other significant events after the reporting period.
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DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Information on Directors
Mr Uzi Breier
CEO and Executive Director
Qualifications
B.Sc, MBA
Experience
Mr. Breier has held senior positions at fortune-500 companies and served as CEO for both
technology start-ups and more established companies. He currently dedicates efforts to promote
some of the exciting characteristics of Israel – entrepreneurship, innovation and leadership.
Interest in Shares and
Options
1,500,000 Fully Paid Ordinary Shares
2,000,000 Unquoted Options
Special Responsibilities
Nil
Directorship held in other
listed entities (last 3
years)
Nil
Dr Volker Mirgel
Non-Executive Chairman
Qualifications
PhD Organic Chemistry
Experience
Dr Mirgel is a former Bayer Senior Vice President and member of the Bayer’s Global Leadership
Team. After receiving his PhD in Organic Chemistry from University of Cologne he joined the
German chemical and pharmaceutical company Bayer AG. During his 34-year career with Bayer
he has served in multiple technical, marketing and general management functions, in Europe,
Asia Pacific and United States.
In 2013, Dr Mirgel retired from Bayer to serve as an independent consultant for executive clients
in the chemical and advance materials industry.
Interest in Shares and
Options
1,000,000 Unquoted Options
Special Responsibilities
Nil
Directorship held in other
listed entities (last 3
years)
Nil
Mr Ashley Krongold
Non-Executive Director
Qualifications
B.Com
Experience
Mr Krongold has spent 15 years in the Investment Banking and Accounting industries. He was a
founding member of Investec Bank Australia and is currently CEO of the Krongold Group and a
non-executive director of Weebit Nano Ltd (ASX: WBT). He is also a founding General Partner of
global equity crowd-funding platform, OurCrowd.
Interest in Shares and
Options
1,875, 032 Ordinary shares
1,089,892 Performance shares
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DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Information on Directors
Special Responsibilities
Nil
Directorship held in other
listed entities (last 3
years)
Weebit Nano Limited (current)
G-Medical Innovations Ltd (resigned 23 April 2018)
Mr John Bullwinkel
Non-Executive Director
Qualifications
Dip.FS, FIPA
Experience
Mr. Bullwinkel is Managing Director of Business Partners Pty Ltd, a boutique advisory and
investment consulting company and is based in Melbourne. He has held senior Private Banking
roles at Macquarie Private Bank, ANZ Private Bank, Deutsche Bank and Merrill Lynch. He has also
held senior positions at Citibank and NatWest in Corporate Commercial Banking.
Interest in Shares and
Options
Nil
Special Responsibilities
Nil
Directorships held in
other listed entities
(last 3 years)
Nil
Dr Moti Gross
CEO and Executive Director (Resigned 18 May 2018)
Qualifications
LLB, PhD Economics
Experience
Dr Gross has extensive managerial experience leading technological companies, developing
business strategy for ongoing enterprises and start-ups. Dr Gross earned his PhD in Economics
and Finance at Oxford University and a Bachelor of Law from Peres Academic Centre in Israel.
Interest in Shares and
Options
3,260,687 Ordinary shares (at resignation date)
2,107,125 Performance shares (at resignation date)
Special Responsibilities
Nil
Directorships held in
other listed entities
(last 3 years)
Nil
Mr Steve Bajic
Non-Executive Director (Resigned 15 January 2019)
Qualifications
Dip.FM
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DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Information on Directors
Experience
Mr. Bajic has been in the finance industry for 20 years and has helped raise capital in various
industries at all levels of company advancement. He has an extensive resume of current and past
private and public director and officer positions.
Interest in Shares and
Options
100,000 Ordinary Shares
Special Responsibilities
Nil
Directorships held in
other listed entities
(last 3 years)
Nil
Mr Faldi Ismail
Non-Executive Chairman (Resigned 1 February 2018)
Qualifications
B.Bus, MAICD
Experience
Mr Ismail has significant experience working as a corporate advisor specialising in the restructure
and recapitalisation of a wide range of ASX-listed companies. With many years of investment
banking experience, his expertise covers a wide range of industry sectors. Mr Ismail is the
founder and operator of Otsana Capital, a boutique advisory firm specialising in mergers &
acquisitions, capital raisings and Initial Public Offerings (IPO’s) and is currently a director of
several ASX-Listed companies.
Interest in Shares and
Options
2,916,667 Ordinary shares (at resignation)
1,866,667 Performance shares (at resignation)
1,333,334 Options exercisable by payment of $0.40 each, expiring 3 years from date of issue (at
resignation)
Special Responsibilities
Nil
Directorships held in
other listed entities
(last 3 years)
Ookami Limited (current)
Asiamet Resources Limited (current)
Vysarn Limited (current)
Dotz Nano Limited (ceased 1 February 2018)
Flamingo Al Limited (ceased 27 June 2017)
Quantify Technology Holdings Limited (ceased 1 March 2017)
TV2U International Limited (ceased 21 October 2016)
Zenitas Health Ltd (ceased 6 April 2016)
Mr Menashe Baruch
Non-Executive Director (Resigned 21 March 2018)
Qualifications
B.Ec
Experience
Mr Baruch is an experienced entrepreneur in the field of retail sales as well as an experienced
investor in hi-tech companies over the past 10 years.
Interest in Shares and
Options
242,198 Ordinary shares (at resignation date)
242,198 Performance shares (at resignation date)
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DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Information on Directors
Special Responsibilities
Nil
Directorships held in
other listed entities
(last 3 years)
Nil
Mr Antony Sormann
Non-Executive Director (Resigned 21 March 2018)
Qualifications
LLB, B.Ec
Experience
Mr Sormann is currently a Director in the Capital team at Henslow. He has over 20 years’
experience in investment banking and legal advisory services, including nine years as a director of
SLM Corporate Pty Ltd and seven years working in the investment banking division of N.M.
Rothschild & Sons (Australia) Limited of which two years were as an executive in the Rothschild
Group’s New York office. He has also previously been an Executive Director of Keybridge Capital
Limited, and a Non-Executive Director of PTB Group Limited and Molopo Energy Limited.
Interest in Shares and
Options
Nil
Special Responsibilities
Nil
Directorship held in
other listed entities
(last 3 years)
Keybridge Capital Limited (ceased October 2016)
Molopo Energy Limited (ceased December 2016)
PTB Group (ceased October 2016)
Information on Key Management
Dr Michael Shtein
Chief Technology Officer
Qualifications
Ph.D. Nano Technology
Experience
Dr Shtein holds a Ph.D. in Nano Technology interdisciplinary studies from Ben-Gurion University,
together with and M.Sc in Chemical Engineering and MBA. He was the Chief Material Engineer –
R&D Development for the Israeli Ministry of Defence and has developed several new materials
and compounds. His main research topic is composite nanomaterials (CNT, Graphene, WS2).
Mr Avigdor Kaner
VP Business Development
Qualification
BA, MBA
Experience
Mr Avigdor Kaner has a multitude of experience in business development. He has held many
senior marketing positions including Head of Business Development for Baran Technologies. He
has also worked in the USA market for a variety of organisations as a freelance consultant. Mr
Kaner holds an MA from Tel-Aviv University and is currently finishing his PhD degree.
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DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Information on Key Management
Mr Tomer Segev
Chief Financial Officer
Qualifications
BA, MBA, CPA
Experience
Mr Segev is an experienced executive with extensive knowledge of investment banking and
international finance. He has previous CFO experience with various commercialised start-up
companies, including APPFRONT, RoundForest and NorthBit.
Mr Segev has worked in the United States as an Associate Vice President at CSG Partners and as a
Senior Analyst at PWC. Later he was Head of M&A for investment bank Rosario Capital.
Mr Ariel Malik
VP International Finance (Contract Completed on 31 December 2018)
Qualification
BA, MBA
Experience
Mr Malik is a business strategy consultant in the roles of Senior Vice President for International
Finance. Mr Malik has many years’ experience as an investment banker and is responsible for
overseeing; strategic planning, international business development, cross border negotiations,
capital raisings and finance development.
Mr Malik is an Israeli biotech and materials investor and entrepreneur. He was the founder and
co-founder of Pluristem (NASDAQ: PSTI), Oramed Pharma (NASDAQ: BLSP), each a technology
company that was built around technologies from Tel Aviv Universities, the Hebrew University of
Jerusalem, the Technion and other research institutes. Mr Malik is also the founding shareholder
of Dotz and has in addition to Dotz and in co-operation with Ben Gurion University and Rice
University, established Weebit Nano (ASX:WBT) and Ultracharge (ASX:UTR).
Mr Eran Gilboa
Chief Financial Officer (Resigned 31 December 2018)
Qualifications
B.A, M.A, CPA
Experience
Mr Gilboa has experience as the Chief Financial Officer for numerous global companies in the field
of hi-tech, real estate, finance and media. Mr Gilboa has gained experience in capital offerings,
working with venture capital firms and various boards of directors. Mr Gilboa was responsible for
private and public companies in his role as a Senior Accountant at Ernst & Young. Mr Gilboa has a
CPA licence and holds a B.A in Economics and Management, specialising in finance, from the
College of Management in Israel, and M.A (Law) from Bar Ilan University.
Information on Company Secretary
Mr Ian Pamensky
Company Secretary (Appointed 7 February 2018)
Qualifications
B.Com, BAccS (Hons), CA
Experience
Mr Pamensky has over 22 years’ experience in the finance and secretarial sector for both SME
and ASX-listed entities. Since 1997, Mr Pamensky has held various roles with ASX-listed
companies.
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DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Information on Company Secretary
Mr Peter Webse
Company Secretary (Resigned 7 February 2018)
Qualifications
B.Bus, FGIA, FCPA, MAICD
Experience
Mr Webse has over 25 years’ company secretarial experience and is managing director of
Platinum Corporate Secretariat Pty Ltd, a company specialising in providing company secretarial,
corporate governance and corporate advisory services. Mr Webse holds a Bachelor of Business
with a double major in Accounting and Finance, is a Fellow of the Governance Institute of
Australia, a Fellow Certified Practicing Accountant and a Member of the Australian Institute of
Company Directors.
Meetings of Directors
The number of formal meetings of Directors held during the period and the number of meetings attended by each director was
as follows:
Uzi Breier
Appointed 21 March 2018
Volker Mirgel
Appointed 3 April 2018
Ashley Krongold
Appointed 31 October 2016
John Bullwinkel
Appointed 21 March 2018
Faldi Ismail
Moti Gross
Steve Bajic
Appointed 31 October 2016, Resigned 1 February 2018
Appointed 31 October 2016, Resigned 18 May 2018
Appointed 31 October 2016, Resigned 15 January 2019
Menashe Baruch
Appointed 31 October 2016, Resigned 21 March 2018
Antony Sormann
Appointed 1 February 2018, Resigned 21 March 2018
DIRECTORS’ MEETINGS
Number eligible
to attend
Number
Attended
7
7
7
7
Nil
3
7
Nil
Nil
7
7
7
7
Nil
1
4
Nil
Nil
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DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Options
Unissued shares under option
At the date of this report, the unissued ordinary shares Dotz Nano Limited under option are as follows:
Expiry Date
31 October 2019
31 October 2019
14 June 2020
8 August 2019
Grant Date
1 November 2016
1 November 2016
13 May 2016
8 August 2017
5 February 2020
5 February 2018
1 November 2020
20 April 2020
20 April 2020
20 April 2020
1 August 2020
1 October 2021
1 October 2021
1 October 2022
15 February 2024
15 February 2023
30 June 2020
15 February 2024
10 May 2018
10 May 2018
10 May 2018
10 May 2018
1 August 2018
27 November 2018
27 November 2018
27 November 2018
8 February 2019
8 February 2019
8 February 2019
8 February 2019
Exercise Price
Number Under Option
$0.40
$0.30
$0.20
$0.20
$0.30
Nil
Nil
$0.105
$0.20
$0.20
Nil
Nil
Nil
$0.13
Nil
$0.12
$0.13
4,500,000
1,000,000
5,000,000
10,000,000
6,000,000
1,000,000
1,000,000
425,000
1,000,000
1,500,000
3,700,000
3,200,000
2,000,000
1,000,000
1,000,000
2,666,659
2,000,000
46,991,659
No option holder has any right under the options to participate in any other share issue of the Company or of any other
entity.
No options were exercised during the year (2017: Nil).
Performance Shares
At the date of this report, the performance shares of the Company are as follows:
Expiry Date
Grant Date
Milestone
30 April 2019
31 October 2020
31 October 2016
31 October 2016
Milestone 2
Milestone 3
Number of Performance
Shares
22,000,000
22,000,000
44,000,000
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DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Performance Shares (Continued)
Class
Milestone 2
Milestone 3
Milestone
Upon Dotz achieving the production and distribution of an aggregate of 50 kilograms of GQDs
in any 12 month period through formal off-take agreements with a reputable third party
within 30-months from the date of issue of the Performance Shares.
Upon Dotz achieving the production and distribution of an aggregate of 100 kilograms of GQDs
through formal off-take agreements with a reputable third party in any 12-month period
within 48 months from the date of issue of the Performance Shares.
No value has been allocated to the Performance Shares due to the significant uncertainty of meeting the performance
milestones which are based on future events. To date, none of the Milestones have been met.
Proceedings on behalf of 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.
Indemnifying Officers
The Company indemnifies each of its Directors, officers and company secretary. The Company indemnifies each director or
officer to the maximum extent permitted by the Corporations Act 2001 from liability to third parties, except where the
liability arises out of conduct involving lack of good faith, and in defending legal and administrative proceedings and
applications for such proceedings.
The Company must use its best endeavours to insure a director or officer against any liability, which does not arise out of
conduct constituting a wilful breach of duty or a contravention of the Corporations Act 2001. The Company must also use its
best endeavours to insure a Director or officer against liability for costs and expenses incurred in defending proceedings
whether civil or criminal.
Insurance premiums
During the year the Company paid insurance premiums to insure directors and officers against certain liabilities arising out of
their conduct while acting as an officer of the Group. Under the terms and conditions of the insurance contract, the nature of
the liabilities insured against and the premium paid cannot be disclosed.
Environmental Regulations
In the normal course of business, there are no environmental regulations or requirements that the Company is subject to.
Future Developments, Prospects and Business Strategies
The Company’s principal continuing activity is the development and commercialisation of technologies in the advanced
materials industry, specifically graphene quantum dots (GQDs). The Company’s future developments, prospects and business
strategies are to continue to develop and commercialise these technologies.
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, BDO Audit (WA) Pty Ltd, as part of the
terms of its audit engagement agreement against claims by third parties arising from their report on the financial report.
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DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Non-audit Services
During the year, BDO Audit (WA) Pty Ltd, the Company’s auditor did not provide any services other than their statutory
audits. Other BDO firms and divisions provided tax services to the Group. Details of their remuneration can be found within
the financial statements at Note 6 Auditor’s Remuneration.
In the event that non-audit services are provided by BDO (WA) Pty Ltd, the Board has established certain procedures to
ensure that the provision of non-audit services are compatible with, and do not compromise, the auditor independence
requirements of the Corporations Act 2001. These procedures include:
(cid:120)
(cid:120)
non-audit services will be subject to the corporate governance procedures adopted by the Company and will be
reviewed by the Board to ensure they do not impact the integrity and objectivity of the auditor; and
ensuring non-audit services do not involve reviewing or auditing the auditor’s own work, acting in a management or
decision making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.
Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended 31 December 2018 has been received and can be found on page
20 of the financial report.
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DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Remuneration Report (Audited)
This remuneration report for the year ended 31 December 2018 outlines the remuneration arrangements of the Group in
accordance with the requirements of the Corporations Act 2001 (Cth), as amended (Act) and its regulations. This
information has been audited as required by section 308(3C) of the Act.
The remuneration report is presented under the following sections:
Introduction
1.
2. Remuneration governance
3. Executive remuneration arrangements
4. Non-executive Director fee arrangements
5. Details of remuneration
6. Additional disclosures relating to equity instruments
7.
Loans to key management personnel (KMP) and their related parties
8. Other transactions and balances with KMP and their related parties
1.
Introduction
Key Management Personnel (KMP) have authority and responsibility for planning, directing and controlling the major
activities of the Group. KMP comprise the directors of the Company and identified key management personnel.
Compensation levels for KMP are competitively set to attract and retain appropriately qualified and experienced directors
and executives. The Board may seek independent advice on the appropriateness of compensation packages, given trends in
comparable companies both locally and internationally and the objectives of the Group’s compensation strategy.
2. Remuneration governance
The Directors believe the Company is not currently of a size nor are its affairs of such complexity as to warrant the
establishment of a separate remuneration committee. Accordingly, all matters are considered by the full Board of
Directors, in accordance with a remuneration committee charter.
During the financial year, the Company did not engage any remuneration consultants.
3. Executive remuneration arrangements
The compensation structures are designed to attract suitably qualified candidates, reward the achievement of strategic
objectives, and achieve the broader outcome of creation of value for shareholders. Compensation packages may include a
mix of fixed compensation, equity-based compensation, as well as employer contributions to superannuation funds. Shares
and options may only be issued subject to approval by shareholders in a general meeting.
At the date of this report the Company has four executive appointed, being the appointment of Mr Uzi Breier as the
Executive Director and CEO, Dr Michael Shtein as the Chief Technology Officer, Mr Avigdor Kaner as the VP of Business
Development, and Mr Tomer Segev as the Chief Financial Officer. The terms of their Executive Employment Agreements
with Dotz Nano Limited are summarised in the following table.
14
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
Executive Name
Mr Uzi Breier
Dr Michael Shtein
Mr Avigdor Kaner
Mr Tomer Segev
Remuneration
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Executive salary of US$240,000 per annum, plus company leased car;
Annual bonus of 25% of yearly salary based upon the performance targets established by
the Board (No bonus was payable for the year ended 31 December 2018); and
Reimbursement of reasonable business expenses incurred in the ordinary course of the
business in accordance with the Group’s reimbursement policies
Executive salary of US$240,0000 per annum, plus company leased car; and
Reimbursement of reasonable business expenses incurred in the ordinary course of the
business in accordance with the Group’s reimbursement policies
Executive salary of US$180,000 per annum, plus company leased car; and
Reimbursement of reasonable business expenses incurred in the ordinary course of the
business in accordance with the Group’s reimbursement policies
Executive salary of US$93,650 per annum (including social benefits) and
Reimbursement of reasonable business expenses incurred in the ordinary course of the
business in accordance with the Group’s reimbursement policies
At this stage the Board does not consider the Group’s earnings or earnings related measures to be an appropriate key
performance indicator (KPI). In considering the relationship between the Group’s remuneration policy and the
consequences for the Company’s shareholder wealth, changes in share price are analysed as well as measures such as
successful completion of business development and corporate activities.
4. Non-executive Director fee arrangements
The Board policy is to remunerate Non-executive Directors at a level to comparable companies for time, commitment, and
responsibilities. Non-executive Directors may receive performance related compensation. Directors’ fees cover all main
Board activities and membership of any committee. The Board has no established retirement or redundancy schemes in
relation to Non-executive Directors.
The maximum aggregate amount of fees that can be paid to Non-executive Directors is presently limited to an aggregate of
AU$500,000 per annum and any change is subject to approval by shareholders at the General Meeting. Fees for Non-
executive Directors are not linked to the performance of the Company. However, to align Directors’ interests with
shareholder interests, the Directors are encouraged to hold shares in the Company. Total fees for the Non-executive
Directors for the financial year were $237,605 (2017: $205,535) and cover main Board activities only. Non-executive
Directors may receive additional remuneration for other services provided to the Group.
Performance Conditions Linked to Remuneration
The Group has established and maintains Dotz Nano Limited Employee Incentive Option Plan (Plan) to provide ongoing
incentives to Eligible Participants of the Company. Eligible Participants include:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
a Director (whether executive or non-executive) of any Group Company;
a full or part time employee of any Group Company;
a casual employee or contractor of a Group Company; or
a prospective participant, being a person to whom the Offer was made but who can only accept the Offer if
arrangement has been entered into that will resulting in the person becoming an Eligible Participant.
The Board adopted the Plan to allow Eligible Participants to be granted Options to acquire shares in the Company. The
purpose of the Plan is to assist in the reward and motivation of Eligible Participants and link the reward of Eligible
Participants to performance and the creation of Shareholder value. It is designed to align the interest of Eligible Participants
more closely to the interests of Shareholders by providing an opportunity for Eligible Participants to receive shares. It
provides the Eligible Participants with the opportunity to share in any future growth in value of the Company and provides
greater incentives for Eligible Participants to focus on the Company’s longer term goals. At 31 December 2018 a total of
8,900,000 options have been issued under this plan.
15
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
5. Details of Remuneration
31-Dec-18
Directors:
Uzi Breier
Volker Mirgel
John Bullwinkel
Faldi Ismail
Moti Gross
Steve Bajic
Menashe Baruch
Ashley Krongold
Antony Sormann
Key management:
Ariel Malik
Eran Gilboa
Michael Shtein
Avigdor Kaner
Tomer Segev
Total
Short Term
Salary, Fees &
Commissions
Post-
Employment
Superannuation
Other*
Share-based
payments
Total
Performance
based
remuneration
US$
US$
US$
US$
US$
162,068
74,167
28,030
3,737
117,000
37,373
18,009
37,373
5,224
198,184
214,803
285,248
182,543
5,534
1,369,293
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,428
-
-
-
-
-
-
-
176,496
74,167
28,030
3,737
148,867
55,032
320,899
-
3,926
-
-
16,787
29,820
16,407
25,040
-
-
-
-
-
132,983
163,247
85,119
159,927
-
37,373
21,935
37,373
5,224
347,954
407,870
386,774
367,510
5,534
255,275
596,308
2,220,876
0%
0%
0%
0%
17%
0%
0%
0%
0%
31%
37%
0%
0%
0%
* Other includes termination benefits to Moti Gross US$135,113 and other benefits such as car lease, fuel and etc paid to
KMP.
31-Dec-17
Directors:
Faldi Ismail
Moti Gross
Steve Bajic
Menashe Baruch
Ashley Krongold
Key management:
Ariel Malik
Eran Gilboa
Michael Shtein
Avigdor Kaner
Total
Short Term
Salary, Fees &
Commissions
Post-
Employment
Superannuation
Other
Share-based
payments
Total
Performance
based
remuneration
US$
US$
US$
US$
US$
91,997
282,461
38,332
36,875
38,332
239,498
197,408
205,016
159,695
1,289,614
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
91,997
282,461
38,332
36,875
38,332
239,498
197,408
205,016
159,695
1,289,614
0%
0%
0%
0%
0%
0%
0%
0%
0%
16
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
6. Additional disclosures relating to equity instruments
KMP Shareholdings
The number of ordinary shares in Dotz held by each KMP of the Group during the financial year is as follows:
31-Dec-18
Directors:
Uzi Breier
Volker Mirgel
John Bullwinkel
Faldi Ismail*
Moti Gross*
Steve Bajic
Menashe Baruch*
Ashley Krongold
Antony Sormann
Key management:
Ariel Malik
Eran Gilboa
Michael Shtein
Avigdor Kaner
Tomer Segev
Total
Balance at the start
of the year
Granted as
Remuneration
during the year
Issued on exercise
of options during
the year
Other changes
during the year
Balance at
end of Year
-
-
-
2,916,667
3,260,687
100,000
242,198
1,884,838
-
11,746,611
1,816,486
2,446,201
-
24,413,688
-
-
-
-
-
-
-
-
-
1,530,000
2,080,000
-
-
-
3,610,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,530,000)
(2,080,000)
-
-
-
(3,610,00)
-
-
-
2,916,667
3,260,687
100,000
242,198
1,884,838
-
11,746,611
1,816,486
2,446,201
-
-
24,413,688
* Balances are at resignation date.
Options awarded, vested and lapsed during the year
The table below discloses the number of share options granted, vested or lapsed during the year.
Share options do not carry any voting or dividend rights and can only be exercised once the vesting conditions have been
met, until their expiry date.
17
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
KMP Options Holdings
The number of options over ordinary shares held by each KMP of the Group during the financial year is as follows:
31-Dec-18
Directors:
Uzi Breier
Volker Mirgel
John Bullwinkel
Faldi Ismail*
Moti Gross
Steve Bajic
Menashe Baruch
Ashley Krongold
Antony Sormann
Key management:
Ariel Malik
Eran Gilboa
Michael Shtein
Avigdor Kaner
Tomer Segev
Total
Balance
at the
start of
the year
Granted as
remuneration
during the
year
Exercised
during the
year
Other
changes
during the
year
Balance at
the end of
the year
Vested and
exercisable
Vested
and un-
exercisable
-
-
-
1,333,334
-
-
-
-
-
-
-
-
-
-
1,333,334
-
-
-
-
-
-
-
-
1,500,000
-
3,700,000
3,500,000
-
8,700,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,333,334
-
-
-
-
-
1,500,000
-
3,700,000
3,500,000
-
10,033,334
-
-
-
1,333,334
-
-
-
-
-
1,000,000
-
1,200,000
2,000,000
-
5,533,334
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
KMP performance rights holdings
No performance rights were issued during the current financial year (2017: Nil)
KMP performance shares holdings
The number of performance shares held by each KMP of the Group during the financial year is as follows:
31-Dec-18
Directors:
Uzi Breier
Volker Mirgel
John Bullwinkel
Faldi Ismail*
Moti Gross*
Steve Bajic
Menashe Baruch*
Ashley Krongold
Key management:
Ariel Malik
Eran Gilboa
Michael Shtein
Avigdor Kaner
Antony Sormann
Total
Balance at
the start of
the year
Granted as
Remuneration
during the year
Other changes
during the year
Balance at
end of Year
-
-
-
1,866,667
3,160,687
-
242,198
1,634,838
11,746,611
1,816,486
2,446,201
-
-
22,913,688
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,053,562)
-
(80,733)
(544,946)
(3,915,537)
(605,495)
(815,400)
-
-
(7,015,673)
-
-
-
1,866,667
2,107,125
-
161,465
1,089,892
7,831,074
1,210,991
1,620,801
-
-
15,898,015
* Balances are at resignation date.
18
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ REPORT
7.
Loans to key management personnel (KMP) and their related parties
There were no loans made to key management personnel during the financial year.
8. Other transactions and balances with KMP and their related parties
Purchases from related parties are made on terms equivalent to those that prevail in arm’s length transactions. The Group
acquired the following services from entities that are controlled by members of the group’s key management personnel.
Some Directors or former Directors of the Group hold or have held positions in other companies, where it is considered they
control or significantly influence the financial or operating policies of those entities. During the year, the following entities
provided corporate services and rental to the Group. Transactions between related parties are on normal commercial terms
and conditions no more favourable than those available to other parties unless otherwise stated.
Entity
Nature of transactions
Otsana Capital Pty Ltd
Capital raising fee
Otsana Capital Pty Ltd
Adamantium Holdings
Pty Ltd
Sharon Malik
Corporate advisor retainer
Rent and registered office
fee
Marketing fee
Key
Management
Personnel
Faldi Ismail
Faldi Ismail
Total Transactions
Payable Balance
2018
US$
2017
US$
-
110,219
2018
US$
-
2017
US$
-
22,424
91,997
7,047
74,219
Faldi Ismail
2,990
18,399
-
10,927
Ariel Malik
114,075
134,590
-
A capital raising fee of $110,219 was paid to Otsana Capital Pty Ltd for the year ended 31 December 2017. Otsana Pty Ltd is
a company controlled by former Director Faldi Ismail.
A corporate advisor retainer of $22,424 was paid or payable to Otsana Capital Pty for the period end 31 December 2018
(2017: $91,997) as per the Corporate Advisor Mandate dated 6 August 2016.
The Company had a Rental Agreement with Adamantium Holdings Pty Ltd, a company related to Mr Faldi Ismail. The rent
paid during the year ended 31 December 2018 was $2,990 (2017: $18,399).
Marketing fees of $114,075 were paid to Sharon Malik (VP Marketing) for the years ended 31 December 2018 (2017:
$134,590), the spouse of Key Management Personnel Ariel Malik.
9. Voting of shareholders at last year’s annual general meeting
At the AGM held on 31 May 2018, 79% of the votes received supported the adoption of the remuneration report for the year
ended 31 December 2017. The company did not receive any specific feedback at the AGM regarding its remuneration
practices.
REMUNERATION REPORT (END)
Signed in accordance with a resolution of the Board of Directors.
Volker Mirgel
Non-Executive Chairman
28 March 2019
19
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY DEAN JUST TO THE DIRECTORS OF DOTZ NANO LIMITED
As lead auditor of Dotz Nano Limited for the year ended 31 December 2018, 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 Dotz Nano Limited and the entities it controlled during the period.
Dean Just
Director
BDO Audit (WA) Pty Ltd
Perth, 28 March 2019
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 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 (WA) 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 other than for
the acts or omissions of financial services licensees
20
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018
Revenue
Other income
Cost of Sales
Administrative expenses
Consulting fees
Depreciation
Directors fees
Executive remuneration
Administrative remuneration
Finance expenses
Insurance
Interest expense
Impairment expense
Legal and professional fees
Finance and accounting expenses
Motor vehicle expense
Occupancy costs
Marketing and Investor relations
Research and development
Share based compensation
SRA and patent expense
Travel and accommodation
Loss before income tax
Income tax expense
Loss for the year
Note
2
2
2
3
3
3
3
3
3
3
3
4
2018
US$
15,395
1,408
(5,388)
2017
US$
107,795
3,732
(37,728)
(187,958)
(174,989)
(73,902)
(74,024)
(237,605)
(609,250)
(239,752)
(33,392)
(72,462)
(5,129)
-
(142,570)
(305,298)
(173,778)
(90,203)
(593,225)
(1,025,675)
(1,451,763)
(107,309)
(324,792)
(30,755)
(51,956)
(183,352)
(567,484)
(209,692)
(181,529)
(25,533)
(170)
(371,536)
(188,243)
(313,288)
(111,826)
(101,269)
(562,782)
(723,925)
(438,241)
(204,877)
(364,250)
(5,736,672)
(4,731,898)
-
-
(5,736,672)
(4,731,898)
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations
15
(117,014)
368,141
Other comprehensive loss for the year, net of tax
Total comprehensive loss for the year
-
-
(5,853,686)
(4,363,757)
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
7
7
(3.59)
(3.59)
(4.07)
(4.07)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with
the accompanying notes.
21
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2018
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Property, plant and equipment
Investments
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
SHAREHOLDERS’ EQUITY
Issued capital
Reserves
Accumulated losses
SHAREHOLDERS’ EQUITY
Note
8(a)
9
9
10
11
12
13
14
15
2018
US$
508,572
230,722
117,626
856,920
44,575
322,592
-
175,000
542,167
2017
US$
2,835,485
177,497
98,880
3,111,862
92,653
244,743
4,773
245,000
587,169
1,399,087
3,699,031
410,718
14,451
425,169
655,148
10,790
665,938
242,436
242,436
79,718
79,718
667,605
745,656
731,482
2,953,375
18,762,675
15,900,912
1,608,364
955,348
(19,639,557)
(13,902,885)
731,482
2,953,375
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
22
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2018
Issued Capital
Option
Reserve
US$
US$
Foreign
Currency
Reserve
US$
Accumulated
Losses
US$
Total
US$
Balance at 1 January 2017
12,456,472
418,625
(268,858)
(9,170,987)
3,435,252
Loss for the year
Other comprehensive income
Total comprehensive loss for
the year
Transactions with owners,
recognised directly in equity
-
-
-
Issue of shares (net of costs)
3,444,440
Issue of options
-
Balance at 31 December 2017
15,900,912
-
-
-
-
437,440
856,065
-
(4,731,898)
(4, 731,898)
368,141
-
368,141
368,141
(4, 731,898)
(4,363,757)
-
-
-
-
3,444,440
437,440
99,283
(13,902,885)
2,953,375
Balance at 1 January 2018
15,900,912
856,065
99,283
(13,902,885)
2,953,375
Loss for the year
Other comprehensive income
Total comprehensive loss for
the year
Transactions with owners,
recognised directly in equity
-
-
-
Issue of shares (net of cost)
2,861,763
-
-
-
-
Issue of options
-
770,030
-
(5,736,672)
(5,736,672)
(117,014)
-
(117,014)
(117,014)
(5,736,672)
(5,853,686)
-
-
-
-
2,861,763
770,030
731,482
Balance at 31 December 2018
18,762,675
1,626,095
(17,731)
(19,639,557)
The above Consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes.
23
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Note
2018
US$
2017
US$
2,820
107,398
(4,449,910)
(3,492,519)
1,408
2,187
Net cash used in operating activities
8(b)
(4,445,682)
(3,382,934)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment
Disposal/ (acquisition) of investments
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Net Proceeds for the issue of shares
Payment to lenders
Grant from BIRD
Other (proceeds from unissued shares)
Net cash from financing activities
Net (decrease)/ increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Foreign exchange
(123,399)
(176,214)
35,295
(41,252)
(88,104)
(217,466)
2,108,357
3,430,400
(31,730)
(31,200)
239,198
-
79,718
50,000
2,315,825
3,528,918
(2,217,961)
(71,482)
2,835,485
2,843,980
(108,952)
62,987
Cash and cash equivalents at the end of the financial year
8(a)
508,572
2,835,485
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes
24
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
These consolidated financial statements cover Dotz Nano Limited (Company) and its controlled entities as a consolidated
entity (also referred to as Group). Dotz Nano Limited is a company limited by shares, incorporated and domiciled in
Australia. The Group is a for-profit entity.
The financial statements were issued by the board of directors of the Company on 28 March 2019.
The following is a summary of the material accounting policies adopted by the consolidated entity in the preparation and
presentation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation of the financial report
a) Statement of Compliance
These financial statements are general purpose financial statements which have been prepared in accordance with
Australian Accounting Standards (AASBs) (including Australian interpretations) adopted by the Australian Accounting
Standard Board (AASB) and the Corporations Act 2001.
b) Going Concern
The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business
activity and the realisation of assets and the settlement of liabilities in the ordinary course of business. The Group incurred
a loss for year ended 31 December 2018 of $5,736,672 (2017: $4,731,898), net cash outflows from operating activities of
$4,445,682 (2017: $3,382,934) and had cash on hand of $508,572 (2017: $2,835,485).
The ability of the Group to continue as a going concern is dependent on securing additional funding through either equity,
debt or receipts, or a combination of all, to continue to fund its operational and technology development activities. These
conditions indicate a material uncertainty that may cast a doubt about the Group’s ability to continue as a going concern
and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.
The Directors believe that there will be sufficient funds available to continue to meet the Group’s working capital
requirements as at the date of this report and that sufficient funds will be available to finance the operations of the Group
for the following reasons:
(cid:120)
(cid:120)
(cid:120)
The Directors of Dotz Nano Limited have assessed the likely cash flow for the 12 month period from the date of
signing this annual report and its impact on the Group and believe there will be sufficient funds to meet the Group’s
working capital requirements as at the date of this report.
The Group has historically demonstrated its ability to raise funds to satisfy its immediate cash requirements, including
raising AU$850,000 subsequent to the year ended 31 December 2018. The Group is also planning to raise further
funds through the placement of ordinary shares.
The Directors of Dotz Nano have reason to believe that in addition to the cash flow currently available, and expected
funding through equity or debt fundraising, additional funds from receipts are expected through the
commercialisation of the Group’s products.
Should the Group not be able to continue as a going concern, it may be required to realise its assets and discharge its
liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial
statements or raise additional capital through equity or debts raisings and that the financial report does not include any
adjustments relating to the recoverability and classification of recorded asset amounts or liabilities that might be necessary
should the Group not continue as a going concern and meet its debts as and when they become due and payable.
25
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
b) Going Concern (Continued)
The directors plan to continue the Group’s operations on the basis as outlined above and believe there will be sufficient
funds for the Group to meet its obligations and liabilities for at least twelve months from the date of this report.
c) Adoption of new and revised accounting standards
A number of new or amended standards became applicable for the current reporting period and the Group had to change
its accounting policies as a result of the adoption of the following standards:
(cid:120) AASB 9 Financial Instruments; and
(cid:120) AASB 15 Revenue from Contracts with Customers
The impact of the adoption of these standards and the new accounting policies are disclosed in below. The impact of the
new standards adopted by the Group, has not had a material impact on the amounts presented in the Group’s financial
statements.
AASB 9 Financial Instruments – Impact of Adoption
Impairment of financial assets
The Group’s financial assets subject to AASB 9’s new expected credit loss model are cash and trade receivables, which arise
from the provision of services and sale of goods.
The impact of the impairment requirements of AASB 9 on cash and cash equivalents has not resulted in a material impact to
the financial statements.
Under AASB 9, the Group was required to revise the impairment methodology used in the calculation of its provision for
doubtful debts to the expected credit loss model. This change in methodology has not had a material impact on the
financial statements. The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a
lifetime expected loss allowance for all trade receivables. Trade receivables are written off when there is no reasonable
expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure
or a debtor to engage in a repayment plan with the Group, and a failure to make contractual payments for a period of
greater than 120 days past due.
AASB 9 Financial Instruments – Accounting Policies applied from 1 January 2018
Classification
From 1 January 2018, the Group classifies its financial assets in the following measurement categories:
(cid:120) those to be measured subsequently at fair value (either through OCI, or through profit or loss), and
(cid:120) those to be measured at amortised cost.
The classification depends on how the Group manages the financial assets and the contractual terms of the cash flows. At
year end, all of the Group’s financial assets have been classified as those to be measured at amortised cost.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
26
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
c) Adoption of new and revised accounting standards (Continued)
Impairment
From 1 January 2018, the Group assesses expected credit losses associated on a forward looking basis. For trade
receivables, the Group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables.
AASB 15 Revenue from Contracts with Customers – Impact of Adoption
The Group has adopted AASB 15 Revenue from Contracts with Customers from 1 January 2018 which resulted in changes to
accounting policies but no adjustments to the amounts recognised in the financial statements.
AASB 15 Revenue from Contracts with Customers – Accounting policies applied from 1 January 2018
Group revenues consist of the following elements:
(cid:120)
physical products which are sent to the customer, where revenue is recognised upon shipment or arrival of goods,
dependent on the terms that have been agreed with the customer;
The Group has no material contracts where the period between the transfer of the promised goods or services to the
customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the
transaction prices for the time value of money.
d)
Principles of Consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31
December 2018. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with
the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls
an investee if and only if the Group has:
(cid:120)
(cid:120)
(cid:120)
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the
investee);
Exposure, or rights, to variable returns from its involvement with the investee, and
The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts
and circumstances in assessing whether it has power over an investee, including:
(cid:120)
(cid:120)
(cid:120)
The contractual arrangement with the other vote holders of the investee,
Rights arising from other contractual arrangements,
The Group’s voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date
the Group gains control until the date the Group ceases to control the subsidiary.
27
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
d) Principles of Consolidation (Continued)
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent
of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit
balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and
cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
A change in ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the
Group loses control over a subsidiary, it:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
De-recognises the assets (including goodwill) and liabilities of the subsidiary
De-recognises the carrying amount of any non-controlling interests
De-recognises the cumulative translation differences recorded in equity
Recognises the fair value of the consideration received
Recognises the fair value of any investments retained
Recognises any surplus or deficit in profit and loss
Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained earnings, as
appropriate, as would be required if the Group had directly disposed of the related assets or liabilities
e) Business combination
Business combinations occur where an acquirer obtains control over one or more businesses.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or
businesses under common control. The business combination will be accounted for from the date that control is attained,
whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is
recognised (subject to certain limited exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from a
contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration
classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent
consideration classified as an asset or liability is remeasured in each reporting period to fair value, recognising any change
to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date.
All transaction costs incurred in relation to business combinations are recognised as expenses in profit or loss when
incurred. The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
f) Goodwill
Goodwill represents the excess of the costs of a business combination over the interest in the fair value of identifiable
assets, liabilities and contingent liabilities acquired. Cost of a business combination comprise the fair values of assets given,
liabilities assumed, and equity instruments issued. Any costs of acquisition are charged to profit or loss.
Goodwill is recognised as an intangible asset with any impairment in carrying value being charged to the income statement.
The Goodwill is not systematically amortised and the company reviews goodwill for impairment once a year, or more
frequently if events or changes to circumstances indicated that there is an impairment.
28
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
g)
Income Tax
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable
income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore
measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as
well unused tax losses.
Current income tax expense charged to profit or loss is the tax payable on taxable income calculated using applicable
income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore
measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as
well unused tax losses.
Current and deferred income tax expense (income) is charged or credited directly to equity instead of profit or loss when
the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have
been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial
recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable
profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their
measurement also reflects the manner in which management expects to recover or settle the carrying amount of the
related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is
probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures,
deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be
controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets
and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is
intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in
future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
h)
Leases
Leases are classified at their inception as either operating or finance leases based on economic substance of the agreement
so as to reflect the risks and benefits incidental to ownership.
29
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
h)
Leases (Continued)
Operating Leases
The minimum lease payments made under operating leases are charged against profits in equal installments over the
accounting periods covered by the lease term where the lessor effectively retains substantially all of the risks and benefits
of ownership of the leased item.
The cost of improvements to or on leased property is capitalised, disclosed as leasehold improvements and amortised.
Finance leases
Leases which effectively transfer substantially all of the risks and rewards incidental to ownership of the leased item to the
Company are capitalised at the present value of the minimum lease payments and disclosed as property, plant and
equipment under lease. A lease liability of equal value is also recognised.
Capitalised lease assets are depreciated over the shorter of the estimated useful life of the assets and the lease term.
Minimum lease payments are allocated between interest expense and reduction of the lease liability with the interest
expense calculated using the interest rate implicit in the lease and recognised directly in net profit.
i)
Financial Instruments
Initial recognition and measurement
Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a
party to the contractual provisions of the instrument.
Financial instruments are initially measured at fair value plus transaction costs where the instrument is not classified as at
fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss
are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below.
Classification and subsequent measurement
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to
determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar
instruments and option pricing models.
(i)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market and are subsequently measured at amortised cost.
Loans and receivables are included in current assets, except for those which are not expected to mature within 12
months after the end of the reporting period. (All other loans and receivables are classified as non-current assets.)
(ii) Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.
Gains or losses are recognised in profit or loss through the amortisation process and when the financial liability is
derecognised.
Derivative instruments
The Group does not trade or hold derivatives.
30
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
i)
Financial Instruments (Continued)
Financial guarantees
The Group has no material financial guarantees.
Impairment
At the end of each reporting period, the Group assesses whether there is objective evidence that a financial asset has
been impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an
incurred ‘loss event’) has an impact on the estimated future cash flows of the financial asset or the group of financial
assets that can be reliably estimated. Evidence of impairment may include indications that the debtor or a group of
debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the
probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a
measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate
with defaults.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flow expires or the asset is transferred to
another party whereby the entity no longer has any significant continuing involvement in the risks and benefits
associated with the asset.
Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The
difference between the carrying value of the financial liability extinguished or transferred to another party and the fair
value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.
j)
Impairment of non-financial assets
At the end of each reporting period, the Directors assesses whether there is any indication that an asset may be impaired.
The assessment will include the consideration of external and internal sources of information, including dividends
received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits.
If any such indication exists, an impairment test is carried out on the asset by comparing the asset’s recoverable amount,
being the higher of its fair value less costs to sell and its value in use, to the asset’s carrying amount. Any excess of the
asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss. 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.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
k)
Intangible assets
Acquired intangible assets are measured on initial recognition at cost including directly attributable costs. Intangible assets
acquired in a business combination are measured on initial recognition at fair value at the acquisition date.
Intangible assets with a finite useful life are amortised over their useful life and reviewed for impairment whenever there is
an indication that the assets may be impaired. The amortisation period and the amortisation method for an intangible asset
are reviewed at least at each year end.
Intangible assets with indefinite useful lives are not systematically amortised and are tested for impairment annually or
whenever there is an indication that the intangible assets may be impaired. The useful life of these assets is reviewed
annually to determine whether their indefinite life assessment continued to be supportable. If the events and
circumstances do not continue to support the assessment, the change in the useful life assessment from indefinite to finite
31
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
k)
Intangible assets (Continued)
is accounted for prospectively as a change in accounting estimate and on that date the asset is tested for impairment. The
intangible assets are considered to be with indefinite useful life.
l)
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits available on demand with banks with original maturity of three
months or less.
m) Revenue and other income
Revenue is measured at the fair value of the consideration received or receivable. Interest income is brought to account
on an accruals basis using the effective interest rate method and, if not received at the end of the reporting period, is
reflected in the statement of financial position as a receivable
n) Operating expenses
Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin.
o) Goods and Services Tax (GST) and Value Added Tax (VAT)
Revenues, expenses, and assets are recognised net of the amount of GST or VAT, except where the amount of GST or VAT
incurred is not recoverable from the Australian Tax Office (ATO) and Israel Tax Authority (ITA).
Receivable and payables are stated inclusive of the amount of GST or VAT receivable or payable. The net amount of the
GST or VAT recoverable from, or payable to, the ATO or ITA is included with other receivables and payables in the
statement of financial position.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST or VAT component of
investing and financing activities, which are disclosed as operating cash flows.
p) Plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of plant and equipment over their
expected useful lives.
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting
date.
An item of plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group.
Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
32
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
q) Research and development
Expenditure on research activities is recognised in profit or loss as incurred. Development expenditure is capitalised only
if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future
economic benefits are probable and the Company intends to and has sufficient resources to complete development and
to use or sell the asset. Otherwise, it is recognised in profit or loss as incurred.
r)
Employee Benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to the end
of the reporting period. Employee benefits that are expected to be settled within 12 months have been measured at the
amounts expected to be paid when the liability is settled. Employee benefits payable later than 12 months have been
measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the
liability, consideration is given to employee wages increases and the probability that the employee may satisfy any
vesting requirements. Those cash flows are discounted using market yields on national government bonds with terms to
maturity that match the expected timing of cash flows attributable to employee benefits.
Equity-settled compensation
The Group operates an employee share and option plan. Share-based payments to employees are measured at the fair
value of the instruments issued and amortised over the vesting periods. The fair value of performance right options is
determined using the satisfaction of certain performance criteria (Performance Milestones). The number of share option
and performance rights expected to vest is reviewed and adjusted at the end of each reporting period such that the
amount recognised for services received as consideration for the equity instruments granted is based on the number of
equity instruments that eventually vest. The fair value is determined using either a Black Scholes, Binominal or Monte
Carlo simulation model depending on the type of share-based payment.
s) Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will result, and that outflow can be reliably measured. Provisions are
measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.
t)
Equity and reserves
Share capital represents the fair value of shares that have been issued. Any transaction costs associated with the issuing
of shares are deducted from share capital, net of any related income tax benefits. The option reserve records the value of
share-based payments.
u) Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each entity within the Group is measured using the currency of the primary economic
environment in which that entity operates. The consolidated financial statements are presented in USA dollars which is
the Parent’s functional currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of
the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items
measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary
items measured at fair value are reported at the exchange rate at the date when fair values were determined.
33
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
u) Foreign currency transactions and balances (Continued)
Exchange differences arising on the translation of monetary items are recognised in profit or loss.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive
income to the extent that the underlying gain or loss is recognized other comprehensive Income; otherwise the exchange
difference is recognised in profit or loss.
Group companies
The financial results and position of foreign operations whose functional currency is different from the Group’s
presentation currency are translated as follows:
(cid:120)
(cid:120)
(cid:120)
assets and liabilities are translated at year-end exchange rates prevailing at that reporting period;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than USA dollars are
recognised in other comprehensive income and included in the foreign currency translation reserve in the statement of
financial position. These differences are recognised in profit or loss in the period in which the operation is disposed.
v) Segment Information
Identification of reportable segments
The Group has identified its operating segment based on the internal reports that are reviewed and used by the Board of
Directors (the chief operating decision makers) in assessing performance and in determining the allocation of resources.
The Group’s sole operating segment is consistent with the presentation of these consolidated financial statements.
w) Earnings per share
Basic earnings per share is calculated by dividing:
(cid:120)
(cid:120)
the profit attributable to member of the parent entity, excluding any costs of servicing equity other than ordinary
shares
by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year (if any).
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
(cid:120)
(cid:120)
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares; and
the weighted average number of additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
34
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
x) Critical Accounting estimates and judgements
The directors evaluate estimates and judgements incorporated into the financial statements based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events and are
based on current trends and economic data, obtained both externally and within the Group.
Key Estimates and judgements
Impairment
In assessing impairment, management estimates the recoverable amount of each asset or cash-generating unit based on
expected future cash flows and uses an interest rate to discount them. The company reviews goodwill and other intangible
assets for impairment once a year or more frequently if events or changes in circumstances indicate that there is
impairment. Goodwill is allocated at initial recognition to each of the Company’s cash-generating units that are expected to
benefit from synergies of the business combination giving rise to the goodwill. An impairment loss is recognised if the
recoverable amount of the cash-generating unit to which goodwill has been allocated is lower than the carrying value of the
cash generating unit. Any impairment is first allocated to goodwill.
Share based payments
Share-based payments are measured at the fair value of goods or services received or the fair value of the equity
instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded
at the date the goods or services are received. The fair value of options is determined using either the Black-Scholes,
Binominal or Monte Carlo valuation models. The number of shares and options expected to vest is reviewed and adjusted
at the end of each reporting period such that the amount recognised for services received as consideration for the equity
instruments granted is based on the number of equity instruments that eventually vest.
Bird Grant Liability
Government grant liability reflects the grant received from the Bird Foundation. The grant is repayable upon the Group
commencing product commercialisation and generating revenue from sale of product, with repayments being based on 5%
of each dollar of revenue. As required by AASB 9 Financial Instruments, the liability has been recognised at fair value on
initial recognition and subject to management’s estimate of discount rate, and the timing and quantity of future revenues.
NOTE 2: REVENUE AND OTHER INCOME
Revenue
Other income – interest
Cost of Sales
2018
US$
15,395
1,408
(5,388)
2017
US$
107,795
3,732
(37,728)
35
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 3: LOSS FOR THE YEAR
Loss before income tax from continuing operations includes the following specific
expenses:
Executive Remuneration
- CEO and Executive Director (current and former)
- VP International Finance
Finance cost
Marketing and Investor relations
SRA and patent expense
Travel and accommodation
Impairment expense:
-
Impairment expense on Technology
- Impairment write off goodwill and other
Share based compensation:
Options issued to broker on 8-Aug-17
Options issued to lead manager on 5-Feb-18
Shares issued to lead manager on 5-Feb-18
Options issued to employees and consultants on 10-May-18
11
16
16
16
2018
US$
2017
US$
(411,066)
(334,165)
(198,184)
(233,319)
(609,250)
(567,484)
(33,392)
(181,529)
(593,225)
(562,782)
(107,309)
(204,877)
(324,792)
(364,070)
-
-
-
-
327,185
44,351
371,536
(438,241)
(273,539)
(67,272)
(198,998)
Shares issued to employees, consultants and corporate advisor on 10-May-18 16
(419,248)
Shares issued to former CEO Moti Gross on 29-Jun-18
Options issued to lead manager on 1-Aug-18
Shares issued to consultants on 2-Nov-18
Options issued to employees on 27-Nov-18
Options issued to employees on 27-Nov-18
16
16
16
16
16
(55,032)
(38,434)
(159,383)
(221,974)
(17,883)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Research and development:
-
Employee costs
- Lab expenses
(1,451,763)
(438,241)
(933,277)
(671,508)
(92,398)
(52,417)
(1,025,675)
(723,925)
36
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 4: INCOME TAX
The financial accounts for the year ended 31 December 2018 comprise the results of Dotz Australia and Dotz Israel. The
legal parent is incorporated and domiciled in Australia where the applicable tax rate is 27.5% (2017: 27.5%). The applicable
tax rate in Israel is 23% (2017: 24%).
(a) Income tax expense
Current tax
Deferred tax
2018
US$
-
-
2017
US$
-
-
(b) The prima facie tax payable on loss from ordinary activities before
income tax is reconciled to the income tax expense as follows:
Income tax benefit on operating loss at 27.5% (2017: 27.5%)
(1,577,585)
(1,301,272)
Non-deductible items
Non-deductible expenditure
Non-assessable income
Adjustment for difference in tax rates
Temporary differences not recognised
Income tax attributable to operating income/(loss)
The applicable weighted average effective tax rates are as follows:
Balance of franking account at year end
Deferred tax assets
Tax losses
Black hole expenditure
Unrecognised deferred tax asset
Set-off deferred tax liabilities
Net deferred tax assets
Less deferred tax assets not recognised
Net assets
Deferred tax liabilities
Other
Set-off deferred tax assets
Net deferred tax liabilities
Tax losses
419,196
189,941
-
154,080
1,004,309
-
Nil%
Nil
-
117,477
993,854
-
Nil%
Nil
977,429
101,959
1,427,118
91,312
1,079,388
1,518,430
-
-
1,079,388
1,518,430
(1,079,388)
(1,518,430)
-
-
-
-
-
-
-
-
Unused tax losses for which no deferred tax asset has been recognised
1,079,388
1,518,430
Carry forward losses
Potential future income tax benefits attributable to tax losses carried forward have not been brought to account at 31
December 2018, because the Directors do not believe it is appropriate to regard realisation of the future income tax
benefits as probable.
37
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 5: RELATED PARTY TRANSACTIONS
a) Key Management Personnel Compensation
With exception of Mr Breier, Dr Mirgel, Dr Gross and Mr Ismail, the directors entered into contracts to each be paid
AUD$4,167 per month, for the period ended 31 December 2018. The salary of Mr Breier is set at US$240,000 and the salary
of Dr Mirgel is set at US$100,000. The salary of Mr Ismail was set at AU$120,000 per annum and the salary of Dr Gross was
set at US$280,800. The contracts remain in place until the Directors either resign or are not re-elected at an AGM.
The totals of remuneration paid to KMP during the year are as follows:
Short-term salary, fees and commissions
Directors fees
Share based payments
Total KMP Compensation
b) Other related party transactions
2018
US$
2017
US$
1,386,963
1,084,078
237,605
596,308
205,536
-
2,220,876
1,289,614
Purchases from related parties are made on terms equivalent to those that prevail in arm’s length transactions. The Group
acquired the following services from entities that are controlled by members of the group’s key management personnel.
Some Directors or former Directors of the Group hold or have held positions in other companies, where it is considered
they control or significantly influence the financial or operating policies of those entities. During the year, the following
entities provided corporate services and rental to the Group. Transactions between related parties are on normal
commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.
Entity
Nature of transactions
Otsana Capital Pty Ltd
Capital raising fee
Otsana Capital Pty Ltd
Adamantium Holdings
Pty Ltd
Sharon Malik
Corporate advisor retainer
Rent and registered office
fee
Marketing fee
Key
Management
Personnel
Faldi Ismail
Faldi Ismail
Total Transactions
Payable Balance
2018
US$
2017
US$
-
110,219
2018
US$
-
2017
US$
-
22,424
91,997
7,047
74,219
Faldi Ismail
2,990
18,399
-
10,927
Ariel Malik
114,075
134,590
-
A capital raising fee of $110,219 was paid to Otsana Capital Pty Ltd for the year ended 31 December 2017. Otsana Pty Ltd is
a company controlled by former Director Faldi Ismail.
A corporate advisor retainer of $22,424 was paid or payable to Otsana Capital Pty for the period end 31 December 2018
(2017: $91,997) as per the Corporate Advisor Mandate dated 6 August 2016.
The Company had a Rental Agreement with Adamantium Holdings Pty Ltd, a company related to Mr Faldi Ismail. The rent
paid during the year ended 31 December 2018 was $2,990 (2017: $18,399).
Marketing fees of $114,075 were paid to Sharon Malik (VP Marketing) for the years ended 31 December 2018 (2017:
$134,590), the spouse of Key Management Personnel Ariel Malik.
38
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 6: AUDITOR’S REMUNERATION
Remuneration of the auditor of the Group for:
-
-
Auditing and reviewing the financial reports (BDO) – Australia
Auditing and reviewing the financial reports (BDO) – Israel
Non-assurance services
-
-
Tax (BDO) – Australia
Tax (BDO) – Israel
NOTE 7: LOSS PER SHARE
(Loss) per share (EPS)
2018
US$
27,736
30,600
58,336
3,756
6,961
10,717
2018
US$
2017
US$
28,635
20,000
48,635
2,892
3,800
6,692
2017
US$
a)
Loss used in calculation of basic EPS and diluted EPS
(5,736,672)
(4,731,898)
b) Weighted average number of ordinary shares outstanding during the
year used in calculation of basic and diluted loss per share
159,808,324
116,256,129
NOTE 8 a: CASH AND CASH EQUIVALENTS
Cash at bank
Total cash and cash equivalents in the statement of cash flows
NOTE 8 b: CASH FLOW INFORMATION
Loss after income tax
Non-cash flows in loss after income tax
Depreciation
Impairment expense
Share based payment expense
Foreign exchange loss
Changes in assets and liabilities
Increase in receivables
Increase in prepayments
Decrease in payables
(Decrease)/increase in other payables
Increase in provisions
Decrease in deferred tax
2018
US$
508,572
508,572
2017
US$
2,835,485
2,835,485
2018
US$
2017
US$
(5,736,672)
(4,731,898)
74,024
-
1,451,763
29,866
(5,149)
(18,746)
(162,263)
(82,166)
3,661
-
51,956
371,536
438,241
222,922
(93,482)
(34,967)
(7,061)
475,742
9,077
(85,000)
Cash flow (used in) operating activities
(4,445,682)
(3,382,934)
39
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 8 b: CASH FLOW INFORMATION (CONTINUED)
Credit Standby Facilities
The Group has no credit standby facilities.
Non-Cash investing and financing activities
There were no non-cash investing and financing activities during the year.
NOTE 9: TRADE AND OTHER RECEIVABLES
CURRENT
Other receivables
NON CURRENT
Other receivables
2018
US$
230,722
230,722
44,575
44,575
2017
US$
177,497
177,497
92,653
92,653
All amounts are short-term. The net carrying value of trade receivables is considered a reasonable approximation of fair
value.
NOTE 10: PLANT AND EQUIPMENT
Plant and equipment at costs
Accumulated depreciation
Opening balance at reporting date
Additions
Depreciation
Closing balance at reporting date
NOTE 11: INTANGIBLE ASSETS
Balance at the beginning of the year
Acquisition of License Agreement with William Marsh Rice University
Adjustments to accrued licence fees (a)
Impairment expense
Balance at the end of the year
2018
US$
2017
US$
513,827
362,028
(191,235)
(117,285)
322,592
244,743
244,743
151,873
(74,024)
322,592
2018
US$
245,000
30,000
(100,000)
144,230
152,469
(51,956)
244,743
2017
US$
472,185
100,000
-
-
(327,185)
175,000
245,000
(a) At 31 December 2017, the acquisition of Licence Agreement amount $100,000 was an accrual which was payable on 1
January 2018. The agreement was amended as noted below, therefore the amount $100,000 was not paid and was
reversed in year ended 31 December 2018.
40
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 11: INTANGIBLE ASSETS (CONTINUED)
In December 2014, the Company signed an exclusive technology transfer license agreement (“the License Agreement”) with
William Marsh Rice University (“Rice”) located in Houston Texas. The License Agreement grants the Company an exclusive
license, sub-license, assignable, worldwide license to make, develop, use, import, commercialise offer for sale, sell,
produce, lease, distribute or otherwise transfer Rice patents covered by the agreement, specifically Rice technology “Coal
as an abundant source of GQD’s” and “Bandgap Engineering of Carbon Quantum Dotz”. The License initial basic fee was
US$85,000. In the original agreement applicable to financial year ended 31 December 2017, the Company was required pay
Rice University royalties as follows:
o
o
o
o
Royalties of 4% of adjusted gross sales attributable to the Company
Royalties of 4% of adjusted gross sales attributable to the Company’s sublicense
The company to pay Rice University 25% of any cash and non-cash consideration received for sublicense initiation fee,
annual fee, sub-license milestone payments, or other such non-sale based royalty payable by a sub-licensee
The Company was required to pay Rice University the following annual minimum royalties: US$10,000 on 1 January
2016, US$50,000 on 1 January 2017, US$100,000 on 1 January 2018, US$450,000 on 1 January 2019 and
US$1,000,000 from 1 January 2020 and each year thereafter (the payments starting from 1 January 2018 were varied
as noted below).
The Licence Agreement was amended during the financial year ended 31 December 2018. Under the amended Licence
Agreement, the Company is required to make the following payments:
o
o
o
A non-refundable, non-creditable, license amendment fee of US30,000 due and payable within 30 days from invoicing
from Rice
Annual License Maintenance Fees of US$15,000 due and payable on each January 1st, starting January 1st 2019 and
due annually on each January 1st thereafter; provided, however that Licensee’s obligations to pay the licensee
Maintenance Fee shall cease on January 1st of the calendar year following the date of first commercial sale
Annual Minimum Royalties: if royalties paid to Rice do not reach the following minimum amounts: US$20,000 for the
calendar year immediately following the year in which first commercial sale occurred: US$50,000 for second calendar
year following the year in which first commercial sale occurred; and US$100,000 for each calendar year thereafter
(“Annual Minimum Royalty”), Licensee shall pay to Rice on or before the quarter royalty payment deadline for the last
calendar quarter of the stated calendar year an additional amount equal to the difference between the stated Annual
Minimum Royalty and the actual Royalties paid to Rice in that calendar year. For clarity and avoidance of doubt, after
first commercial sale of Rice Licensed Product, the corresponding Annual Minimum royalty shall continue to be due
and payable (on or before the quarterly royalty payment deadline) for the last calendar quarter of the given calendar
year for duration of the term, regardless of whether any sales occur in a given calendar year
The Company may terminate the License Agreement at any time by giving written notice to Rice University. In addition, the
Company is obliged to reach certain milestones with regards to research and development. Commercial and production
activities. Rice University has the option to terminate the agreement upon the Company failure in reaching these
milestones.
The intangible asset has been allocated to the company’s only cash generating unit (CGU) for impairment testing. The Board
has determined the recoverable amount of the CGU by assessing the fair value less cost of disposal (FVLCOD) of the
underlying assets. The method applied was the market approach based on the current market capitalisation (number of
shares on issue multiplied by the quoted market price per share) of the Group on the Australian Securities Exchange (ASX).
The recoverable value is therefore a Level 1 measurement based on observable inputs of publicly traded shares in an active
market. The Board has not identified any possible reasons in key assumption that could cause the carrying amount of the
CGU to exceed its recoverable amount. Any reasonable change to the company’s share price would not create an
impairment. Based on this assessment at t 31 December 2018, no impairment was recognised.
41
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 11: INTANGIBLE ASSETS (CONTINUED)
On 20 May 2015, the Company acquired 100% of Graphene Materials Ltd from the controlling shareholder. Graphene
Materials Ltd had a license agreement with B.G Negev Technologies and Applications Ltd, a company owned by Ben-Gurion
University located in Israel. This License Agreement was for exclusive, sub-licensed, worldwide royalty bearing license to
develop, exploit, utilise and commercialise the Licensed BGN IP and the Licensed Products. On acquisition of Graphene
Materials Ltd an amount totalling to $327,185 was allocated to technology. No impairment loss was recognised for the prior
year ended 31 December 2016. For the year ended 31 December 2017 management determined there would be no further
use or commercial income related to the technology a specific asset impairment was recognised of $327,185.
NOTE 12: TRADE AND OTHER PAYABLES
Trade and other payables
Accruals
All amounts are short-term. The carrying values are considered to approximate fair value.
NOTE 13: BORROWINGS
NON-CURRENT
Government grant
2018
US$
179,743
230,975
410,718
2018
US$
242,436
242,436
2017
US$
402,694
252,454
655,148
2017
US$
79,718
79,718
The Government Grant relates to a Grant the Group received from the Bird Foundation. The Grant is repayable upon the
Group commencing product commercialization and generating revenue from sale of product. The repayments are based
on 5% of each dollar of revenue. At 31 December 2018 the carrying value of the borrowings was $242,436.
NOTE 14: ISSUED CAPITAL
(a) Share Capital
2018
US$
2017
US$
180,714,662 (31 December 2017: 140,818,135) fully paid ordinary shares
18,762,676
15,900,912
(b) Reconciliation of Share Capital
Opening balance at 1 January 2017
Shares issued under Public Offer on 8 August 2017
Shares issued under Public Offer on 5 December 2017
Closing balance at 31 December 2017
No.
US$
109,984,802
12,456,472
12,500,000
1,130,474
18,333,333
2,313,966
140,818,135
15,900,912
42
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 14: ISSUED CAPITAL
Opening balance at 1 January 2018
Shares issued under Placement on 5 February 2018
Shares issued to Lead Manager on 5 February 2018
Shares issued under Placement on 10 May 2018
Shares issued in lieu of cash payments on 10 May 2018
Shares issued in lieu of cash payment on 29 June 2018
Shares issued under Placement on 1 August 2018
Shares issued under Cleansing Prospectus on 15 August 2018
Shares issued in lieu of cash payments on 2 November 2018
Less: capital raising fees
Closing balance at 31 December 2018
2018
No.
2017
US$
140,818,135
15,900,912
2,777,778
396,050
500,000
363,108
5,385,000
775,000
71,289
49,312
423,956
54,372
27,777,778
1,848,790
100
7
2,317,723
153,354
-
(135,367)
180,714,622
18,762,675
(c) Capital Management
Due to the nature of the Group’s activities, the Group does not have ready access to credit facilities, with the primary
source of funding being equity raisings. Therefore, the focus of the Group’s capital risk management is the current
working capital position against the requirements of the Group to meet research and development programs and
corporate overheads. The Group’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating
requirements, with a view to initiating appropriate capital raisings as required. Any surplus funds are invested with major
financial institutions.
(d) Performance Shares
In addition to the number of shares disclosed above, there are also 44,000,000 performance shares on issue. The
performance shares will convert to ordinary shares on 1:1 basis subject to the performance milestones being met prior to
expiry date. The performance shares are summarized below:
Class
Expiry
Milestone
Milestone 2
Milestone 3
30/04/2019 Upon Dotz achieving the production and distribution of an aggregate of 50 kilograms of
GQDs in any 12 month period through formal off-take agreements with a reputable third
party within 30-months from the date of issue of the Performance Shares.
31/10/2020 Upon Dotz achieving the production and distribution of an aggregate of 100 kilograms of
GQDs through formal off-take agreements with a reputable third party in any 12-month
period within 48 months from the date of issue of the Performance Shares.
43
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 15: RESERVES
a) Reserves
Ref
Option Reserve 40,325,000 (31 December 2017: 20,500,000) options on issue
Foreign currency translation reserve
b) Options Reserve
Opening balance at 1 January 2017
Issue of Lead Manager Options
Closing balance at 31 December 2017
Opening balance at 1 January 2018
Issue of Joint Lead Manager Options on 5 February 2018
Issue of options to employees and consultants on 10 May 2018
Issue of options to Lead Manager on 1 August 2018
Issue of options under Employee Share Option Plan on 27 November 2018
2018
US$
1,626,095
(17,731)
1,608,364
2017
US$
856,065
99,283
955,348
No.
US$
10,500,000
418,625
10,000,000
20,500,000
437,440
856,065
20,500,000
6,000,000
3,425,000
1,500,000
8,900,000
856,065
289,873
197,239
38,025
244,893
Closing balance at 31 December 2018
40,325,000
1,626,095
c)
Foreign currency translation reserve
Opening balance
Difference arising on translation
Balance at the end of the year
US$
US$
99,283
(268,858)
(117,014)
(17,731)
368,141
99,283
The foreign currency translation reserve records exchange differences arising on translation of a foreign controlled
subsidiary.
NOTE 16: SHARE BASED PAYMENTS
The following share-based payment arrangements existed at 31 December 2018 and 31 December 2017:
2017 SHARE BASED PAYMENTS
(cid:120)
10,000,000 Broker Options
2018 SHARE BASED PAYMENTS
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
6,000,000 Lead Manager Options
1,000,000 Employee Options
1,000,000 Employee Options
500,000 Employee Options
425,000 Employee Options
500,000 Consultant Options
1,500,000 Lead Manager Options
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Broker Options
500,000 Lead Manager Shares
5,385,000 Employee, Consultant and Corporate Advisor Shares
775,000 Consultant Shares (Former CEO)
2,317,723 Consultant Shares
3,700,000 Employee Options
3,200,000 Employee Options
2,000,000 Employee Options
10,000,000 Broker Options were issued on 8 August 2017 with exercise price of AU$0.20 each expiring on 8 August 2019.
These options have been valued using the Black and Scholes option valuation methodologies taking into account the
terms and conditions upon which the options were granted.
44
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE16: SHARE BASED PAYMENTS (CONTINUED)
Lead Manager Options
6,000,000 Lead Manager Options were issued on 5 February 2018 with exercise price of AU$0.30 each expiring on 5
February 2020. These options have been valued using the Black and Scholes option valuation methodologies taking into
account the terms and conditions upon which the options were granted.
Employee Options
1,000,000 Employee Options were issued on 10 May 2018 with exercise price of AU$Nil each expiring on 20 April 2020.
These options have been valued using market share price taking into account the terms and conditions upon which the
options were granted.
Employee Options
1,000,000 Employee Options were issued on 10 May 2018 with exercise price of AU$Nil each expiring on 1 November
2020. These options have been valued using market share price taking into account the terms and conditions upon which
the options were granted.
Employee Options
500,000 Employee Options were issued on 10 May 2018 with exercise price of AU$0.20 each expiring on 20 April 2020.
These options have been valued using the Binominal option valuation methodology taking into account the terms and
conditions upon which the options were granted.
Employee Options
425,000 Employee Options were issued on 10 May 2018 with exercise price of AU$0.105 ach expiring on 20 April 2020.
These options have been valued using the Binominal option valuation methodology taking into account the terms and
conditions upon which the options were granted.
Consultant Options
500,000 Consultant Options were issued on 10 May 2018 with exercise price of AU$0.20 each expiring on 20 April 2020.
These options have been valued using the Binominal option valuation methodology taking into account the terms and
conditions upon which the options were granted.
Lead Manager Options
1,500,000 Lead Manager Options were issued on 10 May 2018 with exercise price of AU$0.20 each expiring on 1 August
2020. These options have been valued using the Black and Scholes option valuation methodologies taking into account
the terms and conditions upon which the options were granted.
Lead Manager Shares
500,000 Lead Manager Shares were issued on 5 February 2018 with issue price of AU$Nil and have been valued using the
market share price.
Employee, Consultants and Corporate Advisor Shares
5,385,000 Employee, Consultant and Corporate Advisor Shares were issued on 10 May 2018 with issue price of AU$Nil
and have been valued using the market share price.
45
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE16: SHARE BASED PAYMENTS (CONTINUED)
Consultant Shares (Former CEO)
775,000 Consultant Shares were issued on 29 June 2018 with issue price of AU$Nil and have been valued using the
market share price.
Consultant Shares
2,317,723 Consultant Shares were issued on 2 November 2018 with issue price of AU$Nil and have been valued using the
market share price.
Employee Options
3,700,000 Employee Options were issued on 27 November 2018 with exercise price of AUD $Nil each expiring on 1
October 2021. These options have been valued using market share price taking into account the terms and conditions
upon which the options were granted.
Employee Options
3,200,000 Employee Options were issued on 27 November 2018 with exercise price of AUD $Nil each expiring on 1
October 2021. The Options vest on 27 November 2019. These options have been valued using market share price taking
into account the terms and conditions upon which the options were granted.
Employee Options
2,000,000 Employee Options were issued on 27 November 2018 with exercise price of AUD $Nil each expiring on 1
October 2022. The Options vest subject to the Company achieving revenue of US$1,000,000 for the financial year ended
31 December 2019.
A summary of the inputs used in the valuation of the options and shares is as follows:
Options and Shares
Broker
Options
Lead Manager
Options
Financial year
Exercise price
2017
2018
AU$0.20
AU$0.30
Lead
Manager
Shares
2018
N/A
Employee
Options
Employee
Options
Employee
Options
Employee
Option
Consultant
Options
2018
Nil
2018
Nil
2018
2018
2018
AU$0.20
AU$0.105
AU$0.20
Price at measurement
AU$0.13
AU$0.16
AU$0.18
AU$0.105
AU$0.105
AU$0.105
AU$0.105
AU$0.105
8-Aug-17
5-Feb-18
5-Feb-18
10-May-18
10-May-18
10-May-18
10-May-18
10-May-18
Grant date
Vesting date
Expected volatility (i)
N/A
100%
N/A
100%
Expiry date
8-Aug-19
5-Feb-20
Expected dividends
Nil
Risk free interest rate
1.74%
Nil
1.93%
N/A
N/A
N/A
N/A
N/A
N/A
1-Nov-18
N/A
1-Feb-19
N/AUS
92.22%
92.22%
92.22%
92.22%
92.22%
20-Apr-20
1-Nov-20
20-Apr-20
20-Apr-20
20-Apr-20
Nil
Nil
Nil
Nil
Nil
2.62%
2.62%
2.62%
2.62%
2.62%
Value per option or
share
AU$0.055
AU$0.060
AU$0.18
AU$0.105
AU$0.105
AU$0.0345 AU$0.0517 AU$0.0345
Number of options
10,000,000
6,000,000
500,000
1,000,000
1,000,000
500,000
425,000
500,000
Total value in AUD
AU$552,431
AU$365,955
AU$90,000 AU$105,000 AU$105,000 AU$17,262 AU$21,990 AU$17,262
Total value in USD
US$438,241
US$273,539
US$67,272 US$78,704 US$78,704
US12,939
US$15,748 US$12,903
(i) Volatility was determined in reference to similar companies for the same period.
46
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE16: SHARE BASED PAYMENTS (CONTINUED)
Options and Shares
Financial year
Exercise price
Employee,
Consultant,
Corporate
Advisor
Shares
2018
N/A
Consultant
Shares
Lead Manager
Options
Consultant
Shares
Employee
Options
Employee
Options
Employee
Options
2018
N/A
2018
AU$0.20
2018
N/A
2018
Nil
2018
Nil
2018
Nil
Price at measurement
AU$0.105
AU$0.095
AU$0.096
AU$0.092
AU$0.085
AU$0.085
AU$0.085
Grant date
Vesting date
Expected volatility (i)
Expiry date
Expected dividends
Risk free interest rate
Value per option or
share
10-May-18
29-Jun-18
1-Aug-18
2-Nov-18
27-Nov-18
27-Nov-18
27-Nov-18
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
100%
1-Aug-20
Nil
2.01%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
27-Nov-19
N/A
N/A
N/A
N/A
(a)
N/A
N/A
N/A
N/A
AU$0.105
AU$0.095
AU$0.0343
AU$0.092
AU$0.085
AU$0.085
AU$0.085
Number of options
5,385,000
775,000
1,500,000
2,317,723
3,700,000
3,200,000
2,000,000
Total value in AUD
AU$565,425
AU$73,625
AU$51,419 AU$213,231 AU$314,500 AU$25,337
AU$Nil
Total value in USD
US$419,248
US$55,032
US$38,434
US$159,383 US$221,974 US$17,883
US$Nil
(a) Vesting is subject to Company achieving revenue of US$1,000,000 or more for the financial year ending 31 December 2019.
Note
Share based compensation comprises of the following:
Options issued to broker on 8-Aug-17
Options issued to lead manager on 5-Feb-18
Shares issued to lead manager on 5-Feb-18
Options issued to employees and consultants on 10-May-18
Shares issued to employees, consultants and corporate advisor on 10-May-18
Shares issued to former CEO Moti Gross on 29-Jun-18
Options issued to lead manager on 1-Aug-18
Shares issued to consultants on 2-Nov-18
Options issued to employees on 27-Nov-18
Options issued to employees on 27-Nov-18
2018
US$
-
(273,539)
(67,272)
(198,998)
(419,248)
(55,032)
(38,434)
(159,383)
(221,974)
(17,883)
2017
US$
(438,241)
-
-
-
-
(1,451,763)
(438,241)
47
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 17: OPERATING SEGMENTS
Segment Information
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of
Directors (the chief operating decision makers) in assessing performance and in determining the allocation of resources.
The Group’s sole operating segment is consistent with the presentation of these consolidated financial statements.
NOTE 18: FINANCIAL INSTRUMENTS
Financial Risk Management Policies
The Group’s financial instruments consist mainly of deposits with banks, other debtors and accounts payable. The main
purpose of non-derivative financial instruments is to raise finance for Group’s operations.
Specific Financial Risk Exposures and Management
The main risk the Group is exposed to through its financial instruments are market risk (including fair value and interest rate
risk) and cash flow interest rate risk, credit risk and liquidity risk.
(a) Interest Rate Risk
From time to time the Group has significant interest bearing assets, but they are as a result of the timing of equity raising
and capital expenditure rather than a reliance on interest income. The interest rate risk arises on the rise and fall of interest
rates. The Group’s income and operating cash flows are not expected to be materially exposed to changes in market
interest rates in the future and the exposure to interest rates is limited to the cash and cash equivalents balances.
The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of
changes in market interest rates and the effective weighted average interest rates on classes of financial assets and
financial liabilities, is below:
48
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 18: FINANCIAL INSTRUMENTS (CONTINUED)
Floating
Interest
Rate
Non-interest
bearing
2018
Total
Floating
Interest
Rate
Non-interest
bearing
2017
Total
US$
US$
US$
US$
US$
US$
Financial assets
- Within one year
Cash and cash equivalents
508,572
-
508,572
2,835,485
-
2,835,485
Other receivables
-
34,975
34,975
-
22,624
22,624
Total financial assets
508,572
34,975
543,547
2,835,485
22,624
2,858,109
Weighted average interest rate
0.08%
0.13%
Financial Liabilities
- Within one year
Trade and other Payables
Other liabilities
Total financial liabilities
Weighted average interest rate
-
-
-
410,718
410,718
14,451
14,451
425,169
425,169
-
-
-
655,148
655,148
10,790
10,790
665,938
665,938
Net financial assets
508,572
(390,194)
118,378
2,835,485
(643,314)
2,192,171
Sensitivity Analysis
The following table illustrates sensitivities to the Consolidated Entity’s exposures to changes in interest rates. The table
indicates the impact on how profit and equity values reported at reporting date would have been affected by changes in
the relevant risk variable that management considers to be reasonably possible. These sensitivities assume that the
movement in a particular variable is independent of other variables.
Movement in
Movement in
Profit
US$
Equity
US$
Year ended 31 December 2018
+/-1% in interest rates
17,000
17,000
Year ended 31 December 2017
+/-1% in interest rates
28,397
28,397
(b) Credit risk
The maximum exposure to credit risk is limited to the carrying amount, net of any provisions for impairment of those
assets, as disclosed in the Statement of Financial Position and notes to the financial statements.
Credit risk related to balances with banks and other financial institutions is managed by the Group in accordance with
approved Board policy. Such policy requires that surplus funds are only invested with counterparties with a Standard and
Poor’s rating of at least AA-. The following table provides information regarding the credit risk relating to cash and money
market securities based on Standard and Poor’s counterparty credit ratings.
49
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 18: FINANCIAL INSTRUMENTS (CONTINUED)
Cash and cash equivalents - AA Rated
(c) Liquidity risk
Note
8a
2018
US$
508,572
2017
US$
2,835,485
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting
its obligations related to financial liabilities. The Group’s approach to managing liquidity is to ensure, as far as possible, that
it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Group’s reputation.
The Group manages liquidity risk by maintaining adequate reserves by continuously monitoring forecast and actual cash
flows.
The Group has no access to credit standby facilities or arrangements for further funding or borrowings in place. The
financial liabilities of the Group are confined to trade and other payables as disclosed in the Statement of Financial Position.
All trade and other payables are non-interest bearing and due within 12 months of the reporting date.
2018
Interest
rate
Less than 6
months
6-12
months
1-2
years
2-5
years
Over 5
years
Total
contractual
cash flows
US$
US$
US$
US$
US$
US$
Carrying
amount
assets/
(liabilities)
US$
Financial
liabilities at
amortised cost
Trade and other
payables
Borrowings
2017
Financial
liabilities at
amortised cost
Trade and other
payables
Borrowings
n/a%
Interest
rate
(410,718)
-
(410,718)
-
-
-
-
-
-
-
-
-
-
-
-
(410,718)
-
(410,718)
(410,718)
-
(410,718)
Less than 6
months
6-12
months
1-2
years
2-5
years
Over 5
years
Total
contractual
cash flows
US$
US$
US$
US$
US$
US$
Carrying
amount
assets/
(liabilities)
US$
n/a%
(655,148)
-
(655,148)
-
-
-
-
-
-
-
-
-
-
-
-
(655,148)
-
(655,148)
(655,148)
-
(655,148)
(d) Net fair Value of financial assets and liabilities
Fair value estimation
Due to the short term nature of the receivables and payables the carrying value approximates fair value.
50
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 18: FINANCIAL INSTRUMENTS (CONTINUED)
(e) Financial arrangements
The company had no other financial arrangements in place at 31 December 2018 based on the information available to the
current board.
(f) Currency risk
The currency risk is the risk that the value of financial instruments will fluctuate due to change in foreign exchange rates.
Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in a
currency that is not the Company’s functional currency. The company is exposed to foreign exchange risk arising from
various currency exposures primarily with respect to the US Dollar (the functional currency), the New Israeli Shekel, the
Australian Dollar, the Singapore Dollar and Euro.
The Company’s policy is not to enter into any currency hedging transactions.
Cash and cash equivalents
Foreign Currency
USD Equivalent
Foreign Currency
USD Equivalent
2018
2017
New Israeli Shekels
Australian Dollar
Singapore Dollar
Euro
141,463
327,001
-
958
37,744
230,641
-
1,097
204,781
58,781
3,260,497
2,544,779
130,904
97,917
NOTE 19: PARENT ENTITY FINANCIAL INFORMATION
The following information has been extracted from the books and records of the legal parent Dotz Nano Limited which have
been prepared in accordance with Australian Accounting Standards and the accounting policies as outlined in note 1.
(a)
Financial Position of Dotz Nano Limited
ASSETS
Current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
TOTAL LIABILITIES
NET ASSETS
SHAREHOLDERS’ (DEFICIT)/ EQUITY
Issued capital
Reserves
Accumulated Losses
SHAREHOLDERS’ (DEFICIT)/ EQUITY
2018
US$
864,148
864,148
132,666
132,666
731,482
2017
US$
3,294,734
3,294,734
341,358
341,358
2,953,374
334,043,873
1,442,692
(334,755,083)
731,482
331,182,110
1,502,054
(329,730,790)
2,953,374
51
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 19: PARENT ENTITY FINANCIAL INFORMATION (CONTINUED)
(b) Statement of profit or loss and other comprehensive income
Loss for the year
Total comprehensive loss
(9,295,339)
(9,295,339)
(5,335,749)
(5,335,749)
(c) Guarantees entered into by Dotz Nano Limited for the debts of its subsidiary
There are no guarantees entered into by Dotz Nano Limited
(d) Contingent liabilities of Dotz Nano Limited
There were no known contingent liabilities as at 31 December 2018 (2017: Nil).
(e) Commitments by Dotz Nano Limited
Known commitments as at 31 December 2018 are disclosed in the consolidated entities in Note 21 below.
NOTE 20: CONTROLLED ENTITIES
Dotz Nano Limited
Controlled entity
Dotz Nano Ltd
Dotz Singapore Pte Ltd
Graphene Materials Ltd
DotzBlue Ltd
Country of
Incorporation
Israel
Singapore
Israel
Israel
Percentage Owned
2018
100%
100%
100%
100%
2017
100%
100%
100%
100%
NOTE 21: COMMITMENTS
Operating lease commitments:
No longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
Other expenditure commitments:
No longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years
2018
US$
10,977
-
-
10,977
62,271
58,315
-
120,271
2017
US$
141,590
11,799
-
153,389
136,738
76,959
-
213,697
52
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 22: CONTINGENT LIABILITIES
The Group has no known contingent liabilities as at 31 December 2018 (2017: Nil).
NOTE 23: EVENTS SUBSEQUENT TO REPORTING DATE
Since the reporting date the following significant events have occurred:
o
o
o
o
o
On 14 January 2019, it was announced that the Company has secured a commercial Purchase Order (PO) of Validotz
markers from a Swiss based company providing Secured-Plastic-Packaging Solutions, valued at US$100,000.
On 16 January 2019, the Company announced the resignation of Mr Steve Bajic as a Non-Executive Director.
On 22 January 2019, the Company announced the appointment of Mr Tomer Segev as the new Chief Financial
Officer and the resignation of Mr Eran Gilboa as the Chief Financial Officer of the Group.
On 30 January 2019, the Company announced a $300,000 PO of Validotz security-markers in lubricants sector
expected to be realized during 2019 and 2020.
Subsequent to balance date, the Company issued the following shares and options:
(cid:120)
10,666,632 Ordinary Fully Paid Shares and 2,666,659 Unquoted Options (exercisable at AU$0.12 each on or
before 30 June 2020) on conversion of the Convertible Loans Facility (Facility). The Facility was announced on
the 9 January 2019 and funds raised under the Facility summed to AUD $0.85 million
(cid:120)
The terms of the Facility were set out as below:
o
o
o
Facility Limit AUD $1,000,000,
Simple Interest to accrue at 8% p.a.,
1:4 Options for each converted share, and
o Automatic conversion upon shareholders’ approval
(cid:120)
(cid:120)
(cid:120)
(cid:120)
2,000,000 Unquoted Options, exercisable at $0.12 each before 15 February 2024 issued to the CEO
1,500,000 Ordinary Shares issued to the CEO with 12 month holding lock to 15 February 2020 issued to the
CEO
1,000,000 Unquoted Options issued to the Chairman exercisable at $0.13 each on or before 15 February 2024
provided that Chairman is an employee or consultant of the Company at all times before the expiry date
1,000,000 Unquoted Options exercisable at nil on or before 15 February 2023 issued to an employee under
the Company’s Employee Share Option Plan. The options are subject to vesting on 9 December 2019 and
require that the option holder is an employee or consultant of the Company at all times during the period
ending on the vesting date
There were no other significant events after the reporting period.
53
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018
NOTE 24: NEW ACCOUNTING STANDARDS FOR APPLICATION IN FUTURE PERIODS
Australian accounting standards and Interpretations that have recently been issued or amended but are not yet effective
and have not been adopted by the Group for the year ended 31 December 2018. Relevant Standards and Interpretations
are outlined in the table below.
Application
Date of
Standard
1 January
2019
Application
Date of
Group
1 July 2019
1 January
2019
1 July 2019
New/revised
pronouncement
Explanation of amendments
AASB 16
Leases
AASB 16
Leases
AASB16 requires lessees to account for all leases under a single on
balance sheet model in a similar way to finance leases under AASB
117 Leases. The standard includes two recognition exemptions for
lessees – leases of ’low-value’ assets (e.g., personal computers)
and short-term leases (i.e., leases with a lease term of 12 months
or less). At the commencement date of a lease, a lessee will
recognise a liability to make lease payments (i.e., the lease liability)
and an asset representing the right to use the underlying asset
during the lease term (i.e., the right-of-use asset).
Lessees will be required to separately recognise the interest
expense on the lease liability and the depreciation expense on the
right-of-use asset.
Lessees will be required to remeasure the lease liability upon the
occurrence of certain events (e.g., a change in the lease term, a
change in future lease payments resulting from a change in an
index or rate used to determine those payments). The lessee will
generally recognise the amount of the re-measurement of the
lease liability as an adjustment to the right-of-use asset.
is substantially unchanged
Lessor accounting
from today’s
accounting under AASB117. Lessors will continue to classify all
leases using the same classification principle as in AASB 117 and
distinguish between two types of leases: operating and finance
leases
Impact on Dotz Nano Limited
The company have assessed that there is no expected material
impact of the above standard.
The Group has decided not to early adopt any of the new and amended pronouncements. The impact of the above
standards is yet to be determined unless noted otherwise above.
54
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
DIRECTORS’ DECLARATION
In the Director’s opinion:
1.
The consolidated financial statements and notes set out on pages 21 to 54 are in accordance with the Corporations
Act 2001, including:
a)
complying with Australian Accounting Standards and Corporations Regulations 2001;
b) giving a true and fair view, the consolidated entity’s financial position as at 31 December 2018 and of its
performance for the year ended on that date; and
2.
3.
There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
This declaration has been made after receiving the declaration required to be made to the directors in accordance
with Section 295A of the Corporations Act 2001 for the financial year ended 31 December 2018.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the
Directors by:
Volker Mirgel
Non-Executive Chairman
28 March 2019
55
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Dotz Nano Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Dotz Nano Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 31 December 2018, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 31 December 2018 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1(b) in the financial report which describes the events and/or conditions
which give rise to the existence of a material uncertainty that may cast significant doubt about the
group’s ability to continue as a going concern and therefore the group may be unable to realise its
assets and discharge its liabilities in the normal course of business. Our opinion is not modified in
respect of this matter.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 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 (WA) 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 other than for
the acts or omissions of financial services licensees
56
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Accounting for Share-Based Payments
Key audit matter
How the matter was addressed in our audit
During the financial year ended 31 December 2018,
the Group issued equity instruments, in the form
of shares and options, to eligible directors,
employees and other consultants, which have been
accounted for as share-based payments, as
disclosed in Note 16 to the financial report.
The Group’s policy for accounting for share-based
payments and significant judgements applied to
these arrangements are disclosed in Note 1.
Share-based payments are a complex accounting
area and due to the complex and judgemental
estimates used in determining the fair value of
share-based payments, we consider the Group’s
accounting for share-based payments to be a key
audit matter.
Our audit procedures in respect of this area
included but were not limited to the following:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
Reviewing relevant supporting
documentation to obtain an
understanding of the contractual nature
and terms and conditions of the share-
based payment arrangements;
Involving our valuation specialists to
assess the assumptions and inputs used
in the valuation;
Assessing management’s determination
of achieving non-market vesting
conditions of the performance shares
issued;
Assessing the allocation of the share-
based payment expense over
management’s expected vesting period;
and
Assessing the adequacy of the disclosure
in Note 1, Note 3 and Note 16 in the
financial report.
57
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 31 December 2018, but does not include
the financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
58
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 14 to 19 of the directors’ report for the
year ended 31 December 2018.
In our opinion, the Remuneration Report of Dotz Nano Limited, for the year ended 31 December 2018,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Dean Just
Director
Perth, 28 March 2019
59
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CORPORATE GOVERNANCE STATEMENT
This Corporate Governance Statement is current as at 22 March 2019 and has been approved by the Board of the Company.
This Corporate Governance Statement discloses the extent to which the Company follows the recommendations set by the
ASX Corporate Governance Council in its publication Corporate Governance Principles and Recommendations 3rd Edition
(Recommendations). The Recommendations are not mandatory, however the Recommendations that have not been
followed have been identified and reasons for not following them, along with what (if any) alternative governance practices
have been adopted in lieu of the Recommendation.
The Company has adopted Corporate Governance Policies which provide written terms of reference for the Company’s
corporate governance practices and has been following these practices since 1 July 2016. The Board of the Company has
not yet formed an audit committee, nomination committee, risk management committee or remuneration committee.
The Company’s Corporate Governance Policies are contained within the Corporate Governance Plan and available on the
Company’s website at www.dotznano.com/corporate-governance
Principle 1: Lay solid foundations for management and oversight
Roles of the Board & Management
The role of the Board is to provide overall strategic guidance and effective oversight of management. The Board derives its
authority to act from the Company’s Constitution.
The Board is responsible for and has the authority to determine all matters relating to the strategic direction, policies,
practices, establishing goals for management and the operation of the Company. The Board delegates responsibility for the
day-to-day operations and administration of the Company to the Managing Director/Chief Executive Officer.
The role of management is to support the Managing Director/Chief Executive Officer and implement the running of the
general operations and financial business of the Company, in accordance with the delegated authority of the Board.
In addition to matters it is expressly required by law to approve, the Board has reserved the following matters to itself:
•
•
•
Driving the strategic direction of the Company, ensuring appropriate resources are available to meet objectives and
monitoring management’s performance;
Appointment, and where necessary, the replacement, of the Managing Director/Chief Executive Officer and other
senior executives and the determination of their terms and conditions including remuneration and termination;
Approving the Company’s remuneration framework;
• Monitoring the timeliness and effectiveness of reporting to Shareholders;
•
•
•
•
•
•
•
Reviewing and ratifying systems of audit, risk management and internal compliance and control, codes of conduct and
legal compliance to minimise the possibility of the Company operating beyond acceptable risk parameters;
Approving and monitoring the progress of major capital expenditure, capital management and significant acquisitions
and divestitures;
Approving and monitoring the budget and the adequacy and integrity of financial and other reporting such that the
financial performance of the company has sufficient clarity to be actively monitored;
Approving the annual, half yearly and quarterly accounts;
Approving significant changes to the organisational structure;
Approving decisions affecting the Company’s capital, including determining the Company’s dividend policy and
declaring dividends;
Ensuring a high standard of corporate governance practice and regulatory compliance and promoting ethical and
responsible decision making;
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DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CORPORATE GOVERNANCE STATEMENT
•
•
Procuring appropriate professional development opportunities for Directors to develop and maintain the skills and
knowledge needed to perform their role as Directors effectively;
Ensuring that the Company acts legally and responsibly on all matters and assuring itself that the Company has
adopted, and that its practice is consistent with, a number of guidelines including:
(cid:16)
(cid:16)
(cid:16)
(cid:16)
(cid:16)
(cid:16)
(cid:16)
Corporate Code of Conduct;
Continuous Disclosure Policy;
Diversity Policy;
Performance Evaluation;
Risk Management;
Trading Policy; and
Shareholder Communication Strategy.
Subject to the specific authorities reserved to the Board under the Board Charter, the Board delegates to the Managing
Director/Chief Executive Officer responsibility for the management and operation of the Company. The Managing
Director/Chief Executive Officer is responsible for the day-to-day operations, financial performance and administration of
the Company within the powers authorised to him from time-to-time by the Board. The Managing Director/Chief Executive
Officer may make further delegation within the delegations specified by the Board and will be accountable to the Board for
the exercise of those delegated powers.
Further details of Board responsibilities, objectives and structure are set out in the Board Charter which is contained within
the Corporate Governance Plan on the Company’s website at www.dotznano.com/corporate-governance.
Board Committees
The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the
formation of separate committees at this time including audit and risk, remuneration or nomination committees, preferring
at this stage of the Company’s development, to manage the Company through the full Board of Directors. The Board
assumes the responsibilities normally delegated to the audit and risk, remuneration and nomination Committees.
If the Company’s activities increase, in size, scope and nature, the appointment of separate committees will be reviewed by
the Board and implemented if considered appropriate.
Board Appointments
The Company undertakes comprehensive reference checks prior to appointing a director or putting that person forward as
a candidate to ensure that person is competent, experienced, and would not be impaired in any way from undertaking the
duties of director. The Company provides relevant information to shareholders for their consideration about the attributes
of candidates together with whether the Board supports the appointment or re-election.
The terms of the appointment of a non-executive director, executive directors and senior executives are agreed upon and
set out in writing at the time of appointment.
The Company Secretary
The Company Secretary is accountable directly to the Board, through the Chairman, on all matters to do with the proper
functioning of the Board, including agendas, Board papers and minutes, advising the Board and its Committees (as
applicable) on governance matters, monitoring that the Board and Committee policies and procedures are followed,
communication with regulatory bodies and the ASX and statutory and other filings.
61
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CORPORATE GOVERNANCE STATEMENT
Diversity
The Board has adopted a Diversity Policy which provides a framework for the Company to establish and achieve measurable
diversity objectives, including in respect to gender, age, ethnicity and cultural diversity. The Diversity Policy allows the
Board to set measurable gender diversity objectives (if considered appropriate) and to assess annually both the objectives
(if any have been set) and the Company’s progress towards achieving them.
The Board considers that, due to the size, nature and stage of development of the Company, setting measurable objectives
for the Diversity Policy at this time is not appropriate. The Board will consider setting measurable objectives as the
Company increases in size and complexity.
The participation of women in the Company at 31 December 2018 is as follows:
(cid:120) Women employees in the Company
(cid:120) Women in senior management positions
(cid:120) Women on the Board
36%
0%
0%
The Company’s Diversity Policy is available on its website.
Board & Management Performance Review
On an annual basis, the Board conducts a review of its structure, composition and performance.
The annual review includes consideration of the following measures:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
comparing the performance of the Board against the requirements of its Charter;
assessing the performance of the Board over the previous 12 months having regard to the corporate strategies,
operating plans and the annual budget;
reviewing the Board’s interaction with management;
reviewing the nature and timing of information provided to the Board by management;
reviewing management’s performance in assisting the Board to meet its objectives; and
identifying any necessary or desirable improvements to the Board Charter.
The method and scope of the performance evaluation will be set by the Board and may include a Board self-assessment
checklist to be completed by each Director. The Board may also use an independent adviser to assist in the review.
The Chairman has primary responsibility for conducting performance appraisals of Non-Executive Directors, in conjunction
with them, having particular regard to:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
contribution to Board discussion and function;
degree of independence including relevance of any conflicts of interest;
availability for and attendance at Board meetings and other relevant events;
contribution to Company strategy;
membership of and contribution to any Board committees; and
suitability to Board structure and composition.
The Board conducts an annual performance assessment of the Managing Director/Chief Executive Officer against agreed
key performance indicators.
62
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CORPORATE GOVERNANCE STATEMENT
The Managing Director/Chief Executive Officer conducts an annual performance assessment of senior executives against
agreed key performance indicators.
Given the fact the Company was only reinstated under its present structure on 14 November 2016, no formal appraisal of
the Board or any senior executive has been conducted.
Independent Advice
Directors have a right of access to all Company information and executives. Directors are entitled, in fulfilling their duties
and responsibilities, to seek independent external professional advice as considered necessary at the expense of the
Company, subject to prior consultation with the Chairman. A copy of any such advice received is made available to all
members of the Board.
Principle 2: Structure the board to add value
Board Composition
Board is comprised of the following members at 20 March 2019:
Mr Uzi Breier
Dr Volker Mirgel
Chief Executive Officer and Managing Director (appointed 18 May 2018);
Non-Executive Chairman (appointed 3 April 2018);
Mr Ashley Krongold
Non-Executive Director (appointed 31 October 2016); and
Mr John Bullwinkel
Non-Executive Director (appointed 21 March 2018)
Dotz Nano has adopted a definition of 'independence' for Directors that is consistent with the Recommendations.
The Board comprises a majority of non-executive directors, three of whom are considered independent.
Board Selection Process
The Board considers that a diverse range of skills, backgrounds, knowledge and experience is required in order to effectively
govern Dotz Nano. The Board believes that orderly succession and renewal contributes to strong corporate governance and
is achieved by careful planning and continual review.
The Board is responsible for the nomination and selection of directors. The Board reviews the size and composition of the
Board regularly and at least once a year as part of the Board evaluation process.
The Board will establish a Board Skills Matrix. The Board Skills Matrix will include the following areas of knowledge and
expertise:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
strategic expertise;
specific industry knowledge;
accounting and finance;
risk management;
experience with financial markets; and
investor relations.
Induction of New Directors and Ongoing Development
New Directors are issued with a formal Letter of Appointment that sets out the key terms and conditions of their
appointment, including Director's duties, rights and responsibilities, the time commitment envisaged, and the Board's
expectations regarding involvement with any Committee work.
63
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CORPORATE GOVERNANCE STATEMENT
An induction program is in place and new Directors are encouraged to engage in professional development activities to
develop and maintain the skills and knowledge needed to perform their role as Directors effectively.
Principle 3: Act ethically and responsibly
The Company has implemented a Code of Conduct, which provides a framework for decisions and actions in relation to
ethical conduct in employment. It underpins the Company’s commitment to integrity and fair dealing in its business affairs
and to a duty of care to all employees, clients and stakeholders.
All employees and Directors are expected to:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
behave honestly and with integrity and report other employees who are behaving dishonestly;
carry out your work with integrity and to a high standard and in particular, commit to the Company’s policy of
producing quality goods and services;
operate within the law at all times;
act in the best interests of the Company;
follow the policies of the Company; and
act in an appropriate business-like manner when representing the Company in public forums.
An employee that breaches the Code of Conduct may face disciplinary action including, in the cases of serious breaches,
dismissal. If an employee suspects that a breach of the Code of Conduct has occurred or will occur, he or she must report
that breach to the Company Secretary, or in their absence, the Chairman. No employee will be disadvantaged or prejudiced
if he or she reports in good faith a suspected breach. All reports will be acted upon and kept confidential.
Principle 4: Safeguard integrity in corporate reporting
The Board as a whole fulfils to the functions normally delegated to the Audit Committee as detailed in the Audit Committee
Charter.
The Board is responsible for the initial appointment of the external auditor and the appointment of a new external auditor
when any vacancy arises. Candidates for the position of external auditor must demonstrate complete independence from
the Company throughout the engagement period. The Board may otherwise select an external auditor based on criteria
relevant to the Company’s business and circumstances. The performance of the external auditor is reviewed on an annual
basis by the Board.
The Board receives regular reports from management and from external auditors. It also meets with the external auditors
as and when required.
The external auditors attend Dotz Nano's AGM and are available to answer questions from security holders relevant to the
audit.
Prior approval of the Board must be gained for non-audit work to be performed by the external auditor. There are
qualitative limits on this non-audit work to ensure that the independence of the auditor is maintained.
There is also a requirement that the lead engagement partner responsible for the audit not perform in that role for more
than five years.
CEO and CFO Certifications
The Board, before it approves the entity’s financial statements for a financial period, receives from its CEO and CFO (or the
persons fulfilling those functions) a declaration provided in accordance with Section 295A of the Corporations Act that, in
their opinion, the financial records of the entity 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
64
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CORPORATE GOVERNANCE STATEMENT
entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which
is operating effectively.
Principle 5: Make timely and balanced disclosure
The Company has a Continuous Disclosure Policy which outlines the disclosure obligations of the Company as required
under the ASX Listing Rules and Corporations Act. The policy is designed to ensure that procedures are in place so that the
market is properly informed of matters which may have a material impact on the price at which Company securities are
traded.
The Board considers whether there are any matters requiring disclosure in respect of each and every item of business that
it considers in its meetings. Individual Directors are required to make such a consideration when they become aware of any
information in the course of their duties as a Director of the Company.
The Company is committed to ensuring all investors have equal and timely access to material information concerning the
Company.
The Board has designated the Company Secretary as the person responsible for communicating with the ASX. All key
announcements at the discretion of the Managing Director are to be circulated to and reviewed by all members of the
Board.
The Chairman, the Board, Managing Director and the Company Secretary are responsible for ensuring that:
a)
b)
company announcements are made in a timely manner, that announcements are factual and do not omit any
material information required to be disclosed under the ASX Listing Rules and Corporations Act; and
company announcements are expressed in a clear and objective manner that allows investors to assess the impact of
the information when making investment decisions.
Principle 6: Respect the rights of security holders
The Company recognises the value of providing current and relevant information to its shareholders. The Board of the
Company aims to ensure that the shareholders are informed of all major developments affecting the Company’s state of
affairs.
The Company respects the rights of its shareholders and to facilitate the effective exercise of those rights the Company is
committed to:
•
•
communicating effectively with shareholders through releases to the market via ASX, the company website,
information posted or emailed to shareholders and the general meetings of the Company;
giving shareholders ready access to clear and understandable information about the Company; and
• making it easy for shareholders to participate in general meetings of the Company.
The Company also makes available a telephone number and email address for shareholders to make enquiries of the
Company. These contact details are available on the “Contact Us” page of the Company’s website.
Shareholders may elect to, and are encouraged to, receive communications from Dotz Nano and Dotz Nano's securities
registry electronically. The contact details for the registry are accessible from the “For Investors” page of the Company’s
website.
The Company maintains information in relation to its Constitution, governance documents, Directors and senior executives,
Board and committee charters, annual reports and ASX announcements on the Company’s website.
65
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CORPORATE GOVERNANCE STATEMENT
Principle 7: Recognise and manage risk
The Board is committed to the identification, assessment and management of risk throughout Dotz Nano's business
activities.
The Board is responsible for the oversight of the Company’s risk management and internal compliance and control
framework. The Company does not have an internal audit function. Responsibility for control and risk management is
delegated to the appropriate level of management within the Company with the Managing Director having ultimate
responsibility to the Board for the risk management and internal compliance and control framework. Dotz Nano has
established policies for the oversight and management of material business risks.
Dotz Nano's Risk Management and Internal Compliance and Control Policy recognises that risk management is an essential
element of good corporate governance and fundamental in achieving its strategic and operational objectives. Risk
management improves decision making, defines opportunities and mitigates material events that may impact security
holder value.
Dotz Nano believes that explicit and effective risk management is a source of insight and competitive advantage. To this
end, Dotz Nano is committed to the ongoing development of a strategic and consistent enterprise wide risk management
program, underpinned by a risk conscious culture.
Dotz Nano accepts that risk is a part of doing business. Therefore, the Company’s Risk Management and Internal
Compliance and Control Policy is not designed to promote risk avoidance. Rather Dotz Nano's approach is to create a risk
conscious culture that encourages the systematic identification, management and control of risks whilst ensuring the
Company does not enter into unnecessary risks or enter into risks unknowingly.
Dotz Nano assesses its risks on a residual basis; that is it evaluates the level of risk remaining and considering all the
mitigation practices and controls. Depending on the materiality of the risks, Dotz Nano applies varying levels of
management plans.
The Board has required management to design and implement a risk management and internal compliance and control
system to manage Dotz Nano’s material business risks. It receives regular reports on specific business areas where there
may exist significant business risk or exposure. The Company faces risks inherent to its business, including economic risks,
which may materially impact the Company’s ability to create or preserve value for security holders over the short, medium
or long term. The Company has in place policies and procedures, including a risk management framework (as described in
the Company’s Risk Management and Internal Compliance and Control Policy), which is developed and updated to help
manage these risks. The Board does not consider that the Company currently has any material exposure to environmental
or social sustainability risks.
The Company’s process of risk management and internal compliance and control includes:
(cid:120)
(cid:120)
(cid:120)
identifying and measuring risks that might impact upon the achievement of the Company’s goals and objectives, and
monitoring the environment for emerging factors and trends that affect those risks;
formulating risk management strategies to manage identified risks, and designing and implementing appropriate risk
management policies and internal controls; and
monitoring the performance of, and improving the effectiveness of, risk management systems and internal
compliance and controls, including regular assessment of the effectiveness of risk management and internal
compliance and control.
The Board review’s the Company’s risk management framework at least annually to ensure that it continues to effectively
manage risk.
Management reports to the Board as to the effectiveness of Dotz Nano’s management of its material business risks at each
Board meeting.
66
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
CORPORATE GOVERNANCE STATEMENT
Principle 8: Remunerate fairly and responsibly
The Board as a whole fulfils to the functions normally delegated to the Remuneration Committee as detailed in the
Remuneration Committee Charter.
Dotz Nano has implemented a Remuneration Policy which was designed to recognise the competitive environment within
which Dotz Nano operates and also emphasise the requirement to attract and retain high caliber talent in order to achieve
sustained improvement in Dotz Nano’s performance. The overriding objective of the Remuneration Policy is to ensure that
an individual’s remuneration package accurately reflects their experience, level of responsibility, individual performance
and the performance of Dotz Nano.
The key principles are to:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
review and approve the executive remuneration policy to enable the Company to attract and retain executives and
Directors who will create value for shareholders;
ensure that the executive remuneration policy demonstrates a clear relationship between key executive performance
and remuneration;
fairly and responsibly reward executives having regard to the performance of the Group, the performance of the
executive and the prevailing remuneration expectations in the market;
remunerate fairly and competitively in order to attract and retain top talent;
recognise capabilities and promote opportunities for career and professional development; and
review and approve equity-based plans and other incentive schemes to foster a partnership between employees and
other security holders.
The Board determines the Company’s remuneration policies and practices and assesses the necessary and desirable
competencies of Board members. The Board is responsible for evaluating Board performance, reviewing Board and
management succession plans and determines remuneration packages for the Managing Director, Non-Executive Directors
and senior management based on an annual review.
Dotz Nano’s executive remuneration policies and structures and details of remuneration paid to directors and key
management personnel (where applicable) are set out in the Remuneration Report.
Non-Executive Directors receive fees (including statutory superannuation where applicable) for their services, the
reimbursement of reasonable expenses and, in certain circumstances options.
The maximum aggregate remuneration approved by shareholders for Non-Executive Directors is AU$500,000 per annum.
The Directors set the individual Non-Executive Directors fees within the limit approved by shareholders.
Executive directors and other senior executives (where appointed) are remunerated using combinations of fixed and
performance-based remuneration. Fees and salaries are set at levels reflecting market rates and performance-based
remuneration is linked directly to specific performance targets that are aligned to both short and long term objectives.
The Company prohibits Directors and employees from entering into any transaction that would have the effect of hedging
or otherwise transferring the risk of any fluctuation in the value of any unvested entitlement in the Company’s securities to
any other person.
Further details in relation to the company’s remuneration policies are contained in the Remuneration Report, within the
Directors’ report.
67
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
ADDITIONAL ASX INFORMATION
AS AT 19 MARCH 2019
The shareholder information set out below was applicable as at 19 March 2019.
As at 19 March 2019 there were 1,170 holders of Ordinary Fully Paid Shares.
VOTING RIGHTS
The voting rights of the ordinary shares are as follows:
(a)
(b)
(c)
at meetings of members each member entitled to vote may vote in person or by proxy or attorney;
on a show of hands each person present who is a member has one vote; and
on a poll each person present in person or by proxy or by attorney has one vote for each ordinary share held.
There are no voting rights attached to any of the options and performance shares that the Company currently has on issue.
Upon exercise of these options, the shares issued will have the same voting rights as existing ordinary shares.
TWENTY LARGEST SHAREHOLDERS
The names of the twenty largest holders of each class of listed securities are listed below:
Ordinary Fully Paid Shares
Holder Name
CITICORP NOMINEES PTY LIMITED
IBI TRUST MANAGEMENT
IBI TRUST MANAGEMENT
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
ORNA SIMA LUBLINER
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMINEES PTY LTD
IBI TRUST MANAGEMENT
BUZZ CAPITAL PTY LTD
102 CAPITAL MANAGEMENT
MR TONY PETER VUCIC &
MRS DIANE VUCIC
IBI TRUST MANAGEMENT
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMS PTY LTD
ROMFAL SIFAT PTY LTD
Holding
% IC
38,951,708
20.19%
11,988,809
6.22%
11,746,611
9,432,832
6,270,548
5,945,409
6.09%
4.89%
3.25%
3.08%
4,341,256
2.25%
3,160,687
1.64%
3,000,000
1.56%
2,993,461
1.55%
2,500,000
1.30%
2,446,201
1.27%
2,363,333
1.23%
2,315,025
1.20%
2,266,667
1.18%
68
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
ADDITIONAL ASX INFORMATION
AS AT 19 MARCH 2019
DANNY EDGAR
IBI TRUST MANAGEMENT
SUKHMOHAN ATHWAL
MR BRUNO NOSEK
NOAM COHEN
Total
Total issued capital - selected security class(es)
SUBSTANTIAL HOLDERS
2,222,222
1.15%
2,051,855
2,000,000
1,963,200
1,889,795
1.06%
1.04%
1.02%
0.98%
119,849,619
62.14%
192,881,254
100.00%
The names of the substantial shareholders disclosed to the Company as substantial shareholders as at 19 March 2019 are:
Name
Amiram Bornstein
Ariel Malik
DISTRIBUTION OF EQUITY SECURITIES
Ordinary Fully Paid Shares
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Totals
No of Shares Held
% of Issued Capital
11,988,809
11,746,611
6.22%
6.09%
Holders
Total Units
% Issued Share
Capital
134
174
191
510
161
1,170
5,788
581,211
1,592,113
18,794,367
171,907,775
192,881,254
0.00%
0.30%
0.83%
9.74%
89.13%
100.00%
Unmarketable Parcels – 323 Holders (based on share price of $0.09)
RESTRICTED SECURITIES
As at 19 March 2019 the following shares are subject to escrow:
(cid:120) Nil
UNQUOTED SECURITIES
As at 19 March 2019, the following unquoted securities are on issue:
44,000,000 Performance Shares1 escrowed - 59 Holders
There are no holders with more than 20%
1 Details on the performance conditions surrounding the Performance Shares are contained within the Directors’ Report.
69
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
ADDITIONAL ASX INFORMATION
AS AT 19 MARCH 2019
5,000,000 Options Expiring 14/06/2020 @ $0.20 escrowed until 21 December 2018 – 12 Holders
Holders with more than 20%
Holder Name
Buzz Capital Pty Ltd
Holding
% IC
2,395,000
47.90%
4,500,000 Options Expiring 31/10/2019 @ $0.40 escrowed until 21 December 2018 – 6 Holders
Holders with more than 20%
Holder Name
Attollo Investments Pty Ltd
Otsana Pty Ltd
Holding
% IC
2,516,666
55.93%
1,000,000
22.22%
1,000,000 Options Expiring 31/10/2019 @ $0.30 escrowed until 21 December 2018 – 2 Holders
Holders with more than 20%
Holder Name
Bull Equities
Oran Dorel
10,000,000 Options Expiring 08/08/2019 @ $0.20 – 14 Holders
Holders with more than 20%
Holder Name
SUNSET TIDAL PTY LTD
6,000,000 Options Expiring 05/02/2020 @ $0.30 – 7 Holders
Holders with more than 20%
Holder Name
LTL CAPITAL PTY LTD
2,666,659 Options Expiring 30/06/2020 @ $0.12 – 6 Holders
Holders with more than 20%
Holder Name
ORNA SIMA LUBLINER
3,700,000 Options Expiring 01/10/2021 @ $nil – 11 Holders
Holders with more than 20%
Holder Name
MICHAEL SHTEIN
3,200,000 Options Expiring 01/10/2021 @ $nil – 6 Holders
Holders with more than 20%
Holding
% IC
500,000
50.00%
500,000
50.00%
Holding
% IC
4,000,000
40.00%
Holding
% IC
5,600,000
93.33%
Holding
% IC
1,567,637
58.79%
Holding
% IC
1,200,000
32.43%
70
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
ADDITIONAL ASX INFORMATION
AS AT 19 MARCH 2019
Holder Name
MICHAEL SHTEIN
2,000,000 Options Expiring 01/10/2022 @ $nil – 2 Holders
Holders with more than 20%
Holder Name
TALSBAR CONSULTING LTD
MICHAEL SHTEIN
3,000,000 Options Expiring 01/10/2022 @ $0.13 – 2 Holders
Holders with more than 20%
Holder Name
KNAZ-BREIER LTD
VMCONNECT LLC
1,000,000 Options Expiring 15/02/2023 @ $nil – 1 Holders
Holders with more than 20%
Holder Name
TOMER SEGEV
1,000,000 Options Expiring 20/04/2020 @ $nil – 1 Holders
Holders with more than 20%
Holder Name
TALSBAR CONSULTING LIMITED
1,000,000 Options Expiring 01/11/2020 @ $nil – 1 Holders
Holders with more than 20%
Holder Name
TALSBAR CONSULTING LIMITED
500,000 Options Expiring 20/04/2020 @ $0.20 – 1 Holders
Holders with more than 20%
Holder Name
CHANGING THE WORLD TECHNOLOGIES LTD
212,500 Options Expiring 20/04/2020 @ $0.105 – 1 Holders
Holders with more than 20%
Holder Name
KANAYAMA CORPORATION LTD
Holding
% IC
1,500,000
46.88%
Holding
1,000,000
1,000,000
% IC
50%
50%
Holding
% IC
2,000,000
66.67%
1,000,000
33.33%
Holding
1,000,000
% IC
100%
Holding
1,000,000
% IC
100%
Holding
1,000,000
% IC
100%
Holding
500,000
% IC
100%
Holding
212,500
% IC
100%
71
DOTZ NANO LIMITED
ABN 71 125 264 575
ANNUAL REPORT 31 DECEMBER 2018
ADDITIONAL ASX INFORMATION
AS AT 19 MARCH 2019
212,500 Options Expiring 20/04/2020 @ $0.105 – 1 Holders
Holders with more than 20%
Holder Name
KANAYAMA CORPORATION LTD
500,000 Options Expiring 20/04/2020 @ $0.20 – 1 Holders
Holders with more than 20%
Holder Name
COREY PATTEN
1,500,000 Options Expiring 01/08/2020 @ $0.20 – 1 Holders
Holders with more than 20%
Holder Name
GLENEAGLE SECURITIES (AUST) PTY LTD
ON-MARKET BUY BACK
There is currently no on-market buyback program.
ASX LISTING RULE 4.10.19
Holding
212,500
% IC
100%
Holding
500,000
% IC
100%
Holding
1,500,000
% IC
100%
The Company has used its cash and assets in a form readily convertible to cash that it had at the time of reinstatement of
the Company’s securities to quotation in a way consistent with its business objectives.
72