FAMILY ZONE CYBER SAFETY LIMITED
APPENDIX 4E
FAMILY ZONE CYBER SAFETY LIMITED
ACN 167 509 177
APPENDIX 4E
GIVEN TO THE ASX UNDER LISTING RULE 4.3A
Reporting Period
Financial year end
Previous corresponding reporting period
Results for Announcement to Market
30 June 2019
$
30 June 2018
$
30 June 2019
30 June 2018
% increase/
(decrease)
over
corresponding
period
Revenue from ordinary activities
4,184,323
2,329,780
80%
Profit/(Loss) after from ordinary activities
tax attributable to members
Net profit/(loss) for the period attributable
to members
(14,401,137)
(18,206,211)
(21)%
(14,416,110)
(18,194,548)
(21)%
Dividends
No dividends have been declared or paid during the year ended 30 June 2019. The Directors do
not recommend the payments of a dividend in respect of the year ended 30 June 2019.
The Company does not have any dividend reinvestment plan in operation.
Explanation of Results
Throughout the year the Group continued to develop and refine the commercialisation strategy for
its suite of cyber safety product. The Group reported strong growth in customer sales with
material contribution from all three distribution channels being consumer, education and
wholesale. The education business in particular contributed strongly to revenue growth during
the year, with significant uptake seen in the US education market. The Group reported operating
revenues of $4.18 million for the current financial year representing an 80% increase from the
prior year.
The Group continued to invest in the development of a new products as well as undertaking a
number of major product enhancements to continually upgrade and improve the features of its
existing products, create new revenue streams and optimise its customer acquisition strategy.
Family Zone’s continued investment in R&D activities during the year, resulted in the Group
1
FAMILY ZONE CYBER SAFETY LIMITED
APPENDIX 4E
receiving government grant income of approximately $3.83 million resulting in total revenue and
other income for the year of approximately $8.03 million1.
Employee and director remuneration was a key expenditure item for the financial year being
approximately $6.13 million. During the year the Group invested in the establishment an
experienced sales and delivery team to drive growth in the US education market.
Non- cash share based payments to employees and consultants during the period were
approximately $1.93 million. These equity incentives are designed to ensure employee and
consultants interests were closely aligned with the achievement of the Group’s operational and
financial targets and also to reduce cash payments as part of the Group’s commitment to reduce
cash overheads and bring forward the achievement of cash flow breakeven. Another significant
non-cash expenditure items was the depreciation and amortisation charge for the financial year of
approximately $4.50 million.
The Group reported a net loss attributable to members for the period of approximately
$14.40 million.
Net Tangible Assets per Security
Net Tangible Asset/(Liabilities) per share
30 June 2019
30 June 2018
Net tangible assets/ (liabilities) (cents per share)
1.96
(1.89)
Controlled entities
The Company did not gain or lose control over any entities during the financial period. The
Company’s controlled entities as at 30 June 2019 are outlined below.
Controlled entities
Family Zone Inc.
Family Zone Cyber Safety Pte. Ltd.
Family Zone NZ Cyber Safety Ltd
(formerly Linewize Services Ltd)
Country of
Incorporation
USA
Singapore
Date of incorporation /
acquisition
9 September 2016
2 June 2017
New Zealand
29 November 2017
The Group did not have any associates or joint ventures during the period.
Earnings/(loss) per Share
Loss per share
30 June 2019
30 June 2018
Basic and diluted loss per share (cents per share)
(9.07)
(17.35)
Audit
This Appendix 4E is based on the audited financial statements for the year ended 30 June 2019.
1 Excluding gain on contingent consideration revaluation
2
FAMILY ZONE CYBER SAFETY LIMITED
APPENDIX 4E
The Independent Audit Report included an emphasis of matter highlighting matters that indicate
the existence of a material uncertainty that may cast significant doubt about the Group’s ability to
continue as a going concern.
Attachments
The Company’s audited Annual Financial Report for the year ended 30 June 2019 (‘Annual
Report’) is attached.
Additional Appendix 4E disclosure requirements can be found in the Annual Report which
contains a Review of Operations, the Directors Report and the 30 June 2019 Financial
Statements and accompanying notes including segment information in Note 24, events occurring
after the reporting period Note 30 and the Independent Auditor’s Report on page 74 of the Annual
Report.
3
ACN 167 509 177
ANNUAL REPORT
for the year ended 30 June 2019
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
CONTENTS
PAGE
CORPORATE INFORMATION .................................................................................................................................... 3
CHAIRMAN'S MESSAGE ............................................................................................................................................ 4
REVIEW OF OPERATIONS ........................................................................................................................................ 5
DIRECTORS’ REPORT ............................................................................................................................................. 10
DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) ............................................................................ 17
AUDITOR’S INDEPENDENCE DECLARATION ........................................................................................................ 29
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ..................... 30
CONSOLIDATED STATEMENT OF FINANCIAL POSITION .................................................................................... 31
CONSOLIDATED STATEMENT OF CHANGES OF EQUITY ................................................................................... 32
CONSOLIDATED STATEMENT OF CASH FLOWS ................................................................................................. 33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS .............................................................................. 34
DIRECTORS’ DECLARATION .................................................................................................................................. 73
INDEPENDENT AUDITOR’S REPORT………………………………………………………………………………………74
ASX ADDITIONAL INFORMATION ........................................................................................................................... 79
CORPORATE GOVERNANCE .................................................................................................................................. 85
2
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
CORPORATE INFORMATION
Directors
Tim Levy
John Sims
Crispin Swan
Phil Warren
Sir Peter Westmacott
Company secretary
Emma Wates
Managing Director
Non-executive Chairman
Executive Director - Sales
Non-executive Director
Non-executive Director
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
Level 5
126 Phillip Street
Sydney NSW 2000
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 11, 12-14 The Esplanade
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 2019
CHAIRMAN’S MESSAGE
Dear Fellow Shareholders,
I am pleased to present the 2019 Annual Report for Family Zone Cyber Safety Limited (ASX: FZO) (‘the Company’)
and its wholly owned subsidiaries (‘Family Zone’ or ‘the Group’), looking back on a year that has seen us deliver
strong growth in revenues, exciting product developments and new distribution partnerships with major telcos and
retailers.
We achieved an 80 per cent increase in operating revenue from customers in FY2019 compared to the previous
year, and total revenue and other income of $8.0 million1. During the year, we surpassed the 100,000 user
milestone, and at the end of the year had 134,000 customers on our books. We have achieved this growth across
all of our sales channels which supports and validates our product offerings and distribution strategies.
The education business has continued to be a key contributor to the Group’s revenue growth with the launch of our
expanded School Zone product during the year gaining immediate traction in the US and resulting in 270 US
schools being signed up during FY2019. We are excited about the opportunity presented by the US education
market, given the results achieved in a relatively short period, the large market size presented and the relatively low
customer acquisition costs.
During the year we launched a world first cyber safety phone the FZ ONE, a fully featured smartphone with built in
cyber safety. This product is now being distributed directly online and through major retails partnerships with
Woolworths in Australia and Noel Leeming in New Zealand. Another exciting product we launched in late FY2019
was SpotShield, which Family Zone has developed to address hotspotting.This one of the key IT challenges facing
schools today, that sees children bypassing school filtering systems. We have received an extremely positive
response to this product which is already live in a number of Australian schools.
We have continued to work closely with a number of our global telco partners on developing our mass customer
acquisition tool, “Insights”. Family Zone Insights is a free service leveraging the power of the Family Zone Platform
to provide valuable reporting, location tracking and alert services to parents. This product is now in the final stages
of product delivery and will be launched initially through our partnership with Telkomsel in Indonesia, before being
rolled out to our other telco partners globally.
I would like to thank and acknowledge the efforts and management and staff who have been committed to the
execution and delivery of our business strategy during what has been a productive 12 months.
We expect 2020 to be another dynamic and successful year, with a number of exciting opportunities for the Group
including the expansion of our education business into the US and the roll out of Insights across all our distribution
channels. We continue to target overhead reduction with our resources and investment focussed on scalability,
deployment and support arrangement in the large market of USA and Asia.
On behalf of the Board, I would like to thank shareholders for their continued support of the Group as we continue
to execute our commercialisation strategy for our globally scalable cyber safety ecosystem.
John J Sims
Chairman
1 Excludes gain on revaluation of contingent consideration
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Family Zone Cyber Safety Limited
Annual Report 30 June 2019
REVIEW OF OPERATIONS
Family Zone’s revenue continued to grow strongly
this financial year with material contributions from
each of its three sales channels (education,
wholesale and consumer). The Group reported
sales revenue from customers of $4.18 million for
the year ended 30 June 2019, representing an
80% increase from the prior financial year.
The Group also generated $3.83 million in R&D
grant funding (other income/revenue) during the
financial year as a
its continued
investment in the development of new products as
well as major upgrades to its existing products.
result of
is
revenue
Family Zone’s customer
largely
generated through recurring customer contracts
particularly with schools and parents. During the
year the Group signed more than $4.50 million of
contracted
is amortised and
recognised as accounting revenue over the service
delivery period.
revenue which
Excludes any gain on the revaluation of contingent consideration
Key operational highlights and achievements during the year ended 30 June 2019 included:
Education
o
o
reached 220 partner schools and 839 school clients globally at year end (including 402 schools in
the US);
launched School Manager in the US creating immediate sales traction and a strong sales pipeline;
and
o new product, SpotShield launched in late FY2019 to address “hotspotting” in schools.
Wholesale
o signed a reseller agreement with Woolworths Mobile;
o signed agreements with India’s largest two telcos, Vodafone India and Bharti Airtel, to resell Family
Zone in India; and
o successful trials undertaken with Telkomsel in Indonesia resulting in 65,000 subscribers being
signed in approximately 6 months.
Consumer
o grew direct customers by 106% year on year;
o Launch of the FZ ONE cyber safe mobile phone, a world-first initiative that has Family Zone’s
cyber safety controls embedded in a high-spec Android device; and
o signed a distribution deal with iconic retailer chain Woolworths in Australia and NZ leading retailer
Noel Leeming to distribute the FZ ONE.
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Family Zone Cyber Safety Limited
Annual Report 30 June 2019
REVIEW OF OPERATIONS
Education
Family Zone’s education business continued to contribute strongly to revenue growth during the financial year, with
school clients increasing 49% to 839 schools (from 563 schools in the prior year); and
student licences growing by 45% to 482,000 (from 332,000 in the prior year)
at the end of the current financial year.
Family Zone rebranded and expanded its School Zone Platform during the year with the Group rolling out this
significantly improved product to its existing and new customers in late 2018. This expanded offering provides
schools with an innovative firewall, filtering platform and classroom management tools. There was a rapid take up
(270 US schools being signed up during FY2019) of the new School Zone in US schools confirming product market
fit and saleability.
The US market was a strong contributor to the growth in the Group’s education business during the year, with 402
of its school clients being in the USA. The strong growth in the US education market this financial year has
resulted from the Group’s investment in and establishment of an experienced sales and delivery team in the
second half of 2018 calendar year. This team has driven the rapid growth in US school sign ups while building a
strong pipeline of opportunities with a number of new proof of concepts deployments live and performing well.
The US education market is large and strategically important for the Group. It is 10 times the size of the Australian
market with approximately 70,000 schools across 14,000 Public School Districts plus 30,000 independent private
schools and 55 million K-12 students.
Family Zone is confident that there will be continued and accelerating growth from its US education business.
Family Zone also entered the UK education market in March 2019 following an inbound inquiry from a UK based
edu-tech reseller. The Group has 5 schools in the UK operating through a reseller at commercial rates.
Significantly this was achieved with no incremental marketing spend and no requirement for the Group to employ
resources or establish a physical in-market presence.
New Product Launched - SpotShield
In June 2019, the Group launched a new innovative product called SpotShield targeted at managing “Hot Spotting”
in schools. Hotspotting is one of the key IT challenges in schools as it permits students to readily bypass school
filters risking school duty of care.
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Family Zone Cyber Safety Limited
Annual Report 30 June 2019
REVIEW OF OPERATIONS
Family Zone SpotShield puts schools back in control by ensuring all devices at school and during school time are
subject to a school's Acceptable Use Policy. School policy applies whether the device is connected to school Wi-Fi,
cellular networks or any 3rd party Wi-Fi services.
The Group has received an extremely positive response to this new product with SpotShield already live in a
number of Australian schools. SpotShield is providing new engagement and up-sale opportunities for the sales
team and is expected continue to drive growth in the education market.
Wholesale
Family Zone has secured multiple strategic partnerships with top tier telocs across Asia including:
Telkomsel in Indonesia which has in excess of 160m subscribers and is one of the largest mobile carriers
in the world. It is estimated to have over 10m child users;
Maxis Communications in Malaysia– with over 12m subscribers and an estimated 2m child users;
PLDT and Smart Communications in the Philippines - PLDT is Philippines main long-distance provider and
primarily a provider of business services. Smart is a leading mobile provider in the Philippines with over
60m subscribers and is estimated to have in excess of 8m child users;
Vodafone in India is India’s largest telecommunications company with circa 42% customer market share
and more than 430m subscribers; and
Bharti Airtel –in November 2018 Family Zone signed a Letter of Intent with Bharti Airtel India’s second-
largest telco, for the resale of Family Zone’s services in India. Bharti Airtel ranks within the top three
telcos globally and operates in 16 countries.
During the year Family Zone continued to work with its telco partners to develop and trial strategies to deliver to
customer and monetise cyber safety services. The Group has been working particularly closely with Telkomsel in
Indonesia to test alternative services, on boarding, marketing and sales strategies. These trials have achieved
significant take-up and are validating the strategies being developed.
The Group’s agreed strategy with its Asian telco partners is to implements its freemium, “Insights” led acquisition
strategy. Family Zone Insights is a free service leveraging the Family Zone platform to provide valuable reporting,
location tracking and alert services to parents. Under this go-to-market model “Insights” will be offered free for
telcos to re-brand and bundle with their customer offerings. This will allow the Group to cost-effectively identify,
connect and inform those parents who are the best candidates to up-sell the Family Zone premium service.
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Family Zone Cyber Safety Limited
Annual Report 30 June 2019
REVIEW OF OPERATIONS
Consumer
Family Zone’s direct to consumer business operates with a fixed marketing spend oriented to ‘back-to-school’
periods. The channel is growing consistently as Family Zone’s brand and reputation builds and offering develops.
World First Cyber Safety Mobile Phone
During the year, the Group launched the FZ ONE its own fully features smartphone with built in cyber safety. The
FZ ONE was built in consultation with major retailers and cyber safety experts to suit the needs and desires of
parents, schools and children.
For children: The FZ ONE has Android (Oreo) and is a high specification, high quality and great looking
device. There are no functional compromises or limitations on features, apps, social networks or gaming.
For parents: The FZ ONE has Family Zone deeply embedded into the operating system - it is incredibly
simple to set up, highly secure and cyber safe. As a fully featured Android device, parents can also add
family, social and gaming apps and can leverage all of Google’s services and functions.
For schools: The FZ ONE supports Family Zone’s innovative School Community features. Schools can
have confidence that FZ ONE devices are compliant with school policy.
The FZ ONE is distributed online through Family Zone direct and through partnerships signed during the year with
major retailers, Woolworths in Australia and Noel Leeming in New Zealand..
Soon after the launch of the FZ ONE in October 2018 the Company announced a landmark partnership for the FZ
One to be retailed through Woolworth supermarket locations nationwide and through Woolworths online. This
presented a significant milestone and validation of the market opportunity of the FZ ONE.
The partnership with Woolworths was extended in February 2019 with Woolworth’s Mobile also signing on as a
reseller of Family Zone’s subscription services to its customers and employees.
Noel Leeming is New Zealand’s leading consumer electronics retailer with 77 stores. Noel Leeming agreed to retail
the FZ ONE both in store and online from June 2019. The FZONE is the first child-friendly device in Noel
Leeming’s product range, which further validates the product fit and complex challenges Family Zone seeks to
solve in the “tech savvy” New Zealand market.
Other Operational Achievements
The Group continued its development of new products as well as major product advancements including:
Continued investment in the Group’s education solutions including significant upgrades of School Manager
(formerly Linewize platform);
Comprehensive upgrade of the user interface of Family Zone’s consumer solutions; and
Continued build-out of Family Zone’s client (i.e. installed) technologies, now supporting iOS, Android, PC,
MAC and Chromebook plus supporting man-in-the middle and full packet level inspection.
Cashflow breakeven acceleration plan
During the period, Family Zone initiated a program to bring forward the achievement of a cashflow breakeven
position. This program is targeting annualised cash cost savings of circa $4 million by 31 December 2019 through
8
REVIEW OF OPERATIONS
reductions in the Group’s overheads and costs of sale. This program is progressing and expected to be achieved.
This cash flow enhancement program has been strongly supported by the Board and senior executives who agreed
to receive securities in lieu of all, or part, of their cash salaries for 2019 calendar year.
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
Launch of Family Zone Insights
Family Zone’s focus for the next financial year is on scalability. The Group will deliver this through a significantly
streamlined approach to sales, deployment and support.
Key to this strategy is the introduction of Family Zone Insights, which will ultimately be a free monitoring tool:
Available for parents to download on their children’s devices;
Included free when schools install Family Zone technology on student devices;
Included free for telcos and device manufacturers to re-brand and bundle with their offerings; and
Included free for parents purchasing Family Zone hardware (i.e. the FZ ONE and Family Zone Box).
Under this go-to-market model, schools, telcos and device manufacturers become Family Zone’s distribution
partners, driving cyber safety messages and introducing the Group’s premium paid services to their constituents.
This strategy allows the Group to more cost-effectively identify, connect and inform those parents who are the best
candidates for the up-sell of the Family Zone premium services.
Family Zone’s telco partners are excited about introducing this “Insights-led” model, with several already working
with the Group to bundle the Family Zone Insights service (i.e. free to the customer) into their premium service
model.
9
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
DIRECTORS’ REPORT
Your Directors have pleasure in submitting their report together with the financial statements of Family Zone Cyber
Safety Limited (‘Company’) and its wholly owned subsidiaries (the ‘Group’ or ‘Family Zone’) for the financial year
ended 30 June 2019. 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
Mr John Sims
Managing Director
Non-executive Independent Chairman
Mr Crispin Swan
Executive Director – Sales
Mr Phil Warren
Non-executive Independent Director
Sir Peter Westmacott
Non-executive Independent Director
Appointed 8 October 2018
The Directors have been in office since the start of the year to the date of this report unless otherwise stated.
COMPANY SECRETARY
The following person held the position of Company Secretary at the end of the financial year:
Emma Wates
PRINCIPAL ACTIVITIES
Family Zone is a technology group focussed on cyber safety. Meeting a growing demand to keep kids safe online
and manage digital lifestyles, Family Zone has developed a unique ecosystem-based approach to cyber safety.
The Family Zone ecosystem is a platform from which cyber safety settings, advice, and support can be delivered
across any network and any device – offering a universal approach to cyber safety at home, at school and
anywhere in between. The innovation of the Family Zone ecosystem is that it not only supports the needs of
schools and parents but also that it also permits telos and device manufacturers to embed world’s-best practice
cyber safety into their offerings.
The principal activities of the Group during the period have been continued sales and distribution, marketing and
customer support of its suite of cyber safety products and services.
There have been no other significant changes in the nature of these activities during the financial year.
RESULTS
The Group reported total revenue and other income for the year ended 30 June 2019 of $9,199,917 (2018:
$5,047,879) with revenue from operations being $4,184,323 (2018: $2,329,780).
The net loss attributable to members of the Group for the year ended 30 June 2019 amounted to $14,401,137
(2018: loss $18,206,211).
REVIEW OF OPERATIONS
The operations of the Group during the financial period have focussed on the sales and marketing of its suite of
cyber safety products through its key distribution channels as well as the provision of ongoing customer support
services and continual improvement and upgrade of its services.
A review of the Group’s operations over the past financial year is outlined on pages 5 to 9 of the Annual Report.
10
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
DIRECTORS’ REPORT
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
There have been no significant changes in the state of affairs of the Group that occurred during the financial year
not otherwise disclosed in this report or the financial statements.
LIKELY DEVELOPMENTS
Other than as disclosed elsewhere in this report, there are no likely developments in the operations of the Group
that were not finalised at the date of this report.
ENVIRONMENTAL REGULATION
The Group 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.
EVENTS AFTER BALANCE DATE
On 23 July 2019, the Group announced that it had received advice from the US Patent & Trademark Office of the
award of a Patent in relation to the Group’s “Device Management System” under application 15/286434.
On 25 July 2019, the Group announced a new strategic partner, Check Point Software Technologies Ltd, to bring a
unique, best of breed cyber safety and security solution to the education sector.
Apart from the events discussed above, no other matters or circumstances have arisen since the end of the period
which significantly affected or may significantly affect the operations of the Group, the results of those operations or
the state of affairs of the Group in subsequent financial years.
11
DIRECTORS’ REPORT
INFORMATION ON DIRECTORS
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
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)
● 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.
(Hons)
Arts
(UK/Germany)
European Business
Programme
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
● Sales Manager, Sema
● Account Manager, Cisco Systems
● Account Manager, Alcatel-Lucent
● 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
12
DIRECTORS’ REPORT
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
Mr Phil Warren
B. Com, CA
raisings, debt
Experience and expertise
Mr Warren is a Chartered Accountant and managing director of West Perth based
corporate advisory firm Grange Consulting. Mr. Warren has over 20 years of experience
in finance and corporate roles in Australia and Europe. He has specialised in company
valuations, mergers and acquisitions, capital
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, Jupiter Energy Limited
Other directorships held in ASX listed companies in the last three years – Nil
financing,
Sir Peter
Westmacott
Experience and expertise
Sir Peter is a distinguished senior British diplomat, who has been British Ambassador to
Turkey, France and the United States of America. Sir Peter has been honoured with
numerous awards and appointments in the UK and France. He was appointed
Companion of the Order of St Michael and St George in 2000, promoted to Knight
Commander (KCMG) in 2003 and Knight Grand Cross (GCMG) in 2016. He was also
made a Lieutenant of the Victorian Order by HM The Queen in 1993.
Other current directorships of ASX listed companies
None
Other directorships held in ASX listed company in the last three years
None
MEETINGS OF DIRECTORS
The number of Directors’ meetings held, and the number of meetings attended by each of the Directors, for the
year ended 30 June 2019:
Director
Tim Levy
John Sims
Crispin Swan
Phil Warren
Sir Peter Westmacott
Number of Board meetings eligible
to attend
Number of Board meetings
attended
7
7
7
7
5
7
7
6
7
5
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Family Zone Cyber Safety Limited
Annual Report 30 June 2019
DIRECTORS’ REPORT
The number of audit committee meetings held, and the number of meetings attended by each of the Directors, for
the year ended 30 June 2019.
Director
John Sims
Phil Warren (Chairman)
Number of audit committee
meetings eligible to attend
Number of audit committee
meetings attended
2
2
2
2
No remuneration committee meetings were held for the year ended 30 June 2019.
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,
performance shares and performance rights of the Group were:
Performance Shares
Performance Rights
Director
Shares Unlisted
Options
Class B
Class C
Class D
Class E
Class F
Class G
Tim Levy
10,939,729
181,351 3,878,610
3,878,610
John Sims
322,222
-
-
-
-
-
-
-
-
-
977,998
-
Crispin
Swan
4,196,574
197,838 2,205,383
2,205,383
333,340
333,330
333,330
213,333
Phil Warren
293,088 1,500,000
Sir Peter
Westmacott
283,052
75,000
-
-
-
-
-
-
-
-
-
-
-
-
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Group paid an insurance premium of $92,085 for Directors and Officers Liability Insurance cover with an
indemnity limit of $10,000,000 during the year.
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 Group.
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 2019 is provided in this report.
14
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
DIRECTORS’ REPORT
NON-AUDIT SERVICES
Pitcher Partners BA&A Pty Ltd consented to and was appointed as the Group’s auditors on 20 May 2016.
The Group may decide to employ the auditor on assignments additional to their statutory audit duties where the
auditor’s expertise and experience with the Group are important. Non-audit services were provided by the Group’s
current auditors, Pitcher Partners BA&A Pty Ltd as detailed below. 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 Ltd or related
entities for non-audit services
Pitcher Partner BA&A Pty Ltd – Other assurance engagements
Pitcher Partners (WA) Pty Ltd - Taxation
Total auditor’s remuneration for non-audit services
UNISSUED SHARES UNDER OPTION
30 June 2019
$
30 June 2018
$
3,000
10,600
13,600
6,250
8,500
14,750
At the date of this report unissued ordinary shares, or interests of the Company under option, are:
Date Option Granted
29/08/2016
19/09/2016 to 31/08/2017
16/12/2016
05/05/2017
04/12/2017
04/12/2017
09/04/2018
09/04/2018
29/08/2018
11/03/2019
18/03/2019
21/05/2019
Total
Expiry Date of
Option
Exercise Price
of Option
Number of shares
under Option
29/08/2019
19/09/2019
15/12/2019
05/05/2020
04/12/2020
04/12/2020
09/04/2021
09/04/2021
29/08/2020
11/03/2022
18/03/2022
21/05/2022
$0.25
$0.33
$0.30
$0.30
$0.50
$0.60
$0.75
$0.90
$0.60
$0.25
$0.18
$0.235
5,888,438
4,321,340
5,335,000
1,750,000
850,000
850,000
516,765
516,765
500,000
250,000
2,147,647
898,692
23,824,647
15
DIRECTORS’ REPORT
SHARES ISSUED DURING OR SINCE THE END OF THE YEAR AS A RESULT OF EXERCISE
During the year, and as at the date of this report, details of ordinary shares issued by the Company are as a result of
the exercise of Options are:
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
Tranche
Date Option Granted
1
3
Total
20/05/2016
19/09/2016 to 31/08/2017
ROUNDING OF AMOUNTS
Number of
Shares issued
Amount paid
for Shares
300,000
72,297
372,297
$75,000
$23,858
$98,858
The Company has applied the relief available to it in ASIC Legislative Instrument 2016/191, and accordingly certain
amounts included in this report and in the financial report have been rounded off to the nearest $1 (where rounding
is applicable), under the option available to the Company under ASIC Corporations.
16
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for Directors and key management personnel of the
Group for the year ended 30 June 2019. 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 Group, directly or indirectly, including any director (whether executive or otherwise) of the Group,
and includes the following specified executives in the Group:
A.
Details of Key Management Personnel
Name
Position
Period of Responsibility
Mr Tim Levy
Mr John Sims
Mr Crispin Swan
Mr Phil Warren
Sir Peter Westmacott
Managing Director
Appointed 1 April 2014
Non-Executive Chairman
Appointed 13 May 2016
Executive Director - Sales
Appointed 3 September 2015
Non-Executive Director
Non-Executive Director
Appointed 13 May 2016
Appointed 8 October 2018
B.
Remuneration Policies
Remuneration levels for Directors, secretaries and senior executives of the Group (“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 Group’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 Group’s performance; and
the amount of incentives within each Directors and senior executives 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 Group. 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 Group believes this
policy will be effective in increasing shareholder wealth.
17
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
Service Agreements
The Group has services agreements with each of its executive Directors and key management personnel. The
Group has also entered into Non-Executive Director appointment letters outlining the policies and terms of this
appointment including compensation.
The principal terms of the executive service agreements existing at reporting date are set out below:
Mr Tim Levy – Managing Director
The Company has an executive services agreement with Mr Tim Levy for his role as Managing Director of the Group
which commenced 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 this agreement (as varied)
are as follows:
a)
b)
a base salary of $220,000 per annum plus statutory superannuation. During the year Mr Levy agreed to
forgo 100% of his cash salary and opted to receive 977,778 performance rights for the service provided
during 2019 calendar year. Refer to Section E for details on these performance rights including the vesting
conditions.
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 a 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;
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; and
by Mr Levy immediately, by giving notice, if the Company is in breach of a material term of this
agreement.
(ii)
(iii)
(iv)
(v)
Mr Crispin Swan– Executive Director – Sales
The Company has an executive services agreement with Mr Crispin Swan 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 (as varied) are as follows:
a) a base salary of $240,000 per annum plus statutory superannuation. During the year Mr Swan agreed to forgo
20% of his cash salary and opted to instead receive 213,333 performance rights for the service provided
during 2019 calendar year. Refer to Section E for details on these performance rights including the vesting
conditions;
the agreement may be terminated;
b)
(i)
(ii)
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
18
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
unable to perform his duties under the agreement for three consecutive months or a period
aggregating to three months in a 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;
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; and
by Mr Swan immediately, by giving notice, if the Company is in breach of a material term of this
agreement.
(iii)
(iv)
(v)
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 29 August 2016 (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. During the year Mr Sims
agreed to forgo his cash salary and opted to receive 222,222 ordinary shares for the service provided during 2019
calendar year. As there are no vesting conditions attached to these ordinary shares, the full amount has been
expensed during the financial year. 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 29 August 2016 (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. During the year Mr Warren agreed to
forgo his cash salary and opted to receive 177,778 ordinary shares for the service provided during 2019 calendar
year. As there are no vesting conditions attached to these ordinary shares, the full amount has been expensed
during the financial year.
Non-Executive Director Appointment – Sir Peter Westmacott
The Company has entered into an agreement with Sir Peter Westmacott in respect of his appointment as a Non-
Executive Director of the Company, which commenced 8 October 2018. Sir Peter Westmacott will be paid a fee of
19
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
$40,000 per annum (exclusive of statutory superannuation) for his services as Non-Executive Director from 8
October 2018 and will be reimbursed for all reasonable expenses incurred in performing his duties. During the year
the Sir Peter agreed to forgo his cash salary and opted to receive 177,778 ordinary shares for the service provided
during 2019 calendar year. As there are no vesting conditions attached to these ordinary shares, the full amount has
been expensed during the financial year.
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
The Company does not have a Director’s Retirement Scheme in place at present.
20
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
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 Group for the year ended 30
June 2019 are set out in the following table.
Directors and
Key Management
Personnel
30 June 2019
Short -term
Post employment
Long term
Share-based
payments
TOTAL
Performance based %
of remuneration
Salary
fees
$
Cash
bonus
$
Other
$
Super-
annuation
$
Retire-
ment
benefits
$
Termination
benefits
$
Incentive
Plans
$
Long
Service
Leave
$
Ordinary
Shares/
Options/
Performance
Rights (PR)
$
Fixed
based
%
Performance
based %
$
Mr Tim Levy
128,333
Mr Crispin Swan
220,000
Mr John Sims
Mr Phil Warren
25,000
23,333
Sir Peter Westmacott1
6,667
Total Directors
403,333
-
-
-
-
-
-
-
20,900
5,600
22,800
-
-
-
-
3,800
-
5,600
47,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
151,243
300,476
86%
200,283
448,683
90%
50,000
75,000
100%
40,000
67,133
100%
40,000
46,667
100%
481,5262
937,959
91%
14%
10%
0%
0%
0%
9%
1 Sir Peter Westmacott was appointed as Non-Executive Director on 8 October 2018.
2 During the year, the Directors were issued ordinary shares and performance rights in the Company in lieu of cash salaries for the 2019 calendar year. Share-based
payments to Messrs Sims, Warren and Westmacott which pertain to their services to be provided over the 2019 calendar year have been expensed in full.
21
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
Details of the remuneration of the Directors and the key management personnel (as defined in AASB 124 Related Party Disclosures) of the Group for the year ended 30
June 2018 are set out in the following table.
Directors and
Key Management
Personnel
30 June 2018
Short -term
Post employment
Long term
Share-based
payments
TOTAL
Performance based %
of remuneration
Salary
fees
$
Cash
bonus
$
Non-
monetary
$
Super-
annuation
$
Retire-
ment
benefits
$
Termination
benefits
$
Incentive
Plans
$
Long
Service
Leave
Options/
Performance
Rights (PR)
Fixed
based
%
Performance
based %
$
$
$
Mr Tim Levy
206,667
Mr Crispin Swan
234,067
Mr John Sims
Mr Phil Warren
50,000
40,000
Total Directors
530,734
-
-
-
-
-
-
-
-
-
-
19,633
21,533
-
3,800
44,966
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
226,300
100%
293,989
549,589
47%
-
-
50,000
100%
43,800
100%
293,989
869,689
66%
0%
53%
0%
0%
34%
22
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
D.
Relationship between remuneration and company performance
The Directors assess performance of the Group with regard to the achievement of both operational and financial
targets with a current focus on subscriber numbers, sales revenues and share price. Directors and executives are
issued options and, in some cases, performance shares or performance rights, 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 Board 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 and rights vest on the achievement of operational and financial milestones, providing those
Directors and executives holding performance shares and performance rights an incentive to meet the operational
and financial milestones prior to the expiry date of the performance shares and performance rights.
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.
The following table shows gross income, profits/(losses) and dividends for the last four years for the listed entity, as
well as the share prices at the end of the respective financial years. Analysis of the actual figures shows an
increase in gross income which has been reflected in the increase of the Group’s share price. The Board is of the
opinion that these results can be attributed, in part, to the previously described remuneration policy and is satisfied
with the overall upwards trend in shareholder wealth over the past two years.
Gross revenue and other
income
2019
$
2018
$
2017
$
2016
$
9,199,917
5,047,879
2,290,721
444,122
Net profit/(loss)
(14,401,137)
(18,206,211)
(8,834,735)
(2,815,607)
Share price at year-end
Dividends paid
0.150
0.00
0.475
0.00
0.33
0.00
0.20
0.00
23
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
E.
Key management personnel’s equity holding
a)
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 2019 are as follows:
Directors and
Executives
Held at
1 July 2018
Options
exercised
Options
expired
Other
changes
Held at
30 June 2019
Mr Tim Levy
750,000
(300,000)
(450,000)
181,3511
181,351
Vested and
exercisable
at 30 June 2019
60,450
-
-
-
750,000
1,500,000
2,000,000
(750,000)
(1,500,000)
(500,000)
Mr Crispin Swan
Mr John Sims
Mr Phil Warren
Sir Peter
Westmacott
Total
1. 181,351 options were issued under ESOP with exercise price of $0.18 and expire date of 18 March 2022.
2. 197,838 options were issued under ESOP with exercise price of $0.18 and expire date of 18 March 2022.
3. These options were acquired prior to Sir Peter Westmacott’s appointment as a Director of Family Zone
197,838
-
1,500,000
65,946
-
1,500,000
197,8382
-
-
(3,200,000)
5,000,000
1,701,396
1,954,189
(300,000)
75,0003
454,189
75,000
75,000
-
-
-
Cyber Safety Limited on 8 October 2018.
Employee Share Option Plan (ESOP) options were considered to represent the value of the services received over
the vesting period, the Group has determined the most appropriate values for these options using the Black-
Scholes option pricing model for those issued in the year, applying the following inputs.
Underlying share price
Exercise price
Expected volatility
Expiry date (years)
Expected dividends
Risk free rate
Value per option
2,147,647
$0.525
$0.641
106%
3.0
Nil
1.93%
$0.322
1. These options have been valued under accounting standards based on the expected exercise price of the options on the grant date being
$0.64. At the grant date the options to be issued were to have an exercise price being the lower of
$0.64 being 10% above the 10 day vwap from establishment of the option plan; or
20% below the 10 day vwap from the issue of the options.
ESOP options have 3 year terms and an exercise price of $0.18 per option. One third of the options vested
immediately, one third vest in 1 year and one third vest in 2 years.
b)
Number of Shares held by Key Management Personnel
24
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
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
Held at
1 July 2018
Received as
remuneration
Shares issued
for cash
subscription
Other
changes
Held at
30 June 2019
10,179,729
4,196,574
100,000
115,310
Mr Tim Levy
Mr Crispin Swan
Mr John Sims
Mr Phil Warren
Sir Peter
Westmacott
Total
1. 350,000 shares in the Company were acquired under the Placement, 110,000 shares were acquired on
-
-
222,2222
177,7783
460,0001
-
-
-
300,0001
-
-
-
14,591,613
177,7783
105,2744
10,939,729
4,196,574
322,222
293,088
16,034,665
577,778
460,000
405,274
283,052
-
-
market, and 300,000 shares were acquired on the exercise of 300,000 Incentive Options.
2. 222,222 shares were issued to John Sims in lieu of cash remuneration.
3. 177,778 shares were issued to Phil Warren and Sir Peter Westmacott in lieu of cash remuneration.
4. These shares were acquired prior to Sir Peter Westmacott’s appointment as a Director of Family Zone Cyber
Safety Limited on 8 October 2018.
c)
Number of Employee Options issued during the year under the Employee Share Option Plan
During the year, 181,351 options were issued to Mr Tim Levy under ESOP with exercise price of $0.18 and expire
date of 18 March 2022 and 197,838 options were issued to Mr Crispin Swan under ESOP with exercise price of
$0.18 and expire date of 18 March 2022.
d)
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 2019 are as
follows:
Held at 1 July 2018
Held at 30 June 2019
Class A
Performance
Shares1
Class B
Performance
Shares
Class C
Performance
Shares
Class A
Performance
Shares1
Class B
Performance
Shares
Class C
Performance
Shares
-
-
-
-
-
-
3,878,610
3,878,610
2,205,383
2,205,383
-
-
-
-
-
-
6,083,993
6,083,993
-
-
-
-
-
-
3,878,610
3,878,610
2,205,383
2,205,383
-
-
-
-
-
-
6,083,993
6,083,993
Directors and
Executives
Mr Tim Levy
Mr Crispin Swan
Mr John Sims
Mr Phil Warren
Sir Peter
Westmacott
Total
1. Class A Performance Shares converted into Shares during the prior financial period following achievement of
performance milestone being 15,000 paying subscribers of the Group generating at least $100,000 revenue per
month over 3 consecutive months (as confirmed by the Group’s auditor) by 29 August 2018.
25
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
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 B Performance Shares convert on achievement of $10,000,000 revenue by the Group over a 12 month
rolling period of which 30% is subscription income (as confirmed by the Group’s auditor) by 29 August 2019.
● Class C Performance Shares convert on achievement of $20,000,000 revenue by the Group over a 12
month rolling period of which 30% is subscription income (as confirmed by the Group’s auditor) by 29 August
2020.
As at 30 June 2019 the Class B and C Performance Milestones have not been achieved.
The Performance Shares held by the Directors outlined above were not granted as part of their remuneration but
issued to the Directors in consideration for cancellation of ordinary shares they held in the Company prior to the
Company’s listing of ASX.
e)
Performance Rights Holdings of Key Management Personnel
The number of Performance Rights 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 2019 are as follows:
Directors and
Executives
Performance Rights
held at
1 July 2018
Received as
remuneration
Other changes
Mr Tim Levy
-
Mr Crispin Swan
1,000,0001
977,7782
213,3332
Mr John Sims
Mr Phil Warren
Sir Peter
Westmacott
Total
-
-
-
-
-
-
1,000,000
1,191,111
-
-
-
-
-
-
Performance Rights
held at
30 June 2019
977,778
1,213,333
-
-
-
2,191,111
1. Comprising 333,340 Class D Performance Rights, 333,330, Class E Performance Rights and 333,330
Class F Performance Rights
2. 1,191,111 Class G Performance Rights were issued to Directors in lieu of cash remuneration
The Performance Rights are subject to the following performance based vesting milestones:
Class of
Performance
Right
Class D
Performance
Rights
Class E
Performance
Rights
Vesting Condition
Milestone
Date
Number of Performance
Rights vesting
Expiry Date
On achievement of 15,000 paying
subscribers of the Company generating
at least $100,000 revenue per month
over 3 consecutive months
On achievement of $10,000,000
revenue by the Company over a 12
month rolling period of which 30% is
subscription income
29 August
2018
33,334 for each Tier 1
partnering deal that goes live
before the Expiry Date
4 Dec 2020
29 August
2019
33,333 for each Tier 1
partnering deal that goes live
before the Expiry Date
4 Dec 2020
26
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
Class F
Performance
Rights
Class G
Performance
Rights
On achievement of $20,000,000
revenue by the Company over a 12
month rolling period of which 30% is
subscription income
29 August
2020
33,333 for each Tier 1
partnering deal that goes live
before the Expiry Date
4 Dec 2020
Continuous 12 months service condition
up to 1 January 2020
1 January
2020
1,191,111
1 Jan 2020
Once the applicable Vesting Condition has been satisfied, the number of Performance Rights specified in the table
above will vest for each Tier 1 partnering deal that goes live between the date of grant and the Expiry Date.
Class D, E, and F Performance Rights issued to Mr Swan in the prior year, have been valued at $0.675 using the
Black-Scholes option pricing model applying the following inputs: share price at grant date of $0.675 per share;
expected volatility of 100%; expected dividends of nil; and a risk free rate of 2.28%.. The total value of the
Performance Rights issued to Mr Swan when granted is $675,000 with the share-based payment expense
recognised over the vesting period of the Performance Rights. No expense has been recognised for the Class E
Performance Rights as the vesting condition was not expected to be achieved.
Class G Performance Rights issued to Mr Swan and to Mr Levy during the year, have been valued based on the
relevant amount of cash remuneration originally due to Messrs Swan and Levy under their Executive Service
Agreements which they agreed to forgo and receive in Performance Rights. The number of Performance Rights
was determined with reference of the most recent capital raising share issue price of the Company at the date of
approval of the issue of the Performance Rights being $0.225 per Share. The total value of the Performance
Rights issued to Mr Swan and Mr Levy when granted is $268,000 with the share-based payment expense
recognised over the vesting period of the Performance Rights.
F.
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.
G. 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
Mr Phil Warren, a Director of the Company, is also a director of Grange Consulting and an entity related to him is a
shareholder of Grange Consulting.
Grange Consulting is engaged to provide financial management and company secretarial services to the Group.
Pursuant to this engagement Grange Consulting will receive $7,500 (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.
27
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
A summary of the total fees paid to Grange Consulting and Grange Capital Partners for the year ended 30 June
2019 and 30 June 2018 is as follows:
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
Company secretarial services
Total
30 June 2019
$
30 June 2018
$
94,500
94,500
94,500
94,500
1. Amounts payable to Grange Consulting and Grange Capital Partners as at 30 June 2019 were $25,987 (incl.
GST), as at 30 June 2018 were $17,586 (incl. GST).
b)
Tellus Matrix LLP
Sir Peter Westmacott, a Director of the Company, is also Vice Chairman and Partner of Tellus Matrix LLP.
$387,503 was paid to Tellus Matrix LLP for the year end 30 June 2019 in relation to capital raising and corporate
advisory fees. There were no amounts outstanding and payable to Tellus Matrix LLP as at 30 June 2019. 101,825
fully paid ordinary shares were also issued to a nominee of Tellus Matrix LLP for corporate advisory services. In
addition, 500,000 options for a 2 year term with an exercise price $0.60 per option were issued to a nominee of
Tellus Matrix LLP for capital raising services. These options were valued using the Black-Scholes option pricing
model on 29 August 2018, applying the following inputs.
No of Options
Underlying share price
Exercise price
Expected volatility
Expiry date (years)
Expected dividends
Risk free rate
Value per option
Total expense recognised 30
June 2019
500,000
$0.35
$0.60
113%
2.00
Nil
2.00%
$0.164
$81,859
*********** END OF AUDITED REMUNERATION REPORT ***********
Signed in accordance with a resolution of the Directors.
Mr Tim Levy
Managing Director
30 August 2019
28
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 2019, 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 APES 110 Code of Ethics for Professional Accountants.
This declaration is in respect of Family Zone Cyber Safety Limited and the entities it controlled
during the year.
PITCHER PARTNERS BA&A PTY LTD
PAUL MULLIGAN
Executive Director
Perth, 30 August 2019
- 29 -
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2019
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
Revenue
Cost of sales
Gross profit
Administration costs
Employee and director benefits costs
Marketing costs
Other income
Other costs
Operating loss
Finance costs
Note
4
5(a)
5(b)
6
4
5(c)
2019
$
2018
$
4,184,323
(2,033,080)
2,151,243
(3,425,160)
(6,127,582)
(1,005,088)
2,329,780
(1,213,262)
1,116,520
(4,199,771)
(6,562,179)
(1,232,543)
5,015,594
(10,909,873)
(14,300,866)
2,791,736
(10,085,058)
(18,171,295)
(100,271)
(34,915)
Loss before income tax
(14,401,137)
(18,206,211)
Income tax benefit/(expense)
7
-
-
Loss after tax for the period attributable to the members of
Family Zone Cyber Safety Limited
(14,401,137)
(18,206,211)
Other comprehensive income
Items that will be reclassified subsequently to profit or loss
when specific conditions are met:
Exchange differences on translating foreign operations, net of
tax
(14,973)
11,663
Total comprehensive (loss) for the period attributable to the
members of Family Zone Cyber Safety Limited
(14,416,110)
(18,194,548)
Basic and diluted loss per share (cents per share) for the year
attributed to the members of Family Zone Cyber Safety Limited
8
(9.07)
(17.35)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction
with the accompanying notes.
30
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Prepayments
Inventory
Total Current Assets
Non-Current Assets
Intangibles
Trade and other receivables
Plant and equipment
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Provisions
Contingent consideration
Borrowings
Total Current Liabilities
Non-current Liabilities
Trade and other payables
Contingent consideration
Total Non-current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
Note
2019
$
2018
$
9
10
11
12
13
10
14
15
16
17
18
15
17
19
20
21
5,116,523
3,228,710
805,604
157,152
9,307,989
2,461,222
1,006,509
143,373
149,929
3,761,033
4,826,403
80,112
682,757
5,589,272
14,897,261
9,025,186
321,928
257,682
9,604,796
13,365,829
4,123,740
491,728
629,440
1,469,535
6,714,443
200,754
47,595
248,349
6,962,792
3,372,409
461,028
-
-
3,833,437
243,883
2,245,505
2,489,388
6,322,825
7,934,469
7,043,004
45,567,979
7,451,587
(45,085,097)
7,934,469
30,873,178
6,853,786
(30,683,960)
7,043,004
The above Consolidated Statement of Financial Position is to be read in conjunction with the accompanying notes.
31
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
Issued
Capital
$
Share-based
Payment
Reserve
$
Accumulated
Losses
$
Foreign
Currency
Translation
Reserve
$
Total
$
Balance at 1 July 2017
12,582,677
2,506,406
(12,477,749)
-
2,611,334
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, Performance Rights
& Performance Shares
Total transactions with owners
Balance at 30 June 2018
-
-
-
18,290,501
-
-
-
-
-
4,335,717
(18,206,211)
-
(18,206,211)
-
11,663
11,663
(18,206,211)
11,663
(18,194,458)
-
-
-
-
18,290,501
4,335,717
18,290,501
30,873,178
4,335,717
6,842,123
-
(30,683,960)
-
11,663
22,626,218
7,043,004
Issued
Capital
$
Share-based
Payment
Reserve
$
Accumulated
Losses
$
Foreign
Currency
Translation
Reserve
$
Total
$
Balance at 1 July 2018
30,873,178
6,842,123
(30,683,960)
11,663
7,043,004
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, Performance Rights
& Performance Shares
Total transactions with owners
Balance at 30 June 2019
-
-
-
14,694,801
-
-
-
-
-
612,774
(14,401,137)
-
(14,401,137)
-
(14,973)
(14,973)
(14,401,137)
(14,973)
(14,416,110)
-
-
-
-
14,694,801
612,774
14,694,801
45,567,979
612,774
7,454,897
-
(45,085,097)
-
(3,310)
15,307,575
7,934,469
The above Consolidated Statement of Changes in Equity is to be read in conjunction with the accompanying notes
32
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2019
Cash flows from operating activities
Receipt from customers
Government grants received
Payments to suppliers and employees
Interest (paid)/received
Net cash flows (used in) operating activities
Cash flows from investing activities
Purchase of plant & equipment
Payments for intangible assets
Non-related party loans
Net cash paid for acquisition of business
Net cash flows (used in) investing activities
Cash flows from financing activities
Proceeds from issue of shares, net of issue costs
Proceeds from borrowings
Net cash flows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning year
Effects of foreign exchange rates
Cash and cash equivalents at end year
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
Note
23
2019
$
2018
$
4,181,121
1,882,977
(16,257,044)
(16,509)
(10,209,455)
2,880,833
2,655,859
(16,088,385)
4,949
(10,556,642)
(614,487)
(52,094)
-
-
(666,581)
(112,540)
(49,764)
(45,208)
(167,039)
(374,550)
12,135,673
1,401,937
13,537,610
11,993,175
-
11,993,175
2,661,574
2,461,222
(6,273)
5,116,523
1,061,982
1,387,577
11,663
2,461,222
9
The above Consolidated Statement of Cash Flows is to be read in conjunction with the accompanying notes.
33
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 1: REPORTING ENTITY
Family Zone Cyber Safety Limited is the listed public company incorporated and domiciled in Australia and head of
the Group. The financial statements of the Group are as at, and for the year ended, 30 June 2019.
A description of the nature of the Group’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) (AASB) and the Corporations Act 2001.
The Financial Statements and Notes of the Group 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 Limited is a company limited by shares. The financial report is presented in Australian
currency. Family Zone Cyber Safety Limited 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 Consolidated Statement of Profit or Loss and Other Comprehensive Income shows that the Group incurred a
net loss of $14,401,137 during the year ended 30 June 2019 (2018: loss of $18,206,211), and net cash outflows of
$10,209,455 from the operating activities (2018: $10,556,642). The Consolidated Statement of Financial Position
shows that the Group had cash and cash equivalents of $5,116,523 as at 30 June 2019 (2018: $2,461,222). These
conditions indicate the existence of a material uncertainty that may cast significant doubt about the Group’s ability
to continue as a going concern.
The ability of the Group to continue as a going concern is dependent on the following:
- The Group being able to successfully raise further debt or capital funding within the next six months;
- The Group achieving the growth targets approved by the Board across Australia, New Zealand and the US
markets;
- The receipt of $1.8 million from the ATO in respect of Research & Development expenditure arising from
2020 financial year; and
- The pursuit of the identified annualised cashflow savings of $4 million by 31 December 2019 under the
Group’s established “Cashflow breakeven acceleration plan” as described in the Directors’ Report.
Management believe there are sufficient funds to meet the Group’s working capital requirements as at the date of
this report.
In the event that the matters above do not eventuate, then the Group may be unable to continue as a going
concern, and may be required to realise its assets and discharge its liabilities other than in the ordinary course of
business, and at amounts that differ from those stated in the financial statements and that the financial report does
34
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
not include any adjustments relating to the recoverability and classification of recorded asset amounts or liabilities
that might be necessary should the entity not continue as a going concern.
(b) Adoption of new and revised accounting standards
The Group have adopted the new accounting standards during the year ended 30 June 2019 as outlined below.
AASB 9 Financial Instruments
AASB 9 supersedes pronouncement AASB 139 ‘Financial Instruments: Recognition and Measurement’ and was
adopted by the Group from 1 July 2018. This, and the related amendments to other accounting standards,
introduced three significant areas of change from AASB 139 Financial Instruments: Classification and Measurement:
- A new model for classification and measurement of financial assets and liabilities;
- A new expected loss impairment model for determining impairment allowances; and
- A redesigned approach to hedge accounting.
With the exception of hedge accounting which is not applicable to the Group as the Group has not entered in to any
such arrangements, the Group has applied AASB 9 retrospectively, with the initial application date of 1 July 2018.
The redesigned approach to hedge accounting will apply prospectively if the Group enters in to any such
arrangements.
At the date of initial application, the Group has determined that it will:
- Apply the simplified approach for trade receivables in the calculation of the expected credit loss (ECL) rather
than the general approach.
As a result of the adoption of the above, as at the date of initial application, there is no material impact on the
transactions and balances recognised in the financial statements.
The Group’s accounting policy for financial instruments is detailed as follows:
Financial Assets
Financial assets are classified, at initial recognition, and subsequently measured at amortised cost, fair value
through other comprehensive income (OCI), and fair value through profit and loss.
The classification of financial instruments at initial recognition depends on the financial asset’s contractual cashflow
characteristics and the Group’s business model for managing them. With the exception of the Group’s trade
receivables that do not contain a significant financing component, the Group initially measures the financial asset at
its fair value plus, in the case of a financial asset not at fair value through profit and loss, transaction costs. Trade
receivables that do not contain a significant financing component are measured at the transaction price determined
in accordance with the Group’s accounting policy for revenue recognition.
For trade receivables, the Group applies a simplified approach in calculating expected credit losses. Therefore, the
Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime expected
credit losses at each reporting date. In determining the provision required, the Group utilises its historical credit loss
experience, adjusted only where appropriate for forward-looking factors specific to the debtors and economic
environment.
Financial Liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities through fair value through profit or loss,
loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as
appropriate.
35
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables,
net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables.
AASB 15 Revenue from contracts with Customers
AASB 15 was adopted by the Group from 1 July 2018. AASB 15 supersedes AASB 111 Construction Contracts,
AASB 118 Revenue and related interpretations and it applies with limited exceptions, to all revenue arising from
contracts with its customers.
The core principle of AASB 15 is that an entity should recognise revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. Specifically, the Standard introduces a 5-step approach to revenue
recognition:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Under AASB 15, a company recognises revenue when (or as) a performance obligation is satisfied, i.e. when
‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer.
The standard requires entities to exercise judgement, taking into consideration all of the relevant facts and
circumstances when applying each step of the model to contracts with their customers. The standard also specifies
the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract.
The Group adopted AASB 15 in accordance with the transition requirements in AASB 15, which permits companies
to transition to AASB 15 by applying the Standard:
-
-
retrospectively to each prior reporting period presented; or
retrospectively with the cumulative effect of initially applying the Standard recognised as at the date of initial
application (i.e., at the beginning of the annual reporting period in which the entity first applies the
Standard).
The Group adopted AASB 15 using the full retrospective method of adoption. The effect of the transition on the
current period has not been disclosed as the standard provides an optional practical expedient. However, the impact
on the current period is immaterial. The Group did not apply any of the other available optional practical expedients.
At the initial date of application, the effect of adopting AASB 15 did not have a material impact on the transactions
and balances recognised in the financial statements, including comparatives.
The Group’s revenue accounting policy is detailed below:
The principal activities of the Group are the sale and distribution, marketing and customer support of its suite of
cyber safety products and services.
Sales of Hardware
Revenue from the sale of equipment is recognised at the point in time when control of the asset is transferred to the
customer, generally on delivery of the equipment. The Group considers whether there are other promises in the
contract that are separate performance obligations to which a portion of the transaction price needs to be allocated
(e.g., warranties, customer loyalty points). In determining the transaction price for the sale of equipment, the Group
36
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
considers the effects of variable consideration, the existence of significant financing components, non-cash
consideration, and consideration payable to the customer (if any).
Subscription revenues
Subscription/service revenue is recognised over time over the life of the service contract as the Groups service
obligations under the contract are satisfied.
Contract balances
Contract Assets:
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the
Group transfers goods or services to a customer before the customer pays consideration or before payment is due,
a contract asset is recognised for the earned consideration that is conditional.
Trade receivables
A receivable represents the Group's right to an amount of consideration that is unconditional (i.e., only the passage
of time is required before payment of the consideration is due). Refer to accounting policies of financial assets under
AASB 9: Financial Instruments above.
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Group has received
consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the
Group transfers goods or services to the customer, a contract liability is recognised when the payment is made, or
the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Group performs
under the contract.
Capitalised Contract Cost
Incremental costs of obtaining a contract and certain costs to fulfil a contract are recognised as an asset if the
following criteria are met:
-
-
-
the costs relate directly to a customer contract;
the costs generate or enhance resources of the entity that will be used in satisfying performance obligations
attaching to the customer contracts; and
the costs are recoverable from the customer.
Any capitalised contract costs assets are amortised on a systematic basis that is consistent with the Group's transfer
of the related goods or services to the customer.
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 reducing the carrying amount of the asset.
(c) Standards Issued but not yet effective
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 Consolidated 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
37
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
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, Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) 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 Consolidated 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 Group will adopt this
standard from 1 July 2019. The Company is yet to make and assessment of the impact of this standard.
(d) 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:
(i) Share-Based Payments
The Company measures the cost of equity-settled transactions with suppliers and employees by reference to 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. The fair value of the equity instruments granted is determined using the Black-Scholes option
pricing model taking into account the terms and conditions upon which the instruments were granted. The
accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on
the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss
and equity.
(ii) Research and Development Assets
The Group’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 Group. 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.
(iii) Impairment of assets
In determining the recoverable amount of assets, in the absence 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
38
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
the asset is determined. Value in use calculations performed in assessing recoverable amounts incorporate a
number of key estimates.
(iv) Contingent Consideration
When the fair values of financial assets and financial liabilities recorded in the Consolidated Statement of Financial
Position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation
techniques including the discounted cash flow (DCF) model. The inputs to these models are taken from observable
markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values.
Contingent consideration, resulting from business combinations, is valued at fair value at the acquisition date as
part of the business combination. When the contingent consideration meets the definition of a financial liability, it is
subsequently remeasured to fair value at each reporting date. The determination of the fair value is based on a
probability weighted payout approach. The probability weighted value of the contingent consideration was then
discounted to determine the net present value of the contingent consideration. The key assumptions take into
consideration the probability of meeting each performance target and the discount factor (refer to note 17 for
details).
In the prior year, as part of the accounting for the acquisition of Linewize, contingent consideration with an
estimated fair value of $2,238,275 was recognised at the acquisition date and remeasured to $677,035 as at the
current reporting date. Future events may require further revisions to the estimate. $629,440 of the value of the
contingent consideration has been classified as current as consideration is expected within the next 12 months.
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these financial
statements. The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board 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) 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.
(b)
Income Tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in Consolidated
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
39
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
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.
(c) Financial Assets and Financial Liabilities
Financial assets and financial liabilities are recognised when the Group 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 Group. A financial liability is removed from the Consolidated
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 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.
(d)
Trade and Other Receivables
Trade accounts and other receivables represent the principal amounts due at reporting date less, where applicable,
any allowances for expected credit losses.
(e)
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.
(f)
Intangible Assets
Expenditure on the research phase of projects to develop new customised software for IT and billing systems is
recognised as expense as incurred. Costs that are directly attributable to a project’s development phase are
recognised as intangible assets provided they meet the following recognition requirements;
●
●
●
●
Development costs can be reliably measured
The project is technically and commercially feasible
The Group intends to and has sufficient resources to complete the project
The Group has the ability to use or sell the software.
Additionally, as part of its asset acquisitions the group has committed to the development of projects which are
expected to bring substantial economic benefits over the next 12-36 months. Costs relating to the acquisition and
development of the products have been capitalised.
40
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
All intangible assets are amortised on a straight-line basis over 3 years.
(g) 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 Group
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
(h) Research & Development Expense
Depreciation Rate
10% - 40%
The Group expenses all research and development costs as incurred. The amounts incurred in relation to patent
development costs and patent applications are expensed until the Group has received formal notification that a
patent has been granted. The Group believes expensing patent development and application costs provides the
most relevant and reliable information to financial statement users. The Group will only record a development asset
in accordance with the policy set out in Note 2(f).
During the period of development, the asset is tested for impairment annually.
(i)
Impairment of Non-Financial Assets
At each reporting date, the Group 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
profit or loss.
(j) 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.
(k) Cash and Cash Equivalents
Cash and cash equivalents in the Consolidated 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 Consolidated
Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of
outstanding bank overdrafts.
(l) 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
41
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
settled wholly 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 wholly 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.
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 Group to employee's superannuation funds. These superannuation contributions are
recognised as an expense in the same period when the employee services are received.
(m) 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, including performance shares, performance rights and options, 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.
(n) 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.
(o) Earnings per Share
(i)
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Group, excluding
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year.
(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.
42
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
(p) Segment Reporting
An operating segment is a component of a Group 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 Group), whose operating results are regularly reviewed by the Group'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.
AASB 8 ‘Operating Segments’ requires operating segments to be identified on the basis of internal reports about
components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate
resources to the segment and assess its performance.
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.
The Group has three operating segments being information technology (and more specifically the provision of
cyber safety services) in Australia, United States of America and New Zealand which is consistent with internal
reporting provided to the chief operating decision maker. The chief operating decision maker has been identified
as the Board of Directors. In the year ended 30 June 2018 the Group operated under two operating segments
being information technology (and more specifically the provision of cyber safety services) Australia and New
Zealand.
(q) Current and non-current classification
Assets and liabilities are presented in the Consolidated 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
Group'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 Group'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.
(r) 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
Consolidated Statement of Financial Position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
43
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
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.
(s) Foreign Currency Translation
(i)
Functional and presentation currency
The functional currency of each of the Group's entities is measured using the currency of the primary economic
environment in which that entity operates. The functional currency of the parent is Australian Dollars. The
consolidated financial statements are presented in Australian Dollars.
(ii)
Transactions and Balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the
date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-
monetary items measured at historical cost continue to be carried at the exchange rate at the date of transaction.
Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were
determined.
Exchange differences arising on the transition of monetary items are recognised in the Consolidated Statement of
Profit or Loss and Other Comprehensive Income in the period in which they arise, except where deferred in equity
as a qualifying cash flow.
(iii) Group Companies
The financial results and position of foreign operations whose functional currency is different from the Group's
presentation currency are translated as follows:
- Assets and liabilities are translated at period-end exchange rates prevailing at that reporting date;
- Income and expenses are translated at average exchange rates for the period; and
- Retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences on translation of foreign operations are transferred directly to the Group's foreign currency
translation reserve in the balance sheet. These differences transferred to the Consolidated Statement of Profit or
Loss and Other Comprehensive Income in the period in which the operation is disposed. For the purpose of
presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are
expressed in Australian Dollars using exchange rates prevailing at the end of the reporting period. Income and
expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated
significantly during that period, in which case the exchange rates at the dates of the transactions are used.
Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity.
(t) Business Combinations
Business combinations occur where an acquirer obtains control over one or more businesses.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving
entities or businesses under common control. The business combination will be accounted for from the date that
control is obtained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent
liabilities) assumed is recognised (subject to certain limited exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from a
contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration
classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent
consideration classified as an asset or liability is remeasured in each reporting period to fair value, recognising any
44
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date.
All transaction costs incurred in relation to business combinations, other than those associated with the issue of a
financial instrument, are recognised as expenses in profit or loss when incurred. The acquisition of a business may
result in the recognition of goodwill or a gain from a bargain purchase.
(u) Rounding
The Company has applied the relief available to it in ASIC Legislative Instrument 2016/191 and accordingly, certain
amounts included in the Directors’ report and in the financial report have been rounded off to the nearest $1 (where
rounding is applicable), under the option available to the Company under ASIC Corporations.
(v) Leases
Leases of property, plant and equipment where substantially all the risks and benefits incidental to the ownership of
the asset, but not the legal ownership, transfer to the Group, are classified as finance leases. Finance leases are
capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased
property, plant and equipment or the present value of the minimum lease payments, including any guaranteed
residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest
expense for the period. Leased assets are depreciated on a straight-line basis over their estimated useful lives.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are
recognised in the profit or loss on a straight-line basis over the lease term.
NOTE 4: REVENUE AND OTHER INCOME
Operating Revenue
Service revenue(1)
Hardware revenue(2)
Other Income
Interest revenue
Other
Research and development grant
Export assistance grant
Gain on contingent consideration revaluation
2019
$
2018
$
3,584,539
599,784
4,184,323
2,064,367
265,413
2,329,780
9,132
7,032
3,830,960
-
1,168,470
5,015,594
19,282
42,958
2,583,700
72,159
-
2,718,099
(1) Service revenue is recognised over the life of the service contract as the service obligations under the contract are satisfied.
(2) Hardware revenue is recognised at the point in time when control of the asset is transferred to the customer.
45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 5: EXPENSES ITEMS
5(a) Administration costs
Administration costs
Information technology and infrastructure costs
Other costs
Total administration costs
5(b) Employee and director benefits costs
Directors’ fees
Employee wages and superannuation
Total employee and director benefits costs
5(c) Other costs
Share-based payment expenses
Depreciation and amortisation expenses
Research and development expenses
Total other costs
NOTE 6: MARKETING COSTS
Marketing costs
Advertising
Call centre charges
Domain licenses
Marketing and marketing staff costs
Total marketing costs
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
2019
$
2018
$
1,866,391
433,996
1,124,773
3,425,160
1,720,924
1,014,444
1,464,403
4,199,771
346,589
5,780,993
6,127,582
530,734
6,031,445
6,562,179
1,933,070
4,498,680
4,478,123
10,909,873
4,306,427
3,269,831
2,508,800
10,085,058
2019
$
515,953
36,037
1,083
452,015
1,005,088
2018
$
698,020
148,280
5,805
380,437
1,232,543
46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
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):
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
2019
$
2018
$
-
-
-
-
-
-
Profit / (loss) before tax for the year
(14,401,137)
(18,206,211)
Prima facie income tax payable on profit before income tax at:
- 27.50% (Australia)
- 28.00% (New Zealand)
- 21.00% (US)
- 17.00% (Singapore)
Adjustments for:
Entertainment
Share-based payments
R&D tax incentive classified as income
Non-deductible expenditure
Offset against DTL/DTA not recognised
Tax losses not recognised
Income tax expense attributable to profit
(c) Deferred taxes
Deferred tax asset balance comprises:
Tax losses
Plant & Equipment
Provisions & Accruals
Capital & Business related costs
Offset against deferred tax liability / not recognised
Deferred tax liability balances comprises:
PPE and Intangible assets
Offset against deferred tax assets / not recognised
Net deferred tax asset / (liability)
(2,210,745)
(476,975)
(328,425)
(20,731)
(4,458,576)
(318,462)
(237,754)
(645)
4,700
431,115
(1,375,932)
1,235,089
2,741,904
-
-
4,639
1,184,267
710,518
1,185,860
1,930,153
-
-
2019
$
2018
$
3,995,130
-
192,295
318,206
(4,505,631)
2,589,970
-
191,542
303,083
(3,084,595)
(63,340)
63,340
-
(395,108)
395,108
-
47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
(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 income tax related to items charged or credited
directly to equity
Decrease / (increase) in deferred tax assets
(Decrease) / increase in deferred tax liabilities
Adjust for derecognition / offset of DTA/DTL
(f)
Deferred tax assets / liabilities not brought to account
Temporary differences
Operating tax losses – Australia
Operating tax losses – Other jurisdictions
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
2019
$
2018
$
(1,723,820)
(318,086)
2,041,906
-
(1,221,059)
(336,614)
1,557,673
-
-
-
-
-
-
-
-
-
2019
$
447,161
5,218,515
4,222,526
9,888,202
2018
$
99,518
2,589,970
833,165
3,522,653
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.
NOTE 8: LOSS PER SHARE
Basic earnings/(loss) per share amounts are calculated by dividing net profit/(loss) for the year attributable to
ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the
year.
The following reflects the income or loss and share data used in the total operations basic and diluted earnings per
share computations:
Loss used in the calculation of basic and diluted loss per share
(14,401,137)
(18,206,211)
Basic and diluted (loss) per share attributable to equity holders
(cents Per Share)
(9.07)
(17.35)
2019
$
2018
$
48
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
Weighted average number of ordinary shares outstanding
Weighted average number of ordinary shares outstanding during the
year used in calculation of basic and diluted loss per share
Number
Number
158,819,942
104,927,965
158,819,942
104,927,965
Options and other potentially dilutive ordinary shares 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
2019
$
2018
$
5,116,523
5,116,523
2,461,222
2,461,222
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.
NOTE 10: TRADE AND OTHER RECEIVABLES
Current:
Trade receivable
Less provision for expected credit losses
GST receivable
Capitalised contract costs
R&D Grant receivable (secured)
Total Current Trade and Other Receivable
Non-Current:
Capitalised contract costs
Bonds and deposits
Total Non-Current Trade and Other Receivable
18
2019
$
2018
$
988,647
(64,042)
42,868
313,254
1,947,983
3,228,710
264,180
(47,129)
53,078
736,380
-
1,006,509
23,702
56,410
80,112
304,000
17,928
321,928
Total Trade and Other Receivable
3,308,822
1,328,437
NOTE 11: PREPAYMENTS
Prepayments
2019
$
805,604
2018
$
143,373
49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 12: INVENTORY
Current:
At cost:
Finished goods
Total Inventory
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
2019
$
2018
$
157,152
157,152
149,929
149,929
a) Amounts recognised in profit or loss
Inventories recognised as an expense during the year ended 30 June 2019 amounted to $615,974 (2018:
$258,935). These were included in cost of sales.
NOTE 13: INTANGIBLES
Intellectual Property at cost (1)
Less: Accumulated amortisation and impairment
Customer Contracts at cost (2)
Less: Accumulated amortisation and impairment
2018
$
13,707,892
(4,955,835)
339,181
(66,052)
9,025,186
(1) Intellectual Property (IP) includes $8,470,986 acquired in the prior year as part of the Linewize acquisition (refer to note 17
for further detail), the remaining amortisation period for this IP is 17 months. The remaining amortisation period on other IP
is 5 months
2019
$
13,759,986
(9,093,652)
339,181
(179,112)
4,826,403
(2) The remaining amortisation period for customer contracts is 17 months.
a) Reconciliation of movements in intangible assets
Intangible Assets
Balance at 1 July 2017
Additions
Impairment expense
Amortisation expense
Balance at 30 June 2018
Additions
Impairment expense
Amortisation expense
Balance at 30 June 2019
NOTE 14: PROPERTY PLANT & EQUIPMENT
Property plant & equipment – at cost
Less: Accumulated amortisation and impairment
$
3,325,003
8,859,931
-
(3,159,748)
9,025,186
52,094
-
(4,250,877)
4,826,403
2019
$
2018
$
1,072,904
(390,147)
682,757
405,152
(147,470)
257,682
50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
a) Reconciliation of movements in fixed assets
Property Plant and Equipment
Balance at 1 July 2017
Additions
Depreciation expense
Balance at 30 June 2018
Additions
Reclassification of inventory
Depreciation expense
Balance at 30 June 2019
NOTE 15: TRADE AND OTHER PAYABLES
Current:
Trade payables(1)
Customer contract liabilities(2)
Accruals & other payables
Total Current Trade and Other Payables
Non-Current:
Customer contract liabilities (2)
Total Non-Current Trade and Other Payable
Total Trade and Other Payables
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
$
217,421
172,540
(132,280)
257,681
616,096
58,392
(249,412)
682,757
2019
$
2018
$
1,143,101
1,903,181
1,077,458
4,123,740
200,754
200,754
4,324,494
500,277
1,645,500
1,226,632
3,372,409
243,883
243,883
3,616,292
(1) Current trade payables are non-interest bearing and are normally settled on 30-day terms
(2) Revenue is recognised when services are rendered to the customer. The amount received at the time of the transaction is
recognised as a customer contract liability until delivery takes place and control passes.
NOTE 16: PROVISIONS
Current:
Provision for annual leave
Total Current Provisions
2019
$
2018
$
491,728
491,728
461,028
461,028
NOTE 17: BUSINESS COMBINATION (PRIOR YEAR)
On 29 November 2017, Family Zone acquired 100% of the share capital in Linewize Services Limited and Linewize
Limited (Linewize) which own and operate an innovative cloud-managed firewall service, specifically developed for
the needs of the education sector. Its services covers user authentication, content filtering, network appliances,
telecoms services, BYOD support, network access management and an award winning suite of classroom tools.
51
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
Linewize is the leading provider of cyber security and safety services in New Zealand with its technology
represented in a network of 260 schools and 130,000 students at the time of the acquisition.
The key drivers and benefits of this acquisition included providing the Group access to a rapidly expanding network
of schools and parents plus access to world leading technology for schools and experienced executives as well as
strategic opportunities for Family Zone to build out features, transform service levels and achieve order of
magnitude reductions in service costs through Linewize’s innovative and world class cloud technology.
a) Details of the consideration paid to Vendors:
Cash deposit paid
Ordinary shares issued
Contingent consideration (Performance Shares issued)
Total purchase consideration
$
179,578
6,326,616
2,238,275
8,744,469
The value of the ordinary shares issued as part of the consideration was assessed at a price of $0.665 per Share
which was based on the quoted price at the date of the business combination.
b) Contingent consideration
The contingent consideration comprised 9,500,000 Performance Shares (Classes D to H Performance Shares)
which convert into Shares subject to the achievement of various revenue and customer targets over a 5 year period
as outlined in the table below:
Class of
Performance
Share
Number of
Consideration
Performance Shares
Performance Milestones
Range of
Contingent
Consideration
D
E
F
G
H
NZ$1,250,000 of Recurring Revenue; or
1,000,000
310 LW School Deploys; or
$0 - $665,000
5,000 FZO NZ Accounts.
NZ$1,750,000 of Recurring Revenue; or
1,000,000
360 LW School Deploys; or
$0 - $665,000
10,000 FZO NZ Accounts.
NZ$3,750,000 of Recurring Revenue; or
2,000,000
460 LW School Deploys; or
$0 - $1,330,000
20,000 FZO NZ Accounts.
NZ$6,250,000 of Recurring Revenue; or
2,500,000
585 LW School Deploys; or
$0 - $1,662,500
32,500 FZO NZ Accounts.
3,000,000
NZ$9,250,000 of Recurring Revenue and FZO NZ Group
Revenue
$0 - $1,995,000
$0 - $6,317,500
Total
9,500,000
LW School Deploys means the total school deployments of the core technology of Linewize in any country.
52
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
The value of the contingent consideration has been assessed based on a probability weighted payout approach.
The probability weighted value of the contingent consideration was then discounted to determine the net present
value of the contingent consideration.
As at 30 June 2019, the contingent consideration has been revalued at $677,035 resulting in a gain on revaluation
recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income of $1,168,470.
$629,440 of the value of the contingent consideration has been classified as a current liability, as consideration is
expected within the next 12 months.
c) Assets and liabilities acquired
Assets and liabilities held by Linewize at the acquisition date recognised on acquisition at fair value:
Cash
Accounts receivable
Inventory
Property plant and equipment
Accounts payable and accruals
Loans payable
Intangible asset - Contracted customers
Intangible asset - Linewize IP/Platform
Net identifiable assets acquired
Less: Gain on bargain purchase
Total purchase consideration
$
12,539
35,671
10,937
37,803
(45,277)
(45,208)
339,181
8,470,986
8,816,632
(72,163)
8,744,469
The gain on bargain purchase arose when the Group’s share of the fair value of identifiable net assets of Linewize
acquired exceeded the cost of the acquisition paid by the Group. The excess is recognised as income within the
Consolidated Statement of Profit or Loss and Other Comprehensive Income.
NOTE 18: BORROWINGS
Current:
R&D Loan Facility
Interest Payable
Total Current Borrowings
2019
$
2018
$
1,404,244
65,291
1,469,535
-
-
-
During the period, the Company received advance funding on its expected FY2019 R&D rebate from Radium
Capital. Refer to below for key terms of this funding.
Key Facility Terms:
Counterparty: Innovation Structured Finance Co LLC facilitated by Radium Capital
Amount: 80% of the expected R&D tax offset resulting from each period’s eligible R&D expenditures, with
principal and interest repaid from the actual tax offsets at the end of the financial year
Final Maturity Date: 30 September 2019
o Family Zone has the option to repay earlier without penalties
53
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
Interest Rate: 14% per annum
Security: Secured against the R&D refund receivable from the ATO
Conditions: R&D expenditure has to be reviewed by R&D Tax Consultants
Purpose of Loan as per agreement: Wholly or predominantly for working capital or research and development
expenditure.
NOTE 19: ISSUED CAPITAL
Issued Ordinary Shares - no par value (fully paid)
Total
Opening balance – 1 July 2017
Closing balance – 30 June 2018
Shares issued on exercise of Performance Rights on 4 Jul 2018
Shares issued on exercise of options during the period on 20 Jul 2018
Shares issued to sophisticated investor on 29 Aug 2018
Shares issued to Tellus Matrix LLP for advisory services on 29 Aug 2018
Shares issued to Netsweeper for services on 19 Oct 2018
Shares issued to Fidelio on 28 Nov 2018
Shares issued to Tim Levy on 28 Nov 2018 (following shareholder approval)
Shares issued to sophisticated investor on 11 Jan 2019
Shares issued to sophisticated investor on 18 Jan 2019
Shares issued to consultant on 26 Feb 2019
Shares issued to the Linewize Vendors on conversion of performance shares
on 18 Mar 2019
Shares issued to executives on the exercise of Class A performance rights
on 18 Mar 2019
Shares issued in respect to Brand Ambassadorial Agreement on 8 Apr 2019
Shares issued to Fidelio on 18 Apr 2019
Shares issued to Non-executive Directors in lieu of cash salaries for the 2019
calendar year on 18 Apr 2019
Shares issued to sophisticated investors on 29 Apr 2019
Shares issued to Tim Levy on exercise of options on 15 May 2019
Less: share issue costs
Closing balance – 30 June 2019
2018
Number of
Shares
2019
Number of
Shares
200,627,835 134,610,852
200,627,835 134,610,852
Number of
Shares
Value
$
81,795,928
134,610,852
12,582,677
30,873,178
266,667
72,297
9,650,000
101,825
2,087,436
2,788,997
350,000
11,095,556
133,333
216,000
-
10,658
4,825,000
45,981
1,000,000
725,139
175,000
2,496,500
30,000
48,600
2,000,000
400,000
83,333
500,000
309,889
-
100,000
61,979
577,778
130,000
35,483,872
300,000
200,627,835
5,500,000
75,000
(929,056)
45,567,979
Capital Management
When managing capital, the Board’s objective is to ensure the Group 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 Group.
The Board is constantly reviewing the capital structure to take advantage of favourable costs of capital or high
54
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
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 Group was not subject to any externally imposed capital
requirements during the year.
NOTE 20: RESERVES
Nature and Purpose of Share-Based Payment Reserve
The share-based payment reserve records the value of options, performance rights and performance shares issued
to the Group’s directors, employees, and third parties. The value of the amount disclosed during the year reflects
the value of options and performance shares issued by the Group.
Performance Shares
Performance Rights
Options
Total Share-Based Payment Reserves
2019
$
1,587,603
2,120,938
3,746,356
7,454,897
2018
$
1,657,455
1,830,128
3,354,540
6,842,123
Nature and Purpose of Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange differences arising on translation of a foreign controlled
subsidiaries.
Foreign Currency Translation Reserve
Total Reserve
Options outstanding at 30 June 2019
2019
$
(3,310)
(3,310)
2018
$
11,663
11,663
The following options over ordinary shares of the Company existed at reporting date:
Grant Date
Expiry Date
Exercise
Price
Balance at
start of
Year
(number)
Granted
During the
Year
(number)
Exercised
during the
year
(number)
Forfeited
during the
year
(number)
Balance at
year end
30/06/2019
(number)
Vested and
exercisable at
year end
(number)
20/05/2016
29/08/2016
19/09/2016 -
31/08/2017
16/12/2016
5/05/2017
4/12/2017
4/12/2017
9/04/2018
9/04/2018
29/08/2018
11/03/2019
18/03/2019
21/05/2019
Total
(300,000)
(3,700,000)
-
-
-
-
5,888,438
5,888,438
(72,297)
(911,229)
4,321,340
1,996,083
20/05/2019
$0.25
4,000,000
29/08/2019
$0.25
5,888,438
19/09/2019
$0.33
5,304,866
15/12/2019
$0.30
5,335,000
1,750,000
850,000
850,000
516,765
516,765
5/05/2020
4/12/2020
4/12/2020
9/04/2021
9/04/2021
$0.30
$0.50
$0.60
$0.75
$0.90
29/08/2020
$0.60
11/03/2022
$0.25
18/03/2022
$0.18
21/05/2022
$0.235
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,335,000
5,335,000
1,750,000
1,750,000
850,000
850,000
516,765
516,765
500,000
250,000
850,000
850,000
516,765
516,765
500,000
250,000
715,885
898,692
20,067,628
55
-
-
-
-
500,000
250,000
2,209,859
898,692
25,011,834
3,858,551
(372,297)
(4,673,441)
23,824,647
(62,212)
2,147,647
-
898,692
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
Reconciliation of movement in option reserve:
Opening Balance - 1 July 2018
Options issued for corporate advisory and capital raising services
Share-based payment expense in respect to employee options on issue as at 1
July 2018 and granted during the year
Exercised during the year
Forfeited during the year
Closing Balance – 30 June 2019
Number of
Options
Value
$
25,011,834 3,354,540
1,648,692
170,224
2,209,859
221,592
(372,297)
(4,673,441)
-
-
23,824,647 3,746,356
On 29 August 2018, 500,000 options were issued for capital raising services to a nominee of Tellus Matrix LLP
(refer Note 26: Related Party Transactions). These options had a 2 year terms and exercise price of $0.60 per
option vesting immediately.
On 11 March 2019, 250,000 options were issued for strategic advisory services to be provided to the Company.
These options had a 3 year terms and exercise price of $0.25 per option vesting immediately.
On 18 March 2019, 2,209,859 options were issued under the Company’s Employee Share Option Plan. These
options had a 3 year terms and exercise price of $0.18 per option with one third of the options vesting immediately,
one third vesting in 1 year and one third vesting in 2 years.
On 21 May 2019, 898,692 options were issued for capital raising services provided by Blue Ocean Equities. These
options had a 3 year terms and exercise price of $0.235 per option vesting immediately.
These options were valued using the Black-Scholes option pricing model applying the following inputs.
Date
29/08/2018
11/03/2019
No of Options at 30 June 2019
500,000
Underlying share price
Exercise price
Expected volatility
Expiry date (years)
Expected dividends
Risk free rate
Value per option
$0.35
$0.60
113%
2.00
Nil
2.00%
$0.164
250,000
$0.215
$0.25
101%
3.00
Nil
1.53%
$0.129
18/03/2019
2,147,6471
21/05/2019
898,692
$0.525
$0.6401
106%
3.0
Nil
1.93%
$0.323
$0.125
$0.235
101%
3.00
Nil
1.21%
$0.063
1. These options have been valued under accounting standards based on the expected exercise price of the options on the grant date being
$0.64. At the grant date the options to be issued were to have an exercise price being the lower of
$0.64 being 10% above the 10 day vwap from establishment of the option plan; or
20% below the 10 day vwap from the issue of the options.
56
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
Performances shares outstanding at 30 June 2019
The following performance shares of the Company existed at reporting date. On achievement of the performance
milestones attaching to the class of performance shares, the performance shares automatically convert into fully
paid ordinary shares for nil consideration.
Class
Grant Date
Expiry Date
Balance at
start of Year
(number)
Granted
During the
Year*
(number)
Converted
during the year
(number)
Forfeited
during the
year
(number)
B
C
D
E
F
G
H
16/6/16 - 16/12/16
29/08/2019
10,499,999
16/6/16 - 16/12/16
29/08/2020
10,499,998
29/11/2017
29/11/2022
1,000,000
29/11/2017
29/11/2022
1,000,000
29/11/2017
29/11/2022
2,000,000
29/11/2017
29/11/2022
2,500,000
29/11/2017
29/11/2022
3,000,000
30,499,997
-
-
-
-
-
-
-
-
-
(1,000,000)
(1,000,000)
-
-
-
(2,000,000)
-
-
-
-
-
-
-
-
Balance at
year end
(number)
10,499,999
10,499,998
-
-
2,000,000
2,500,000
3,000,000
28,499,997
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 B Performance Shares convert on achievement of $10,000,000 revenue by the Group over a 12 month
rolling period of which 30% is subscription income (as confirmed by the Group’s auditor) by 29 August 2019.
● Class C Performance Shares convert on achievement of $20,000,000 revenue by the Group over a 12
month rolling period of which 30% is subscription income (as confirmed by the Group’s auditor) by 29 August
2020.
● Vesting conditions for Class D-H Performance Shares are disclosed within Note 17.
As at 30 June 2019 the Class B and C Performance Milestones have not been achieved. The Class B
Performance Shares are not expected to meet their vesting conditions as at 30 June 2019 and the share-based
payment expensed to date in respect to the Class B Performance Shares has been reversed.
The Performance Shares held by the Directors outlined above were not granted as part of their remuneration but
issued to the Directors in consideration for cancellation of ordinary shares they held in the Company prior to the
Company’s listing of ASX.
Reconciliation of movement in performance share reserve:
Opening Balance - 1 July 2018
Share-based payment expense for the year in respect to Performance Shares
on issue as at 1 July 2018
Performance Shares converted into ordinary shares on achievement of
performance milestone
Closing Balance – 30 June 2019
Number of
Performance
Shares
Value
$
30,499,997 1,657,455
-
(69,852)
(2,000,000)
-
28,499,997 1,587,603
57
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
Performance Rights at 30 June 2019
The following Performance Rights of the Company existed at reporting date:
Grant Date
Expiry Date
Exercise
Price
Balance at
start of Year
(number)
Granted
During the
Year
(number)
Exercised
during the
year
(number)
Forfeited
during the
year
(number)
Balance at
year end
(number)
Vested and
exercisable
at year end
(number)
04/12/2017
04/12/2020
Nil
4,316,667
2,055,1961
(350,000)2
(666,666) 3
5,355,197
5,355,197
1. 125,000 Class B Performance Rights and 125,000 Class C Performance Rights have been issued to a senior executive under
the Company's Performance Rights Plan. In addition, 1,191,111 Class G Performance Rights and 614,085 Class G
Performance Rights have been issued to Executive Directors in lieu of cash salaries for the 2019 calendar year.
2. 350,000 Class A Performance Rights were exercised during the period.
3. 333,333 Class B Performance Rights and 333,333 Class C Performance Rights have lapsed and been cancelled during the
period.
Reconciliation on movement in performance right reserve:
Opening Balance - 1 July 2018
Share-based payment expense for the year in respect to Performance Rights on
issue as at 1 July 2018 and granted during the year
Performance Rights exercised during the year following achievement of
performance milestone
Performance Rights lapsed and cancelled during the year
Closing Balance - 30 June 2019
Number of
Performance
Rights
4,316,667
Value
$
1,830,128
2,055,196
290,810
(350,000)
(666,666)
-
-
5,355,197
2,120,938
These Performance Rights have been valued at grant date and each Class are being expensed over the vesting
period.
Performance
Rights
Valuation
Date
Vesting Date
Fair Value at
Grant Date
Number Issued
Class B
Class C
Class D
Class E
Class F
Class G
Total
04/12/2017
04/12/2017
04/12/2017
04/12/2017
04/12/2017
01/01/2019
29/08/2019
29/08/2020
29/08/2018
29/08/2019
29/08/2020
01/01/2020
$0.675
$0.675
$0.675
$0.675
$0.675
$0.225
1,274,998
1,275,003
333,340
333,330
333,330
1,805,196
5,355,197
The Performance Rights 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 B Performance Rights convert on achievement of $10,000,000 revenue by the Group over a 12 month
rolling period of which 30% is subscription income by 29 August 2019.
58
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
● Class C Performance Shares convert on achievement of $20,000,000 revenue by the Group over a 12
month rolling period of which 30% is subscription income by 29 August 2020.
● 33,334 Class D Performance Rights vest for each Tier 1 partnering deal that goes live before 4 December
2020 following the achievement of 15,000 paying subscribers of the Company generating at least $100,000
revenue per month over 3 consecutive months by 29 August 2018;
● 33,334 Class E Performance Rights vest for each Tier 1 partnering deal that goes live before 4 December
2020 following the achievement of $10,000,000 revenue by the Company over a 12 month rolling period of
which 30% is subscription income by 29 August 2019;
● 33,334 Class E Performance Rights vest for each Tier 1 partnering deal that goes live before 4 December
2020 following the achievement of $10,000,000 revenue by the Company over a 12 month rolling period of
which 30% is subscription income by 29 August 2020; and
● Class G Performance Rights vest subject to continued employment with the Company in existing roles until 1
January 2020.
The Class B-F Performance Rights have been valued using the Black-Scholes option pricing model applying the
following inputs: share price at grant date of $0.675 per share; expected volatility of 100%; expected dividends of
nil; and a risk free rate of 2.28%.
Class G Performance Rights were issued to Mr Swan, Mr Levy and other senior executives during the year. These
have been valued based on the relevant amount of cash remuneration originally due to these executives under
their Executive Service Agreements which they have agreed to forgo and receive in Performance Rights. The
number of Performance Rights was determined with reference of the most recent capital raising issue price of the
Company at the date of approval of the issue of the Performance Rights being $0.225 per Share. The total value of
the Performance Rights issued to these executives when granted is $406,169 with the share-based payment
expense recognised over the vesting period of the Performance Rights.
The Class B and Class E Performance Rights are not expected to meet their vesting conditions as at 30 June 2019
and the share-based payment expensed to date in respect to the Class B and Class E Performance Rights has
been reversed.
NOTE 21: ACCUMULATED LOSSES
Accumulated Losses
Opening balance
Net loss for the financial year
Total Accumulated Losses
2019
$
(45,567,979)
2018
$
(30,683,960)
(30,683,960)
(14,401,137)
(45,085,097)
(12,477,749)
(18,206,211)
(30,683,960)
59
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 22: SHARE-BASED PAYMENTS
Share-based payments made during the year ended 30 June 2019 are summarised below:
(a) Recognised Share-Based Payment Expense
Advisor Options issued for advisory services provided
Shares issued to consultants in lieu of services provided
Options issued to employees as incentive
Shares issued to employees as incentive
Performance Rights issued to employees as incentive and for services
Performance Share issued to employees as incentive and for services
Less amounts recognised within equity
2019
$
170,224
1,347,076
221,592
130,000
272,097
(69,852)
(138,067)
1,933,070
2018
$
-
1,045,874
1,122,952
-
1,830,128
307,473
-
4,306,427
(b) Options Granted During the Year
The Group’s current Employee Share Option Plan (ESOP) was approved by the board of directors on 7 July 2016.
The ESOP is designed to provide medium and long term incentives for all employees (including non-executive and
executive directors) and to attract and retain experienced employees, board members and executive officers and
provide motivation to make the group more successful.
Under the ESOP, participants have been granted options which only vest if certain performance milestones are
met. Participation in the plan is at the board’s discretion and no individual has a contractual right to participate in
the plan or to receive any guaranteed benefit.
Any option may only be exercised after the option has vested and other conditions imposed by the board have
been satisfied. Options are granted under the plan for no consideration. Options granted under the plan carry no
dividend or voting rights. When exercisable, shares allotted pursuant to the exercise of options will be allotted
following receipt of relevant documentation and payments will rank equally with all other shares.
During the year, the following Employee Options were granted and vested:
Tranche
Valuation
Date
Expiry Date
Exercise
Price
Issued
during the
year
Vested during
the year
Total Share-Based
Payment Expense
for the year
1
2
3
4
5
6
Total
19/09/2016
19/09/2019
02/12/2016
19/09/2019
20/02/2017
19/09/2019
31/08/2017
19/09/2019
16/12/2016
15/12/2019
18/03/2019
15/03/2022
$0.33
$0.33
$0.33
$0.33
$0.30
$0.18
-
-
-
-
-
2,209,859
2,209,859
-
-
-
-
1,500,000
715,885
2,215,885
($225,219)
($69,131)
($20,835)
($231,425)
$77,465
$528,128
$58,983
60
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
Employee Options were considered to represent the value of the services received over the vesting period, the
Group has determined the most appropriate values for these Employee Options using the Black-Scholes option
pricing model applying the following inputs.
Underlying share price
Exercise price
Expected volatility
Expiry date (years)
Expected dividends
Risk free rate
Value per option
Tranche 5
Tranche 6
$0.20
$0.30
100%
3.00
Nil
2.28%
$0.106
$0.525
$0.641
106%
3.00
Nil
1.93%
$0.322
1. These options have been valued under accounting standards based on the expected exercise price of the options on the grant date being
$0.64. At the grant date the options to be issued were to have an exercise price being the lower of
$0.64 being 10% above the 10 day vwap from establishment of the option plan; or
20% below the 10 day vwap from the issue of the options.
During the year, the third Vesting Condition, as set out below, of the Tranche 1-4 Employee Options was not met
as at 30 June 2019. The share-based payment expensed to date in respect to these options has been reversed.
Vesting Date
Vesting condition
31/12/2017
25% of the Options will vest and become exercisable upon the Company having 20,000 paying subscribers
registered by 31 December 2017. (“First Vesting Condition”) Vested as at 30 June 2018.
31/12/2017
25% of the Options vest and become exercisable upon the Company having 30,000 paying subscribers
registered by 31 December 2017. (“Second Vesting Condition”) Vested as at 30 June 2018.
30/06/2019
50% of the Options will vest and become exercisable upon the Company achieving $10,000,000 of customer
revenue in any of the financial years ended 30 June 2017, 30 June 2018 or 30 June 2019. (“Third Vesting
Condition”)
The vesting conditions attaching to the Tranche 5 Employee Options are as follows:
Vesting Date
Vesting condition
15/12/2019
15/12/2019
15/12/2019
15/12/2019
25% vest on Family Zone achieving $2.0m Cumulative Revenue in 24 months from engagement or 20,000
Paying Zones. Vested as at 30 June 2018.
25% vest on Family Zone achieving $4.0m Cumulative Revenue in 24 months from engagement or 30,000
Paying Zones. Vested as at 30 June 2018.
25% vest on Family Zone achieving $8.0m Cumulative Revenue in 24 months from engagement or 40,000
Paying Zones. Vested as ay 30 June 2018.
25% vest on Family Zone achieving $10.0m Cumulative Revenue in 24 months from engagement or 50,000
Paying Zones. Vested as at 30 June 2019.
61
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
The vesting conditions attaching to the Tranche 6 Employee Options are as follows:
Vesting Date
Vesting condition
18/03/2019
33.3% vested on issue
18/03/2020
33.3% vest one year following the Issue Date
18/03/2021
33.3% vest on two years following the Issue Date
c) Performance Rights
During the year, 125,000 Class B Performance Rights and 125,000 Class C Performance Rights have been issued
to a senior executive under the Company's Performance Rights Plan. In addition, 1,191,111 Class G Performance
Rights and 614,085 Class G Performance Rights have been issued to Executive Directors in lieu of cash salaries
for the 2019 calendar year. The Performance Rights issued convert into ordinary shares on a one-for-one basis
subject to the achievement of a series of vesting conditions.
These Performance Rights were considered to represent the value of the services received over the vesting period.
The Performance Rights have been valued based on the share price of the Company at the date of approval of the
issue of the Performance Rights with a share-based payment expense recognised over the vesting period of the
Performance Rights.
The total share-based payment expense for the year in respect to the Performance Rights on issue was
$1,434,155.
d) Performance Shares
The total share-based payment expense for the year in respect to the 28,499,997 Performance Shares that had
been issued to employees in lieu of services in the prior period was $148,287.
NOTE 23: OPERATING CASH FLOW INFORMATION
Reconciliation of cash flow from operations with loss after income tax
Loss for the year
Non-cash items
Share-based payments
Advertising and other expenses settled in equity
Depreciation and amortisation
Revaluation of contingent consideration
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 Provisions
Cash flows used in operations
Non-cash investing and financing activities disclosed in other notes are:
Options and shares issued to employees and advisors, per note 22.
2019
$
2018
$
(14,401,137)
(18,206,211)
2,021,783
73,511
4,498,680
(1,168,470)
4,306,427
-
3,269,831
139,192
762,424
(65,614)
(1,914,204)
(16,429)
(10,209,455)
742,355
(30,995)
(532,526)
(112,953)
(10,556,642)
62
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 24: FINANCIAL INSTRUMENTS
(a)
Financial Risk Management Objectives and Policies
The Group’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 Group 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 Group 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 Consolidated Statement of Financial Position
or in the notes.
(d) Credit Risk
(i)
Exposure to Credit Risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s
maximum exposure to credit risk at the reporting date was:
Financial Assets - Current
Cash and cash equivalents
Trade receivables
Total Financial Assets
2019
$
2018
$
5,116,523
3,228,710
8,345,233
2,461,222
264,181
2,725,403
Financial assets as at 30 June 2019 are neither past due nor impaired.
The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables and contract assets. Refer to Note 2(b) for the Group’s adoption
of AASB 9.
63
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
(ii)
Interest Rate Risk
The Group’s maximum exposure to interest rates at the reporting date was:
Range of
Effective Carrying
Interest
Amount
Rate
(%)
$
Interest Rate Exposure
Variable
Interest
Rate
$
Non
Interest
Bearing
$
Fixed
Interest
Rate
$
Total
$
0-4
5,116,523
4,923,111
193,412
-
5,116,523
14
1,469,535
0-1
2,461,222
-
-
-
-
1,469,535
1,469,535
2,461,222
2,461,222
2019
Financial Assets - Current
Cash and cash equivalents
Financial Liabilities -
Current
Borrowings
2018
Financial Assets - Current
Cash and cash equivalents
(e)
Fair value of Financial Instruments
The directors consider the carrying amount of the Group’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 Group’s financial liabilities represents the maximum liquidity risk. The Group’s
maximum exposure to liquidity risk at the reporting date was:
Financial Liabilities - Current
Trade and other payables
Borrowings
Total financial liabilities
2019
$
2018
$
1,143,101
1,469,535
2,612,636
500,277
-
500,277
64
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
(ii)
Contractual Maturity Risk
The following table discloses the contractual maturity analysis at the reporting date:
0-6 months
6-12 months
$
$
Over 1 to 5
years
$
More than 5
years
$
Total
$
2019
Financial Instrument
Financial Assets
Cash
5,116,523
Trade and other receivables
3,228,710
Total financial assets
8,345,233
Financial Liabilities
Trade and other payables
Borrowings
Total financial liabilities
1,143,101
1,469,535
2,612,636
-
-
-
-
-
-
-
-
-
-
-
-
2018
Financial Instrument
0-6 months
$
6-12 months
$
Over 1 to 5
years
$
More than 5
years
$
Financial Assets
Cash
Trade and other receivables
Total financial assets
2,461,222
264,181
2,725,403
Financial Liabilities
Trade and other payables
500,277
Total financial liabilities
500,277
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,116,523
3,228,710
8,345,233
1,143,101
1,469,535
2,612,636
Total
$
2,461,222
264,181
2,725,403
500,277
500,277
65
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
(g) Market Risk
(i)
Foreign exchange risk
The group’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollars
was as follow:
Net assets (liabilities)
Value of NZD exposure
expressed in AUD
Value of USD exposure
expressed in AUD
2019
(239,029)
2018
(245,905)
2019
221,165
2018
37,996
Net profit (Loss)
(1,703,487)
(1,135,000)
(1,563,928)
(852,164)
Foreign Currency sensitivity:
Based on the net liability position of the foreign subsidiaries at 30 June 2019, had the Australian dollar
weakened/strengthened by 10% against the New Zealand dollar with all other variables held constant, the Group’s
post-tax loss for the year would have been $170,349 higher/$170,349 lower (2018: $113,500 higher/$113,500
lower), and the effect on equity would have been $23,902 higher/$23,902 lower (2018: $24,591 higher/$24,591
lower).
In addition, had the Australian dollar weakened/strengthened by 10% against the US dollar with all other variables
held constant, the Group’s post-tax loss for the year would have been $156,393 higher/$156,393 lower (2018:
$85,216higher/$85,216 lower), and the effect on equity would have been $22,117 higher/$22,117 lower (2018:
$3,800 higher/$3,800 lower).
The Group currently does not engage in any hedging or derivative transactions to manage foreign currency risk.
(ii)
Interest Rate Risk
The Group’s only exposure to interest rate risk is on balances held as cash and R&D Loan Facility as set out in
Note 24(d)(ii).
(iii) Other Price Risk
By virtue of the nature and classification of the financial instruments held by the Group, it is not exposed to
significant other price risk.
(iv) Sensitivity Disclosure Analysis
Taking into account past performance, future expectations and economic forecasts, the Group 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.
66
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
2019
Financial Assets - Current
Cash and cash equivalents
Trade Receivables
Financial Liabilities - Current
Trade and other payable
Borrowings
2018
Financial Assets - Current
Cash and cash equivalents
Trade Receivables
Financial Liabilities - Current
Trade and other payable
Carrying
Amount
$
4,923,111
3,228,710
Interest Rate Risk
+1%
-1%
Profit
$
49,231
-
Equity
$
49,231
-
Profit
$
Equity
$
(49,231)
-
(49,231)
-
1,143,101
1,469,535
-
(14,695)
-
(14,695)
-
14,695
-
14,695
2,461,222
264,181
24,612
-
24,612
-
(24,612)
-
(24,612)
-
500,277
-
-
-
-
NOTE 25: SEGMENT INFORMATION
AASB 8 ‘Operating Segments’ requires operating segments to be identified on the basis of internal reports about
components of the Company that are regularly reviewed by the chief operating decision maker in order to allocate
resources to the segment and to assess its performance.
In the prior year, the Group operated in two segments being cyber security services in Australia and in New
Zealand. During the financial year, the Group has continued to expand into the United States of America (USA).
As a result of the growth, the Group now has three operating segments which are consistent with the internal
reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as
the Board of Directors.
The three main operating segments in which the group operates are information technology (and more specifically
the provision of cyber safety services) in Australia, New Zealand and United States of America. The Group also
operates in Asia, however this is in the early stages of development, and has been allocated to other. Other also
includes head office & corporate expenditure.
30 June 2019
Segment
Income
Sales revenue
Other income
Contingent
consideration
Total Income
Australia
$
New Zealand
$
USA
$
3,209,354
3,840,053
1,168,470
790,384
7,015
-
193,846
49
-
Other
$
(9,262)
8
-
8,217,877
797,399
193,895
(9,254)
Total
$
4,184,322
3,847,125
1,168,470
9,199,917
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
Segment
Expenses
Cost of sales
Administration
costs
Finance costs
Employee and
director benefits
Marketing costs
Research and
Development
Share-based
payments
Loss before
depreciation
and
amortisation
Depreciation and
amortisation
Loss before
Income Tax
30 June 2019
Segment Assets and
Liabilities
Cash
Trade and other
receivables
Prepayments
Inventory
Plant and equipment
Intangible assets
Trade and other
payables
Provisions
Borrowings
Contingent consideration
Net Assets
Australia
$
(1,675,055)
New Zealand
$
(163,721)
(2,088,252)
(840,922)
(93,862)
(1,009)
USA
$
(131,582)
(409,086)
(5,350)
(3,607,180)
(1,372,474)
(1,147,928)
(921,340)
(68,121)
(15,627)
(4,478,123)
-
-
-
-
-
Other
$
(62,722)
(86,870)
Total
$
(2,033,080)
(3,425,160)
(50)
(100,271)
-
-
-
(6,127,582)
(1,005,088)
(4,478,123)
(1,933,070)
(1,933,070)
(4,645,965)
(1,648,848)
(1,515,678)
(2,091,966)
(9,902,457)
(1,459,069)
(2,991,362)
(48,249)
-
(4,498,680)
(6,105,034)
(4,640,210)
(1,563,927)
(2,091,966)
(14,401,137)
Australia
$
New Zealand
$
USA
$
Other
$
Total
$
4,990,392
44,555
2,570,177
153,916
763,212
146,205
274,563
668,647
16,581
28,152
106,013
4,157,756
35,160
579,916
25,811
10,924
302,181
-
46,416
5,116,523
4,813
3,308.822
-
(28,130)
-
-
805,604
157,151
682,757
4,826,403
(3,068,531)
(514,838)
(556,624)
(184,500)
(4,324,493)
(418,319)
(1,469,535)
(677,035)
3,779,776
(73,409)
-
-
(3,918,726)
-
-
-
397,368
-
-
-
(161,401)
(491,728)
(1,469,535)
(677,035)
7,934,469
68
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
30 June 2018
Segment Income
Sales revenue
Other income
Total Income
Segment Expenses
Cost of sales
Administration costs
Finance costs
Employee and director benefits
Marketing costs
Research and Development
Share-based payments
Loss before depreciation and
amortisation
Australia
$
New Zealand
$
2,068,772
2,779,284
4,848,056
239,517
12,445
251,962
Other
$
21,492
7
21,499
Total
$
2,329,780
2,791,736
5,121,516
(1,145,401)
(3,432,731)
(20,803)
(5,289,451)
(1,162,949)
(2,385,566)
(50,150)
(363,976)
(844)
(788,386)
(45,741)
(116,385)
-
-
(17,710)
(1,213,262)
(403,064)
(13,269)
(484,342)
(23,852)
(6,848)
(4,306,427)
(4,199,771)
(34,916)
(6,562,179)
(1,232,543)
(2,508,800)
(4,306,427)
(8,588,485)
(1,113,521)
(5,234,013)
(14,936,380)
Depreciation and amortisation
Loss before Income Tax
(1,540,024)
(10,128,869)
(1,729,806)
(2,843,327)
-
(5,234,013)
(3,269,831)
(18,206,211)
30 June 2018
Segment Assets and Liabilities
Cash
Trade and other receivables
Prepayments
Inventory
Plant and equipment
Intangible assets
Trade and other payables
Provisions
Contingent consideration
Net Assets
Australia
$
New Zealand
$
2,366,182
1,181,902
136,956
92,423
218,390
1,930,708
(3,108,858)
(404,671)
(2,245,505)
167,527
53,342
111,764
6,417
57,506
39,290
7,094,478
(498,205)
(56,357)
-
6,808,235
Other
$
41,698
34,771
-
-
-
-
(9,229)
-
-
67,240
Total
$
2,461,222
1,328,437
143,373
149,929
257,682
9,025,186
(3,616,292)
(461,028)
(2,245,505)
7,043,004
69
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 26: RELATED PARTY TRANSACTIONS
(a) Parent and Subsidiaries
The parent entity and ultimate parent entity of the Group is Family Zone Cyber Safety Limited, a company listed on
the Australian Securities Exchange. The components of the Group are:
Parent
Family Zone Cyber Safety Limited
Incorporation
Extent of control
2018
2019
Australia
-
-
Controlled entities
Family Zone Inc.
Family Zone Cyber Safety Pte. Ltd.
Family Zone NZ Cyber Safety Ltd (formerly Linewize Service Ltd)1
USA
Singapore
New Zealand
100%
100%
100%
100%
100%
100%
1. On 1 April 2019 Linewize Services Ltd amalgamated with Linewize Ltd (acquiring all its assets and liabilities). Linewize
Services Ltd was renamed Family Zone NZ Cyber Safety Ltd and Linewize Ltd was deregistered.
(b) 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 Group is as follows:
Short-term employee benefits
Post-employment benefits
Share-based payment
Total
(c)
Loans with Key Management Personnel
(Mr Tim Levy – Managing Director)
2019
$
2018
$
408,933
47,500
481,526
937,959
530,734
-
293,989
824,723
A loan balance has arisen between Family Zone Cyber Safety Limited and Mr Tim Levy as a result of funds loaned
to the Company and payments made on behalf of the Company by the Mr Levy in the prior year. 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
2019
$
-
-
-
-
2018
$
(20,483)
-
20,483
-
70
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
(c) Other Transactions with Key Management Personnel
a) Grange Consulting
Mr Phil Warren, a Director of the Company, is also a Managing Director of Grange Consulting and an entity related
to him is shareholder of Grange Consulting.
A summary of the total fees paid to Grange Consulting and Grange Capital Partners for the year ended 30 June
2019 and 30 June 2018 is as follows:
Company secretarial and financial management services
Total
30 June 2019
$
94,500
94,500
30 June 2018
$
94,500
94,500
Amounts payable to Grange Consulting/Grange Capital Partners as at 30 June 2019 were $25,987 (Including
GST), as at 30 June 2018 were $17,586 (incl GST).
b) Tellus Matrix LLP
Sir Peter Westmacott, a Director of the Company, is also Vice Chairman and Partner of Tellus Matrix LLP.
$387,503 was paid to Tellus Matrix LLP for the year end 30 June 2019 in relation to capital raising and corporate
advisory fees. There were no amounts outstanding and payable to Tellus Matrix LLP as at 30 June 2019. In
addition, 500,000 options for a 2 year term with an exercise price $0.60 per option were issued to a nominee of
Tellus Matrix LLP for capital raising services. 101,825 fully paid ordinary shares were also issued to a nominee of
Tellus Matrix LLP for corporate advisory services.
NOTE 27: 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 – Other assurance engagements
Pitcher Partners (WA) Pty Ltd – Taxation
Total remuneration of Pitcher Partners BA&A Pty Ltd and related firms
2019
$
2018
$
47,000
3,000
10,600
60,600
41,000
6,250
8,500
55,750
71
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2019
NOTE 28: COMMITMENTS AND CONTINGENT LIABILITIES
Operating Lease Commitments – Group as Lessee:
Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Total
30 June 2019
$
160,780
158,442
-
319,222
30 June 2018
$
66,298
-
-
66,298
The Directors are not aware of any other commitments or any contingent liabilities that may arise from the Group’s
operations as at 30 June 2019.
NOTE 29: PARENT ENTITY DISCLOSURE
Assets
Current assets
Non-current assets
Total Assets
Liabilities
Current liabilities
Non-current liabilities
Total Liabilities
Net Assets/(Deficiency)
Equity
Issued Capital
Reserves
Accumulated losses
Total Equity
30 June 2019
$
30 June 2018
$
8,454,204
5,135,615
13,589,819
3,508,483
9,322,390
12,830,873
5,583,205
72,145
5,655,350
3,298,480
2,489,389
5,787,869
7,934,469
7,043,004
45,567,979
7,454,897
(45,088,407)
7,934,469
30,871,193
6,842,123
(30,670,312)
7,043,004
NOTE 30: EVENTS OCCURRING AFTER THE REPORTING PERIOD
On 23 July 2019, the Company announced that it had received advice from the US Patent & Trademark Office of
the award of a Patent in relation to the Company’s “Device Management System” under application 15/286434.
On 25 July 2019, the Company announced a new strategic partner, Check Point Software Technologies Ltd, to
bring a unique, best of breed cyber safety and security solution to the education sector.
Apart from the events discussed above, no other matters or circumstances have arisen since the end of the period
which significantly affected or may significantly affect the operations of the Group, the results of those operations or
the state of affairs of the Group in subsequent financial years.
72
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
DIRECTORS’ DECLARATION
In the Directors’ opinion:
(a)
the accompanying financial statements set out on pages 30 to 72 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 Group’s financial position as at 30 June 2019 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 Group 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 2019.
This declaration is made in accordance with a resolution of the Board of Directors.
On behalf of the Directors
Tim Levy
Managing Director
30 August 2019
73
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FAMILY ZONE CYBER SAFETY LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Family Zone Cyber Safety Limited “the Company” and
its controlled entities “the Group”, which comprises the consolidated statement of financial
position as at 30 June 2019, the consolidated statement of profit or loss and other
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
(a)
(b)
giving a true and fair view of the Group’s financial position as at 30 June 2019 and of
its financial performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations
2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities
for the Audit of the Financial Report section of our report. We are independent of the Group in
accordance with the auditor independence requirements of the Corporations Act 2001 and the
ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110
Code of Ethics for Professional Accountants “the Code” that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of the Company, would be in the same terms if given to the
directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 2(a) to the financial report which indicates that the Group incurred
a net loss of $14,410,138 during the year ended 30 June 2019 (2017: loss of $18,206,211),
net cash outflows of $10,209,455 from operating activities (2018: 10,556,642) and had cash
and cash equivalents of $5,116,523 (2018: $2,461,222). These conditions, along with other
matters as set forth in Note 2(a), indicate the existence of a material uncertainty that may cast
significant doubt about the Group’s ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial report of the current period. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
- 74 -
Pitcher Partners BA&A Pty LtdAn independent Western Australian Company ABN 76 601 361 095.Level 11, 12-14 The Esplanade, Perth WA 6000Registered Audit Company Number 467435.Liability limited by a scheme under Professional Standards Legislation.Adelaide Brisbane Melbourne Newcastle Perth SydneyPitcher Partners is an association of independent firms. Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FAMILY ZONE CYBER SAFETY LIMITED
Key Audit Matter
How our audit addressed the key audit matter
Valuation of intangible assets
Refer to Note 11 of the financial report
At 30 June 2019, the consolidated statement of
financial position of the Group includes intangible
assets of $4,826,403.
This amount represents 32% of total assets.
Due to the significance to the Group’s financial
report and the level of management’s judgment
involved in assessing whether there are
impairment indicators present, we consider this
to be a key audit matter.
Revenue Recognition
Refer to Note 2(b) & 4 of the Financial Report
For the year ended 30 June 2019, the Group has
revenue of $4,184,323 from the sale of hardware
and/or for contracts to provide subscription
services.
The determination of revenue recognition
requires management judgements in accounting
for revenue, discounts and credit notes in
accordance with the Group’s identified
performance obligations as part of the
transaction.
Our procedures included, amongst others:
Assessing management’s determination of the
appropriate Cash Generating Unit (“CGU”) based
on our understanding of the nature of the Group’s
business and the economic environment in which
it operates. Also reviewing the internal reporting
of the Group to assess how earnings streams
and groups of assets are monitored and reported
Evaluating management’s relevant controls and
processes regarding valuation of the CGU to
determine any potential impairment including the
procedures around the preparation and review of
the associated cash flow forecasts
Assessing the appropriateness of management’s
judgment and conclusion that there were no
impairment indicators present as at 30 June
2019. In doing so considering internal and
external impairment factors and assessing the
appropriateness of the amortisation period of the
capitalised expenditure pursuant to the
requirements of Australian Accounting
Standards.
Assessing, agreeing and checking the data within
the cash flow forecasts associated with the CGU.
Considering the adequacy of the disclosures
included within the financial report.
Our procedures included, amongst others:
Obtaining an understanding of the relevant
controls associated with the treatment of
revenue, including, but not limited to, those
relating to identification of performance
obligations, discounts, incentives and rebates.
Considering the appropriateness of the Group’s
revenue recognition accounting policies including
those relating to identifying performance
obligations, determining the transaction price and
allocating the transaction price to the
performance obligations in contract.
Testing a sample of transactions by sighting
evidence of signed contracts, related invoices
and comparing the revenue amount recognised
to the timing of when the Group satisfies
performance obligations associated with the
transaction.
Considering the adequacy of the disclosures
included within the financial report.
- 75 -
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FAMILY ZONE CYBER SAFETY LIMITED
Share Based Payments
Refer to Note 3(m), 16 and 23 of the
Financial Report
At 30 June 2019, share based payments of
$1,933,070 represent a significant portion of
the Group’s expenditure.
Share based payments must be recorded at
fair value of the service provided, or in the
absence of such, at the fair value of the
underlying equity instrument granted. In
calculating the fair value there are a number
of management judgements including but
not limited to:
• Assessing the probability of achieving
key performance milestones in relation
to vesting conditions; and
• Assessing the fair value of the share
price on grant date, estimate of
expected future share price volatility,
expected dividend yield and risk-free
rate of interest.
Our procedures included, amongst others:
Obtaining an understanding of the relevant
controls associated with the preparation of
the valuation model used to assess the fair
value of share based payments, including
those relating to volatility of the underlying
security and the appropriateness of the
model used for valuation.
Critically evaluating and challenging the
methodology and assumptions of
management in their preparation of
valuation model, agreeing inputs to internal
and external sources of information.
Assessing the appropriateness of share
based payments expensed during the year
pursuant to the requirements of Australian
Accounting Standards.
Assessing the Group’s accounting policy as
set out within Note 3(m) for compliance with
the requirements of AASB 2 Share-based
Payment.
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Directors report, which was obtained as at the date of our audit
report, and any additional other information included in the Company’s annual report for the
year ended 30 June 2019, but does not include the financial report and our auditor’s report
thereon. Our opinion on the financial report does not cover the other information and
accordingly we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other
information above and, in doing so, consider whether the other information is materially
inconsistent with the financial report or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the
Group to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or has no realistic alternative but to do so.
- 76 -
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FAMILY ZONE CYBER SAFETY LIMITED
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a
whole is free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of
this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial report, whether
due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor’s report to the related disclosures in the
financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue
as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including
the disclosures, and whether the financial report represents the underlying transactions
and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the financial
report. We are responsible for the direction, supervision and performance of the Group
audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
- 77 -
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FAMILY ZONE CYBER SAFETY LIMITED
From the matters communicated with the directors, we determine those matters that were of
most significance in the audit of the financial report of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended
30 June 2019. In our opinion, the Remuneration Report of Family Zone Cyber Safety Limited,
for the year ended 30 June 2019, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
PITCHER PARTNERS BA&A PTY LTD
PAUL MULLIGAN
Executive Director
Perth, 30 August 2019
- 78 -
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
ASX ADDITIONAL INFORMATION
7
Additional information required by the 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 22 August 2019 includes the following securities:
Equity Class
Fully paid ordinary shares
Unlisted Options ($0.25, 29 Aug 2019)
Unlisted Employee Options ($0.33, 19 Sept 2019)
Unlisted Employee Options ($0.30, 15 Dec 2019)
Broker Options ($0.30, 5 May 2020)
Broker Options ($0.50, 4 Dec 2020)
Broker Options ($0.60, 4 Dec 2020)
Broker Options ($0.75, 9 Apr 2021)
Broker Options ($0.90, 9 Apr 2021)
TM Options ($0.60, 29 Aug 2020)
Advisor Options (($0.25, 11 Mar 2022)
Employee Options ($0.18, 18 Mar 2022)
Broker Options ($0.235, 21 May 2022)
Performance Shares (Class B-H)
Performance Rights (Class B-G)
Number of holders
1,614
24
27
2
1
1
1
1
1
1
1
44
1
14
15
Total on issue
200,627,835
5,888,438
4,321,340
5,335,000
1,750,000
850,000
850,000
516,765
516,765
500,000
250,000
2,147,647
898,692
28,499,997
5,355,197
All issued fully paid ordinary shares (Shares) carry one vote per share. Options, Performance Share and
Performance Rights do 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
Herald Investment Trust plc
Number of Shares held
10,479,729
10,458,510
% of Total Shares
5.22%
5.22%
3.
a)
Distribution of equity securities as at 22 August 2019
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
69,367
1,047,988
1,914,911
28,121,134
169,474,435
200,627,835
109
367
239
682
217
1,614
% Total
Shares
0.03%
0.52%
0.95%
14.02%
85.47%
100.00%
There were 311 holders with less than a marketable parcel of Shares based on the closing share price of $0.17 on
22 August 2019.
79
ASX ADDITIONAL INFORMATION (CONTINUED)
80
b)
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
c)
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
d)
Employee Options ($0.30, 15 Dec 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
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
Holders Total Options
-
-
7,813
706,250
5,174,375
5,888,438
-
-
1
12
11
24
Total
Employee
Options
-
-
-
603,523
3,717,817
4,321,340
Total
Employee
Options
-
-
-
-
5,335,000
5,335,000
Holders
-
-
-
8
19
27
Holders
-
-
-
-
2
2
% Total
Options
-
-
0.13%
11.99%
87.87%
100.00%
% Total
Employee
Options
-
-
-
13.97%
86.03%
100.00%
% Total
Employee
Options
-
-
-
-
100.00%
100.00%
e)
Broker Options ($0.30-$0.90, 5 May 2020 to 9 Apr 2021)
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
-
-
-
-
1
1
Total Broker
Options
-
-
-
-
4,483,530
4,483,530
% Total Broker
Options
-
-
-
-
100.00%
100.00%
80
ASX ADDITIONAL INFORMATION (CONTINUED)
f)
TM Options ($0.60,29 Aug 2020)
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Totals
g)
Advisor Options (($0.25, 11 Mar 2022)
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Totals
h)
Employee Options ($0.18, 18 Mar 2022)
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Totals
i)
Broker Options ($0.235, 21 May 2022)
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
Holders
-
-
-
-
1
1
Holders
-
-
-
-
1
1
Holders
-
4
5
27
8
44
Holders
-
-
-
-
Total TM
Options
-
-
-
-
500,000
500,000
Total
Advisor
Options
-
-
-
-
250,000
250,000
% Total TM
Options
-
-
-
-
100.00%
100.00%
% Total Advisor
Options
-
-
-
-
100.00%
100.00%
Total
Employee
Options
-
8,170
37,370
741,235
1,360,272
2,147,647
% Total
Employee
Options
-
0.38%
1.77%
34.51%
63.34%
100.00%
Total
Advisor
Options
-
-
-
-
% Total Advisor
Options
-
-
-
-
81
ASX ADDITIONAL INFORMATION (CONTINUED)
8
100,001 - 9,999,999,999
Totals
j)
Performance Shares (Class A-H)
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Totals
k)
Performance Rights (Class B-G)
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Totals
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
1
1
898,692
898,692
100.00%
100.00%
Total
Performance
Shares
-
-
-
-
28,499,997
28,499,997
Holders
-
-
-
-
14
14
% Total
Performance
Shares
-
-
-
-
100.00%
100.00%
Total
Performance
Rights
-
-
-
100,000
5,255,197
5,355,197
Holders
-
-
-
1
14
15
% Total
Performance
Rights
-
-
-
-
100.00%
100.00%
82
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
ASX ADDITIONAL INFORMATION (CONTINUED)
4.
Top 20 Shareholder as at 22 August 2019
Position Holder Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
TIMOTHY NOMINEES PTY LTD
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
GASMERE PTY LTD
VIDACOS NOMINEES LIMITED
MCCUSKER HOLDINGS PTY LTD
SISU INTERNATIONAL PTY LTD
BNP PARIBAS NOMINEES PTY LTD
BIG PROPERTY INVESTMENTS P/L
CARLO CHIODO/CHIODO TRADING
CITICORP NOMINEES PTY LIMITED
FRESHIE PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
TRIGGER ASSETS PTY LTD
SCOTT ROBERT NOAKES
MICHAEL OLIVER LAWSON
1001 PTY LTD
NOVALANE COM PTY LTD
BROWN BRICKS PTY LTD
FIDELIO
GOONET PTY LTD
Total
Total issued capital - selected security class(es)
Holding
12,789,924
10,479,729
8,445,544
6,808,888
5,751,825
5,640,000
5,165,149
5,008,786
4,444,445
4,410,686
4,274,710
4,196,574
4,160,612
3,885,986
3,680,000
3,680,000
3,550,000
3,472,680
2,355,938
2,315,271
2,222,222
% IC
6.37%
5.22%
4.21%
3.39%
2.87%
2.81%
2.57%
2.50%
2.22%
2.20%
2.13%
2.09%
2.07%
1.94%
1.83%
1.83%
1.77%
1.73%
1.17%
1.15%
1.11%
106,738,969
53.20%
200,627,835 100.00%
5.
Restricted Securities
The following securities as classified as restricted securities and are subject to escrow periods as outlined below
Security
Shares
6.
Unquoted Securities
Escrowed to
29 Nov 2019
Escrowed to
1 Jan 2020
Escrowed to
8 Apr 2020
6,080,000
793,778
500,000
The names of the security holders holding more than 20% of an unlisted class of security are listed below:
83
ASX ADDITIONAL INFORMATION (CONTINUED)
a)
Broker Options ($0.30-$0.90, 5 May 2020 to 9 Apr 2021)
Holder Name
TR Nominees Pty Ltd
Total Broker Options
b)
Performance Shares
Holder Name
Timothy Nominees Pty Ltd
Total
c)
TM Options ($0.60, 29 Aug 2020)
Holder Name
Vidacos Nominees Limited
Total Broker Options
d)
Advisor Options ($0.25, 11 Mar 2022)
Holder Name
Idea X Partners Pte Ltd
Total Broker Options
e)
Broker Options ($0.25, 11 Mar 2022)
Holder Name
L39 Pty Ltd
Total Broker Options
7.
On-market buy back
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
Holding
% Total Options
4,483,530
4,483,530
100.00%
100.00%
Holding
7,757,220
30,499,997
% Total
Performance
Shares
25.43%
100.00%
Holding
% Total Options
500,000
500,000
100.00%
100.00%
Holding
% Total Options
250,000
250,000
100.00%
100.00%
Holding
% Total Options
898,692
898,692
100.00%
100.00%
There is currently no on-market buyback program for any of the Company’s listed securities and no securities were
purchased on market during the financial period.
8.
Use of Funds
In accordance with ASX Listing Rule 4.10.19, Family Zone confirms it has used the cash and assets in a form
readily convertible into cash, that it had at the time of its admission to ASX, for the year ended 30 June 2019 in a
way that is consistent with its business objectives and strategy.
84
Family Zone Cyber Safety Limited
Annual Report 30 June 2019
CORPORATE GOVERNANCE
In accordance with ASX Listing Rule 4.10.3 the Company’s corporate governance statement can be found at the
following URL:
https://cdn2.hubspot.net/hubfs/416543/Corporate%20Governance%20Statement%20-
Family%20Zone%2030%20June%202019.pdf
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.
85