Family Zone Cyber Safety Limited
ACN 167 509 177
ANNUAL REPORT
for the year ended 30 June 2016
CONTENTS
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
PAGE
CORPORATE INFORMATION .................................................................................................................................... 3
DIRECTORS' REPORT ............................................................................................................................................... 4
AUDITORS INDEPENDENCE DECLARATION ........................................................................................................ 22
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME .................................................. 23
STATEMENT OF FINANCIAL POSITION ................................................................................................................. 24
STATEMENT OF CHANGES OF EQUITY ................................................................................................................ 25
STATEMENT OF CASH FLOWS .............................................................................................................................. 26
NOTES TO THE FINANCIAL STATEMENTS ........................................................................................................... 27
DIRECTORS’ DECLARATION .................................................................................................................................. 55
INDEPENDENT AUDITOR'S REPORT ..................................................................................................................... 56
ASX ADDITIONAL INFORMATION ........................................................................................................................... 58
2
CORPORATE INFORMATION
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
Directors
Tim Levy
John Sims
Crispin Swan Executive Director - Sales
Phil Warren
Managing Director
Non-executive Chairman
Non-executive Director
Company secretary
Emma Wates
Registered and principal administrative office:
945 Wellington Street
WEST PERTH WA 6005
Telephone: +61 8 9322 7600
Principal place of business
Level 15, 207 Murray Street
WEST PERTH WA 6000
Telephone: 1300 398 326
Share register
Automic Registry Services
Suite 310, 50 Holt Street
SURRY HILLS, NSW 2010
Telephone: +61 8 9324 2099
Solicitors
GTP Legal
68 Aberdeen Street
NORTHBRIDGE WA 6003
Telephone: +61 8 6555 1866
Bankers:
Westpac Banking Corporation
Level 14, 109 St Georges Terrace
Perth WA 6000
Auditors:
Pitcher Partners BA&A Pty Ltd
Level 1, 914 Hay Street
PERTH WA 6000
Telephone: +61 8 9322 2022
Securities Exchange Listing
Family Zone Cyber Safety Limited is listed on the Australian Securities Exchange (ASX Code: FZO)
3
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
DIRECTORS’ REPORT
Your Directors have pleasure in submitting their report together with the financial statements of Family Zone
Cyber Safety Limited (the ‘Company’) for the financial year ended 30 June 2016. In order to comply with the
provisions of the Corporations Act 2001, the Directors’ report as follows:
DIRECTORS
The Directors in office at any time during the financial year and until the date of this report are as follows:
Mr Tim Levy
Managing Director
Mr John Sims
Non-executive Independent Chairman
(Appointed 13 May 2016)
Mr Crispin Swan
Executive Director – Sales
Mr Phil Warren
Non- executive Independent Director
(Appointed 13 May 2016)
Mr Ben Trigger
Mr Paul Robinson
Director
Director
(Resigned 13 May 2016)
(Resigned 13 May 2016)
The Directors have been in office since the start of the year to the date of this report unless otherwise stated.
PRINCIPAL ACTIVITIES
The principal activities of the Company during the financial year were the continued development, technical
assessment and trials of the Family Zone Platform a universal parental control platform that works in the home,
outside, within carrier networks, public hotspots and schools.
The Family Zone Platform is a cloud based parental control platform owned and operated by the Company. The
Family Zone Platform incorporates networking and application technologies which allow parental controls to be
embedded within home, enterprise, public and telecommunications carrier networks and installed on mobile
devices.
The Family Zone Platform was soft launched in Australia in March 2016 with its consumer offerings including the
Family Zone Box and Family Zone App available for sale direct to consumers.
There have been no significant changes in the nature of these activities during the financial year.
RESULTS
The net loss attributable to members of the Company for the year ended 30 June 2016 amounted to $2,815,607
(2015: loss $654,948).
REVIEW OF OPERATIONS
The operations of the Company for the majority of the financial year have been focussed on the ongoing
development, technical assessment and trials of the Family Zone Platform. In building and developing the Family
Zone Platform the Company has invested heavily in R&D during the financial year incurring significant
expenditure in IT services, IP and branding as well as business development, administration and inventory costs
in preparing for the commercial launch of its products. The Company reported an operating loss of $2,815,607
for the financial year, which includes an intangible asset impairment of $690,041 and share based payment
expense of $512,141.
In October 2015 the Company initiated a beta testing programme with USA based beta testing provider
CenterCode. Feedback from the beta testing resulted in a number of enhancements being introduced to the
Family Zone Platform in early 2016.
The Family Zone Platform has been specifically designed to allow for a wide variety of channel and distribution
opportunities. During the financial year the Company has been focused on pursuing the following key distribution
channels:
4
DIRECTORS’ REPORT (CONTINUED)
Direct to consumer;
Re-sale through telecommunications carriers; and
Access partnerships (Access Partner Model).
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
The Family Zone products and services can be sold direct to consumers and generate revenues through Family
Zone Box sales and subscription revenues. The Family Zone Platform consumer offerings including the Family
Zone Box and Family Zone App were only soft launched in Australia in March 2016 with a full launch being
undertaken in July 2016. The Company therefore did not generate any material sales revenues from its
consumer offerings during the financial year with other revenues of $438,490 generated in the financial year
predominantly from government grants and interest.
Telecommunication carriers also represent a significant distribution opportunity for the Company, with the Family
Zone products and services being suitable to offer through carriers to their customers as a value added service.
The Company’s strategy is to charge a monthly wholesale fee per Family Zone service provided through the
carrier. The fee charged will vary based on the level of service offered by the Company and carrier. During the
financial year the Company pursued commercial negotiations and commenced technical trials of the Family Zone
server level technology within the carrier network of a major Philippines telecommunications carrier. No
wholesale product sales were however generated through telecommunication partners during the financial year.
The Access Partner Model involves partnering with providers of on premise networking equipment and
connectivity solutions to multi-dwelling units and commercial and residential properties to embed the Family Zone
filtering technologies within their hardware. The Company aims to create effective Family Zone hotspots to
market its products and services to consumers. During the financial year the Company entered into
arrangements and commenced testing of the Family Zone technology with two access partners in the USA.
The Company’s key asset is the intellectual property associated with the Family Zone Platform and the
commercialisation of that product. This comprises various trademarks, patents, licenced patents, copyright in the
software which is the Family Zone Platform, as well as other unregistered intellectual property constituted by
confidential information and know-how. It also comprises registered domain names. Other assets as at 30 June
2016 comprise cash, Family Zone Box inventories and capitalised development costs.
During the financial year the Company commenced preparation for a capital raising and listing on the Australian
Securities Exchange and converted from a private to public company on 10 June 2016. The Company was
admitted to official quotation on ASX following the end of the financial year on 29 August 2016 (Refer to events
since the end of the financial year for further details).
On 23 June 2016 the Company undertook a 1 for 1.913974 share consolidation (Consolidation). All Securities
in this Directors report are on a post Consolidation basis unless otherwise stated.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
There have been no significant changes in the state of affairs of the Company that occurred during the financial
year not otherwise disclosed in this report or the financial statements.
5
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
DIRECTORS’ REPORT (CONTINUED)
AFTER BALANCE DATE EVENTS
Following the end of the financial year the Company lodged and an initial public offering Prospectus dated
12 July 2016 and Supplementary Prospectus dated 26 July 2016 with ASX and ASIC for the issue of up to
30,000,000 Shares at an issue price of $0.20 to raise $6,000,000 as well as an offer of 7,500,000 Options (with
an exercise price of $0.25 and expiry date of 29 August 2019) at an issue price of $0.005 to raise a further
$37,500 (together Offers). The Offers were closed heavily oversubscribed with the Company raising $6,037,500
and being admitted to the Official Quotation on ASX on 29 August 2016.
On completion of the Company’s initial public offering on ASX, 1,430,000 Convertible Notes on issue at 30 June
2016 were converted into 13,758,927 Shares and 2,593,750 Attaching Options. The Company also issued
718,750 shares to Fidelio Partners in July 2016 pursuant to the Fidelio Agency Agreement following the receipt of
a purchase order from a leading mobile carrier in South East Asia.
On 19 September 2016, the Company issued 3,880,958 Unlisted Options (exercise price of $0.33, expiry 19
September 2019) to employees of the Company pursuant to the Company’s Employee Share Option Plan.
-
-
-
25% of options will vest and become exercisable upon the Company having 20,000 paying subscribers
registered by 31 December 2017.
25% of options will vest and become exercisable upon the Company having 30,000 paying subscribers
registered by 31 December 2017.
25% of options will vest and become exercisable upon the Company achieving $10,000,000 of customer
revenue in any financial years ended 30 June 2017, 2018 or 2019.
Apart from the events discussed above, no other matters or circumstances have arisen since the end of the
financial year which significantly affected or may significantly affect the operations of the Company, the results of
those operations or the state of affairs of the Company in subsequent financial years
LIKELY DEVELOPMENTS
Other than as disclosed elsewhere in this report, there are no likely developments in the operations of the
Company that were not finalised at the date of this report.
ENVIRONMENTAL REGULATION
The Company is not subject to any significant environmental Commonwealth or State regulations or laws.
DIVIDENDS
There were no dividends paid or declared or recommended since the start of the financial year.
6
DIRECTORS’ REPORT (CONTINUED)
INFORMATION ON DIRECTORS AND COMPANY SECRETARY
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
DIRECTORS
Mr Tim Levy
B. Com, CA
Experience and expertise
Mr. Levy is a successful telecommunications and technology entrepreneur. He is the
founder of Vodafone’s largest Australian retail partner Mo’s Mobiles and was the former
CEO/COO of listed Optus reseller B Digital Limited. Prior to working in commerce Mr.
Levy was a management consultant at Andersen’s working in technology and change
projects across Australia, South Africa, Zambia, Jordan and Saudi Arabia.
Mr. Levy is a graduate of the University of Western Australia and was a practising
Chartered Accountant prior to his move into commerce.
Other current directorships of ASX listed companies
Nil
Other directorships held in ASX listed companies in the last three years
Nil
Mr John Sims
B. Acc (Glasgow)
Experience and expertise
Mr. Sims is a successful technology and telecommunications executive with over 35
years’ experience. Based in San Francisco his former roles include:
President, Global Sales, BlackBerry Limited
Global Head of Telecom & President, SAP Mobile Services, SAP AG
Board Member, Mobixell Networks
CEO, 724 Solutions Inc
Founder and CEO, TANTAU Software Inc
COO, SCC Communications (now Intrado, part of West Corp) and
Vice President, Telecommunications, Tandem Computers
Other current directorships of ASX listed companies
Nil
Other directorships held in ASX listed companies in the last three years
Nil
Mr Crispin Swan
B.
Arts
(UK/Germany)
European Business
Programme
(Hons)
Experience and expertise
Mr Swan is an experienced sales executive and general manager working across a
range of global enterprises. His expertise is in international business development,
executive and IT & T sales. Mr. Swan’s former roles have included:
Vice President Sales Asia Pacific, Mavenir Systems
Regional Sales Director and General Manager, Airwide Solutions
Network Infrastructure Solutions IS Manager for Australia & Papua New Guinea,
Schlumberger
Sales Manager, Sema
Account Manager, Cisco Systems
Account Manager, Alcatel-Lucent and
Sales Executive, Cable & Wireless Communications
Other current directorships of ASX listed companies
Nil
Other directorships held in ASX listed companies in the last three years
Nil
Mr Phil Warren
B. Com, CA
Experience and expertise
Mr Warren is a Chartered Accountant and executive director of West Perth based
corporate advisory firm Grange Consulting. Mr. Warren has over 20 years of experience
7
DIRECTORS’ REPORT (CONTINUED)
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
in finance and corporate roles in Australia and Europe. He has specialised in company
valuations, mergers and acquisitions, capital raisings, debt financing, financial
management, corporate governance and company secretarial services for a number of
public and private companies.
Mr. Warren has established a number of ASX listed companies from initial unlisted shell
seed raisings through to asset acquisitions leading to ASX listings and continues to act
as corporate advisor to some of these companies. Mr. Warren is a non-executive
director of Cassini Resources Limited and Rent.com.au Limited and also sits on a
number of unlisted company boards in his capacity as finance director.
Other current directorships of ASX listed companies
Cassini Resources Limited
Rent.com.au Limited
Other directorships held in ASX listed companies in the last three years
Nil
Mr Ben Trigger
Mr Trigger was a Director of the Company until 13 May 2016 and is currently Vice
President, Technology Applications of the Company.
Experience and expertise
Mr. Trigger is an experienced technology consultant, and business operator based in
Perth, Western Australia. He is the founder and Managing Director of full-service aged-
care telecommunications operator Living Networks and prior to working for the
company, Mr. Trigger was a Director of Ultimation and CEO of Netlink Group.
Mr. Trigger is responsible for application development for Family Zone.
Other current directorships of ASX listed companies
Nil
Other directorships held in ASX listed companies in the last three years
Nil
Mr Paul Robinson
B. Bus (Comp Science)
Mr Robinson was a Director of the Company until 13 May 2016 and is currently Vice
President, Technology Services of the Company.
Experience and expertise
Mr. Robinson is an experienced technology consultant, and business operator based
in Perth, Western Australia. He is the co-founder and owner of Permeance
Technologies a specialist provider of information technology to enterprises and public
educational providers in Australia. Mr. Robinson is responsible for information
technology services and partner deployments
Other current directorships of ASX listed companies
Nil
Other directorships held in ASX listed companies in the last three years
Nil
COMPANY SECRETARY
Ms Emma Wates
B.Com, CA, CSA
Experience and expertise
Ms Wates is a Chartered Accountant and corporate advisor at Grange Consulting
Group with over 15 years’ experience. She specialises in providing valuation advice,
due diligence investigation, corporate governance, compliance and company
secretarial services to both public and private companies. She has advised on the
listing of a number of companies on ASX as well as being involved in various
secondary and seed raisings for public and private companies.
8
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
DIRECTORS’ REPORT (CONTINUED)
MEETINGS OF DIRECTORS
The Company converted from being a private to public company on 10 June 2016 and listed on ASX on
29 August 2016. As the Company was an unlisted private company for the majority of the financial year ended
30 June 2016 no formal Board Meetings were held during the financial year.
The Founding Directors (Tim Levy, Crispin Swan, Ben Trigger and Paul Robinson) were each actively involved in
the operations and management of the Company would meet regularly to discuss the operational performance
and strategic direction of the Company. Messrs Phil Warren and John Sims were appointed on 13 May 2016 in
preparation for the listing of the Company on ASX and were regularly updated on the Company’s operation and
listing process. All material decisions including the issue of securities were approved by circular resolution of
Directors.
DIRECTORS’ INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY
As at the date of this report, the interests of the Directors in fully paid ordinary shares (Shares), unlisted options
and performance shares of the Company were:
Director
Shares
Unlisted
Options
Class A
Performance
Shares
Class B
Performance
Shares
Class C
Performance
Shares
Tim Levy
John Sims
Crispin Swan
Phil Warren
Ben Trigger*
Paul Robinson*
*Resigned May 2016
5,801,118
750,000
3,878,611
3,878,610
3,878,610
-
1,500,000
-
-
-
1,891,190
750,000
2,205,384
2,205,383
2,205,383
65,310
2,000,000
2,011,309
1,848,018
-
-
-
1,674,677
1,574,662
-
1,674,677
1,574,663
-
1,674,678
1,574,662
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
On 12 September 2016 the Company paid an insurance premium of $27,182 for Directors and Officers Liability
Insurance cover with an indemnity limit of $10,000,000.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court under Section 237 of the Corporations Act 2001 to bring proceedings on
behalf of the Company.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration as required under section 307C of the Corporations Act 2001 for the year
ended 30 June 2016 is provided in this report.
9
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
DIRECTORS’ REPORT (CONTINUED)
NON-AUDIT SERVICES
Pitcher Partners BA&A Pty Ltd consented to and was appointed as the Company’s auditors on 20 May 2016 to
replace the Company’s former auditor DM Advisor Services.
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where
the auditor’s expertise and experience with the Company are important. Non-audit services were provided by the
Company’s current auditors, Pitcher Partners BA&A Pty Ltd as detailed below. The Company’s former auditors,
DM Advisory Services did not provide any non-audit services to the Company.
The Directors are satisfied that the provision of non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001.
Amounts paid/ payable to Pitcher Partners BA&A Pty or related
entities for non-audit services
Preparation of Investigating Accountants Report
Pitcher Partners (WA) Pty Ltd - Taxation
Total auditors remuneration for non-audit services
15,000
2,000
17,000
-
-
30 June 2016
$
30 June 2015
$
10
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
DIRECTORS REPORT (CONTINUED)
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for Directors and key management personnel of the
Company for the year ended 30 June 2016. The information contained in this report has been audited as required
by section 308(3C) of the Corporations Act 2001.
The information provided includes remuneration disclosures that are required under Accounting Standard AASB
124 “Related Party Disclosures”. These disclosures have been transferred from the Financial Report.
This remuneration report details the remuneration arrangements for key management personnel (“KMP”) who are
defined as those persons having authority and responsibility for planning, directing and controlling the major
activities of the Company, directly or indirectly, including any director (whether executive or otherwise) of the
Company, and includes the following specified executives in the Company:
A.
Details of Key Management Personnel
Name
Mr Tim Levy
Mr John Sims
Position
Period of Responsibility
Managing Director
Appointed 1 April 2014
Non-Executive Chairman
Appointed 13 May 2016
Mr Crispin Swan
Executive Director - Sales
Appointed 3 September 2015
Mr Phil Warren
Mr Ben Trigger
Mr Paul Robinson
Non-Executive Director
Director1
Director2
Appointed 13 May 2016
Appointed 13 January 2014, Resigned 13 May 2016
Appointed 1 April 2014, Resigned 13 May 2016
1.
2.
Mr Ben Trigger is currently the Vice President of Technology Applications
Mr Paul Robinson is currently the Vice President Technology Services
B.
Remuneration Policies
Remuneration levels for Directors, secretaries and senior executives of the Company (“the Directors and senior
executives”) will be competitively set to attract and retain appropriately qualified and experienced Directors and
senior executives. The Board may obtain independent advice on the appropriateness of remuneration packages
given trends in comparative companies both locally and internationally and the objectives of the Company’s
remuneration strategy. No such advice was obtained during the current year.
The remuneration structures explained below are designed to attract suitably qualified candidates, reward the
achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders. The
remuneration structures take into account:
the capability and experience of the Directors and senior executives;
the Directors and senior executives ability to control the relevant performance;
the Company’s performance; and
the amount of incentives within each Directors and senior executive’s remuneration.
Remuneration packages include a mix of fixed remuneration and variable remuneration and short and long-term
performance-based incentives.
Fixed remuneration consists of base remuneration, as well as employer contributions to superannuation funds.
Remuneration levels will be, if necessary reviewed annually by the Board through a process that considers the
overall performance of the Company. If required, external consultants provide analysis and advice to ensure the
Directors’ and senior executives’ remuneration is competitive in the market place.
The remuneration policy will be tailored to increase goal congruence between shareholders and Directors and key
management personnel. This will be facilitated through the issue of options and performance shares to key
management personnel to encourage the alignment of personal and shareholder interests. The Company believes
this policy will be effective in increasing shareholder wealth.
11
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
DIRECTORS REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
Service Agreements
The Company entered into services agreements with each of its executive Directors and key management
personnel as part of the process of converting into a public company and listing on the ASX. The Company also
entered into Non-executive Director appointment letters outlining the policies and terms of this appointment
including compensation to the office of Director.
The principal terms of the executive service agreements existing at reporting date are set out below
Mr Tim Levy – Managing Director
The Company and Mr Tim Levy entered into an executive services agreement on 28 June 2016 for his role as
Managing Director of the Company which commenced 29 August 2016 (the date of the Company was admitted to
and Official List) and continues until terminated under the termination provisions outlined below. The principal
terms of this agreement are as follows.
a)
b)
c)
a base salary of $200,000 per annum plus statutory superannuation;
the issue of 750,000 Incentive Options, which have been issued;
the agreement may be terminated
(i)
by either party without cause with 12 months written notice or if the Company elects to with payment
in lieu of notice;
by the Company with one month’s notice, or immediately with payment in lieu of notice if Mr Levy is
unable to perform his duties under the agreement for three consecutive months or a period
aggregating to three months in an 12 month period;
by either party with 12 months written notice if the role of Managing Director becomes redundant. If
the Company terminates the employment of Mr Levy within 12 months of a Change of Control it will
be deemed to be a termination by reason of redundancy. If the Company terminates for reason of
redundancy it shall be obliged to pay Mr Levy for any notice period worked. In addition it will be
required to pay any redundancy amount payable under applicable laws, an amount equal to 12
months base salary (less tax) and any accumulated entitlements; and
by the Company, at any time with written notice and without payment (other than entitlements
accrued to the date of termination) as a result of any occurrence which gives the Company a right of
summary dismissal at common law;
by Mr Levy immediately, by giving notice, if the Company is in breach of a material term of this
agreement.
(ii)
(iii)
(iv)
(v)
12
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
DIRECTORS REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
Mr Crispin Swan– Executive Director – Sales
The Company and Mr Crispin Swan entered into an executive service agreement for his role as Executive Director
- Sales of the Company which commenced on 29 August 2016 (the date the Company was admitted to the Official
List of ASX) and continues until terminated under the termination provisions outlined below. The principal terms of
the agreement are as follows:
a)
b)
c)
a base salary of $220,000 per annum plus statutory superannuation;
the issue of 750,000 Incentive Options, which have been issued;
the agreement may be terminated
(i)
by either party without cause with 12 months written notice or if the Company elects to with payment
in lieu of notice;
by the Company with one month’s notice, or immediately with payment in lieu of notice if Mr Swan is
unable to perform his duties under the agreement for three consecutive months or a period
aggregating to three months in an 12 month period;
by either party with 12 months written notice if Mr Swan’s role becomes redundant. If the Company
terminates the employment of Mr Swan within 12 months of a Change of Control it will be deemed to
be a termination by reason of redundancy. If the Company terminates for reason of redundancy it
shall be obliged to pay Mr Swan for any notice period worked. In addition it will be required to pay
any redundancy amount payable under applicable laws, an amount equal to 12 months base salary
and any accumulated entitlements; and
by the Company, at any time with written notice and without payment (other than entitlements
accrued to the date of termination) as a result of any occurrence which gives the Company a right of
summary dismissal at common law;
by Mr Swan immediately, by giving notice, if the Company is in breach of a material term of this
agreement.
(ii)
(iii)
(iv)
(v)
Mr Ben Trigger and Mr Paul Robinson – Vice Presidents Technology
The Company has entered into consultancy agreements with Mr Ben Trigger for his role as Vice President,
Technology Applications and Mr Paul Robinson for his role as Vice President, Technology Services (together the
Vice President Consultancy Agreements). The Vice Presidency Consultancy Agreements commenced on 29
August 2016 (the date the Company was admitted to the Official List of ASX) and continue until terminated under
the termination provisions outlined below.
The principal terms of the Vice President Consultancy Agreements are as follows:
a)
b)
c)
d)
a daily consultancy fee of $770 exclusive of GST (if applicable);
the consultant will work a minimum of three days per week during normal working hours. This reflects the
time commitment currently required of the consultant given the size and nature of the Company. However
the time commitment may be reviewed and increased from time to time in light of the growth of the
Company.
the consultant may be eligible at the Company’s discretion to participate in the Company’s ESOP on terms
determined by the Company and the Company may pay a discretionary cash bonus on achievement of
KPIs during each year of the Term;
the agreement may be terminated
(i)
by either party without cause with 6 months written notice or if the Company elects to with payment
in lieu of notice;
by the Company, at any time with written notice and without payment (other than entitlements
accrued to the date of termination) as a result of any occurrence which gives the Company a right of
summary dismissal at common law;
by the consultant immediately, by giving notice, if the Company is in breach of a material term of this
agreement.
(ii)
(iii)
13
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
DIRECTORS REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
Non-Executive Directors and Chairman
Non-executive Director fees are set based on fees paid to other Non-Executive Directors of comparable
companies. The aggregate remuneration for Non-Executive Directors has been set by the Board at an amount not
to exceed $500,000 per annum. The Board has resolved that the Non-Executive Directors’ fees will be $50,000
per annum for the Chairman and $40,000 per annum for non-executive Directors (plus statutory superannuation).
The key terms of the Non-Executive Director service agreements are as follows:
Non-Executive Director Appointment – John Sims
The Company has entered into an agreement with Mr John Sims in respect of his appointment as a Non-
Executive Director and Chairman of the Company.
Mr Sims will be paid a fee of $50,000 per annum (exclusive of statutory superannuation) for his services as Non-
Executive Director and Chairman from the date of the Company’s admission to the Official List of ASX and will be
reimbursed for all reasonable expenses incurred in performing his duties. In addition, the Company has issued to
him 1,500,000 Incentive Options each exercisable at $0.25 on or before 20 May 2019.
The appointment of Mr Sims as Non-Executive Chairman is otherwise on terms that are customary for an
appointment of this nature.
Non-Executive Director Appointment – Phil Warren
The Company has entered into an agreement with Mr Phil Warren in respect of his appointment as a Non-
Executive Director of the Company.
Mr Warren will be paid a fee of $40,000 per annum (exclusive of statutory superannuation) for his services as
Non-Executive Director from the date of the Company’s admission to the Official List of ASX and will be
reimbursed for all reasonable expenses incurred in performing his duties. In addition, the Company has issued to
him 500,000 Incentive Options each exercisable at $0.25 on or before 20 May 2019.
The Company does not have a Director’s Retirement Scheme in place at present.
14
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
DIRECTORS REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
C.
Remuneration of Key Management Personnel
Details of the remuneration of the Directors and the key management personnel (as defined in AASB 124 Related Party Disclosures) of the Company for the year ended
30 June 2016 are set out in the following table.
Directors and
Key Management
Personnel
30 June 2016
Short -term
Post employment
Long
term
Salary
fees
$
Cash
bonus
$
Non-
monetary
$
Other
$
Super-
annuation
$
Retirement
benefits
$
Termination
benefits
$
Incentive
Plans
$
Share
based
pay-
ments
Options
/Shares
$
TOTAL
Total
performance
related
%
Options/
Shares
as % of
total
$
Mr Tim Levy
-
Mr Crispin Swan
40,000
Mr John Sims
Mr Phil Warren
Mr Ben Trigger*
Mr Paul Robinson*
-
-
-
-
Total Directors
40,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
--
-
--
--
--
--
--
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
76,875
76,875
376,875
416,875
153,750
153,750
51,250
51,250
-
-
-
-
658,750
698,750
-
-
-
-
-
-
-
100%
90%
100%
100%
-
-
94%
* Resigned as Directors on 13 May 2016 however continue their employment by the Company as Key Management Personnel.
15
DIRECTORS REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
Details of the remuneration of the Directors and the key management personnel (as defined in AASB 124 Related Party Disclosures) of the Company for the year ended
30 June 2015 are set out in the following table.
Directors and
Key Management
Personnel
30 June 2015
Short -term
Post employment
Long
term
Salary
fees
$
Cash
bonus
$
Non-
monetary
$
Mr Tim Levy
-
Mr Crispin Swan
30,000
Mr Ben Trigger*
Mr Paul Robinson*
-
-
Total Directors
30,000
-
-
-
-
-
-
-
-
-
-
Other
$
--
-
--
--
--
Super-
annuation
$
Retirement
benefits
$
Termination
benefits
$
Incentive
Plans
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
TOTAL
Total
performance
related
Options
as % of
total
%
Share
based
pay-
ments
Options
$
$
-
-
-
-
-
-
30,000
-
-
30,000
-
-
-
-
-
-
-
-
-
-
* Resigned as Directors on 13 May 2016 however continue their employment by the Company as Key Management Personnel.
16
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
DIRECTORS REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
D.
Relationship between remuneration and company performance
As the Company only commenced the commercialisation of its Family Zone Platform and consumer product
offerings in March 2016, the Directors assess performance of the Company with regard to the achievement of
both operational and financial targets with a current focus on subscriber numbers and sales revenues. Following
the end of the financial year the Company also listed on ASX and therefore the Board will also assess the
performance of the Group with regard to the price of the Company’s ordinary shares listed on the ASX and the
market capitalisation of the Company.
Directors and executives are issued options and, in some cases, performance shares, to encourage the
alignment of personal and shareholder interests.
Options issued to Directors and executives may be subject to market based price hurdles and vesting conditions
and the exercise price of options is set at a level that encourages the Directors to focus on share price
appreciation. The Company believes this policy will be effective in increasing shareholder wealth. Key
management personnel are also entitled to participate in the employee share and option arrangements.
Performance shares vest on the achievement of operational and financial milestones, providing those Directors
and executives holding performance shares an incentive to meet the operational and financial milestones prior to
the expiry date of the performance shares.
On the resignation of Directors and executives any vested options issued as remuneration are retained by the
relevant party.
The Board may exercise discretion in relation to approving incentives such as options. The policy is designed to
reward key management personnel for performance that results in long-term growth in shareholder value.
17
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
DIRECTORS REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
E.
Share based compensation
a)
Details of compensation Options
The Company granted the following unlisted options as share based payments during financial year. These options are not dependent upon satisfaction of performance
or vesting conditions and have been issued to increase goal congruence between Shareholders and Directors.
2016
Directors and
Executives
Grant date
Number
granted
Fair value per
option at
grant date
Number
vested
during the
year
Vested %
Fair value of
exercised
options
during the
year
Number
lapsed during
the year
Year lapsed
options were
granted
Amount paid
or payable for
exercised
options
Exercise price
$
Expiry date
Tim Levy
20/05/16
750,000
$0.1025
750,000
Crispin Swan
20/05/16
750,000
$0.1025
750,000
John Sims
20/05/16
1,500,000
$0.1025
1,500,000
Phil Warren
20/05/16
500,000
$0.1025
500,000
Ben Trigger
Paul Robinson
Total
-
-
-
-
-
3,500,000
-
-
-
-
-
3,500,000
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$0.25
$0.25
$0.25
$0.25
-
-
-
20/05/2019
20/05/2019
20/05/2019
20/05/2019
-
-
-
No shares were issued on the exercise of any compensation Options during the financial year.
18
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
DIRECTORS REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
F.
a)
Key management personnel’s equity holding
Number of Options held by key management personnel
The number of the options of the Company held, directly, indirectly or beneficially, by each Director and key
management personnel, including their personally-related entities for the year ended 30 June 2016 are as follows:
Directors and
Executives
Mr Tim Levy
Mr John Sims
Mr Crispin Swan
Mr Phil Warren
Mr Ben Trigger
Mr Paul Robinson
Total
Held at
1 July
2015
-
-
-
-
-
-
-
Granted as
remuneration
750,000
1,500,000
750,000
500,000
-
-
3,500,000
Options
exercised
-
-
-
-
-
-
-
Options
expired
-
-
-
-
-
-
-
Held at
30 June
2016
750,000
1,500,000
750,000
500,000
-
-
3,500,000
Vested and
exercisable
at 30 June 2016
750,000
1,500,000
750,000
500,000
-
-
3,500,000
b)
Number of Shares held by key management personnel
The number of ordinary shares of the Company held, directly, indirectly or beneficially, by each Director and key
management personnel, including their personally-related entities as at the date of this report is as follows :-
Directors and
Executives
Mr Tim Levy
Mr John Sims
Mr Crispin Swan
Mr Phil Warren
Mr Ben Trigger
Mr Paul Robinson
Total
Held at
1 July 2015
5,032,276
-
2,260,572
65,310
3,606,865
3,291,580
14,256,603
Received as
remuneration
-
-
783,710
-
-
-
783,710
Shares issued
for cash
subscription Other changes
3,925,916
-
592,621
-
261,035
262,300
4,693,074
(4,299,931)
-
(1,745,712)
-
(1,865,591)
(1,705,862)
(9,617,096)
Held at
30 June 2016
4,658,261
-
1,891,191
65,310
2,011,035
1,848,018
10,473,815
19
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
DIRECTORS REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
c)
Performance Share Holdings of Key Management Personnel
The number of Performance Shares of the Company held, directly, indirectly or beneficially, by each Director and
key management personnel, including their personally-related entities for the year ended 30 June 2016 are as
follows:
Directors and
Executives
Mr Tim Levy
Mr John Sims
Mr Crispin Swan
Mr Phil Warren
Mr Ben Trigger
Mr Paul Robinson
Total held at
1 July 2015
Class A
Performance
Shares
Class B
Performance
Shares
Class C
Performance
Shares
Total held at
30 June 2016
-
-
-
-
-
-
-
3,878,611
3,878,610
3,878,610
11,635,831
-
-
-
-
2,205,384
2,205,383
2,205,383
6,616,150
-
1,674,677
1,574,662
9,333,334
-
1,674,677
1,574,663
9,333,333
-
-
1,674,678
5,024,032
1,574,662
4,721,987
9,333,333
28,000,000
During the year ended 30 June 2016 the Company issued a total of 28,000,000 Performance Shares comprising
9,333,334 Class A Performance Shares, 9,333,333 Class B Performance Shares and 9,333,333 Class C
Performance Shares in consideration for a selective buy back of 18,389,653 fully paid ordinary shares in the
Company. The Performance Shares convert to ordinary fully paid shares on a one for one basis following the
achievement of the performance milestones before the expiry date as outlined below:
Class A Performance Shares convert on achievement of 15,000 paying subscribers of the Company
generating at least $100,000 revenue per month over 3 consecutive months (as confirmed by the
Company’s auditor) by 29 August 2018
Class B Performance Shares convert on achievement of $10,000,000 revenue by the Company over a 12
month rolling period of which 30% is subscription income (as confirmed by the Company’s auditor) by 29
August 2019
Class C Performance Shares convert on achievement of $20,000,000 revenue by the Company over a 12
month rolling period of which 30% is subscription income (as confirmed by the Company’s auditor) by 29
August 2020
(together the Performance Milestones)
As at 30 June 2016 none of the Performance Milestones have been achieved.
G.
Key Management Personnel Loans
No loans were provided to made, guaranteed or secured directly or indirectly to any KMP or their related entities
during the financial year.
H. Other Transactions with Key Management Personnel
Transactions with other related parties are made on normal commercial terms and conditions and at market rates.
Outstanding balances are unsecured and are repayable in cash.
a)
Grange Consulting and Grange Capital Partners
20
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
DIRECTORS REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
Mr Phil Warren, a Director of the Company, is also a director of Grange Consulting and an entity related to him is
shareholder of Grange Consulting. Grange Capital is an entity associated with Grange Consulting.
Grange Consulting was in June 2014 to provide company secretarial services to the Company. Pursuant to this
engagement Grange Consulting received $2,000 (plus GST) per month for these services. An administration fee
of 5% was also payable on each invoice. This engagement can be terminated by either party giving 60 days’
notice in writing.
Grange Capital also received capital raising fees from the Company for assisting in its Convertible Note capital
raising during the financial year. Grange Capital received a 0.05% management fee for the Convertible Note fund
raising and 4.0% capital raising fee on funds raised by Grange Capital.
A summary of the total fees paid to Grange Consulting and Grange Capital Partners for the year ended 30 June
2016 and 30 June 2015 is as follows:
Company secretarial services
Capital raising fee
Total
30 June 2016
$
30 June 2015
$
19,825
6,300
26,125
25,200
-
25,200
1. Amounts payable to Grange Consulting and Grange Capital as at 30 June 2016 were $15,625 (GST Exc.)
The Company also engaged Grange Consulting to provide corporate advisory and transaction management
services in respect to the Offers under its IPO Prospectus. Grange Consulting’s fees from the Company for these
services were:
a $75,000 (plus GST) transaction management fee;
$50,000 (plus GST) success fee payable on successful admission of the Company to the Official List of
the ASX; and
Grange Consulting or its nominees has the right to apply for and/or with Grange Capital allocate up to
2,500,000 Prospectus Options under the Option Offer in the IPO Prospectus.
The above mentioned corporate advisory fees were not paid during the current financial year.
Following the Company’s admission to ASX in August 2016 it was agreed that Grange Consulting would continue
to provide company secretarial services and will also provide financial management services to the Company and
will receive $7,500 (plus GST) per month. An administration fee of 5% is also payable on each invoice. This
engagement can be terminated by either party giving 60 days notice in writing.
*********** END OF AUDITED REMUNERATION REPORT ***********
Signed in accordance with a resolution of the Directors.
Mr Tim Levy
Managing Director
29 September 2016
21
AUDITOR'S INDEPENDENCE DECLARATION
To the Directors of Family Zone Cyber Safety Limited
In relation to the independent audit for the year ended 30 June 2016, to the best of my knowledge and
belief there have been:
(i) No contraventions of the auditor independence requirements of the Corporations Act 2001; and
(ii) No contraventions of any applicable code of professional conduct.
PITCHER PARTNERS BA&A PTY LTD
PAUL MULLIGAN
Executive Director
Perth, 29 September 2016
22
An Independent Western Australian Company ABN 76 601 361 095Registered Audit Company Number 467435Liability limited by a scheme approved under Professional Standards LegislationPitcher Partners is an association of Independent firms Melbourne | Sydney | Perth | Adelaide | Brisbane | Newcastle
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2016
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
Revenue
Other Income
Administration
Impairment of intangible assets
Employee and director benefits expense
Finance costs
Marketing expenses
Research & development expenses
Share based payment expense
Depreciation & amortisation
Loss before income tax
Note
2016
$
2015
Restated *
$
4
4
5
6
5,532
438,590
(577,061)
(690,041)
(559,725)
(27)
(7,685)
(908,855)
(512,141)
(84,367)
(2,895,780)
-
97,860
(35,885)
-
(30,000)
(6,391)
(15,683)
(541,943)
-
(42,733)
(574,775)
Income tax benefit/(expense)
7
80,173
(80,173)
Loss after tax for the period attributable to the members
of Family Zone Cyber Safety
(2,815,607)
(654,948)
Other comprehensive income
-
-
Total comprehensive (loss) for the period attributable to
the members of Family Zone Cyber Safety
(2,815,607)
(654,948)
Basic and diluted loss per share (cents per share) for the year
attributed to the members of Family Zone Cyber Safety
8
(11.71)
(2.66)
The above Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction with the
accompanying notes.
* See Note 28 for details regarding the restatement as a result of this error.
23
STATEMENT OF FINANCIAL POSITION
As at 30 June 2016
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventory
Total Current Assets
Non-Current Assets
Intangibles
Plant and equipment
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Borrowings
Total Current Liabilities
Non-current Liabilities
Deferred tax
Total Non-current Liabilities
TOTAL LIABILITIES
NET ASSETS/(LIABILITIES)
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY/(DEFICIT)
Note
2016
$
Restated
2015
$
2015
$
9
10
11
12
13
14
7
15
16
17
720,227
41,427
216,029
977,683
380,146
6,852
386,998
1,364,681
538,630
1,430,000
1,968,630
-
-
1,968,630
78,721
37,746
118,909
235,376
884,801
-
884,801
1,120,177
555,793
-
555,793
80,173
80,173
635,996
78,721
-
118,909
197,630
884,801
-
884,801
1,082,431
354,568
-
354,568
-
-
354,568
(603,949)
484,211
727,863
1,433,717
1,605,348
(3,643,014)
(603,949)
1,311,618
-
(827,407)
484,211
1,465,596
-
(737,733)
727,863
The above Statement of Financial Position is to be read in conjunction with the accompanying notes.
24
STATEMENT OF CHANGES OF EQUITY
For the year ended 30 June 2016
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
Balance at 1 July 2014
Loss for the year *
Total other comprehensive income
Total comprehensive loss for the year
Transaction with owners, directly recorded
in equity:
Issue of Ordinary Shares, net of transaction
costs
Total transactions with owners
Balance at 30 June 2015
* See Note 28 for details regarding the
restatement as a result of this error.
Balance at 1 July 2015
Loss for the year
Total other comprehensive income
Total comprehensive loss for the year
Transaction with owners, directly recorded
in equity:
Issue of Ordinary Shares, net of transaction
costs
Issue of Options
Share buy-back
Issue of performance rights
Total transactions with owners
Balance at 30 June 2016
Issued
Capital
$
Option
Reserve
Accumulated
Losses
$
Total
$
1
-
-
-
1,311,617
1,311,617
1,311,618
Issued
Capital
$
1,311,618
-
-
-
-
-
-
-
-
-
-
(172,459)
(172,459)
(654,948)
-
(654,948)
(654,948)
-
(654,948)
-
-
(827,407)
1,311,617
1,311,617
484,211
Option &
Performance
Reserve
-
-
-
-
Accumulated
Losses
$
(827,407)
Total
$
484,211
(2,815,607)
-
(2,815,607)
(2,815,607)
-
(2,815,607)
1,317,306
-
(1,195,207)
-
122,099
1,433,717
-
410,141
-
1,195,207
1,605,348
1,605,348
-
-
-
-
(3,643,014)
1,317,306
410,141
(1,195,207)
1,195,207)
1,727,447
(603,949)
The above Statement of Changes in Equity is to be read in conjunction with the accompanying notes.
25
STATEMENT OF CASH FLOWS
For the year ended 30 June 2016
Cash flows from operating activities
Receipt from Customers
Government grants received
Payments to suppliers and employees
Interest received
Interest paid
Net cash flows (used in) operating activities
Cash flows from investing activities
Purchase of plant & equipment
Payments for intangible assets
Net cash flows (used in)/from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from issue of convertible notes
Proceeds received for shares not yet issued
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning year
Cash and cash equivalents at end year
9
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
Note
19
2016
$
2015
$
6,086
437,612
(1,592,709)
978
(27)
(1,148,060)
-
97,860
(1,154,878)
-
(6,391)
(1,063,409)
(7,241)
(200,164)
(207,405)
568,971
1,430,000
-
1,996,971
641,506
78,721
720,227
-
(392,513)
(392,513)
1,051,456
-
348,334
1,399,790
(56,131)
134,852
78,721
The above Statement of Cash Flows is to be read in conjunction with the accompanying notes.
26
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 1: REPORTING ENTITY
Family Zone Cyber Safety Limited is a listed public Company incorporated and domiciled in Australia. The
financial statements of the Company are as at and for the year ended 30 June 2016.
A description of the nature of the Company’s operations and its principal activities is included in the Directors’
Report which does not form part of this financial report.
The financial statements were authorised by the Board of Directors on the date of signing the Directors'
Declaration.
NOTE 2: BASIS OF PREPARATION
This General Purpose Financial Report has been prepared in accordance with Australian Accounting Standards,
other authoritative pronouncements of the Australian Accounting Standards Board (including Australian
Interpretations) and the Corporations Act 2001.
The Financial Statements and Notes of the Company comply with Australian Accounting Standards, which include
Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures
that the Financial Statements and Notes comply with International Financial Reporting Standards.
Family Zone Cyber Safety Ltd is a Company limited by shares. The financial report is presented in Australian
currency. Family Zone Cyber Safety Ltd is a for-profit entity.
(a) Going Concern
These financial statements have been prepared on the going concern basis, which contemplates the continuity of
normal business activities and the realisation of assets and settlement of liabilities in the normal course of
business.
The Statement of Comprehensive Income shows that the Company incurred a net loss of $2,895,780 during the
year ended 30 June 2016 (2015: loss of $574,775). The statement of Financial Position shows that the Company
had cash and cash equivalents of $720,227 (2015: $78,721).
The ability of the Company to continue as a going concern is dependent on it being able to successfully raise
further debt or capital funding. Subsequent to year end the Company lodged an initial public offering Prospectus
date 12 July 2016 and Supplementary Prospectus dated 26 July 2016 with the ASX and the ASIC for the issue of
up to 30,000,000 Shares at an issue price of $0.20 to raise $6,000,000 as well as an offer of 7,500,000 Options
at an issue price of $0.005 to raise a further $37,500. The offers were closed heavily oversubscribed with the
Company raising $6,037,500 and being admitted to official quotation on 29 August 2016.
The financial statements do not include any adjustments relating to the recoverability and classification of
recorded asset amounts, nor to amounts or classification of liabilities that might be necessary should the
Company not be able to continue as a going concern.
27
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
(b) Use of Estimates and Judgements
Significant Judgements and Key Assumptions
The preparation of financial statements in conformity with AASBs requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future periods affected.
Information about critical judgements in applying accounting policies that have the most significant effect on the
amounts recognised in the financial statements are included in the following notes:
Share Based Payments
Goods or services received or acquired in a share-based payment transaction are recognised as an increase in
equity if the goods or services were received in an equity-settled share-based payment transaction or as a liability
if the goods and services were acquired in a cash settled share-based payment transaction.
For equity-settled share-based transactions, goods or services received are measured directly at the fair value of
the goods or services received provided this can be estimated reliably. If a reliable estimate cannot be made the
value of the goods or services is determined indirectly by reference to the fair value of the equity instrument
granted using a Black-Scholes option pricing model that takes into account the exercise price, the term of the
option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share,
the expected dividend yield and the risk free interest rate for the term of the option.
Transactions with employees and others providing similar services are measured by reference to the fair value at
grant date of the equity instrument granted using a Black-Scholes option pricing model.
Research and Development Assets
The Company’s accounting policy for capitalised development expenditure is set out in Note 3(h). The application
of this policy necessarily requires management to make certain estimates and assumptions as to the future
events and circumstances of the Company. Any such estimate and assumptions may change as new information
becomes available. If, after having capitalised expenditure under this policy, it is concluded that the expenditures
relate to aspects of the asset no longer utilised, or it is concluded that the expenditures are unlikely to be
recovered by future exploitation or sale, then the relevant capitalised amount will be written off to the profit or
loss.
Impairment of assets
In determining the recoverable amount of assets, in the absences of quoted market prices, estimations are made
regarding the present value of future cash flows using asset specific discount rates and the recoverable amount
of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a
number of key estimates.
28
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
The accounting policies set out below have been applied consistently to all periods presented in these financial
statements.
The Company has adopted all of the new, revised or amending Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any
new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been
early adopted.
(a) Revenue Recognition
Revenue is recognised when it is probable that the economic benefit will flow to the Company and the revenue
can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.
Interest Revenue
Interest revenue is recognised using the effective interest method. It includes the amortisation of any discount or
premium.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
(b) Government Grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all
attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income
on a systematic basis over the periods that the related costs, for which it is intended to compensate, are
expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected
useful life of the related asset.
(c)
Income Tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in Statement of
Profit or Loss and Other Comprehensive Income except to the extent that it relates to items recognised directly in
equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of
goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly
controlled entities to the extent that they probably will not reverse in the foreseeable future. Deferred tax is
measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based
on the laws that have been enacted or substantively enacted by the reporting date.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available
against which temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and
are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
29
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(e)
Financial Assets and Financial Liabilities
Financial assets and financial liabilities are recognised when the Company becomes party to the contractual
provisions of the financial instrument.
A financial asset is derecognised when the contractual rights to the cash flows from the financial assets expire or
are transferred and no longer controlled by the Company.
A financial liability is removed from the Statement of Financial Position when the obligation specified in the
contract is discharged or cancelled or expires.
Financial assets not measured at fair value comprise:
(i)
loans and receivables with fixed or determinable payments that are not quoted in an active market.
These are measured at amortised cost using the effective interest method.
All financial liabilities are measured at amortised cost using the effective interest rate method. The amortised
cost of a financial asset or a financial liability is the amount initially recognised minus principal repayments, plus
or minus cumulative amortisation of any difference between the initial amount and maturity amount and minus
any write-down for impairment or un-collectability.
(f)
Trade and Other Receivables
Trade accounts and other receivables represent the principal amounts due at reporting date less, where
applicable, any allowances for doubtful accounts.
(g)
Inventories
Finished goods are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct
labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the
basis of normal operating capacity. Costs are assigned to individual items of inventory on the basis of weighted
average costs. Costs of purchased inventory are determined after deducting rebates and discounts. Net
realisable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
(h) Plant and Equipment
Items of property, plant and equipment are stated at cost less accumulated depreciation.
The carrying amount of property, plant and equipment is reviewed for impairment when events or changes in
circumstances indicate that carrying value may not be recoverable. If any such indication exists and where the
carrying amount values exceeds the estimated recoverable amount the assets are written down to the
recoverable amounts.
The depreciable amount of all fixed assets is depreciated on a straight line basis over their useful lives to the
Company commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Plant and Equipment
Depreciation Rate
10% - 40%
30
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(i)
Research & Development Expense
The Company expenses all research and development costs as incurred. The amounts incurred in relation to
patent development costs and patent applications are expensed until the Company has received formal
notification that a patent has been granted. The Company believes expensing patent development and
application costs provides the most relevant and reliable information to financial statement users. The Company
will only record a development asset when there is certainty that the Company will be able to patent the
technology it has created, as demonstrated by the approval of the patent application and as a result expect future
economic benefits to flow to the Company.
Following initial recognition of development expenditure as a development asset, the asset is carried at cost less
any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when
development is complete and the asset is available for use. It is amortised over the period of expected future
benefit, which will normally be the useful life of the patent. Amortisation is recorded in other expenses and is
currently undertaken at a rate of 8% - 40% depending on the nature of costs capitalised.
During the period of development, the asset is tested for impairment annually.
(j)
Impairment of Assets
At each reporting date, the Company reviews the carrying value of its tangible and intangible assets to determine
whether there is any indication that those assets should be impaired. If such indication exists, the recoverable
amount of the assets, being the higher of the asset's fair value less costs to sell and value in use, is compared to
the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to
the income statement.
(k)
Trade and Other Payables
Trade accounts and other payables and accrued liabilities represent the principal amounts outstanding at
reporting date plus, where applicable, any accrued interest.
(l)
Cash and Cash Equivalents
Cash and cash equivalents in the Statement of Financial Position comprise cash at bank and in hand and short-
term deposits with an original maturity of three months or less.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts.
(m) Employee Benefits
(i) Short-term employee benefit obligations
Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be
settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration
rates which are expected to be paid when the liability is settled. The expected cost of short-term employee
benefits in the form of compensated absences such as annual leave is recognised in the provision for employee
benefits. All other short-term employee benefit obligations are presented as payables.
(ii) Long-term employee benefit obligations
Liabilities arising in respect of long service leave and annual leave which is not expected to be settled within
twelve months of the reporting date are measured at the present value of the estimated future cash outflow to be
made in respect of services provided by employees up to the reporting date.
31
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(m)
Employee Benefits (Continued)
Employee benefit obligations are presented as current liabilities in the balance sheet if the entity does not have
an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when
the actual settlement is expected to occur
Contributions are made by the Company to employee's superannuation funds. These superannuation
contributions are recognised as an expense in the same period when the employee services are received.
(n) Share-Based Payment Arrangements
Goods or services received or acquired in a share-based payment transaction are recognised as an increase in
equity if the goods or services were received in an equity-settled share-based payment transaction or as a liability
if the goods and services were acquired in a cash settled share-based payment transaction.
For equity-settled share-based transactions, goods or services received are measured directly at the fair value of
the goods or services received provided this can be estimated reliably. If a reliable estimate cannot be made the
value of the goods or services is determined indirectly by reference to the fair value of the equity instrument
granted using a Black-Scholes option pricing model that takes into account the exercise price, the term of the
option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share,
the expected dividend yield and the risk free interest rate for the term of the option.
Transactions with employees and others providing similar services are measured by reference to the fair value at
grant date of the equity instrument granted using a Black-Scholes option pricing model.
(o)
Issued Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
(p) Earnings per Share
(i)
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the financial year.
(ii)
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration in relation
to dilutive potential ordinary shares.
32
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(q) Segment Reporting
An operating segment is a component of an Company that engages in business activities from which it may earn
revenues and incur expenses (including revenues and expenses relating to transactions with other components
of the same Company), whose operating results are regularly reviewed by the Company's chief operating
decision maker to make decisions about resources to be allocated to the segment and assess its performance
and for which discrete financial information is available. This includes start-up operations which are yet to earn
revenues.
Management will also consider other factors in determining operating segments such as the existence of a line
manager and the level of segment information presented to the board of directors. Operating segments have
been identified based on the information provided to the chief operating decision makers – being the executive
management team.
The Company aggregates two or more operating segments when they have similar economic characteristics, and
the segments are similar in the nature of the minerals targeted. Operating segments that meet the quantitative
criteria as prescribed by AASB 8 are reported separately. However, an operating segment that does not meet the
quantitative criteria is still reported separately where information about the segment would be useful to users of
the financial statements.
Information about other business activities and operating segments that are below the quantitative criteria are
combined and disclosed in a separate category for “all other segments”.
(r)
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in
the Company's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised
within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are
classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Company's normal operating
cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting
period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the
reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
(s) Goods and Services Tax ('GST')
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred
is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the
asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of
GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the
statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or
financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash
flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax
authority.
33
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(t)
New Accounting Standards and Interpretations
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory have not been early adopted by the Company for the annual reporting period ended 30 June 2015.
The Company’s assessment of the impact of these new or amended Accounting Standards and Interpretations
are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard
replaces all previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments:
Recognition and Measurement'. AASB 9 introduces new classification and measurement models for financial
assets. A financial asset shall be measured at amortised cost, if it is held within a business model whose
objective is to hold assets in order to collect contractual cash flows, which arise on specified dates and solely
principal and interest. All other financial instrument assets are to be classified and measured at fair value through
profit or loss unless the Company makes an irrevocable election on initial recognition to present gains and losses
on equity instruments (that are not held-for-trading) in other comprehensive income ('OCI'). For financial
liabilities, the standard requires the portion of the change in fair value that relates to the Company's own credit
risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting
requirements are intended to more closely align the accounting treatment with the risk management activities of
the Company. New impairment requirements will use an 'expected credit loss' ('ECL') model to recognise an
allowance. Impairment will be measured under a 12-month ECL method unless the credit risk on a financial
instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted.
The standard introduces additional new disclosures. The Company will adopt this standard from 1 July 2018 but
the impact of its adoption is assessed by the Company to be insignificant.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2017. The standard
provides a single standard for revenue recognition. The core principle of the standard is that an Company will
recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects
the consideration to which the Company expects to be entitled in exchange for those goods or services. The
standard will require: contracts (either written, verbal or implied) to be identified, together with the separate
performance obligations within the contract; determine the transaction price, adjusted for the time value of money
excluding credit risk; allocation of the transaction price to the separate performance obligations on a basis of
relative stand-alone selling price of each distinct good or service, or estimation approach if no distinct observable
prices exist; and recognition of revenue when each performance obligation is satisfied. Credit risk will be
presented separately as an expense rather than adjusted to revenue. For goods, the performance obligation
would be satisfied when the customer obtains control of the goods. For services, the performance obligation is
satisfied when the service has been provided, typically for promises to transfer services to customers. For
performance obligations satisfied over time, a Company would select an appropriate measure of progress to
determine how much revenue should be recognised as the performance obligation is satisfied.
AASB 15 Revenue from Contracts with Customers (Continued)
Contracts with customers will be presented in the Company’s statement of financial position as a contract liability,
a contract asset, or a receivable, depending on the relationship between the Company’s performance and the
customer’s payment. Sufficient quantitative and qualitative disclosure is required to enable users to understand
the contracts with customers; the significant judgments made in applying the guidance to those contracts; and
any assets recognised from the costs to obtain or fulfil a contract with a customer. The Company will adopt this
standard from 1 July 2018 but the impact of its adoption is assessed by the Company to be insignificant as all
sales are made in advance
34
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(u) New Accounting Standards and Interpretations (Continued)
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard
replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance
leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position,
measured as the present value of the unavoidable future lease payments to be made over the lease term. The
exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal
computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use'
asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the
capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct
costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating
lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating
costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods
of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease
expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation)
results will be improved as the operating expense is replaced by interest expense and depreciation in profit or
loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated
into both a principal (financing activities) and interest (either operating or financing activities) component. For
lessor accounting, the standard does not substantially change how a lessor accounts for leases. The Company
will adopt this standard from 1 July 2019 but the impact of its adoption is yet to be assessed by the Company.
NOTE 4: REVENUE AND OTHER INCOME
Revenue
Service revenue
Hardware revenue
Interest and other income
Interest revenue
Other
Government Grant
Research and Development Grant
Export Assistance Grant
2016
$
2015
$
840
4,692
5,532
978
569
1,547
367,942
69,099
437,042
-
-
-
2,663
-
2,663
95,197
-
95,197
35
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 5: LOSS
Loss before income tax has been determined after charging the following expenses:
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
Directors’ fees
Director consulting costs (1)
Employee wages
Superannuation
Total employee and director benefits expense
2016
$
2015
$
40,000
300,000
206,074
13,651
559,725
30,000
-
-
-
30,000
(1) Relates to Mr Crispin Swan for consulting services provided. These services have been provided on an arm’s
length basis with commercial terms no more favourable than those that the Company would have transacted
with other parties for similar services provided.
NOTE 6: MARKETING EXPENSES
Sales and Marketing
Domain licenses
NOTE 7: INCOME TAX
(a) The major components of income tax expense /
(benefit) comprise of:
Current tax benefit
Deferred tax benefit
(b) Reconciliation of prima facie tax on continuing
operations to income tax expense / (benefit):
2016
$
2015
$
7,685
7,685
15,683
15,683
2016
$
2015
$
-
(80,173)
(80,173)
-
80,173
80,173
Profit / (loss) before tax for the year
(2,895,780)
(574,775)
Tax benefit @ 30% tax rate (Australia)
Adjustments for:
Entertainment
Share based payments
R&D tax incentive classified as income
Non-deductible R&D expenditure
Tax losses not recognised
Income tax expense attributable to profit
(868,734)
(172,432)
83
153,642
(110,383)
-
825,391
-
-
-
(28,559)
88,310
112,681
-
36
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 7: INCOME TAX (CONTINUED)
(c) Deferred taxes
Deferred tax asset:
Tax losses
Provisions & Accruals
Capital & Business related costs
Offset against deferred tax liability / not recognised
Deferred tax liability:
Intangible assets
Offset against deferred tax assets / not recognised
Net deferred tax asset / (liability)
(d) Deferred tax assets / liabilities included in income tax
expense
Decrease / (increase) in deferred tax assets
(Decrease) / increase in deferred tax liabilities
Adjust for recognition/offset of DTA/DTL
(e) Deferred tax assets
/
liabilities not brought to
account
Temporary differences
Operating tax losses
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
2016
$
2015
$
690,886
79,790
32,538
(803,213)
(103,813)
103,813
-
-
172,432
-
-
(172,432)
(252,640)
172,467
(80,173)
(80,173)
2016
$
2015
$
(628,746)
(231,000)
779,573
(80,173)
-
80,173
-
80,173
2016
$
2015
$
8,514
690,886
699,400
-
-
-
The tax benefits of the above deferred tax assets will only be obtained if:
- the company derives future assessable income of a nature and of an amount sufficient to enable the
benefits to be utilised;
- the company continues to comply with the conditions for deductibility imposed by law;
and
- no changes in income tax legislation adversely affect the company in utilising the benefits.
37
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 8: LOSS PER SHARE
Basic earnings/(loss) per share amounts are calculated by dividing net profit/(loss) for the period attributable to
ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the
period.
The following reflects the income or loss and share data used in the total operations basic and diluted earnings
per share computations:
2016
$
2015
$
Loss used in the calculation of basic and diluted loss per share
(2,815,607)
(654,948)
Basic earnings/(loss) per share attributable
(cents Per Share)
to equity holders
(11.71)
(2.66)
Weighted average number of ordinary shares outstanding
Adjustments for calculation of basic and diluted earnings per share:
Number
38,661,941
Number
39,224,628
Share consolidation on a 1:1.914 basis
(14,623,557)
(14,623,557)
Weighted average number of ordinary shares outstanding during the
year used in calculation of basic and diluted loss per share
24,038,384
24,601,071
Options outstanding during the year have not been taken into account in the calculation of the weighted average
number of ordinary shares as they are considered anti-dilutive.
There have been no other transactions involving ordinary shares or potential ordinary shares since the reporting
date and before the completion of these financial statements.
NOTE 9: CASH AND CASH EQUIVALENTS
Cash at bank
Total Cash and Cash Equivalents
2016
$
2015
$
720,227
720,227
78,721
78,721
Cash at bank earns interest at floating rates based on daily bank rates. Refer to note 24 on financial instruments
for details on the Company’s exposure to risk in respect of its cash balance.
38
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 10: INVENTORY
Current:
At net realisable value:
Finished goods
Total Inventory
NOTE 11: INTANGIBLES
Development expenses – at cost
Less: Accumulated amortisation and impairment
a) Reconciliation of movements in intangible assets
Balance at 1 July 2014
Additions
Amortisation expense
Balance at 30 June 2015
Additions
Impairment expense
Amortisation expense
Balance at 30 June 2016
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
2016
$
2015
$
216,029
216,029
118,909
118,909
2016
$
2015
$
1,170,348
(790,202)
380,146
929,427
(44,626)
884,801
Research &
Development
$
-
929,427
(44,626)
884,801
240,921
(661,598)
(83,978)
380,146
39
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 12: PROPERTY, PLANT AND EQUIPMENT
Plant and Equipment – at cost
Less: Accumulated Depreciation
a) Reconciliation of movements in plant and equipment.
Balance at 1 July 2014
Additions
Depreciation expense
Balance at 30 June 2015
Additions
Depreciation expense
Balance at 30 June 2016
NOTE 13: TRADE AND OTHER PAYABLES
Current:
Trade payables (1)
Accruals
Share monies received in advance (2)
Total Trade and Other Payables
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
2016
$
2015
$
7,241
(389)
6,852
-
-
-
Plant and
equipment
$
Total
$
-
-
-
-
7,241
(389)
6,852
-
-
-
-
7,241
(389)
6,852
2016
$
2015
$
225,195
313,435
-
538,630
207,459
-
348,334
555,793
Trade payables are non-interest bearing and are normally settled on 30-day terms.
(1) – Included within trade payables is $44,483 payable to Mr Timothy Levy as a result of payments made on
behalf of the Company. Refer to Note 25 (b): Loans with Key Management Personnel for further details.
(2) – relates to share monies which were received in the prior year for shares issued during financial year 30 June
2016.
40
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 13: BORROWINGS
Current:
Convertible notes
Total Borrowings
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
2016
$
2015
$
1,430,000
581,729
-
555,793
In order to meet its short term working capital needs, the Company issued 1,430,000 Convertible notes with a face
value of $1.00 each during the months of March 2016 – June 2016. The notes are interest free for a period of 6
months and a maturity date of 18 months from their date of issue.
Interest on the Convertible notes accrues 6 months after their issue at a rate of 10% p.a.
Subsequent to year end, the Company completed its initial public offering and was admitted for Official Quotation
on the ASX on 29 August 2016. All convertible notes on issue were converted into 13,758,927 shares and
2,593,750 attaching options.
NOTE 15: ISSUED CAPITAL
Issued Ordinary Shares - no par value (fully paid)
Total
Opening balance – 1 July 2014
Issue of 30,879,587 shares on 11th August 2014
Issue of 1,421,293 shares on 15th September 2014
Issue of 1,640,833 shares on 8th October 2014
Issue of 295,211 shares on 19th March 2015
Issue of 102,375 shares on 26th March 2015
Issue of 574,188 shares on 27th June 2015
Cost of shares issued
Closing balance – 30 June 2015
Issue of 7,474,361 shares on 13th January 2016
Issue of 5,825,390 shares on 5th May 2016
Issue of 800,000 shares on 11th May 2016
Selective share buy back on 16th June 2016
Consolidation on a 1:1.914 basis on 16th June 2016
Costs of shares issued
Closing balance – 30 June 2016
The Company has unlimited authorised capital.
There are no restrictions on distributions of dividends or repayment of capital.
2016
Number of
Shares
16,000,029
16,000,029
Number of
Shares
2015
Number of
Shares
34,913,488
34,913,488
$ Value
1
1
30,879,587
1,421,293
1,640,833
295,211
102,375
574,188
-
34,913,488
7,474,361
5,825,390
800,000
(18,389,653)
(14,623,557)
-
16,000,029
883,265
120,810
139,471
59,042
20,475
114,838
(26,284)
1,311,618
574,371
750,078
80,000
(1,195,207)
-
(87,143)
1,433,717
41
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 15: ISSUED CAPITAL (CONTINUED)
Capital Management
When managing capital, the Board’s objective is to ensure the Company continues as a going concern as well as
to maximise the returns to shareholders and benefits for other stakeholders. The Board also aims to maintain a
capital structure that ensures the lowest cost of capital available to the Company.
The Board is constantly reviewing the capital structure to take advantage of favourable costs of capital or high
returns on assets. As the market is constantly changing, the Board may issue new shares, return capital to
shareholders or sell assets to reduce debt.
The Company was not subject to any externally imposed capital requirements during the year.
NOTE 16: RESERVES
Performance Shares
Options
Total Reserves
Issued Options
Opening balance – 1 July 2014
Closing balance – 30 June 2015
20 May 2016 – Issue of incentive options
Closing balance – 30 June 2016
Performance shares
Opening balance – 1 July 2014
Closing balance – 30 June 2015
16 June 2016 – Issue of performance shares
Closing balance – 30 June 2016
2016
$
1,195,207
410,141
1,605,348
2016
No.
-
-
4,000,000
17,974,709
2016
No.
-
-
28,000,000
28,000,000
2015
$
-
-
-
2015
$
-
-
410,141
410,141
2015
$
-
-
1,195,207
Nature and Purpose of Reserve
The share based payment reserve records the value of options and performance shares issued to the Company’s
directors, employees, and third parties. The value of the amount disclosed during the year 2016 reflects the value
of options and performance shares issued by the Company.
42
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 17: ACCUMULATED LOSSES
Accumulated Losses
Opening balance
Net loss for the financial year
Total Accumulated Losses
* See Note 28 for details regarding the restatement as a result of this error
NOTE 19: OPERATING CASH FLOW INFORMATION
Reconciliation of cash flow from operations with loss after income tax
Loss for the year
Non-cash items
Impairment
Share based payments
Depreciation
Changes in Assets and Liabilities
Increase / (Decrease) in Trade and Other Payables
(Increase)/ Decrease in Inventory
(Increase)/ Decrease in Trade and Other Receivables
Increase)/ (Decrease) in income tax payable
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
2016
$
2015
Restated *
$
(3,643,014)
(172,459)
(747,234)
(2,890,780)
(3,643,014)
(172,459)
(574,775)
(747,234)
2016
$
2015
$
(2,815,607)
(654,948)
690,041
817,480
84,367
285,076
(125,563)
(3,681)
(80,173)
-
-
42,733
(393,744)
(118,909)
(18,714)
80,173
Cash flows used in operations
(1,148,060)
(1,063,409)
NOTE 20: AUDITOR’S REMUNERATION
The auditor of Family Zone Cyber Safety Limited
Amounts received or due and receivable by Pitcher Partners for:
Pitcher Partners BA&A Pty Ltd - Audit and review services
Non-audit services – Investigating Accountants Report
Pitcher Partners (WA) Pty Ltd – Taxation
Total remuneration of Pitcher Partners BA&A Pty Ltd and related firms
Other auditors
Amounts received or due and receivable by DM Advisory for:
Audit and review services
Total auditors’ remuneration
2016
$
2015
$
16,000
15,000
2,000
33,000
10,550
42,50
-
-
-
3,960
3,960
43
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 21: SHARE BASED PAYMENTS
Share based payments made during the year ended 30 June 2016 are summarised below.
(a) Recognised Share Based Payment Expense
Incentive options issued during the year (b)
Shares issued to consultants in lieu of services provided (1)
Shares issued to employees as incentive (2)
2016
$
410,141
349,449
90,000
849,590
2015
$
-
205,598
-
205,598
(1) – The Company issued 888,058 shares (2015: 576,827) on a post share-consolidation basis to various
consultants as payment for services they provided during the year. The value assigned to these
payments has been made with reference to the fair value of their services provided or in comparison to
recent capital raising activities and issue price at the time of their settlement.
(2) – 470,217 shares on a post consolidation basis were provided to employees of the Company under the
Employee incentive scheme in place at the time. The fair value assigned to these shares has been made
with reference to the Company’s recent capital raising activities at the time of the issue.
(b) Options Granted During the Year
The Company granted the following incentive options to Directors and Consultants in the year ended 30 June
2016:
Tranche Number of
Options
Issued
Issue
Date
Vesting
Date
Expiry
Date
Exercise
Price
Total Value
Recipient
A
4,000,000
20 May
2016
20 May
2016
20 May
2019
$0.25
$410,141(1)
Directors &
consultants
(1) As the options were issued prior to listing, the Company determined the most appropriate value using the
Black Scholes Model
Number of Options
Underlying share price
Exercise price
Expected volatility
Expiry date (years)
Expected dividends
Risk free rate
Value per option
4,000,000
$ 0.20
$ 0.25
90%
2.85
Nil
1.63%
$ 0.1025
These incentive options were issued for services provided and pursuant to the Director appointments. Refer to
section E of the Remuneration Report for details of incentive options issued to Directors. Further details can be
found within the Company’s Prospectus dated 12 July 2016.
44
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 23: SEGMENT INFORMATION
Segment information has been prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company. The
Board reviews the Company’s primary business segment being the development of the Cyber Safe Technology (Box Services) separately from its corporate
undertakings (Corporate). The Company therefore operates in two segments being Box services & Corporate.
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
Segment income
Sales Revenue
Other income
Total income
Segment expenses
Impairment of intangibles
Operating expenses
Employee expenses
Marketing
Research & Development
Other
Share based payment
expenses
Loss before depreciation
Depreciation
Loss before income tax
Box Services
Corporate
Total
2016
2015
2016
2015
2016
2015
5,532
-
5,532
(690,041)
-
-
(7,685)
(908,855)
-
-
(1,601,049)
(84,367)
(1,685,416)
-
-
-
-
438,590
438,590
-
-
-
(15,683)
(541,943)
-
-
(548,127)
(42,733)
(590,860)
-
(577,061)
(559,725)
-
-
(27)
(512,141)
(1,210,364)
-
(1,210,364)
-
97,860
97,860
-
(35,885)
(30,000)
-
-
(6,391)
-
25,584
-
25,584
5,532
438,590
444,122
(690,041)
(590,067)
(546,139)
(7,685)
(908,855)
(27)
(512,141)
(2,811,413)
(84,367)
(2,895,780)
-
97,860
97,860
-
(35,885)
(30,000)
(15,683)
(541,943)
(6,391)
-
(532,042)
(42,733)
(574,775)
45
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 23: SEGMENT INFORMATION (CONTINUED)
Box Services
Corporate
Total
Segment assets and liabilities
Cash
Trade and other receivables
Inventory
Plant and equipment
Trade and other creditors
Deferred taxes
Intangibles
Borrowings
Net assets
2016
2015
2016
2015
2016
2015
-
-
-
-
720,227
41,427
78,721
37,746
720,227
41,427
78,721
37,746
216,029
118,909
-
-
216,029
118,909
-
-
6,851
-
6,851
-
-
-
(538,631)
(555,793)
(538,631)
(555,793)
-
-
-
(80,173)
-
(80,173)
380,145
884,801
-
-
380,145
884,801
-
-
(1,430,000)
-
(1,430,000)
-
596,174
1,003,710
(1,200,126)
(519,499)
(603,952)
484,211
46
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 24: FINANCIAL INSTRUMENTS
(a)
Financial Risk Management Objectives and Policies
The Company’s principal financial instruments comprise cash, receivables, and payables.
Primary responsibility for identification and control of financial risks rests with the Board. The Board reviews and
agrees policies for managing each of the risks identified.
The Company manages its exposure to key financial risks, including interest rate, credit and liquidity risks in
accordance with the Company’s risk management policy. The primary objective of the policy is to reduce the
volatility of cash flows and asset values arising from such movements.
The Company uses different methods to measure and manage the different types of risks to which it is exposed.
These include monitoring the levels of exposure to interest rate risk, ageing analysis and monitoring of credit
allowances to manage credit risk and the use of future cash flow forecasts to monitor liquidity risk.
(b) Significant Accounting Policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis
of measurement and the basis on which income and expenses are recognised, with respect to each class of
financial asset, financial liability and equity instrument are disclosed in Note 3 to the financial statements.
(c) Categorisation of Financial Instruments
Details of each category in accordance with Australian Accounting Standard AASB 139 Financial Instruments:
Recognition and Measurement, are disclosed either on the face of the Statement of Financial Position or in the
notes.
(d) Credit Risk
(i)
Exposure to Credit Risk
The carrying amount of the Company’s financial assets represents the maximum credit exposure. The
Company’s maximum exposure to credit risk at the reporting date was:
Financial Assets - Current
Cash and cash equivalents
Total Financial Assets
Financial assets as at 30 June 2016 are neither past due nor impaired.
2016
$
2015
$
720,227
720,227
78,721
78,721
47
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 24: FINANCIAL INSTRUMENTS (CONTINUED)
(ii)
Interest Rate Risk
The Company’s maximum exposure to interest rates at the reporting date was:
Range of
Effective Carrying
Amount
Interest
Rate
(%)
$
0 – 1
720,227
2016
Financial Assets - Current
Cash and cash equivalents
2015
Financial Assets - Current
Cash and cash equivalents
0 – 1
78,721
(e)
Fair value of Financial Instruments
Interest Rate Exposure
Variable
Interest
Rate
$
Non
Interest
Bearing
$
Fixed
Interest
Rate
$
Total
$
-
-
-
-
720,227
720,227
78,721
78,721
The directors consider the carrying amount of the Company’s financial instruments to be a reasonable
approximation of their fair value, on account of their short maturity cycle.
(f)
Liquidity Risk
(i)
Exposure to Liquidity Risk
The carrying amount of the Company’s financial liabilities represents the maximum liquidity risk. The Company’s
maximum exposure to liquidity risk at the reporting date was:
Financial Liabilities - Current
Trade and other payables
Borrowings
Total Financial Liabilities
2016
$
2015
$
581,729
1,430,000
1,955,044
702,902
-
702,902
48
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 24: FINANCIAL INSTRUMENTS (CONTINUED)
(ii) Contractual Maturity Risk
The following table discloses the contractual maturity analysis at the reporting date:
2016
Financial
Instrument
Financial Assets
Cash
Trade and other
receivables
Total financial
assets
Financial
Liabilities
Trade and other
payables
Borrowings
Total financial
liabilities
2015
0-6 months
$
6-12 months
$
More than 5
years
$
Over 1
to 5
years
$
720,227
41,427
761,654
538,631
1,430,000
1,968,631
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial Instrument
0-6
months
$
6-12
months
$
Over 1 to 5
years
$
More than
5 years
$
Financial Assets
Cash
Trade and other
receivables
78,721
37,746
Total financial assets
116,467
Financial Liabilities
Trade payables
Other payables
212,798
348,334
Total financial liabilities
561,132
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
720,227
41,427
761,654
538,631
1,430,000
1,968,631
Total
$
78,721
37,746
116,467
212,798
348,334
561,132
The Board notes a shortfall in cash to meet the obligation of the financial liabilities over the next 12 months.
Subsequent to year end, the Company completed a capital raising of over $6,000,000. Refer to Note 2(a): Going
Concern for further details.
49
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 24: FINANCIAL INSTRUMENTS (CONTINUED)
(g) Market Risk
(i)
Currency Risk
The Company’s primary operations were in Australia during the years ended 30 June 2016 and 30 June 2015
and therefore had minimal exposure to foreign exchange risk.
(ii)
Interest Rate Risk
The Company’s only exposure to interest rate risk is Cash as set out in Note 24(e)(ii). The Company is not
exposed to debt interest rate risk as there is nil debt for 2016 (2015: no exposure as borrowings bear interest at a
fixed rate).
(iii) Other Price Risk
By virtue of the nature and classification of the financial instruments held by the entity, it is not exposed to
significant other price risk.
(iv) Sensitivity Disclosure Analysis
Taking into account past performance, future expectations and economic forecasts, the Company believes the
following movements are ‘reasonably possible’ over the next 12 months (base rates are sourced from the
Reserve Bank of Australia).
It is considered that 100 basis points is a ‘reasonably possible’ estimate of potential variations in the interest rate.
The following table discloses the impact on net operating result and equity for each category of financial
instrument held by the Company at year end as presented to key management personnel, if changes in the
relevant risk occur.
2016
Financial Assets - Current
Cash and cash equivalents
2015
Financial Assets - Current
Cash and cash equivalents
Carrying
Amount
$
Interest Rate Risk
+1%
-1%
Profit
$
Equity
$
Profit
$
Equity
$
720,227
7,202
7,202
(7,202)
(7,202)
78,721
787
787
(787)
(787)
50
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 25: RELATED PARTY TRANSACTIONS
(a) Key Management Personnel Compensation
Information on remuneration of all Directors and Key Management Personnel is contained in the Remuneration
Report within the Directors’ Report.
The aggregated compensation paid to Directors and Key Management Personnel of the Company is as follows:
Short-term employee benefits
Post-employment benefits
Share Based Payment
Total
(b)
Loans with Key Management Personnel
(Mr Tim Levy – Managing Director)
2016
$
2015
$
40,000
-
658,750
698,750
30,000
-
-
30,000
A loan balance has arisen between Family Zone Cyber Safety Limited and Mr Tim Levy as a result of payments
made on behalf of the Company by the Director. Movements in the loan account during the year are as follows:
Opening balance payable by the Company
Loans received from director
Cash repayments
Total Payable to the Company
2016
$
2015
$
-
(67,143)
23,000
(44,483)
-
-
-
-
51
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 25: RELATED PARTY TRANSACTIONS (CONTINUED)
(c) Other Transactions with Key Management Personnel
a) Grange Consulting and Grange Capital Partners
Mr Phil Warren, a Director of the Company, is also a director of Grange Consulting and an entity related to him is
shareholder of Grange Consulting. Grange Capital is an entity associated with Grange Consulting.
Grange Consulting was engaged by the Company in June 2014 to provide company secretarial services.
Pursuant to this engagement Grange Consulting received $2,000 (plus GST) per month for these services. An
administration fee of 5% is also payable on each invoice. This engagement can be terminated by either party
giving 60 days’ notice in writing.
Grange Capital also received capital raising fees from the Company for assisting in its Convertible Note capital
raising during the financial year. Grange Capital received a 0.05% management fee for the Convertible Note fund
raising and 4.0% capital raising fee on funds raised by Grange Capital.
A summary of the total fees paid to Grange Consulting and Grange Capital Partners for the year ended 30 June
2016 and 30 June 2015 is as follows:
Company secretarial services
Capital raising fee
Total
30 June 2016
$
30 June 2015
$
19,825
6,300
26,125
25,200
-
25,200
1. Amounts payable to Grange Consulting and Grange Capital as at 30 June 2016 were $15,625 (GST Exc.)
The Company also engaged Grange Consulting to provide corporate advisory and transaction management
services in respect to the Offers under this Prospectus. Grange Consulting will receive the following fees from the
Company for these services:
a $75,000 (plus GST) transaction management fee; and
$50,000 (plus GST) success fee payable on successful admission of the Company to the Official List of
the ASX.
Grange Consulting or its nominees has the right to apply for and/or with Grange Capital allocate up to 2,500,000
Prospectus Options under the Option Offer.
The above mentioned corporate advisory fees were not paid during the current financial year.
Following the Company’s admission to ASX in August 2016 it was agreed that Grange Consulting would continue
to provide company secretarial services and will also provide financial management services to the Company and
will receive $7,500 (plus GST) per month. An administration fee of 5% is also payable on each invoice. This
engagement can be terminated by either party giving 60 days notice in writing.
52
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 26: EVENTS OCCURRING AFTER THE REPORTING PERIOD
Following the end of the financial year the Company lodged and an initial public offering Prospectus dated 12
July 2016 and Supplementary Prospectus dated 26 July 2016 with ASX and ASIC for the issue of up to
30,000,000 Shares at an issue price of $0.20 to raise $6,000,000 as well as an offer of 7,500,000 Options (with
an exercise price of $0.25 and expiry date of 29 August 2019) at an issue price of $0.005 to raise a further
$37,500 (together Offers). The Offers were closed heavily oversubscribed with the Company raising $6,037,500
and being admitted to the Official Quotation on ASX on 29 August 2016.
On completion of the Company’s initial public offering on ASX, 1,430,000 Convertible Notes on issue at 30 June
2016 were converted into 13,758,927 Shares and 2,593,750 Attaching Options. The Company also issued
718,750 shares to Fidelio Partners in July 2016 pursuant to the Fidelio Agency Agreement following the receipt of
a purchase order from a leading mobile carrier in South East Asia.
On 19th September 2016, the Company issued 3,880,958 Unlisted Options (exercise price of $0.33, expiry 19
September 2019) to employees of the Company pursuant to the Company’s Employee Share Option Plan.
-
-
-
25% of options will vest and become exercisable upon the Company having 20,000 paying subscribers
registered by 31 December 2017.
25% of options will vest and become exercisable upon the Company having 30,000 paying subscribers
registered by 31 December 2017.
25% of options will vest and become exercisable upon the Company achieving $10,000,000 of customer
revenue in any financial years ended 30 June 2017, 2018 or 2019.
Apart from the events discussed above, no other matters or circumstances have arisen since the end of the
financial year which significantly affected or may significantly affect the operations of the Company, the results of
those operations or the state of affairs of the Company in subsequent financial years
NOTE 27: CONTINGENT LIABILITIES
The Directors are not aware of any contingent liabilities that may arise from the Company’s operations as at 30
June 2016.
NOTE 28: RESTATEMENT OF COMPARATIVES
Correction of Errors
Issued Capital – Year ending 30 June 2015
The financial statement for the year ended 30 June 2015 included issued capital for shares that were at that date
unissued. The monies received in advance should have been classified as another payable balance.
The financial statement for the year ended 30 June 2015 also did not take into account the deferred tax position
of the entity.
The effect of this error on the comparative period is as follows:
- As at 30 June 2015, the issued capital of the Company was overstated by $153,978.
- As at 30 June 2015, the current liabilities balance of the Company was understated by $201,225.
- As at 30 June 2015, the current assets balance of the Company was understated by $37,746.
- As at 30 June 2015, the deferred tax liability of the Company was understated by $80,173
- For the year ended 30 June 2015, the loss for the year before tax was understated by $9,501
- For the year ended 30 June 2015, the loss for the year after tax was understated by $89,674
- Basic and Diluted Earnings Per Share as at 30 June 2015 has been restated from a loss per share of 2.30
cents to 2.66 cents.
The effect of this error on the financial period is reflected over page.
53
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
NOTE 28: RESTATEMENT OF COMPARATIVES (CONTINUED)
STATEMENT OF FINANCIAL POSITION - ADJUSTED
As at 30 June 2016
ASSETS
Current Assets
Cash and cash equivalents
Trade & other receivables
Inventory
Total Current Assets
Non-Current Assets
Intangibles
Plant and equipment
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Total Current Liabilities
Non-Current Liabilities
Deferred tax
Total Non-current Liabilities
TOTAL LIABILITIES
Note
Restated
2015
$
Adjustment
2015
$
2015
$
9
10
11
12
13
78,721
37,746
118,909
235,376
884,801
-
884,801
1,120,177
555,793
555,793
80,173
80,173
635,996
-
37,746
-
37,746
-
-
-
37,746
78,721
-
118,909
197,630
884,801
-
884,801
1,082,431
201,225
201,225
354,568
354,568
80,173
80,173
281,398
-
-
354,568
NET ASSETS/(LIABILITIES)
484,211
(243,652)
727,863
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY/(DEFICIT)
15
16
17
1,311,618
-
(827,407)
484,211
(153,978)
-
(89,674)
(243,652)
1,465,596
-
(737,734)
727,863
54
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
DIRECTORS’ DECLARATION
In the Directors’ opinion:
(a)
the accompanying financial statements set out on pages 23 to 54 and the Remuneration Report in the
Directors’ Report are in accordance with the Corporations Act 2001, including:
i.
ii.
giving a true and fair view of the Company’s financial position as at 30 June 2016 and of its
performance, as represented by the results of its operations, changes in equity and cash flows, for
the year ended on that date; and
complying with Australian Accounting Standards, Corporations Regulations 2001 and other
mandatory professional reporting requirements;
(b)
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
the financial statements and notes thereto are in accordance with International Financial Reporting
Standards issued by the International Accounting Standards Board.
This declaration is made after receiving the declarations required to be made to the Directors in accordance with
section 295A of the Corporations Act 2001 for the year ended 30 June 2016.
This declaration is made in accordance with a resolution of the Board of Directors.
On behalf of the Directors
29 September 2016
55
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF
FAMILY ZONE CYBER SAFETY LIMITED
Report on the Financial Report
We have audited the accompanying financial report of Family Zone Cyber Safety Limited, which comprises
the statement of financial position as at 30 June 2016, the statement of comprehensive income, statement
of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors’ declaration for the
company at the year's end.
Directors’ Responsibility 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 Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of
Financial Statements, that the financial statements comply with International Financial Reporting
Standards.
Auditor's Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor's judgement, including the assessment of
the risks of material misstatement of the financial report, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control relevant to the company’s preparation of the
financial report that gives a true and fair view in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act
2001.
56
An Independent Western Australian Company ABN 76 601 361 095Registered Audit Company Number 467435Liability limited by a scheme approved under Professional Standards LegislationPitcher Partners is an association of Independent firms Melbourne | Sydney | Perth | Adelaide | Brisbane | Newcastle
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF
FAMILY ZONE CYBER SAFETY LIMITED
Opinion
In our opinion:
(a)
the financial report of Family Zone Cyber Safety Limited is in accordance with the Corporations Act
2001, including:
(i)
giving a true and fair view of Company's financial position as at 30 June 2016 and of its
performance for the year ended on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 2.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 11 to 21 of the directors' report for the year
ended 30 June 2016. 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.
Opinion
In our opinion, the Remuneration Report of Family Zone Cyber Safety Limited for the year ended 30 June
2016, complies with section 300A of the Corporations Act 2001.
PITCHER PARTNERS BA&A PTY LTD
PAUL MULLIGAN
Executive Director
Perth, 29 September 2016
57
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
ASX ADDITIONAL INFORMATION
Additional information required by the ASX Listing Rules not disclosed elsewhere in this Annual Report is set out
below.
1.
Number of holders and voting rights of each class of equity securities
The issued capital of the Company as at 21 September 2016 includes the following securities:
Fully paid ordinary shares
Equity Class
Unlisted Incentive Options ($0.25,20 May 2019)
Unlisted Options ($0.25, 29 Aug 2019)
Unlisted Employee Options ($0.33, 19 Sept 2019)
Performance Shares
Number of holders
558
5
59
23
4
Total on issue
61,977,706
4,000,000
10,093,750
3,880,958
28,000,000
All issued fully paid ordinary shares (Shares) carry one vote per share. An Unlisted Option or Performance
Share does not entitle the holder to vote on any resolution proposed at a general meeting of Shareholders.
2.
Substantial holders in the Company
Substantial Shareholder
Timothy Nominees Pty Ltd
Number of Shares held
% of Total Shares
5,801,118
9.36%
3.
a)
Distribution of equity securities as at 21 September 2016
Fully paid ordinary 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
Holders Total Shares % Total Shares
2
27
36
356
118
539
660
81,409
344,220
17,298,183
44,253,234
61,977,706
0.00%
0.13%
0.56%
27.91%
71.40%
100.00%
There were 4 holders with less than a marketable parcel of Shares based on the closing share price of $0.31 on
21 September 2016.
b)
Unlisted Incentive Options ($0.25, 20 May 2019)
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Totals
Total
Incentive
Options
% Total
Incentive
Options
Holders
-
-
-
-
5
5
-
-
-
-
-
-
-
-
4,000,000
4,000,000
100.00%
100.00%
58
ASX ADDITIONAL INFORMATION
c)
Unlisted Options ($0.25, 29 Aug 2019)
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Totals
d)
Employee Options ($0.33, 19 Sept 2019)
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Totals
4.
Top 20 Shareholder as at 21 September 2016
Shareholder Name
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
Holders
-
-
2
36
21
59
Total Options % Total Options
-
-
0.15%
19.07%
80.77%
100.00%
-
-
15,626
1,925,000
8,153,125
10,093,751
Total
Employee
Options
-
-
-
477,271
3,403,687
3,880,958
Holders
-
-
-
6
17
23
% Total
Employee
Options
-
-
-
12.30%
87.70%
100.00%
ICE COLD INVESTMENTS PTY LTD
TIMOTHY NOMINEES PTY LTD
TRIGGER ASSETS PTY LTD
FRESHIE PTY LTD
1
2
3
4 NOVALANE COM PTY LTD
5 RICHARD ARMSTRONG CALDOW
6 BRISPOT NOMINEES PTY LTD
7 MCCUSKER HOLDINGS PTY LTD
8
9 UBS NOMINEES PTY LTD
10 GASMERE PTY LTD
11 ACNS CAPITAL MARKETS PTY LTD
12 SEVENTY THREE PTY LTD
13 FIDELIO PARTNERS PTE LTD
14 THREE ZEBRAS PTY LTD
15 SESTON GROUP PTY LTD
16
17 TR NOMINEES PTY LTD
17 BRESRIM NOMINESS PTY LTD
17 HAWTHORN GROVE INVESTMENTS PTY LTD
17 SISU INTERNATIONAL PTY LTD
17 SHADWICK NOMINEES PTY LTD
18 YELWAC PTY LTD
19 PERSHING AUSTRALIA NOMINEES PT Y LTD
JAKANA PTY LTD
Number of
Shares
5,801,118
2,011,309
1,891,190
1,848,018
1,371,429
1,092,492
1,000,000
992,289
907,508
900,000
880,000
728,571
718,750
700,000
614,674
550,000
500,000
500,000
500,000
500,000
500,000
457,730
430,390
% Total
Shares
9.36%
3.25%
3.05%
2.98%
2.21%
1.76%
1.61%
1.60%
1.46%
1.45%
1.42%
1.18%
1.16%
1.13%
0.99%
0.89%
0.81%
0.81%
0.81%
0.81%
0.81%
0.74%
0.69%
59
ASX ADDITIONAL INFORMATION
20 ALBATROSS PASS PTY LTD
TOTAL TOP 20 SHAREHOLDERS
TOTAL ISSUED CAPITAL
5.
Restricted Securities
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
420,956
25,816,424
61,977,706
0.68%
41.65%
100.00%
The following securities as classified as restricted securities and are subject to escrow periods as outlined below
Security
Shares
Incentive Options ($0.25, 20 May 2019)
Attaching Options ($0.25, 3 years from Quotation)
Prospectus Options ($0.25, 3 years from Quotation)
Total Options
Class A Performance Shares
Class B Performance Shares
Class C Performance Shares
Total Performance Shares
12 months from
date of issue
4,652,1411
-
2,593,751
4,151,250
6,745,001
-
-
-
-
24 months from
date of Quotation
13,233,637
4,000,000
-
3,348,750
7,348,750
9,333,334
9,333,333
9,333,333
28,000,000
Note:
1. These Shares were issued to unrelated parties on conversion of the Company’s Stage 1 Convertible Notes and are
subject to ASX escrow for 12 months from the date of issue of the Stage 1 Convertible Notes.
6.
Unquoted Securities
The names of the security holders holding more than 20% of an unlisted class of security are listed below:
a)
Unlisted Incentive Options ($0.25, 20 May 2019)
Holder Name
John Sims
Total Incentive Options
Holding
1,500,000
4,000,000
% Total Incentive
Options
37.50%
100.00%
b)
Performance Shares
Holder Name
Timothy Nominees Pty Ltd
Freshie Pty Ltd
Total
7.
On-market buy back
Class A
Performance
Shares
Class B
Performance
Shares
Class C
Performance
Shares
Total
Performance
Shares
% of Total
Performance
Shares
3,878,611
3,878,610
3,878,610
11,635,831
41.56%
2,205,384
2,205,383
2,205,383
6,616,150
23.63%
28,000,000
100.00%
There is currently no on-market buyback program for any of the Company’s listed securities.
60
Family Zone Cyber Safety Limited
Annual Report 30 June 2016
CORPORATE GOVERNANCE
Corporate Governance Statement
The Company’s corporate governance statement can be found at the following URL:
https://www.familyzone.com/hubfs/docs/Corporate_Governance_Statement_-
Family_Zone_30_June_2016.pdf?t=1475120075817
The Board of Directors is responsible for the corporate governance of the Company. The Board guides and
monitors the business and affairs of the Company on behalf of Shareholders by whom they are elected and to
whom they are accountable.
This statement outlines the main corporate governance practises in place throughout the financial year, which
comply with the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations
with 2014 Amendments 3rd edition unless otherwise stated.
61