FAMILY ZONE CYBER SAFETY LIMITED
ACN 167 509 177
ANNUAL REPORT
for the year ended 30 June 2021
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
CONTENTS
PAGE
CORPORATE INFORMATION .............................................................................................................................. 3
CHAIRMAN'S MESSAGE...................................................................................................................................... 4
REVIEW OF OPERATIONS .................................................................................................................................. 5
DIRECTORS’ REPORT ........................................................................................................................................ 8
DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED)......................................................................... 16
AUDITOR’S INDEPENDENCE DECLARATION ................................................................................................... 32
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME .................... 33
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ................................................................................ 34
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ................................................................................ 35
CONSOLIDATED STATEMENT OF CASH FLOWS ............................................................................................. 36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ........................................................................... 37
DIRECTORS’ DECLARATION ............................................................................................................................ 88
INDEPENDENT AUDITOR’S REPORT………………………………………………………………………………………89
ASX ADDITIONAL INFORMATION ..................................................................................................................... 93
CORPORATE GOVERNANCE ............................................................................................................................ 97
2
CORPORATE INFORMATION
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
Directors
Tim Levy
Peter Pawlowitsch
Crispin Swan
Phil Warren
Matthew Stepka
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 3, 45 St George Terrace
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:
BDO Audit (WA) Pty Ltd
38 Station Street
SUBIACO WA 6008
Telephone: +61 8 6382 4600
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 2021
CHAIRMAN’S MESSAGE
Dear shareholders
I am pleased to report on the activities of Family Zone Cyber Safety Limited (Company) and its controlled entities
(Family Zone or the Group) for the financial year ended 30 June 2021, a year that placed our services in focus as
changes weighed on educational institutions around the world.
One of the most recognisable flow-on consequences of the COVID-19 pandemic has been the great acceleration in
how much of our work, education and social lives are carried out online. There is no doubt that the role technology
played in allowing large sections of the economy to continue, and society to remain connected, through the public
health measures offers a case study on the value of digitisation and the internet. However the resultant accelerated
adoption brought to light for regulators, schools and parents the challenges of online safety.
Students have lived more of their lives online over the last two years than would have previously been seen as
possible. This has highlighted the importance not only of cyber safety, but also the need to address the welfare
challenges that follow for age groups so reliant on interpersonal contact for development.
It is in this context that our purpose comes into its own, and that we are able to direct our focus for continued growth
to support institutions and their pupils as they evolve to fit a changing world.
Family Zone has entered a period of rapid development and change. This year we acquired classroom tech innovator
NetRef and soon after the end of FY21 we also acquired Smoothwall. These acquisitions transform the Group into
a world leader with some 330 staff located across Australia, the UK and the US, serving more than 18,000 schools
and 9 million students. Greater scale will allow us to expand our offerings, particularly around data analytics and drive
down unit costs.
Mission and values are considered fundamental at Family Zone and we’re delighted that the NetRef and Smoothwall
teams share our purpose. Our complementary platforms and culture create a unique and remarkable opportunity to
make a global impact.
The Group delivered a number of milestones during FY21, with our growing US market presence front and centre.
The number of licensed students at schools relying on our technology to ensure a safe digital environment reached
the 3 million milestone by the end of the year, at which point 5,600 schools across the US, Australia and New Zealand
had engaged Family Zone to access our cyber safety products and services. The Group’s financial performance
reflected the sales success. Revenue for the year grew to $8.96 million, an increase of 76% on the prior year.
We completed a major digital infrastructure project in the year, which will form an important platform on which to
deliver continued growth. Switching from Amazon Web Services to Google Cloud Platform required a great deal of
concentration and cooperation from our technical staff and external providers. The migration between cloud service
providers was completed in the second half without any interruptions to our clients’ use of our services.
Family Zone is a technology business that supports organisations and households to establish and maintain a
connected digital environment in which children can freely learn and engage with peers, institutions and information
without any unwanted interactions. The successes of FY21 were the result of the dedication and commitment of our
staff and executives at a time when the services we provide were particularly significant, and I would like to thank
them for their service.
I would also like to thank our shareholders and my fellow board members for their support over the last year.
Peter Pawlowitsch
Chairman
4
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
REVIEW OF OPERATIONS
Operational results
Review of operations
HIGHLIGHTS
In the year ended 30 June 2021 the Group passed several milestones as part of its growth and operational objectives,
including:
· Revenue from ordinary activities grew 76.1% to $8.96 million;
· Revenue from the important US education market grew 266% delivering $4.94 million;
Innovative classroom management technology provider NetRef was acquired; and
·
· Completing migration of the Company’s education platforms to Google Cloud materially improving platform
performance and operating leverage.
BUSINESS DEVELOPMENT
Family Zone experienced a period of rapid growth in FY21, underlined by the Group’s success in the strategically
significant US market.
Early in the financial year the Group surpassed the 1 million student license milestone. By December this had reached
1.5 million students and by year-end it had doubled in licensed students again, reaching 3 million on the platform and
servicing in excess of 5% of US school districts.
By the end of the year 5,600 schools across the US, Australia and New Zealand had engaged Family Zone to access
our cyber safety products and services.
Revenue has grown in line with sales successes reaching $8.96 million for the financial year, an increase of 76%.
US sales revenue surpassed the Australian business in the period for the first time. Growth in the US education
market delivered sales of approximately $4.94 million, which marked a rapid increase of 2.6 times on FY20.
5
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
REVIEW OF OPERATIONS
TECHNOLOGY
Cloud services migration
During the period Family Zone migrated its cloud services from Amazon Web Services (AWS) to Google Cloud
Platform (GCP). This was a major project because of the nature of our business and the extent to which it is conducted
digitally. We rely on our cloud services partner to ensure the continuity and integrity of the products and services that
we provide to customers in the public sector, as well as to parents as consumers.
The investment will deliver a long-term reduction in our direct costs and a sustainable competitive advantage.
M&A AND FUNDING ACTIVITIES
The Group raised approximately $48.7 million through the sale of new shares in the period. The equity funding was
to support organic and acquisitive growth opportunities.
Technology and operations growth funding
During the year the Group raised $20 million from sophisticated and institutional investors through a share placement
of 45.45 million new fully paid, ordinary shares at an issue price of $0.44 per share. An accompanying share purchase
plan was opened to all shareholders, raising a further $2 million.
Funds raised were allocated to support the acceleration of growth in existing and new markets, focusing on the
development of technology as well as our sales organisation. The uses of funds included expanding the Group’s
engineering teams and investing in operational systems.
NetRef acquisition
In June, Family Zone announced that it had agreed to purchase US classroom management technology provider
NetRef from Verite Educational Services, LLC (Verite), a US-based boutique provider of custom software solutions
operating across the education, government and private sectors. The acquisition formed part of the Group’s strategic
focus on the significant US market.
Verite was a relatively new entrant into the US K-12 online safety market with its innovative NetRef cloud managed
classroom tool. In less than 12 months Verite had grown impressively to support in excess of 250,000 students.
The acquisition of NetRef provided Family Zone with access to a premium classroom management tool; access to
engineering expertise in technology domains key to the Company's success; and additional experienced sales and
support personnel.
Total consideration paid and payable for the acquisition was approximately $5.97 million (US$4.48 million). The
NetRef business contributed to $nil profit or loss to the Group for the year ended 30 June 2021.
To assist with acquisition funding and to support the continued growth of the Group, especially in the US, $23 million
in equity was raised from institutional, professional and sophisticated investors. The 42.99 million new fully-paid
ordinary shares were issued on 1 July 2021 at a price of $0.535 per share.
Smoothwall acquisition and capital raise
Subsequent to year end, Family Zone announced that it had entered a transformative agreement to acquire
Smoothwall, UK’s leading K-12 digital safety solutions provider.
Smoothwall’s market-leading “Monitor” product is a key driver of growth and services the rapidly growing market for
educational data, analytics and monitoring. The UK market opportunity for the product is significant following
regulatory mandates in the jurisdiction, with the offering also significant to the Group’s growth potential in the US.
6
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
REVIEW OF OPERATIONS
To support the funding requirement, Family Zone completed a capital raising of $146.64 million, consisting of an
entitlement offer and placements to sophisticated and institutional investors, as well as a retail entitlement offer. A
shortfall of approximately 14.1 million new Shares ($7.8 million) in the retail entitlement offer was allocated to the
joint lead managers and underwriters in accordance with the terms of the Underwriting Agreement.
EXECUTIVE APPOINTMENT
Todd Morcombe was appointed chief financial officer (CFO) and commenced in the role on 17 May 2021. Mr
Morcombe brings valuable experience to the executive team, including previous roles as CFO of private investment
companies Wyllie Group and Cape Bouvard Investments and CFO of ASX-listed Little World Beverages.
He is a member of the Australian Society of Certified Practicing Accountants and has a Graduate Diploma in Applied
Finance and Investment Securities from FINSIA.
Financial results
The Group reported operating revenues of $8.96 million for the current financial year representing a 76.1% increase
from the prior year. The growth in revenue was driven by the US education business with sales being approximately
$4.94 million, representing an increase of 266% from the prior year.
The Company continued to invest in expanding the scale of its Platform to support the increasing number of users
and scale of opportunities presented in the US education market as well as the development of new products and
features. Family Zone’s continued investment in R&D activities during the year, resulted in the Group accruing
government R&D grant income of approximately $3.45 million at year end.
During the year the Group undertook a project to move its data and hosting from Amazon Web Services to Google
Cloud Platform (GCP) which resulted in increased significant direct costs whilst these platforms were being run in
parallel. Since the migration to GCP was completed in March 2021 however there has been a significant decrease
in these data and hosting costs of a per student basis.
Employee benefits was a key expenditure item for the financial year being approximately $18.1 million. As a
technology business, employee wages and salary are a key business cost. During the year the Group significantly
expanded its team increasing to have approximately 180 employees at 30 June 2021, with key growth in the
engineering, product development and sales teams.
Non-cash share-based payments to advisors, employees and consultants during the period were approximately
$1.90 million. These equity incentives are designed to ensure employee 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. Another significant non-cash expenditure item was the depreciation and
amortisation charge for the financial year of approximately $2.61 million.
The Group reported a net loss attributable to members for the period of approximately $21.98 million.
On 30 June 2021 Family Zone acquired an innovative classroom management technology business, NetRef. The
acquisition provides the Group a new and innovative product line plus access to specialist and highly relevant
technical and sales experts in the US which will aid in expanding the Company’s footprint in the US. Consideration
for the NetRef acquisition comprised an initial $1.23 million share-based payment with deferred consideration payable
of $4.73 million as at 30 June 2021. The deferred consideration comprises cash and share based payments to be
made on or before 31 January 2022.
During the year the Group raised approximately $48.7 million through share placements to sophisticated and
professional investors as well as a share purchase plan to existing investors.
The Group ended the year with $34.93 million cash at 30 June 2021.
7
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
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 2021. In order to comply with the provisions of the Corporations Act 2001, the Directors’ Report as
follows:
DIRECTORS
The Directors in office at any time during the financial year and until the date of this report are as follows:
Mr Tim Levy
Managing Director
Mr Peter Pawlowitsch
Non-Executive Independent Chairman
Mr Crispin Swan
Mr Phil Warren
Executive Director – Sales
Non-Executive Independent Director
Mr Matthew Stepka
Non-Executive Independent Director
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
Emma is a Corporate Advisor and acted as Company Secretary for a number of ASX listed companies. Emma is a
Chartered Accountant and a Senior Associate of FINSIA.
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 telecommunication service providers and device manufacturers to embed world’s-best
practice cyber safety into their offerings.
The principal activities of the Group during the year 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 2021 of $13,217,746 (2020:
$8,465,865) with revenue from operations being $8,962,485 (2020: $5,090,173).
The net loss attributable to members of the Group for the year ended 30 June 2021 amounted to $21,930,396 (2020:
loss $17,617,120).
REVIEW OF OPERATIONS
The operations of the Group during the financial year 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.
8
DIRECTORS’ REPORT
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
A review of the Group’s operations over the past financial year is outlined on pages 5 to 7 of the Annual 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
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has been financially positive for the
Group up to 30 June 2021, it is not practicable to estimate the potential impact, positive or negative, after the reporting
date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government and
other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic
stimulus that may be provided.
On 1 July 2021, the Company announced the issue of 42,990,654 Placement Shares at $0.535 raising $23 million
(before costs).
On 1 July 2021, the Company issued 2,155,354 shares and paid $1,235,018 cash, comprising the Tranche 1
consideration and cash payable pursuant to the NetRef acquisition agreement.
On 6 August 2021, the Company announced it had executed a binding offer to acquire Smoothwall, UK’s leading
provider of K-12 digital safety solutions for £75.5 million ($142.9 million) cash consideration. The acquisition was to
be funded by a fully underwritten institutional placement of $71.0 million (Placement) and pro-rata accelerated non-
renounceable entitlement offer of $75.4 million (Entitlement Offer) to raise gross proceeds of $146.4 million (Equity
Raising).
The Placement and institutional component of the Entitlement Offer completed on 9 August 2021 raising $114.1
million with a further $24.5 million raised under the retail component of the Entitlement Issue on 25 August 2021. A
further $7.8 million was raised through the placement of the shortfall shares by the Joint Lead Underwriters
completing the $146.4 million capital raising on 30 August 2021. A total of 266,123,291 Shares were issued under
Equity Raising at a price of $0.55 per Share.
The Company completed the acquisition of the Smoothwall business on 16 August 2021. Note 29 provides further
information about this transaction.
On 6 August 2021 the Company issued 887,534 Shares to employees under its Employee Security Incentive Plan.
On 19 August 2021, Family Zone announced it had been awarded a substantial contract, through Smoothwall with
Public Sector Broadband Aggregation, the public sector provider of broadband service to Wales in the UK.
9
DIRECTORS’ REPORT
The 3 year deal has a contract value of ~$1.4 million.
On 8 September 2021 the Company issued 9,896,453 Performance Rights and 1,747,331 Option comprising:
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
· 303,924 Remuneration Performance Rights
· 2,312,529 Employee Performance Rights;
· 4,610,000 STI Executive Performance Rights 2022;
· 1,350,000 STI Executive Performance Rights 2023;
· 1,500,000 LTI Performance Rights;
· 1,247,331 Options ($0.60, 30 June 2025); and
· 500,000 Options ($0.55, 30 June 2025).
On 10 September 2021 the Company issues 228,889 Shares under its Employee Security Incentive Scheme.
On 16 September the Company issued 244,374 Employee Options ($0.60, 30 June 2021), 500,000 STI Executive
Performance Rights 2022. 500,000 STI Performance Rights 2023 and 2,000,000 LTI 2023 Options ($0.60, 30 June
2025).
Since the end of the financial year a total of 1,158,798 Shares have been issued following the exercise of 1,158,798
Options with a total of $208,583 funds received from the exercise of these Options. In addition 69,174 Performance
Rights have been exercised for nil consideration.
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.
INFORMATION ON DIRECTORS
DIRECTORS
Mr Tim Levy
B. Com, CA
Mr Peter
Pawlowitsch
B. Comm, CPA
MBA, FGIA
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
Experience and expertise
Mr Pawlowitsch is an experienced ASX company director. Mr Pawlowitsch specialises in
technology businesses and the transition from startup to sustainability.
Mr Pawlowitsch is also a Fellow of the Governance Institute of Australia and holds a Master
of Business Administration from Curtin University. These qualifications have underpinned
more than 15 years’ experience in the accounting profession and more recently in business
management and the evaluation of businesses and projects.
Other current directorships of ASX listed companies
· Dubber Corporation Limited (September 2011 – present)
10
DIRECTORS’ REPORT
· VRX Silica Limited (February 2010 – present)
· Knosys Limited (March 2015 – present)
· Novatti Group Limited (June 2015 – present)
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
Mr Crispin Swan
B.
(Hons)
Arts
(UK/Germany)
European Business
Programme
Mr Phil Warren
B. Com, CA
Mr Matthew
Stepka
Other directorships held in ASX listed companies in the last three years
· Rewardle Holdings Limited (May 2017 – January 2019)
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
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 raisings, debt financing, financial management, corporate
governance and company secretarial services for a number of public and private
companies.
Mr Warren has established a number of ASX listed companies and continues to act as
corporate advisor to some of these companies. Mr. Warren is a non-executive director of
Rent.com.au Limited and also sits on a number of unlisted company boards in his capacity
as finance and governance director.
Other current directorships of ASX listed companies
· Rent.com.au Limited (September 2014 – present)
Other directorships held in ASX listed companies in the last three years
· Cassini Resources Limited (March 2011- September 2020)
Jupiter Energy Limited (April 2018 – November 2020)
·
Experience and expertise
Mr Stepka is Managing Partner of Machina Ventures, an investment firm focused on early
stage, artificial intelligence and data science enabled companies. He is also a Lecturer at
UC Berkeley, Haas School of Business. Previously, Mr. Stepka was Vice President,
Business Operations and Strategy at Google, where he led and incubated strategic
initiatives including expanding internet access, deploying renewable energy, strengthening
freedom of expression and democracy, innovating in robotics, establishing novel pricing
strategies and extending Google’s footprint in emerging markets, especially Africa.
11
DIRECTORS’ REPORT
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
Prior to joining Google, Mr. Stepka held positions
including Vice President at
drugstore.com, Chief Operating Officer at WorldRes (a leading online hotel reservation
network) and Management Consultant with McKinsey & Company.
Mr. Stepka holds a Juris Doctorate from UCLA School of Law, and is a member of the
California State Bar. In addition, he holds Bachelor of Science degrees in Computer
Engineering and Management from Case Western Reserve University.
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 2021:
Director
Mr Tim Levy
Mr Peter Pawlowitsch
Mr Crispin Swan
Mr Phil Warren
Mr Matthew Stepka
Number of Board meetings eligible
to attend
Number of Board meetings
attended
12
12
12
12
12
12
11
12
12
10
The number of audit committee meetings held, and the number of meetings attended by each of the Directors, for
the year ended 30 June 2021.
Director
Phil Warren (Chairman)
Mr Peter Pawlowitsch
Number of audit committee
meetings eligible to attend
Number of audit committee
meetings attended
2
2
2
2
DIRECTORS’ INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY
As at the date of this report, the interests of the Directors in fully paid ordinary shares (Shares), unlisted options, and
performance rights of the Group were:
Director
Tim Levy
Crispin Swan
Phil Warren
Peter Pawlowitsch
Matthew Stepka
Shares
Unlisted Options
Performance Rights1
10,939,730
4,163,245
491,688
9,934,449
2,000,000
1,681,351
197,838
1,000,000
6,000,000
-
6,849,207
4,827,619
-
-
1,000,000
1. Refer to the table below for breakdown of various classes of Performance Rights held by Directors
12
DIRECTORS’ REPORT
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
As at the date of this report, the interests of the Directors the various classes of performance rights of the Group were:
Director
Class G
PRs
Remuner
ation PRs
Employ
ee PRs
SP PRs
STI 2022
PRs
STI 2023
PRs
LTI 2023
PRs
Total
Tim Levy
977,778
1,071,429
300,000
1,000,000
1,000,000
1,000,000
1,500,000
6,849,207
Performance Rights
Crispin Swan
213,333
814,286
300,000
Phil Warren
Peter
Pawlowitsch
Matthew Stepka
-
-
-
-
-
-
-
-
-
1,000,000
-
-
-
1,000,000
1,000,000
1,500,000
4,827,619
-
-
-
-
-
1,000,000
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company indemnifies the directors and officers of the Company for costs incurred, in their capacity as a director
or officer, for which they may be held personally liable, except where there is a lack of good faith. During the financial
year, the Company paid a market rate premium in respect of a contract to insure the directors and executives of the
Company against a liability to the extent permitted by the Corporations Act 2001. For confidentiality purposes the
insurer has recommended not to disclose of the nature of the liability and the amount of the premium.
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 2021 is provided in this report.
NON-AUDIT SERVICES
BDO Audit (WA) Pty Ltd consented to and was appointed as the Group’s auditors on following shareholder approval
on 19 November 2020.
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, BDO Audit (WA) 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 BDO Audit (WA) Pty Ltd or related entities for
non-audit services
BDO Rewards (WA) Pty Ltd – Review of Managing Directors Remuneration
Package
Total auditor’s remuneration for non-audit services
30 June 2021
$
30 June 2020
$
4,250
4,250
-
-
13
DIRECTORS’ REPORT
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
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
-
9,000
13,250
-
11,700
11,700
At the date of this report unissued ordinary shares, or interests of the Company under option, are:
Options
Advisor Options
Employee Options
Selling/Advisor Options
Director Options
Employee Options
Director Options
Broker Options
Advisor Options
Advisor Options
Director Options
Employee Options
Executive Options
Executive Options
Employee Options
Executive Options
Performance Shares
Performance Rights
Total
Granted
Exercise Price
Expiry Date
Number
11/03/2019
18/03/2019
08/11/2019
08/11/2019
29/05/2020
30/06/2020
30/06/2020
30/06/2020
28/08/2020
30/06/2021
01/09/2021
01/09/2021
01/09/2021
16/09/2021
16/09/2021
29/11/2017
25/02/2019 to
01/09/2021
$0.25
$0.18
$0.21
$0.21
$0.21
$0.21
$0.18
$0.24
$0.18
$0.50
$0.60
$0.60
$0.55
$0.60
$0.60
Nil
Nil
11/03/2022
18/03/2022
08/11/2022
08/11/2022
29/05/2023
07/07/2023
07/07/2023
13/07/2023
13/07/2023
30/06/2025
30/06/2025
30/06/2025
30/06.2025
30/06/2025
30/06/2025
29/11/2022
25/02/2022 to
30/06/2023
250,000
1,372,656
1,595,000
3,000,000
500,000
1,000,000
450,000
700,000
500,000
4,500,000
647,331
600,000
500,000
244,374
2,000,000
3,000,000
36,108,174
56,967,535
14
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
DIRECTORS’ REPORT
SHARES ISSUED DURING OR SINCE THE END OF THE YEAR AS A RESULT OF EXERCISE OF OPTIONS
During the year, and as at the date of this report, details of ordinary shares issued by the Company as a result of the
exercise of Options and Performance Rights are:
Options
Date Granted
Exercise Price
Number of Shares
issued
Amount paid for
Shares
Broker Options
Employee Options
Selling/Advisor
Advisor Options
Advisor Options
Broker Options
Performance Rights
Total
21/05/2019
09/04/2018
08/11/2019
30/06/2020
30/06/2020
07/07/2020
25/02/2019 and
01/09/2021
ROUNDING OF AMOUNTS
$0.235
$0.18
$0.21
$0.24
$0.18
$0.18
Nil
898,692
593,320
2,257,100
1,300,000
2,000,000
1,550,000
6,321,102
$211,193
$106,798
$473,991
$312,000
$360,000
$279,000
-
14,920,214
$1,742,982
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.
15
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
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 2021. The information contained in this report has been audited as required by
section 308(3C) of the Corporations Act 2001.
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
Managing Director
Appointed 1 April 2014
Mr Peter Pawlowitsch Non-Executive Chairman
Appointed 24 September 2019
Mr Crispin Swan
Executive Director - Sales
Appointed 3 September 2015
Mr Phil Warren
Non-Executive Director
Mr Matthew Stepka
Non-Executive Director
Appointed 13 May 2016
Appointed 1 May 2020
●
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.
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, employer contributions to superannuation funds as well as
securities issued under the Staff Incentive Plan as part of the Group’s cashflow conservation strategy. These
securities are considered fixed remuneration when they are not at risk as a result of performance.
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.
During the year, the Board engaged BDO Rewards (WA) Pty Ltd to review its existing remuneration policies
and recommendations on executive short-term and long-term remuneration design. BDO Rewards (WA) Pty Ltd
was paid $4,250 for these services.
16
DIRECTORS’ REPORT
REMUNERATION REPORT CONTINUED (AUDITED)
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
In addition to providing remuneration recommendations, BDO also provided various audit services. For these
services BDO was paid a total of $71,091. Details of these services are disclosed on page 15 of the Directors’ report
and in note 26 to the financial statements.
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.
During the 2021 financial year, the Group implemented a Staff Incentive Plan with the following core objectives:
●
●
●
●
Conserving cash by converting cash based remuneration to security based remuneration;
Attract and retain staff;
Align executives incentives to the Group’s annual recurring revenue targets; and
Align remuneration with shareholders through employees having an equity interest in the Company.
The 2021 Staff Incentive Plan introduced comprised:
Remuneration in Securities
The Executive Directors and a number of senior staff agreed to convert part of their cash based remuneration into
security based remuneration. Shares and Remuneration Performance Rights were issued in lieu of salaries with the
objective of conserving cash and aligning the employee remuneration with shareholders through employees having
an equity interest in the Company.
Employee Incentive Scheme
The Group also introduced an Employee Incentive Scheme across all staff, including Executive Directors,
with the objective of attracting and retaining staff within the business through the issue of Employee
Performance Rights. The Employee Performance Rights were issued under the Company’s Performance Rights
Plan in three equal tranches which vest subject to continued employment over a 3 year period.
Executive Incentive Scheme
The Group also introduced an Executive Incentive Scheme for senior executives, including Executive
Directors, focusing on growing annual recurring revenue (ARR). The continued growth of the Group’s ARR has
been identified as a key strategic objective of the Group with a $16 million ARR target set for 30 June 2021.
The Executive Performance Rights issued under
the Company’s Performance Rights Plan include vesting
conditions which focus on the achievement of $16 million of ARR by 30 June 2021, which was revised to a
quarterly recurring revenue target of $4 million for the June 2021 quarter (QRR Target) following approval at a
Shareholder Meeting on 9 June 2021. No Executive Performance Rights will vest if the Group does not achieve at
least 90% of this QRR Target and all the Executive Performance Rights will vest if the Group’s QRR Target is $5
million by 30 June 2021 exceeding its Target QRR by 25%. The Group did not achieve 90% of the QRR Target and
the Executive Performance Rights lapsed.
Executive 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
17
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
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 $375,000 per annum (2021: $300,000) plus statutory superannuation, effective 1 July 2021
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 Levy agreed to forgo 50% of his cash salary for the 12 month period 1 February 2020 to 31 January 2021 and
opted to receive 1,071,429 Remuneration Performance Rights for the service provided.
Under the Company’s 2022-2023 Staff Incentive Plan, Mr Levy was issued 1,000,000 STI 2022 Performance Rights,
1,000,000 STI 2023 Performance Rights, 1,500,000 LTI Performance Rights and 1,500,000 New Director Options
($0.50, 30 June 2025) on 30 June 2021 as a security based incentive component of his remuneration package. Refer
to Section E for details on these incentive securities including the vesting conditions.
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 $375,000 per annum (2021: $300,000) plus statutory superannuation, effective 1 July 2021
b)
the agreement may be terminated;
(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 2021
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)
Mr Swan agreed to forgo 38% of his base salary for the 12 month period 1 February 2020 to 31 January 2021 and
opted to instead receive 814,286 remuneration Performance Rights for the service provided.
Under the Company’s 2022-2023 Staff Incentive Plan, Mr Swan was issued 1,000,000 STI 2022 Performance Rights,
1,000,000 STI 2023 Performance Rights and 1,500,000 LTI Performance Rights on 30 June 2021 as a security based
incentive component of his remuneration package. Refer to Section E for details on these incentive securities
including the vesting conditions.
Non-Executive Directors and Chairman Fees
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.
Non-Executive Chairman, Mr Peter Pawlowitsch receives a base cash fee of $80,000 per annum (plus statutory
superannuation) payable from his appointment date. If the market capitalisation of the Company reaches $150 million
for 20 consecutive days Mr Pawlowitsch remuneration will increase to $100,000 per annum (plus statutory
superannuation). Mr Pawlowitsch agreed to receive security-based remuneration for the 2020 calendar year in lieu
of his cash remuneration. On 1 January 2021 Mr Pawlowitsch’s base cash fee increased to $100,000 following
achievement of the market capitalisation milestone.
Non-Executive Directors Mr Phil Warren and Mr Matthew Stepka receive a base cash fee of $40,000 per annum and
$60,000 per annum respectively. Mr Stepka agreed to receive equity based remuneration in lieu of his base cash
fees for the 12 month period from his appointment on 1 May 2020 to 30 April 2021.
The Company does not have a Director’s Retirement Scheme in place at present.
19
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
B.
Remuneration of Key Management Personnel
Details of the remuneration of the Directors and the key management personnel (KMP) (as defined in AASB 124 Related Party Disclosures) of the Group for the year ended
30 June 2021 are set out in the following table.
Directors and KMP
Short -term
Post employment
Long term
30 June 2021
Salary
fees
$
Cash
bonus
$
Other
$
Super-
annuation
$
Retire-
ment
benefits
$
Termination
benefits
$
Incentive
Plans
$
Long
Service
Leave
$
Share-based
payments
Shares/
Options/
Performance
Rights (PR)
$
TOTAL
Performance based %
of remuneration
Fixed
based
%
Performance
based %
$
Mr Tim Levy1
212,500
-
Mr Crispin Swan2
233,500
-
Mr Peter Pawlowitsch3
50,000
-
-
-
-
20,188
-
-
22,183
-
-
-
-
12,481
236,668
481,837
15,284
141,841
412,808
12,391
-
-
-
-
141,664
204,055
Mr Phil Warren
40,000
-
-
3,800
-
-
-
-
54,500
98,300
Matthew Stepka4
10,000
-
Total Directors
546,000
-
-
-
-
-
-
58,562
-
-
-
-
-
257,071
267,071
27,765
831,744
1,464,071
80%
83%
31%
45%
29%
53%
1. Mr Levy received 50% of his cash salary fees as equity based remuneration for the 12 month period 1 February 2020 to 31 January 2021.
2. Mr Swan received 38% of his cash salary fees as equity based remuneration for the 12 month period 1 February 2020 to 31 January 2021
3. Mr Pawlowitsch received 100% of the cash salary fees as equity based remuneration for the 12 month period 1 January 2020 to 31 December 2020.
4 Mr Stepka received 100% of his cash salary fees as equity based remuneration for the 12 month period from his appointment on 1 May 2020 to 30 April 2021.
20%
17%
69%
55%
71%
47%
20
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
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 2020 are set out in the following table.
Short -term
Directors and KMP
Post employment
Long term
TOTAL
Share-based
payments
Performance based
% of remuneration
30 June 2020
Salary
fees
$
Cash
bonus
$
Non-
monetary
$
Super-
annuation
$
Retire-
ment
benefits
$
Termination
benefits
$
Incentive
Plans
$
Long
Service
Leave
$
Shares/
Options/
Performance
Rights $
Fixed
based %
Performa
nce
based %
$
Mr Tim Levy1
62,500
-
Mr Crispin Swan2
189,500
-
-
-
18,129
-
-
20,662
-
-
-
-
-
195,101
275,730
-
85,671
295,833
86%
91%
Mr John Sims3
4,166
-
-
-
-
-
-
-
-
4,166
100%
Mr Peter Pawlowitsch3
21,449
-
-
2,037
-
-
-
-
208,523
232,009
Mr Phil Warren
16,666
-
-
Matthew Stepka4
-
-
Total Directors
294,281
-
-
-
3,800
-
-
-
-
-
57,705
78,171
-
-
44,628
-
-
-
-
-
361,863
361,863
-
908,863
1,247,772
45%
26%
3%
52%
14%
9%
0%
55%
74%
97%
48%
1. Mr Levy’s base cash salary increased from $220,000 to $300,000 per annum on 15 January 2020. In the FY2019 Mr Levy received 100% of his base cash salary as equity based
remuneration. In the FY2020 Mr Levy has agreed to receive 50% of his base cash salary as equity based remuneration. In addition Mr Levy’s performance incentives were issued as equity
based incentives in May 2020.
2. Mr Swan’s base cash salary increased from $240,000 to $300,000 per annum on 15 January 2020. In the FY2019 Mr Swan received 20% of his base cash salary as equity based
remuneration. In the FY2020 Mr Swan has agreed to receive 38% of his base cash salary as equity based remuneration. In addition Mr Swan’s performance incentives were issued as equity
based incentives in May 2020.
3. Mr John Sims resigned from his position as Non-Executive Chairman 24 September 2019 and Mr Peter Pawlowitsch was appointed Non-Executive Chairman on the same date.
4 Mr Stepka was appointed as Non-Executive Director 1 May 2020.
21
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
C.
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, recurring (contracted) sales revenues and share price. Directors
and employees are issued options and/or performance rights, to encourage the alignment of personal and
shareholder interests.
Options issued to Directors and employees may be subject to market-based price hurdles and other vesting
conditions that encourage the achievement of strategic targets and/or ongoing commitment to the Group. 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 rights vest on the achievement of market based price hurdles and/or operational milestones, providing
those Directors and executives holding performance rights an incentive to meet the operational and financial
milestones prior to the expiry date of the performance rights.
On the resignation of Directors and employees any vested options and performance rights issued as remuneration
are generally retained by the relevant party.
The Board may exercise discretion in relation to approving incentives such as options and performance rights. The
policy is designed to reward key management personnel for performance that results in long-term growth in
shareholder value, to also encourage employee commitment to the Group and to align staff and shareholders
interests.
The following table shows Group’s operating revenue, profits/(losses) and dividends for the last five financial years,
as well as the Company’s share prices at the end of the respective financial years. The Group has continued to grow
its operating revenue over the last financial year. As outlined in the operating and financial review growth in revenue
in particular contracted recurring revenues from the education business is a key focus of the Group. The Board has
been issued equity based incentives during the financial year as a reward for the operational performance of the
Group but also as an incentive with performance based vesting conditions linked to the Group’s key strategic
objectives being recurring revenue growth and share price appreciation, therefore aligning the interests of Directors
with shareholders.
2021
$
2020
$
2019
$
2018
$
2017
$
Operating revenue
8,962,485
5,090,173
4,184,323
2,329,780
1,589,202
Net profit/(loss)
(21,930,396)
(17,617,120)
(14,401,137)
(18,206,211)
(8,834,735)
Share price at year-end
Dividends paid
0.60
0.00
0.195
0.00
0.150
0.00
0.475
0.00
0.33
0.00
22
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
D.
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 2021 are as follows:
Directors and
Executives
Held at
1 July 2020
Options
exercised
Options
expired
Options
issued
Held at
30 June 2021
Mr Tim Levy1
Mr Crispin Swan
Mr Peter
Pawlowitsch1
Mr Phil Warren2
Mr Matthew Stepka
Total
181,351
197,838
3,000,000
-
-
3,379,189
-
-
-
-
-
-
-
-
-
-
-
-
1,500,000
-
1,681,351
197,838
3,000,000
6,000,000
1,000,000
-
5,500,000
1,000,000
-
8,879,189
Vested and
exercisable
at 30 June 2021
181,351
197,838
2,500,000
1,000,000
-
3,879,189
1. 1,500,000 options ($0.50, 30 June 2025) were issued to Tim Levy and 3,000,000 $0.50, 30 June 2025)
options were issued to Peter Pawlowitsch on 30 June 2021. These options were approved at the
shareholder meeting on 9 June 2021.
2. On 7 July 2020 Phil Warren was issued 1,000,000 options ($0.21, 7 July 2023). These were approved at
shareholder meeting on 30 June 2020.
During the FY2020 period, 3,000,000 options ($0.21, 3 years) were granted to Non-Executive Chairman, Peter
Pawlowitsch pursuant to the terms of his appointment for services to be provided. Shareholder approval was obtained
4 November 2019 and the options were issued 8 November 2019. These options (excluding the 1,000,000 tranche
options vesting immediately) are subject to various vesting conditions as outlined below:
Tranche
Vesting Condition
Number
Value Per
Option
($)
Total
Value
($)
Total Share-Based
Payment Expense
for the year ($)
The 30 day VWAP of the Company’s
Shares being greater than $0.25
The 30 day VWAP of the Company’s
Shares being greater than $0.35
The 30 day VWAP of the Company’s
Shares being greater than $0.45
The 30 day VWAP of the Company’s
Shares being greater than $0.60
2
3
4
5
Total
500,000
0.0917
45,855
500,000
0.0882
44,090
500,000
0.0830
41,480
$36,023
$34,636
$32,586
500,000
0.0754
37,700
$12,555
2,000,000
169,125
$115,800
During the FY2020 period, 1,000,000 options ($0.21, 3 years) were granted to non-executive Director Phil Warren.
Shareholder approval was obtained 30 June 2020, options were issued 7 July 2020. These options (excluding the
500,000 tranche 1 options vesting immediately) are subject to various vesting conditions, the details of which have
been outlined below:
23
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
Tranche
Vesting Condition
Number
Value Per
Option
($)
Total
Value ($)
Total Share-Based
Payment Expense
for the year ($)
The 30 day VWAP of the Company’s
Shares being greater than $0.25
2
Total
500,000
0.1090
54,500
500,000
54,500
$54,500
$54,500
The fair value of these options have been determined using a Monte Carlo simulation model and disclosed in the 30
June 2020 Annual Report.
New Director Options were granted during the year. 3,000,000 options were granted to non-executive Director Peter
Pawlowitsch and 1,500,000 options for Managing Director for services to be provided, expiring 30 June 2025.
Shareholder approval was obtained 9 June 2021, options were issued 30 June 2021. These options are subject to
various vesting conditions, the details of which have been outlined below.
Peter
Pawlowitsch
Tranche 1
Tranche 2
Tranche 3
Total
Vesting Condition1
Number
Value
Per
Option
Total
Value
Total Share-Based
Payment Expense
for the year ($)
The 20 day VWAP of the Company’s
Shares being greater than $0.90
The 20 day VWAP of the Company’s
Shares being greater than $1.45
The 20 day VWAP of the Company’s
Shares being greater than $1.90
750,000
0.348
261,225
750,000
0.314
235,725
1,500,000
0.285
427,950
3,000,000
924,900
7,305
6,592
11,967
25,864
1. The holder must also be continuously employed by the Company on 30 June 2023.
Tim Levy
Vesting Condition
Number
Value
Per
Option
Total
Value
Total Share-
Based Payment
Expense for the
year ($)
The 20 day VWAP of the Company’s
Shares being greater than $0.90
The 20 day VWAP of the Company’s
Shares being greater than $1.45
The 20 day VWAP of the Company’s
Shares being greater than $1.90
Tranche 1
Tranche 2
Tranche 3
Total
500,000
0.348
174,150
500,000
0.314
157,150
500,000
0.285
142,650
1,500,000
473,950
1. The holder must also be continuously employed by the Company on 30 June 2023.
4,870
4,394
3,989
13,253
24
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
The fair value of the New Director Options have been determined using a Monte Carlo simulation model and the
inputs are outlined below:
New Director Options
Underlying share price
Exercise price
Target price
Expiry date (years)
Expected Volatility
Risk free rate
Value per option
Tranche 1
Tranche 2
Tranche 3
$0.58
$0.50
$0.90
4
80%
0.1051%
$0.348
$0.58
$0.50
$1.45
4
80%
$0.58
$0.50
$1.90
4
80%
0.1051%
$0.314
0.1051%
$0.285
b)
Number of Shares held by Key Management Personnel
The number of ordinary shares of the Company held, directly, indirectly or beneficially, by each Director and key
management personnel, including their personally-related entities for the year ended 30 June 2021 is as follows:
Directors and
Executives
Held at
1 July 2020
Received as
remuneration
Mr Tim Levy
Mr Crispin Swan4
10,939,730
4,196,575
Mr Peter
Pawlowitsch1
Mr Phil Warren2
Mr Matthew
Stepka3
Total
4,131,419
293,088
-
19,560,812
-
-
-
-
-
-
Shares
issued for
cash
subscription
Share issued
on exercise
of Options,
Performance
Rights
Other
changes
Held at
30 June
2021
-
-
10,939,730
166,670
(200,000)
4,163,245
-
-
-
-
8,298,085
388,542
4,500,000
(2,500,000)
2,000,000
4,166,666
95,454
-
4,262,120
4,666,670
(2,700,000)
25,789,602
1. Mr Pawlowitsch participated in the May/June 2020 placement with 4,166,666 shares being issued at $0.12 each
($500,000 investment) on 7 July 2020.
2. Mr Warren participated in the Nov 2020 placement with 45,454 shares being issued at $0.44 each ($20,000 investment)
on 25 November 2020. Similarly, 50,000 ordinary shares were acquired via on market purchase at $0.415 each
($20,750 investment) on 30 November 2020.
3. 4,500,000 Remuneration Rights issued to Mr Stepka were exercised during the period and converted into fully paid
ordinary shares. 2,500,000 shares were sold on the market.
4. Mr Swan exercised 166,670 Class D Performance Rights and sold 200,000 shares on market during the year.
25
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
c)
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 2021 are as follows:
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
Performance
Rights
held at
30 June 2021
6,849,207
4,827,619
-
-
1,000,000
-
-
-
Directors and
Executives
Performance
Rights held at
1 July 2020
Received as
remuneration
Exercised
Other changes
Mr Tim Levy1
Mr Crispin Swan2
Mr Peter
Pawlowitsch
Mr Phil Warren
Mr Matthew
Stepka3
Total
4,599,207
3,244,289
3,500,000
3,500,000
-
(166,670)
(1,250,000)
(1,750,000)
-
-
-
-
-
5,500,000
7,843,496
12,500,000
-
-
(4,500,000)
(5,166,670)
(3,000,000)
12,676,826
1. Tim Levy was issued 1,000,000 STI 2022 Performance Rights, 1,000,000 STI 2023 Performance Rights and 1,500,000
LTI Performance Rights on 30 June 2021. These were approved at the shareholder meeting on 9 June 2021. 1,250,000
performance rights lapsed during the year.
2. Crispin Swan was issued 1,000,000 STI 2022 Performance Rights, 1,000,000 STI 2023 Performance Rights and
1,500,000 LTI Performance Rights on 30 June 2021. These were approved at the shareholder meeting on 9 June 2021.
166,670 of previously issued performance rights to Mr Swan were exercised during the financial year 2021 and 1,750,000
performance rights lapsed.
3. 500,000 Remuneration Performance Rights and 5,000,000 MS SP Performance Rights were issued to Matthew Stepka
on 7 July 2020. The issue of these securities was approved by shareholders and therefore for accounting purposes
considered granted on 30 June 2020. Mr Stepka exercised 4,500,000 Performance Rights in the current year.
The Performance Rights that were granted in the prior financial year are subject to the following vesting milestones:
Performance Rights
Vesting Condition
Remuneration
Performance Rights
Continued employment with the Company in existing role from
issue date until the Milestone Date
Executive Performance
Rights
The achievement of QRR1 of $3.6m by the Milestone Date
(being 90% of targeted QRR of $4million)3
Class A Employee
Performance Rights
Class B Employee
Performance Rights
Class C Employee
Performance Rights
Class A TL SP
Performance Rights
Continued employment with the Company in existing role from
issue date until the Milestone Date
Continued employment with the Company in existing role from
issue date until the Milestone Date
Continued employment with the Company in existing role from
issue date until the Milestone Date
The 30 day VWAP of the Company’s Shares being greater than
$0.25 prior to the Milestone Date
3 years from
issue date
26
Milestone Date
6 months from
issue date
30 June 2021
1 year from issue
date.
2 year from issue
date.
3 year from issue
date.
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
Performance Rights
Vesting Condition
Class B TL SP
Performance Rights
Class C TL SP
Performance Rights
Class D TL SP
Performance Rights
Class A MS SP
Performance Rights
Class B MS SP
Performance Rights
Class C MS SP
Performance Rights
Class D MS SP
Performance Rights
Class E MS SP
Performance Rights
The 30 day VWAP of the Company’s Shares being greater than
$0.35 prior to the Milestone Date
The 30 day VWAP of the Company’s Shares being greater than
$0.45 prior to the Milestone Date
The 30 day VWAP of the Company’s Shares being greater than
$0.60 prior to the Milestone Date
Milestone Date
3 years from
issue date
3 years from
issue date
3 years from
issue date
The 30 day VWAP of the Company’s Shares being greater $0.12
prior to the Milestone Date
1 year from issue
date.
The 30 day VWAP of the Company’s Shares being greater than
$0.18 prior to the Milestone Date
1 year from issue
date.
The 30 day VWAP of the Company’s Shares being greater than
$0.24 prior to the Milestone Date
1 year from issue
date.
The 30 day VWAP of the Company’s Shares being greater than
$0.36 prior to the Milestone Date
2 year from issue
date.
The 30 day VWAP of the Company’s Shares being greater $0.60
prior to the Milestone Date
2 year from issue
date.
Note:
1. Quarterly recurring revenue for the June 2021 quarter
2. Other than the Executive Performance Rights, all Performance Rights will vest on achievement of the Vesting
Condition by the Milestone Date.
3. In regard to the Executive Performance, if the QRR is $5m or more, 100% of the Executive Performance
Rights held will vest
OR
If the QRR is less than $5m, the number of Executive Performance Rights vesting is determined based on
this formula:
[QRR at the Milestone Date/ $4m] x [(Number Executive Performance Rights held) x (100/125)]
The Vesting Condition attaching to the Executive Performance Rights was changed from an annual recurring
revenue (ARR) target of $16 million for the year ended 30 June 2021 to a QRR target of $4 million for the June
2021 quarter following approval at a Shareholder Meeting on 9 June 2021. On 30 June 2021, the QRR hurdle
was not met and the rights lapsed.
(i)
During the year, the Company issued the following Performance Rights to Tim Levy and Crispin Swan as an
incentive and as remuneration for services provided. The issue of these Performance Rights was approved
by Shareholders on 9 June 2021 and the Performance Rights were issued on 30 June 2021.
Performance Rights
Tim Levy
Crispin Swan
Total Number
Total Expense
for Year
STI 2022 Performance Rights
STI 2023 Performance Rights
LTI 2023 Performance Rights
TOTAL
1,000,000
1,000,000
1,500,000
3,500,000
1,000,000
1,000,000
1,500,000
3,500,000
2,000,000
2,000,000
3,000,000
7,000,000
$63,108
$32,436
$48,655
$144,199
27
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
The STI 2022 Performance Rights, STI 2023 Performance Rights and LTI Performance Rights issued to Tim Levy
and Crispin Swan have been value using the Black & Scholes Option Pricing Model based on the following key
assumptions:
Tim Levy
STI 2022
Performance
Rights
STI 2023
Performance
Rights
LTI Performance
Rights
Total
Vesting Date
Number of PR issued
Share price at grant date
Exercise Price
Volatility
Risk Free Rate
Fair value per Performance
Right
Total Value of PR
Total Expense for Period
Unvested
30-Jun-22
1,000,000
$0.58
nil
80.00%
0.11%
$0.58
$580,000
$31,554
Unvested
30-Jun-23
1,000,000
$0.58
nil
80.00%
0.11%
$0.58
$580,000
$16,218
3,500,000
Unvested
30-Jun-23
1,500,000
$0.58
nil
80.00%
0.11%
$0.58
$870,000
$24,327
$2,030,000
$72,099
Crispin Swan
STI 2022
Performance
Rights
STI 2023
Performance
Rights
LTI Performance
Rights
Total
Vesting Date
Number of PR issued
Share price at grant date
Exercise Price
Volatility
Risk Free Rate
Fair value per Performance
Right
Total Value of PR
Total Expense for Period
Unvested
30-Jun-22
1,000,000
$0.58
nil
80.00%
0.11%
$0.58
$580,000
$31,554
Unvested
30-Jun-23
1,000,000
$0.58
nil
80.00%
0.11%
$0.58
$580,000
$16,218
3,500,000
Unvested
30-Jun-23
1,500,000
$0.58
nil
80.00%
0.11%
$0.58
$870,000
$24,327
$2,030,000
$72,099
28
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
Each of the STI 2022 Performance Rights, STI 2023 Performance Rights, LTI Performance Rights above will vest
when the applicable vesting condition(s) outlined below are achieved by the Milestone Date outlined.
Performance
Rights
STI 2022
Performance
Rights
STI 2023
Performance
Rights
LTI 2023
Performance
Rights
Vesting Condition
a. Continued employment until 30 June 2022;
b. Receive a positive Personal Scorecard for the financial year ended 30 June
2022 from the Board for performance over the previous 12 months, 50% of the
STI 2022 Performance Rights shall vest;
c. QRR Growth - If the Company achieves 50% growth in Quarterly Recurring
Revenue (QRR) from 1 April 2022 to 30 June 2022 compared to the
corresponding period in the previous year, 60% of the remaining 50% of the
STI 2022 Performance Rights shall vest, with straight line pro- rata vesting for
additional percentages of QRR Growth up to 100% from 1 April 2022 to 30
June 2022 compared to the corresponding period in the previous year.
a. Continued employment until 30 June 2023;
b. Receive a positive Personal Scorecard for the financial year ended 30 June
2023 from the Board for performance over the previous 12 months, 50% of the
STI 2023 Performance Rights shall vest;
c. QRR Growth - If the Company achieves 40% growth in Quarterly Recurring
Revenue (QRR) from 1 April 2023 to 30 June 2023 compared to the
corresponding period in the previous year, 50% of the remaining 50% of the
STI 2023 Performance Rights shall vest, with straight line pro- rata vesting for
additional percentages of QRR Growth up to 100% from 1 April 2023 to 30
June 2023 compared to the corresponding period in the previous year.
150,000 LTI Performance Rights (per holder) shall vest subject to the
achievement of each of the Operational Milestone outlined below, which are
linked to the following key business Objectives:
a. Expand Markets;
b. Expand Products;
c. Launch Community;
d. Make Sustainable;
e. Improve Revenue per Student.
A maximum of 450,000 LTI Performance rights (per holder) can vest per
business objective.
Vesting
Date
30 June
2022
30 June
2023
30 June
2023
29
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
Objective
Expand Markets
Expand Products
Launch
Community
Make Sustainable
Improve
Revenues per
Student
·
·
·
·
·
·
·
·
·
·
Operational Milestones
Achieving revenue of greater than $500,000 in total prior to 30 June 2023 in a market
other than USA, Australia or New Zealand.
Launch of a new product which generates revenue of greater than $500,000 in total
prior to 30 June 2023.
Launch of a new product which achieves 2.5% take-up by School Clients in a particular
country.
Launch of Community in a market outside of Australian and achieve greater than 20%
take-up by School Clients.
Launch of Community in a market outside of Australian and achieve greater than 30%
take-up by School Clients.
Launch of Community in a market outside of Australia and achieve 2% of parents
within all participating School Clients activating a Consumer Account.
Launch of Community in a country outside of Australia and achieve 5% of parents
within all participating School Clients activating a Consumer Account
Achieve quarterly average data and hosting costs per student below targets set by the
Board
Achieve quarterly Service Margin above targets set by the Board.
Achieve Average Revenue Per Student targets set by the Board.
Management have assessed the probability of achieving the vesting conditions, as at reporting date. If it was
assessed that the hurdle was likely to be met prior to the expiry date the share based payment expense has been
adjusted to reflect a shorter vesting period. Management have applied a 100% probability of achievement for all
hurdles listed above.
c)
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.
d)
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.
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 during the year ended 30 June 2021 Grange Consulting was entitled to receive $10,000
(plus GST) per month for these services for the period 1 July 2020 until 30 November 2020 and $4,000 per month
(plus GST) from 1 December 2020 to 30 June 2021. 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.
30
DIRECTORS’ REPORT (CONTINUED)
REMUNERATION REPORT CONTINUED (AUDITED)
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
A summary of the fees paid to Grange Consulting for the year ended 30 June 2021 and 30 June 2020 is as follows:
Company secretarial and financial management services
Total
30 June 2021
30 June 2020
$90,403
$90,403
$94,839
$94,839
$90,403 was paid to Grange for financial management and company secretarial services for the year ended 30 June
2021. $4,620 was outstanding and payable to Grange as at 30 June 2021 (2020: $nil).
*********** END OF AUDITED REMUNERATION REPORT ***********
Signed in accordance with a resolution of the Directors.
Mr Tim Levy
Managing Director
24 September 2021
31
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY JARRAD PRUE TO THE DIRECTORS OF FAMILY ZONE CYBER
SAFETY LIMITED
As lead auditor of Family Zone Cyber Safety Limited for the year ended 30 June 2021, I declare that, to
the best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Family Zone Cyber Safety Limited and the entities it controlled during
the period.
Jarrad Prue
Director
BDO Audit (WA) Pty Ltd
Perth, 24 September 2021
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
32
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2021
Note
2021
$
2020
$
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
Revenue
Revenue from ordinary activities
Other income
Expenses
Direct costs
Share based payments
Employee benefits costs
Administration costs
Finance costs
Depreciation and amortisation
Other costs
Loss before income tax
Income tax benefit/(expense)
4
4
5
20
5
5
11, 12, 13
8,962,485
4,255,261
5,090,173
3,375,692
(7,033,473)
(1,896,905)
(18,105,878)
(4,023,909)
(197,301)
(2,605,522)
(1,285,154)
(21,930,396)
(4,544,508)
(2,915,880)
(10,209,422)
(3,045,570)
(214,404)
(4,164,248)
(988,953)
(17,617,120)
-
-
Loss after tax for the period attributable to the
members of Family Zone Cyber Safety Limited
(21,930,396)
(17,617,120)
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
the period
Total comprehensive
attributable to the members of Family Zone Cyber
Safety Limited
(loss)
for
(53,676)
(9,595)
(21,984,072)
(17,626,715)
Basic and diluted loss per share (cents per share) for
the year attributed to the members of Family Zone
Cyber Safety Limited
7
(6.00)
(7.48)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction
with the accompanying notes.
33
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2021
Note
2021
$
2020
$
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
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
Right to use assets
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Contract liabilities
Provisions
Borrowings
Lease liability
Total Current Liabilities
Non-current Liabilities
Contract liabilities
Contingent consideration
Provisions
Borrowings
Lease Liability
Total Non-current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
8
9
10
11
9
12
13
14
4
15
16
13
4
15
16
13
17
18
19
34,933,166
8,812,572
1,944,985
372,927
46,063,650
5,973,314
158,833
2,764,399
2,552,116
11,448,662
57,512,312
10,851,035
5,567,461
1,201,546
284,406
590,186
18,494,634
2,937,026
68,307
237,762
157,889
2,278,972
5,679,956
24,174,590
5,807,193
4,739,118
188,611
249,993
10,984,915
1,251,177
53,156
1,540,565
365,740
3,210,638
14,195,553
3,121,307
2,314,320
655,028
1,272,510
225,642
7,588,807
1,917,795
22,117
103,563
-
156,625
2,200,100
9,788,907
33,337,722
4,406,646
106,052,956
11,917,378
(84,632,612)
33,337,722
56,673,575
10,435,288
(62,702,217)
4,406,646
The above Consolidated Statement of Financial Position is to be read in conjunction with the accompanying notes.
34
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2021
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
Issued
Capital
Share-based
Payment
Reserve
Accumulated
Losses
$
$
$
Foreign
Currency
Translation
Reserve
$
Total
$
Balance at 1 July 2019
45,567,979
7,454,897
(45,085,097)
(3,310)
7,934,469
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
Reversal of performance rights
Reversal of employee options
Total transactions with owners
-
-
-
-
(17,617,120)
-
(17,617,120)
-
(9,595)
(9,595)
-
-
(17,617,120)
(9,595)
(17,626,715)
11,105,596
-
-
3,054,036
-
-
11,105,596
(20,833)
(39,907)
2,993,296
-
-
-
-
-
-
-
-
-
-
11,105,596
3,054,036
(20,833)
(39,907)
14,098,892
Balance at 30 June 2020
56,673,575
10,448,193
(62,702,217)
(12,905)
4,406,646
Issued
Capital
Share-based
Payment
Reserve
Accumulated
Losses
$
$
$
Foreign
Currency
Translation
Reserve
$
Total
$
Balance at 1 July 2020
56,673,575
10,448,193
(62,702,217)
(12,905)
4,406,646
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
Reversal of performance rights
Reversal of employee options
Total transactions with owners
-
-
-
49,379,381
-
-
-
49,379,381
-
-
-
-
3,497,434
(1,884,679)
(76,988)
1,535,767
(21,930,396)
-
-
(53,676)
(21,930,396)
(53,676)
(21,930,396)
(53,676)
(21,984,072)
-
-
-
-
-
-
-
-
-
-
49,379,381
3,497,434
(1,884,679)
(76,988)
50,915,148
Balance at 30 June 2021
106,052,956
11,983,960
(84,632,613)
(66,581)
33,337,722
The above Consolidated Statement of Changes in Equity is to be read in conjunction with the accompanying notes.
35
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2021
Cash flows from operating activities
Receipts from customers
Government grants received
Payments to suppliers and employees
Interest received
Interest paid
Net cash flows (used in) operating activities
Cash flows from investing activities
Purchase of plant & equipment
Cash acquired from business combination
Net cash flows (used in) investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue transaction costs
Payment of principle portion of lease liabilities
Proceeds from borrowings
Repayments of 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 2021
Note
2021
$
2020
$
10,406,436
2,094,471
(27,889,077)
62,179
(151,655)
(15,477,646)
5,888,149
1,943,696
(16,090,303)
3,742
(22,258)
(8,276,974)
(2,008,981)
31,399
(1,977,582)
(1,261,159)
-
(1,261,159)
50,258,434
(2,475,210)
(573,002)
442,295
(1,206,711)
46,445,806
28,990,578
5,807,193
135,395
34,933,166
11,170,072
(729,560)
(185,671)
1,522,017
(1,523,106)
10,253,752
715,619
5,116,523
(24,949)
5,807,193
21
24
8
The above Consolidated Statement of Cash Flows is to be read in conjunction with the accompanying notes.
36
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
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 2021.
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) Adoption of new and revised accounting standards
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by
the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
Conceptual Framework for Financial Reporting (Conceptual Framework)
The consolidated entity has adopted the revised Conceptual Framework from 1 July 2020. The Conceptual
Framework contains new definition and recognition criteria as well as new guidance on measurement that affects
several Accounting Standards, but it has not had a material impact on the consolidated entity's financial statements.
(b) Standards Issued but not yet effective
The AASB has issued a number of new and amended Accounting Standards and Interpretations that have mandatory
application dates for future reporting periods, some of which are relevant to the Group. The Group has decided not
to early adopt any of the new and amended pronouncements. The Group’s assessment of the new and amended
pronouncements that are relevant to the Group but applicable in future reporting periods is set out below:
(c) 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
37
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
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 by reference to the fair value of the
goods or services received provided this can be estimated reliably. For equity-settled transactions with employees,
the fair value is determined indirectly by reference to the fair value of the equity instruments granted. The fair value
of the equity instruments granted is determined using an appropriate option pricing model taking into account the
terms and conditions upon which the instruments were granted. The Company also made an assessment on the
probability of the achievement of non-market based vesting hurdles in assessing the value of the equity instruments
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. Please refer to Note 20 for further details.
(ii) Impairment of non-financial assets other than goodwill
The consolidated entity assesses impairment of non-financial assets other than goodwill at each reporting date by
evaluating conditions specific to the consolidated entity and to the particular asset that may lead to impairment. If an
impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of
disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.
(iii)
Business combinations
As discussed in note 24, business combinations are initially accounted for on a provisional basis. The fair value of
assets acquired, liabilities and contingent liabilities assumed are initially estimated by the consolidated entity taking
into consideration all available information at the reporting date. Fair value adjustments on the finalisation of the
business combination accounting is retrospective, where applicable, to the period the combination occurred and
may have an impact on the assets and liabilities, depreciation and amortisation reported.
In assessing whether a business has been acquired for the purpose of AASB10 the Company considered whether
an integrated set of activities and assets that is capable of being conducted and managed for the purpose of
providing goods or services to customers, generating investment income (such as dividends or interest) or
generating other income from ordinary activities. In assessing the inputs and substantive processes that contribute
to the ability to create the output, the Company exercised judgement around the extent of the workforce required to
create the necessary outputs of the business.
(iv)
Deferred Consideration
Deferred consideration, resulting from business combinations, is valued at fair value at the acquisition date as part
of the business combination. When the deferred consideration meets the definition of a financial liability, it is
subsequently remeasured to fair value at each reporting date.
The determination of fair value of deferred consideration in the current year required judgement to be exercised in
regards to expected future annual recurring revenue as disclosed in Note 24 of the financial report.
(v)
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or
may have, on the consolidated entity based on known information. This consideration extends to the nature of the
38
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
products and services offered, customers, supply chain, staffing and geographic regions in which the consolidated
entity operates. Other than as addressed in specific notes, there does not currently appear to be either any significant
impact upon the financial statements or any significant uncertainties with respect to events or conditions which may
impact the consolidated entity unfavourably as at the reporting date or subsequently as a result of the Coronavirus
(COVID-19) pandemic.
(vi)
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on
the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall
expected credit loss rate for each group. These assumptions include recent sales experience, historical collection
rates, the impact of the Coronavirus (COVID-19) pandemic and forward-looking information that is available. The
allowance for expected credit losses, as disclosed in note 9, is calculated based on the information available at
balance date. The actual credit losses in future years may be higher or lower.
(vii) Estimation of useful lives of assets
The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for
its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a
result of technical innovations or some other event. The depreciation and amortisation charge will increase where
the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have
been abandoned or sold will be written off or written down.
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 entities to
the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that
39
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
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.
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. 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.
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,
contingent consideration and lease liabilities. All financial liabilities are measured at either amortised cost using the
effective interest rate method, or at fair value. 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. 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.
(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.
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.
(e)
Inventories
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
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair
value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite
40
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life
intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses
recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between
net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life
intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted
for prospectively by changing the amortisation method or period.
Research and development
Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is
probable that the project will be a success considering its commercial and technical feasibility; the consolidated entity
is able to use or sell the asset; the consolidated entity has sufficient resources and intent to complete the
development; and its costs can be measured reliably. Capitalised development costs are amortised on a straight-line
basis over the period of their expected benefit, being their finite life of 3 years.
Customer contracts
Customer contracts acquired in a business combination are amortised on a straight-line basis over the period of their
expected benefit, being their finite life of 3 years.
Software
Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their
expected benefit, being their finite life of 3 years
(g)
Plant and Equipment
Items of plant and equipment are stated at cost less accumulated depreciation.
The carrying amount of 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 3(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
41
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
value. Any excess of the asset's carrying value over its recoverable amount is expensed to profit or loss. Goodwill
(and any indefinite life intangible assets) are tested for impairment annually
(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
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 an appropriate 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 for options and performance
rights with non-marked based vesting conditions and the Monte Carlo simulation model for options and performance
42
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
rights with market based vesting conditions. The fair value of shares issued is based on the closing market price of
the Company’s share on the grant date.
(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) Revenue
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
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
Financial Assets and Financial Liabilities 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 performed the
relevant performance obligations under the contract.
Prepaid Commissions
Commissions owing to resellers are paid at the inception of the contract and recognised as a contract asset,
amortised to direct costs in the consolidated statement of profit or loss and other comprehensive income over the
term of the contract. The contract liability balance in the consolidated statement of financial position is shown net of
prepaid commissions.
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:
43
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
-
-
-
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.
(p) Earnings per Share
(i)
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the 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.
(q) 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.
(r) 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.
44
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
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.
(s) Goods and Services Tax ('GST')
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is
not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset
or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the
Consolidated Statement of Financial Position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax
authority.
(t) 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
45
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
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.
(u) Business Combinations
Business combinations occur where an acquirer obtains control over one or more businesses.
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity
instruments issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-
controlling interest in the acquiree. For each business combination, the non-controlling interest in the acquiree is
measured at either fair value or at the proportionate share of the acquiree's identifiable net assets. All acquisition
costs are expensed as incurred to profit or loss.
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities
assumed for appropriate classification and designation in accordance with the contractual terms, economic
conditions, the consolidated entity's operating or accounting policies and other pertinent conditions in existence at
the acquisition-date.
Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity
interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous
carrying amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or
loss. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for
within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing
investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value
is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the
difference is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a
reassessment of the identification and measurement of the net assets acquired, the non-controlling interest in the
acquiree, if any, the consideration transferred and the acquirer's previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional assets or liabilities during the measurement period,
based on new information obtained about the facts and circumstances that existed at the acquisition-date. The
measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the
acquirer receives all the information possible to determine fair value.
46
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
(v) Right-of-use-assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost,
which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or
before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except
where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing
the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated
useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are
subject to impairment or adjusted for any re-measurement of lease liabilities. The consolidated entity has elected not
to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or
less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.
(w) Lease Liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the
present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit
in the lease or, if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease
payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on
an index or a rate, amounts expected to be paid under -residual value guarantees, exercise price of a purchase
option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The
variable lease payments that do not depend on an index or a rate are expensed in the period in which they are
incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate
used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability
is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying
amount of the right-of-use asset is fully written down.
(x) Basis of Consolidation
The Financial Statements are those of the Group, comprising the financial statements of the Company, and of all
entities which the Company controls. The Group controls an entity when it is exposed, or has rights, to variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using
consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies, which may
exist.
Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup
transactions are eliminated in preparing the consolidated financial statements. Subsidiaries are eliminated from the
date on which control is established and are de-recognised from the date that control ceases.
47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTE 4: REVENUE AND OTHER INCOME
Operating Revenue
Service revenue
Hardware revenue
Other Income
Interest revenue
Other government grants/subsidies received
Research and development grant
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
2021
$
8,698,594
263,891
8,962,485
62,179
747,903
3,445,179
4,255,261
2020
$
4,775,644
314,529
5,090,173
3,742
981,806
2,390,144
3,375,692
Disaggregation of revenue from contracts with customers
Revenue is recognised when or as the Group transfers control of goods or services to a customer at the amount to
which the Group expects to be entitled over time and at a point in time. If the consideration promised includes a
variable amount, the Group estimates the amount of consideration to which it will be entitled.
Timing of revenue
recognition – 30
June 2021
At a point in time
Over time
Total
Service Revenue:
Education
Service Revenue:
Consumer
Hardware Revenue
-
8,221,918
8,221,918
-
476,676
476,676
263,891
-
263,891
Geographical Regions - 30 June 2021
Australia
New Zealand
USA
Rest of the world
Total
Timing of revenue recognition – 30 June 2020
At a point in time
Over time
Total
Service
Revenue:
Education
Service
Revenue:
Consumer
Hardware
Revenue
2,777,162
476,488
266,693
988,093
4,956,663
-
-
(32)
220
-
(2,802)
-
8,221,918
476,676
263,891
Service
Revenue:
Education
Service
Revenue:
Consumer
Hardware
Revenue
-
-
314,529
3,875,585
900,059
-
3,875,585
900,059
314,529
48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Geographical Regions - 30 June 2020
Australia
New Zealand
USA
Rest of the world
Total
Contract liabilities
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
Service
Revenue:
Education
Service
Revenue:
Consumer
Hardware
Revenue
1,635,763
804,825
275,213
952,852
1,286,970
-
13,586
10,777
70,871
-
39,316
-
3,875,585
900,059
314,529
Contract liabilities recognised relate to amounts invoiced in advance of the transfer of services to customers for its
subscription service offerings. Revenue is recognised for these amounts over time, over the life of the service
contract, as the Group’s service performance obligations are satisfied.
a) Reconciliation of movements in contract liabilities
Contract Liabilities
Balance at 1 July 2019
Additions
Recognised within service revenue
Balance at 30 June 2020
Additions
Recognised within service revenue
Balance at 30 June 2021
$
2,103,935
4,031,361
(1,903,181)
4,232,115
12,970,966
(8,698,594)
8,504,487
As at 30 June 2021 $5,567,461 (2020: $2,314,320) has been recognised as current contract liabilities representing
services to be provided within the next 12 months. A further $2,937,026 (2020: $1,917,795) represents contracts
signed for services to be delivered in the next 2-3 years.
In adopting AASB 15, the group recognised a contract asset in relation to the Services fixed-price contracts whereby
the customer pays the fixed amount based on a payment schedule. If the services rendered by the company exceed
the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is
recognised. $2,314,320 revenue was recognised in the current reporting period relating to carried-forward contract
liabilities or performance obligations satisfied in a prior year. $8,504,487 of transaction price relates to unsatisfied
performance obligations that will be satisfied in the future financial periods.
Critical judgement in allocating transaction price
Subscription services fixed-price contracts have a number of performance obligations, and the transaction price was
allocated to the performance obligations based on the stand-alone selling prices.
49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTE 5: EXPENSES
Direct Costs
Service revenue
Hardware revenue
Cloud Storage
Employee and director benefits cost
Director fees
Employee wages and superannuation
Staff and Contractor commissions
Other employee costs
Administration
Advertising
Office expenses
Contractor costs
Information Technology and Infrastructure costs
Other costs
NOTE 6: 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 2021
2021
$
1,147,961
258,133
5,627,379
7,033,473
2020
$
741,727
166,787
3,635,994
4,544,508
546,000
14,770,748
1,020,590
1,768,540
18,105,878
467,362
8,625,158
956,380
160,522
10,209,422
1,000,564
939,224
681,677
1,219,859
182,585
4,023,909
757,295
710,869
515,940
923,272
138,194
3,045,570
2021
$
2020
$
-
-
-
-
-
-
Profit / (loss) before tax for the year
(21,930,396)
(17,617,120)
Prima facie income tax payable on profit before income tax at:
- 26.00% (Australia)
- 28.00% (New Zealand)
- 21.00% (US)
- 17.00% (Singapore)
- 30.00% (India)
(1,333,814)
(1,245,024)
(3,058,814)
(64,250)
-
(3,527,884)
(314,807)
(688,506)
1,116
402
50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Adjustments for:
Entertainment
Cash Flow Boost Income
Share-based payments
Change in Corporate Tax Rate
R&D tax incentive classified as income
Non-deductible expenditure
Foreign Tax Rate Differential
Offset against DTL/DTA 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
Deferred tax liability balances comprises:
PPE and Intangible assets
Prepayments
Offset against deferred tax assets / not recognised
Net deferred tax asset / (liability)
(d)
(e)
Deferred income tax related to items charged or credited
directly to equity
Decrease / (increase) in deferred tax assets
Adjust for derecognition / offset of DTA/DTL
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 2021
6,750
-
493,195
23
(895,747)
17,739
514,703
5,565,239
-
5,175
(13,750)
688,921
(657,289)
2,348,289
2,158,332
-
12,591,316
1,306,232
651,674
689,509
(15,238,731)
8,307,495
117,481
291,332
397,606
(9,113,915)
(677,819)
(623,141)
1,300,960
-
(37,893)
(1,002)
38,895
-
646,606
(646,606)
-
200,629
(200,629)
-
1,346,454
6,830,090
5,908,155
14,084,699
767,526
6,252,726
2,054,769
9,075,021
Total tax losses of $48,993,248 (2020: $27,140,094) have not been brought to account for the year ended 30
June 2021.
The tax benefits of the above deferred tax assets, including tax losses, 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.
51
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTE 7: 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
Basic and diluted (loss) per share attributable to equity holders
(cents Per Share)
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
2021
$
(21,930,396)
2020
$
(17,617,120)
(6.00)
(7.48)
Number
Number
365,463,540
235,571,555
365,463,540
235,571,555
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.
NOTE 8: CASH AND CASH EQUIVALENTS
Cash at bank
Total Cash and Cash Equivalents
2021
$
2020
$
34,933,166
34,933,166
5,807,193
5,807,193
Cash at bank earns interest at floating rates based on daily bank rates. Refer to note 22 on financial instruments for
details on the Company’s exposure to risk in respect of its cash balance.
NOTE 9: TRADE AND OTHER RECEIVABLES
Current:
Trade receivable
Less provision for expected credit losses
Other current receivables:
GST receivable
Capitalised contract costs
R&D Grant receivable
Other receivables
Total Current Trade and Other Receivables
2021
$
2020
$
4,419,657
(95,877)
4,323,780
308,954
23,703
3,754,287
401,848
8,812,572
2,336,421
(95,663)
2,240,758
11,378
23,702
2,403,579
59,701
4,739,118
52
16
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Non-Current:
Bonds and deposits
Total Non-Current Trade and Other Receivables
Total Trade and Other Receivables
NOTE 10: INVENTORY
Current:
At cost:
Finished goods
Total Inventory
a)
Amounts recognised in profit or loss
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
158,833
158,833
53,156
53,156
8,971,405
4,792,274
2021
$
2020
$
372,927
372,927
249,993
249,993
Inventories recognised as an expense during the year ended 30 June 2021 amounted to $258,133 (2020: $351,410).
These were included in direct costs.
NOTE 11: INTANGIBLES
Software at cost
Less: Accumulated amortisation and impairment
Customer lists at cost
Less: Accumulated amortisation and impairment
a) Reconciliation of movements in intangible assets
Intangible Assets
Balance at 1 July 2019
Additions
Impairment expense
Amortisation expense
Balance at 30 June 2020
Additions arising from business combinations – Customer lists(1)
Additions arising from business combinations – Software(1)
Impairment expense
Amortisation expense
Balance at 30 June 2021
(1) Refer to Note 24 for further information.
2021
$
18,795,242
(13,756,182)
1,273,434
(339,180)
5,973,314
2020
$
13,759,986
(12,555,816)
339,181
(292,174)
1,251,177
$
4,826,403
-
-
(3,575,226)
1,251,177
934,253
5,035,257
-
(1,247,373)
5,973,314
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTE 12: PLANT & EQUIPMENT
Plant & equipment – at cost
Less: Accumulated depreciation
a)
Reconciliation of movements in fixed assets
Plant and Equipment
Balance at 1 July 2019
Additions
Depreciation expense
Balance at 30 June 2020
Additions
Depreciation expense
Balance at 30 June 2021
NOTE 13: RIGHT TO USE ASSET AND LEASE LIABILITIES
Lease Assets
Land and Building – right of use assets
Less: Accumulated Amortisation
Lease Liabilities
Current
Lease Liability
Total Current Lease Liability
Non-Current
Lease Liability
Total Non-Current Lease Liability
Total Lease Liabilities
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
2021
$
2020
$
4,339,440
(1,575,041)
2,764,399
2,327,301
(786,736)
1,540,565
$
682,757
1,261,159
(403,351)
1,540,565
2,012,139
(788,305)
2,764,399
2021
$
3,386,241
(834,124)
2,552,117
2021
$
590,186
590,186
2,278,972
2,278,972
2,869,158
2020
$
551,411
(185,671)
365,740
2020
$
225,642
225,642
156,625
156,625
382,267
54
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTE 14: TRADE AND OTHER PAYABLES
Trade payables(1)
Accruals & other payables
Share monies received in advance(2)
Consideration payable
Deferred Consideration Payable(3)
Total Trade and Other Payables
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
2021
$
2,029,648
4,086,897
-
1,235,018
3,499,474
10,851,035
2020
$
1,243,818
1,377,489
500,000
-
3,121,307
(1) Current trade payables are non-interest bearing and are normally settled on 30-day terms
(2) FY20 balance relates to share monies which were received in the 30 June 2020 financial year for shares issued during financial
year 30 June 2021.
(3) In addition to the initial cash and share consideration paid for the NetRef acquisition, there is deferred consideration to the
Vendors of NetRef over the next 6 months. Refer Note 24.
NOTE 15: PROVISIONS
Current:
Provision for annual leave
Provision for long service leave
Total current provisions
Non-Current:
Provision for long service leave
Total non-current provisions
Total Provisions
NOTE 16: BORROWINGS
Current:
R&D Loan Facility1
Interest Payable
Oracle Loan financing2
Total Current Borrowings
Non-Current:
Oracle Loan financing2
Total Non-Current Borrowings
2021
$
1,136,054
65,492
1,201,546
237,762
237,762
1,439,308
2021
$
-
-
284,406
284,406
157,889
157,889
2020
$
596,587
58,441
655,028
103,563
103,563
758,591
2020
$
1,141,322
131,188
1,272,510
-
-
1 During the prior year, the Company received advance funding on its expected FY2020R&D rebate from Radium Capital. Refer
to below for key terms of this funding.
2 In the current financial period, Family Zone entered into a payment facility for the acquisition of products and services related to
an Oracle project.
55
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
a)
Reconciliation of movements in R&D Loan Facility, at amortised cost
R&D Loan Facility
Balance at 1 July 2020
Drawdowns
Interest and other finance costs
Repayments
Balance at 30 June 2021
$
1,272,510
-
56,105
(1,328,615)
-
b) Key Facility Terms: Oracle Project
· Counterparty: Oracle Corporation Australia Pty Ltd facilitated by BOQ Finance
· Amount: $1,002,760
· Final Maturity Date: 31 December 2025. Family Zone has the option to repay earlier without penalties
·
· Security: Unsecured
· Conditions: Nil
Interest Rate: 0% per annum with a service fee of around 10% per invoice
Purpose of Loan as per agreement: Wholly for implementation & licencing of the Netsuite ERP
NOTE 17: ISSUED CAPITAL
Issued Ordinary Shares - no par value (fully paid)
Total
Opening balance – 1 July 2019
Shares issued to the Linewize vendors on conversion of performance shares on
4 September 2019
2021
2020
Number of
Number of
Shares
Shares
391,266,604
295,543,169
391,266,604
295,543,169
Number of
Shares
Value
$
200,627,835
45,567,979
4,500,000
742,500
Placement to sophisticated investors - Tranche 1 on 3 October 2019
4,903,426
686,480
Placement to sophisticated investors - Tranche 2 on 8 November 2019
29,025,146
4,063,520
Shares issued on conversion of Class B Performance Shares 15 Nov 2019
7
-
Shares issued to advisor on 15 November 2019
Shares issued to employees in lieu of cash salary on 2 March 2020
Shares issued to Director in lieu of cash salary on 4 May 2020
Placement to sophisticated investors - Tranche 1 on 6 May 2020
Shares issued to consultants for services provided on 27 May 2020
Less: share issue costs
70,255
1,856,507
559,991
15,807
233,920
80,000
53,500,002
6,420,072
500,000
100,000
-
(1,236,704)
56
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Closing balance – 30 June 2020
295,543,169
56,673,575
Issue of Tranche 2 Placement Shares on 7 July 2020
Shares issued on exercise of Performance Rights
Shares issued on exercise of Broker and Advisor Options
Shares issued on exercise of Employee Options
Issue of Placement Shares - Oct/Nov 2020
Issue of Share Purchase Plan Shares on 25 Nov 2020
Issue of Shares to Netsweeper for services rendered on 3 Dec 2020
Shares issued in lieu of cash remuneration or as incentive
Shares to be issued - Placement shares May 2021
Shares to be issued - NetRef Tranche 1 share consideration1
Less: share issue costs
Closing balance – 30 June 2021
30,833,333
3,700,440
6,218,074
7,005,792
435,034
-
1,426,184
78,306
45,454,545
20,000,000
4,679,466
2,053,505
680,680
416,511
-
-
-
272,272
200,080
23,000,000
1,235,018
(2,586,425)
391,266,604
106,052,956
1 The Tranche 1 share consideration was agreed to be issued and fixed on the completion date of the NetRef acquisition, with the
shares subsequently issued on 1 July 2021. Refer to Note 24 Business Combination for further details on the NetRef Acquisition.
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 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 18: 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.
Options
Performance Shares
Performance Rights
Total Share-Based Payment Reserve
2021
$
5,548,201
1,660,671
4,775,087
11,983,959
2020
$
5,146,818
1,660,671
3,640,704
10,448,193
Nature and Purpose of Foreign Currency Translation Reserve
The foreign currency translation reserve records exchange differences arising on translation of a foreign controlled
subsidiaries.
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Foreign Currency Translation Reserve
Total Foreign Currency Translation Reserve
Options outstanding at 30 June 2021
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
2021
$
(66,581)
(66,581)
2020
$
(12,905)
(12,905)
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)
4/12/2017
4/12/2020
4/12/2017
9/04/2018
9/04/2018
4/12/2020
9/04/2021
9/04/2021
29/08/2018
29/08/2020
11/03/2019
11/03/2022
18/03/2019
18/03/2022
$0.50
$0.60
$0.75
$0.90
$0.60
$0.25
$0.18
850,000
850,000
516,765
516,765
500,000
250,000
-
-
-
-
-
-
1,972,889
25,399
21/05/2019
21/05/2022
$0.235
898,692
8/11/2019
8/11/2019
8/11/2022
8/11/2022
29/04/2020
29/04/2023
09/06/2021
30/06/2025
30/06/2020
7/07/2023
30/06/2020
7/07/2023
30/06/2020
13/07/2023
30/06/2020
13/07/2023
27/08/2020
13/07/2023
$0.21
$0.21
$0.21
$0.50
$0.21
$0.18
$0.18
$0.24
$0.18
3,852,100
3,000,000
500,000
-
-
-
-
-
4,500,000
1,000,000
2,000,000
2,000,000
2,000,000
-
-
-
-
-
500,000
-
-
-
-
-
-
-
(435,034)
(898,692)
(1,257,100)
-
-
-
-
(1,550,000)
(2,000,000)
(1,300,000)
Forfeited
during the
year
(number)
(850,000)
(850,000)
(516,765)
(516,765)
(500,000)
Balance at
year end
(number)
Vested and
exercisable
at year end
(number)
-
-
-
-
-
-
-
-
-
-
-
250,000
250,000
(32,312)
1,530,942
1,530,942
-
-
-
-
-
-
-
-
-
-
-
-
2,595,000
2,595,000
3,000,000
2,500,000
500,000
500,000
4,500,000
-
1,000,000
1,000,000
450,000
450,000
-
700,000
500,000
-
700,000
500,000
Total
20,707,211
5,025,399
(7,440,826)
(3,265,842)
15,025,942 10,025,942
Reconciliation of movement in option reserve:
Opening Balance - 1 July 2019
Options issued for capital raising services and strategic advisory services
Share based payment expense in respect to employee options on issue as at 1
July 2019
Share based payment expense in respect to Director options granted during the
year
Share based payment expense in respect to Company Secretary options
granted during the year
Exercised during the year
Forfeited during the year
Number of
Options
23,824,647
Value
$
3,746,356
9,852,100
1,062,579
-
104,123
4,000,000
186,227
500,000
47,532
-
(17,469,536)
-
-
58
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Closing Balance – 30 June 2020
Options issued for capital raising services and strategic advisory services(a)
Options re-issued due to administrative error(b)
Options issued to Peter Pawlowitsch and Tim Levy approved at the general
meeting(c)
Share based payment expense for employee options on issue as at 1 July 2020
Share based payment expense in respect to Director options on issue as at 1
July 2020
Exercised during the period
Lapsed/forfeited during the period
Closing Balance – 30 June 2021
20,707,211
5,146,818
500,000
222,426
25,399
-
4,500,000
39,116
-
-
46,530
170,301
(7,440,826)
-
(3,265,842)
(76,988)
15,025,942
5,548,202
(a) On 8 August 2020, 500,000 options were issued to a corporate advisor in relation to services provided. These
options expire on 13 July 2023 and exercise price of $0.18 per option vesting immediately (Advisor Options).
The Advisor Options were valued using the Black-Scholes option pricing model. Please refer to the Share Based
Payment Note 20 (1. Broker & Advisor Options) for a summary of the key inputs used in this valuation.
(b) On 26 November 2020, 25,399 options ($0.18, 15 March 2022) were re-issued to replace the 25,399 options
which were incorrectly cancelled due to an administrative error in FY20.
(c) On 9 June 2021, a total of 4,500,000 Director Options (Director Options) were issued to non-executive
Chairman Peter Pawlowitsch and Managing Director Tim Levy for services to be provided. These options expire
on 30 June 2025 and exercise price of $0.50 per option with various vesting conditions associated with the
Director Options. Refer to Note 20: Share based payments for further details as to the basis of valuation of
Director Options and their assessed fair value.
Performances shares outstanding at 30 June 2021
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)
H
29/11/2017
29/11/2022
3,000,000
Granted
During the
Year
(number)
-
Converted
during the
year
(number)
Forfeited
during the
year
(number)
-
-
Balance at
year end
(number)
3,000,000
The Class H Performance Shares were issued in part consideration for the Linewize acquisition. The Performance
Shares convert into Shares on a one for one basis subject to the achievement of various performance targets and
have been reported as contingent consideration for the acquisition, consistent with the disclosure in the 30 June 2019
Annual Report.
Reconciliation of movement in performance share reserve:
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Opening Balance - 1 July 2019
Share-based payment expense for the year in respect to Performance Shares
on issue as at 1 July 2019
Performance Shares converted into ordinary shares on achievement of
performance milestone(2)
Performance Shares lapsed during the period(1)
Closing Balance – 30 June 2020
Closing Balance – 30 June 2021
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
Number of
Performance
Shares
28,499,997
Value
$
1,587,602
-
73,069
(4,500,000)
(20,999,997)
-
-
3,000,000 1,660,671
3,000,000 1,660,671
(1) The Class B Performance Shares converted into ordinary shares on a one for one basis on the achievement of a vesting
condition in FY2020. The vesting condition for the conversion of the Class B Performance Shares on a one for one basis
was assessed as unlikely to be met as at 30 June 2019. The share-based payment expensed to date in respect to these
Class B Performance Shares was therefore reversed in the prior period. Following, consolidation, conversion and
cancellation of the 10,499,999 Class B Performance shares, 7 ordinary shares were issued on 8 November 2019, as
disclosed in Note 17.
(2) Class F and Class G Performance Shares were issued as part of the acquisition of Linewize Services Limited in the 30
June 2017. Class F and Class G Performance Shares converted to fully paid ordinary shares in the previous reporting
period upon achievement of their relevant performance target, consistent with the Linewize disclosures in the 30 June 2019
Annual Report.
Performance Rights outstanding as at 30 June 2021
The following Performance Rights of the Company existed at reporting date:
Grant Date
Expiry Date
4/12/2017
4/12/2020
17/04/2019
17/04/2022
9/09/2019
09/09/2022
2/03/2020
2/03/2024
2/03/2020
2/03/2023
2/03/2020
2/03/2024
1/05/2020
2/03/2024
1/05/2020
1/05/2024
1/05/2020
4/05/2024
1/05/2020
7/07/2023
4/05/2020
04/05/2023
Exercise
Price
Balance at
start of Year
(number)
Granted
During the
Year
(number)1
Exercised
during the
Year
(number)2
Forfeited
during the
Year
(number)3
Balance at
Year end
(number)
Vested and
exercisable
at Year end
(number)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
1,775,007
1,805,196
700,000
3,125,000
2,049,428
3,936,541
2,500,000
1,000,000
600,000
500,000
1,885,715
-
-
-
-
-
-
-
-
-
(166,670)
(1,608,337)
-
-
(195,556)
-
1,609,640
1,609,640
(600,000)
100,000
100,000
-
(3,125,000)
-
-
(410,714)
-
1,638,714
1,638,714
(281,134)
(399,801)
3,255,606
907,836
-
(2,500,000)
-
-
-
-
(500,000)
-
-
-
-
-
1,000,000
600,000
600,000
200,000
-
-
1,885,715
1,885,715
60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
30/06/2020
7/07/2023
30/06/2020
7/07/2023
1/07/2020
13/07/2023
07/07/2020
02/03/2023
19/10/2020
19/10/2023
19/10/2020
19/10/2024
19/02/2021
12/03/2024
19/02/2021
13/04/2024
15/02/2021
15/12/2021
31/03/2021
2/03/2024
29/04/2021
02/03/2024
09/06/2021
30/06/2024
09/06/2021
30/06/2025
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
5,000,000
-
(4,000,000)
-
1,000,000
-
-
-
-
-
-
-
-
-
-
350,000
4,500,000
1,242,857
64,000
96,000
936,572
399,628
35,007
250,000
15,000
4,000,000
3,000,000
-
-
-
(64,000)
-
-
-
-
-
-
-
-
-
-
(350,000)
-
-
-
-
-
-
-
-
4,500,000
3,550,000
1,242,857
414,286
-
96,000
936,572
399,628
-
-
-
-
35,007
35,007
(250,000)
-
-
-
-
-
15,000
5,000
4,000,000
3,000,000
-
-
Total
24,876,887 14,889,064
(6,218,074)
(8,233,138)
25,314,739
10,946,198
(1) The following Performance Rights were granted during the year under the Company’s Performance Rights Plan:
a. 498,635 Remuneration Performance Rights were issued to employees and consultants as security based
remuneration comprising various tranches
b. 2,290,429 Employee Performance Rights were issued to employees as security based remuneration comprising
classes
c. 350,000 US Performance Rights were issued to employees as security based remuneration.
d. 4,500,000 Incentive Performance Rights were issued to the new executives as security based remuneration.
e. At the general meeting held on 9 June 2021, shareholders approved the issue of the 4,000,000 STI and 3,000,000
LTI Performance Rights to Tim Levy and Crispin Swan.
(2) The following Performance Rights were exercised during the period under the Company’s Performance Rights Plan:
a. 166,670 Class D Performance Rights.
b. 195,556 Class G Performance Rights.
c. 974,714 Remuneration Performance Rights
d. 281,134 Employee Performance Rights
e. 600,000 US Performance rights.
f.
4,000,000 SP Performance Rights
(3) The following Performance Rights have lapsed during the year:
a.
b.
c.
d.
1,108,337 Class C Performance Rights, 166,670 Class D Performance Rights, 333,330 Class F Performance
Rights.
399,801 Employee Performance Rights.
350,000 US Performance Rights.
5,875,000 Executive Performance Rights.
61
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Reconciliation on movement in performance right reserve:
Opening Balance - 1 July 2019
Performance Rights granted during the year
Number of
Performance Rights
5,355,197
21,956,684
Performance Rights expense recognised for the current year
Reversal of share based payment expense as vesting conditions are not met
-
-
Performance Rights lapsed and cancelled during the year
(2,434,994)
Value
$
2,120,938
994,592
546,007
(20,833)
-
Closing Balance - 30 June 2020
Performance Rights granted during the year
Performance Rights expense recognised for the current year
Performance rights exercised during the year
24,876,887
3,640,704
14,874,129
1,603,016
-
763,745
(6,218,074)
-
Reversal of share based payment expense as vesting conditions are not met
(9,233,138)
(1,232,378)
Closing Balance - 30 June 2021
25,314,739
4,775,087
These Performance Rights have been valued at grant date and each class of Performance Rights are being expensed
over the vesting period.
Performance Rights
Valuation
Date
Vesting Date
(Expected)
Fair Value
at Grant
Date
Balance as
at 30 June
2021
(Number)
Total
Expense for
the year
Class C Performance Rights3
Class F Performance Rights3
Executive Performance Rights –
Executives - lapsing
4/12/2017
29/08/2020
4/12/2017
29/08/2020
$0.68
$0.68
02/03/2020
30/06/2021
$0.11
Executive Performance Rights – Director
– lapsing
04/05/2020
30/06/2021
$0.13
-
-
-
-
($893,070)
($210,358)
($85,052)
($43,898)
Class G Performance Rights
17/04/2019
17/04/2020
$0.23
1,609,640
-
TL SP Performance Rights
Class A TL SP Performance Rights
Class B TL SP Performance Rights
Class C TL SP Performance Rights
Class D TL SP Performance Rights
MS SP Performance Rights
01/05/2020
01/05/2020
01/05/2020
01/05/2020
1/05/2023
1/05/2023
1/05/2023
1/05/2023
Class C MS SP Performance Rights
30/06/2020
31/12/2020
Class D MS SP Performance Rights
30/06/2020
31/12/2020
Class E MS SP Performance Rights
30/06/2020
30/06/2022
Employee Performance Rights
02/03/2020
Employee Performance Rights - Directors
01/05/2020
Note 1
Note 1
Remuneration Performance Rights
02/03/2020
2/09/2020
$0.11
$0.10
$0.09
$0.08
$0.10
$0.06
$0.03
$0.11
$0.13
$0.11
100,000
200,000
300,000
400,000
-
-
1,000,000
4,409,463
600,000
1,638,714
$8,398
$15,270
$25,264
$10,562
$101,000
$64,000
$14,136
$227,238
$43,535
$66,836
62
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Performance Rights
Valuation
Date
Vesting Date
(Expected)
Fair Value
at Grant
Date
Balance as
at 30 June
2021
(Number)
Total
Expense for
the year
Remuneration Performance Rights – TL
and CS
04/05/2020
4/11/2020
$0.13
1,885,715
$161,926
Remuneration Performance Rights – MS
30/06/2020
30/06/2021
Incentive Performance Rights2
01/07/2020
Note 2
Class A2 Employee Performance Rights
19/02/2021
12/03/2022
Class B2 Employee Performance Rights
19/02/2021
12/03/2023
Class C2 Employee Performance Rights
19/02/2021
12/03/2024
Remuneration Performance Rights - T3
19/02/2021
31/07/2021
Remuneration Performance Rights - T4
19/02/2021
31/07/2021
Remuneration Performance Rights - T5
15/02/2021
15/05/2021
STI 2022 Performance Rights
09/06/2021
30/06/2022
STI 2023 Performance Rights
09/06/2021
30/06/2023
LTI Performance Rights
09/06/2021
30/06/2023
$0.12
$0.23
$0.50
$0.50
$0.50
$0.50
$0.50
$0.45
$0.58
$0.58
$0.58
-
4,500,000
345,524
345,524
245,524
384,628
15,000
35,007
2,000,000
2,000,000
3,000,000
$77,935
$961,769
$59,079
$30,366
$14,507
$159,197
$6,208
$15,750
$63,109
$32,437
$48,655
Class A Employee Performance Rights -
US
Class B Employee Performance Rights -
US
Class C Employee Performance Rights -
US
Total
30/06/2020
02/03/2021
$0.195
414,286
$80,785
30/06/2020
02/03/2022
$0.195
414,286
$48,472
30/06/2020
02/03/2023
$0.195
414,286
$30,326
25,314,739
$1,134,383
(1) One third of the Employee Performance Rights vest one year from issue date (Class A), one third of the Employee
Performance Rights vest two years from issue date (Class B) and one third of the Employee Performance Rights vest three
years from issue date (Class C).
(2) The Incentive Performance Rights comprise the Class A Incentive Performance Rights, Class B Incentive Performance
Rights and Class C Incentive Performance Rights. Refer to table below for further details on vesting conditions of each
class.
(3) All previously recognised expense in relation to these tranches was reversed in full in the current year as the rights lapsed
during the vesting period.
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:
Performance
Rights
Vesting Condition
Class C
Performance Rights
Achievement of $20,000,000 revenue by the Group over a 12 month rolling
period of which 30% is subscription income
Class F
Performance Rights
Achievement of $20,000,000 revenue by the Company over a 12 month
rolling period of which 30% is subscription income
Class G
Performance Rights
Executive
Performance Rights
Continued employment with the Company in existing role from issue date
until the Milestone Date
The achievement of ARR1 of $3.6m by the Milestone Date (being 90% of
targeted QRR of $4million) 2
Milestone
Date
29 August
2020
29 August
2020
1 Jan 2020
30 June
2021
63
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Performance
Rights
Vesting Condition
TL SP Performance Rights
Class A TL SP
Performance Rights
The 30 day VWAP of the Company’s Shares being greater than $0.25 prior to
the Milestone Date
Class B TL SP
Performance Rights
The 30 day VWAP of the Company’s Shares being greater than $0.35 prior to
the Milestone Date
Class C TL SP
Performance Rights
The 30 day VWAP of the Company’s Shares being greater than $0.45 prior to
the Milestone Date
Class D TL SP
Performance Rights
The 30 day VWAP of the Company’s Shares being greater than $0.60 prior to
the Milestone Date
Milestone
Date
3 years
from issue
date
3 years
from issue
date
3 years
from issue
date
3 years
from issue
date
MS SP Performance Rights
Class C MS SP
Performance Rights
The 30 day VWAP of the Company’s Shares being greater than $0.24 prior to
the Milestone Date
1 year from
issue date.
Class D MS SP
Performance Rights
The 30 day VWAP of the Company’s Shares being greater than $0.36 prior to
the Milestone Date
2 year from
issue date.
Class E MS SP
Performance Rights
The 30 day VWAP of the Company’s Shares being greater $0.60 prior to the
Milestone Date
Class A Employee
Performance Rights
Continued employment with the Company in existing role from issue date
until the Milestone Date
Class B Employee
Performance Rights
Continued employment with the Company in existing role from issue date
until the Milestone Date
Class C Employee
Performance Rights
Continued employment with the Company in existing role from issue date
until the Milestone Date
Remuneration
Performance Rights
Continued employment with the Company in existing role from issue date
until the Milestone Date
Continued employment with the Company in existing role from issue date
until the Milestone Date
Continued employment with the Company in existing role from issue date
until the Milestone Date
Remuneration
Performance Rights
- T3
Remuneration
Performance Rights
– T4
Remuneration
Performance
Rights- T5
Vest following continued engagement under the Consultancy Agreement until
Milestone Date.
15 May
2021
Class A Incentive
Performance Rights
Vest upon the Company achieving $200,000 of revenue within 2 years from
acquisition date of Cyber Education Pty Ltd
Class B Incentive
Performance Rights
Vest upon the Company achieving $400,000 of revenue within 2 years from
acquisition date of Cyber Education Pty Ltd
30 June
2022
30 June
2022
64
2 year from
issue date.
1 year from
issue date.
2 year from
issue date.
3 year from
issue date.
6 months
from issue
date
12 Sept
2021
9 Oct 2021
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Performance
Rights
Vesting Condition
Class C Incentive
Performance Rights
Vest upon the Company achieving $600,000 of revenue within 2 years from
acquisition date of Cyber Education Pty Ltd
STI 2022
Performance Rights
STI 2023
Performance Rights
LTI 2023
Performance Rights
a. Continued employment until 30 June 2022;
b. Receive a positive Personal Scorecard for the financial year ended 30
June 2022 from the Board for performance over the previous 12 months, 50%
of the STI 2022 Performance Rights shall vest;
c. QRR Growth - If the Company achieves 50% growth in Quarterly Recurring
Revenue (QRR) from 1 April 2022 to 30 June 2022 compared to the
corresponding period in the previous year, 60% of the remaining 50% of the
STI 2022 Performance Rights shall vest, with straight line pro- rata vesting for
additional percentages of QRR Growth up to 100% from 1 April 2022 to 30
June 2022 compared to the corresponding period in the previous year.
a. Continued employment until 30 June 2023;
b. Receive a positive Personal Scorecard for the financial year ended 30
June 2023 from the Board for performance over the previous 12 months, 50%
of the STI 2023 Performance Rights shall vest;
c. QRR Growth - If the Company achieves 40% growth in Quarterly Recurring
Revenue (QRR) from 1 April 2023 to 30 June 2023 compared to the
corresponding period in the previous year, 50% of the remaining 50% of the
STI 2023 Performance Rights shall vest, with straight line pro- rata vesting for
additional percentages of QRR Growth up to 100% from 1 April 2023 to 30
June 2023 compared to the corresponding period in the previous year.
150,000 LTI Performance Rights (per holder) shall vest subject to the
achievement of each of the Operational Milestone outlined below, which are
linked to the following key business Objectives:
a. Expand Markets;
b. Expand Products;
c. Launch Community;
d. Make Sustainable;
e. Improve Revenue per Student.
A maximum of 450,000 LTI Performance rights (per holder) can vest per
business objective.
Refer below for further breakdown of the milestones for each of the
conditions noted above.
Milestone
Date
30 June
2022
30 June
2022
30 June
2023
30 June
2023
Note:
1. Other than the Executive Performance Rights, all Performance Rights will vest on achievement of the Vesting Condition by
the Milestone Date.
2. In regard to the Executive Performance, if the QRR is $5m or more, 100% of the Executive Performance Rights held will
vest
OR
If the QRR is less than $5m, the number of Executive Performance Rights vesting is determined based on this formula:
[QRR at the Milestone Date/ $4m] x [(Number Executive Performance Rights held) x (100/125)]. On 30 June 2021 the QRR
hurdle was not met and the performance rights lapsed.
65
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Objective
Expand Markets
Expand Products
Launch
Community
Make Sustainable
Improve
Revenues per
Student
·
·
·
·
·
·
·
·
·
·
Operational Milestones
Achieving revenue of greater than $500,000 in total prior to 30 June 2023 in a market
other than USA, Australia or New Zealand.
Launch of a new product which generates revenue of greater than $500,000 in total
prior to 30 June 2023.
Launch of a new product which achieves 2.5% take-up by School Clients in a particular
country.
Launch of Community in a market outside of Australian and achieve greater than 20%
take-up by School Clients.
Launch of Community in a market outside of Australian and achieve greater than 30%
take-up by School Clients.
Launch of Community in a market outside of Australia and achieve 2% of parents
within all participating School Clients activating a Consumer Account.
Launch of Community in a country outside of Australia and achieve 5% of parents
within all participating School Clients activating a Consumer Account
Achieve quarterly average data and hosting costs per student below targets set by the
Board
Achieve quarterly Service Margin above targets set by the Board.
Achieve Average Revenue Per Student targets set by the Board.
NOTE 19: ACCUMULATED LOSSES
Accumulated Losses
Opening balance
Net loss for the financial year
Total Accumulated Losses
NOTE 20: SHARE-BASED PAYMENTS
2021
$
(85,216,910)
2020
$
(62,702,217)
(62,702,217)
(21,930,396)
(84,632,613)
(45,085,097)
(17,617,120)
(62,702,217)
Share-based payments made during the year ended 30 June 2021 are summarised below:
(a) Recognised Share-Based Payment Expense
Broker and advisor options issued in lieu of services provided1
Shares issued to consultants in lieu of services provided2
Shares issued to employees as incentive2
Shares issued to directors in lieu of salary
Options issued to employees as incentive3
Options issued to directors as incentive4
2021
$
222,426
272,272
200,080
-
40,670
209,416
2020
$
1,062,579
115,807
233,920
80,000
144,030
233,759
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Performance Rights issued to employees for services5
Performance Rights issued to directors for services6
Performance Shares issued to employees as incentive and for services7
Reversal of SBP expenses as vesting conditions were not met
Less amounts recognised within equity as a cost of capital raised1
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
1,700,536
666,225
-
(1,303,507)
(111,213)
1,896,905
765,806
774,793
73,069
(60,740)
(507,143)
2,915,880
1. Broker & Advisor options
During the year 500,000 Advisor Options were granted to corporate advisors in relation to services provided. The fair
value of the service could not be reliably measured and therefore, a Black Scholes model was used to determine the
value of the options. The inputs have been detailed below:
Grant date
Underlying share price
Exercise price
Expected volatility
Expiry date (years)
Expected dividends
Risk free rate
Value per option
Total fair value of the options
Input
27 Aug 2020
$0.55
$0.18
106%
2.88
Nil
0.29%
$0.04
$222,426
Of the total fair value of the options, $112,213 was recognised as expense in the Profit or Loss in respect of advisory
services received by the Group. The remaining amount represents consideration for services received in relation to
the capital placement occurring during the period and, as such, has been capitalised against equity as cost of capital.
2. Shares issued to employees, directors and consultants in lieu of services provided
During the year the Group issued 680,680 shares to Consultants as consideration for services provided, to the
value of $272,272.
A further 416,511 shares were issued to employees in lieu of their cash salary. The shares issued to
employee in the current year have been valued at $200,080 based on the share price at grant date.
3. Options issued to Employees
Tranche
Valuation Date
Expiry Date
Exercise
Price
Issued
during the
period
6
Total
18/03/2019
18/03/2022
$0.18
Vested
during
the
period
-
-
-
-
Total Share-Based
Payment Expense
for the year ($)
$40,9601
$40,960
1. Share based payment expense is net of $5,860 reversal amount for options lapsing.
67
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
The valuation for the Employee Options disclosed above have been previously disclosed in prior period financial
reports.
4. Options issued to Directors as Incentive
(a) During the FY2020 year, 3,000,000 options ($0.21, 3 years) were granted to Non-Executive Chairman, Peter
Pawlowitsch pursuant to the terms of his appointment for services to be provided. Shareholder approval was
obtained 4 November 2019 and the options were issued 8 November 2019. These options (excluding the
1,000,000 tranche options vesting immediately) are subject to various vesting conditions as outlined below:
Tranche
Vesting Condition
Number
Value Per
Option
($)
Total
Value
($)
Total Share-Based
Payment Expense
for the year ($)
The 30 day VWAP of the Company’s
Shares being greater than $0.25
The 30 day VWAP of the Company’s
Shares being greater than $0.35
The 30 day VWAP of the Company’s
Shares being greater than $0.45
The 30 day VWAP of the Company’s
Shares being greater than $0.60
2
3
4
5
Total
500,000
0.0917
45,855
500,000
0.0882
44,090
500,000
0.0830
41,480
$36,023
$34,636
$32,586
500,000
0.0754
37,700
$12,555
2,000,000
169,125
$115,800
The fair value of these options have been determined using a Monte Carlo simulation model and disclosed in the 30
June 2020 Annual Report.
(b) During the FY2020 year, 1,000,000 options ($0.21, 3 years) were granted to non-executive Director Phil Warren.
Shareholder approval was obtained 30 June 2020, options were issued 7 July 2020. These options (excluding
the 500,000 tranche options vesting immediately) are subject to various vesting conditions, the details of which
have been outlined below.
Tranche
Vesting Condition
Number
Value Per
Option
($)
Total
Value ($)
Total Share-Based
Payment Expense
for the year ($)
The 30 day VWAP of the Company’s
Shares being greater than $0.25
2
Total
500,000
0.1090
54,500
500,000
54,500
$54,500
$54,500
The fair value of these options have been determined using a Monte Carlo simulation model and disclosed in the 30
June 2020 Annual Report.
(c) New Director Options were granted during the year. 3,000,000 options were granted to non-executive Director
Peter Pawlowitsch and 1,500,000 options for Managing Director, Tim Levy for services to be provided, expiring 30
June 2025. Shareholder approval was obtained 9 June 2021, options were issued 1 July 2021. These options are
subject to various vesting conditions, the details of which have been outlined below.
Peter
Pawlowitsch
Vesting Condition
Number
Value Per
Option
Total
Value
Total Share-
Based
68
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Tranche 1
Tranche 2
Tranche 3
Total
The 20 day VWAP of the Company’s
Shares being greater than $0.90
The 20 day VWAP of the Company’s
Shares being greater than $1.45
The 20 day VWAP of the Company’s
Shares being greater than $1.90
750,000
0.348
261,225
750,000
0.314
235,725
1,500,000
0.285
427,950
3,000,000
924,900
Tim Levy
Vesting Condition
Tranche 1
Tranche 2
Tranche 3
Total
The 20 day VWAP of the Company’s
Shares being greater than $0.90
The 20 day VWAP of the Company’s
Shares being greater than $1.45
The 20 day VWAP of the Company’s
Shares being greater than $1.90
Number
Value Per
Option
Total
Value
500,000
0.348 174,150
500,000
0.314 157,150
500,000
0.285 142,650
1,500,000
473,950
Payment
Expense for
the year ($)
7,305
6,592
11,967
25,864
Total Share-
Based Payment
Expense for the
year ($)
4,870
4,394
3,989
13,253
The fair value of the New Director Options has been determined using a Monte Carlo simulation model using the
inputs outlined below:
Underlying share price
Exercise price
Target price
Expiry date (years)
Expected Volatility
Risk free rate
Value per option
Tranche 1
Tranche 2
Tranche 3
$0.58
$0.50
$0.90
4
80%
0.1051%
$0.348
$0.58
$0.50
$1.45
4
80%
0.1051%
$0.314
$0.58
$0.50
$1.90
4
80%
0.1051%
$0.285
A total of $209,416 share based payment expense was recognised in the Profit or Loss in relation to the Options on
issue and issued to Directors in the current year.
5. Performance Rights issued to employees
During the period 1,592,857 Performance Rights were granted to a US based senior executive under the Company's
Performance Rights Plan, comprising 350,000 US Performance Rights which vests upon meeting the performance
milestone per the table and 1,242,857 Employee Performance Rights which are subject to the service conditions as
disclosed in the table below. The Performance Rights granted convert into ordinary shares on a one for one basis.
69
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Class of Performance Rights
Number of
Performance Rights
Expense recognised
during the year ($)
US Performance Rights
Class A Employee Performance Rights
Class B Employee Performance Rights
Class C Employee Performance Rights
TOTAL
350,000
414,286
414,286
414,285
1,592,857
-
$80,785
$48,472
$30,326
$159,583
The 350,000 US Performance Rights noted in the table above lapsed during the year as the performance milestone
was not met at year end and therefore the expense recognised was reversed.
In addition to the above, 498,645 Remuneration Performance Rights and 1,032,572 Employee Performance Rights
were granted to new and existing employees and consultants. These Performance Rights have been valued based
on the share price of the Company at the date of approval of the issue of the Performance Rights with a share based
payment expense recognised over the vesting period of the Performance Rights. These Performance Rights convert
into ordinary shares on a one for one basis subject to the achievement of the vesting conditions as disclosed in Note
18.
Class of Performance Rights
Number of Performance
Rights
Expense recognised
during the year ($)
Remuneration Performance Rights T3 and T4
Remuneration Performance Rights - T5
Employee Performance Rights - Class A2
Employee Performance Rights - Class B2
Employee Performance Rights - Class C2
Remuneration Performance Rights – T2
Employee Performance Rights – Class A
Employee Performance Rights – Class B
Employee Performance Rights – Class C
TOTAL
399,638
35,007
345,524
345,524
245,543
64,000
32,000
32,000
32,000
$165,406
$15,750
$59,079
$30,366
$14,507
$30,080
$14,080
$4,918
$3,279
1,531,217
$337,464
The Company also recognised an expense of $36,756 in respect to existing Remuneration Performance Rights on
issue and an expense of $204,964 in respect to existing Employee Performance Rights on issue.
The Company also issued 4,500,000 Incentive Performance Rights to new executives under the Company's
Performance Rights Plan as an incentive and for remuneration of post-acquisition services rendered. These rights
were issued to the previous Director of Cyber Education Pty Ltd who are now employees of Family Zone since the
business was acquired on 1 July 2020. Refer Note 24 for further details on the business acquisition.
Class of Incentive Performance Rights
Class A Incentive Performance Right
Class B Incentive Performance Right
Class C Incentive Performance Right
Total
Number of Consideration
Performance Rights
Expense recognised
during the period
2,050,000
1,500,000
950,000
4,500,000
$471,500
$345,000
$145,269
$961,769
70
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
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.
6. Performance Rights issued to Directors
The Company issued a number of Performance Rights to executives and Directors as an incentive and as
remuneration for services during the current and prior year. The expense recognised in respect of these rights in the
current year is as tabled below:
Performance Rights
Number
Expense for Period
MS SP Performance Rights1
TL SP Performance Rights1
Remuneration Performance Rights - Tim Levy, Crispin Swan1
Remuneration Performance Rights - Matthew Stepka1
Employee Performance Rights – Tim Levy and Crispin Swan1
STI 2022 Performance Rights
STI 2023 Performance Rights
LTI 2023 Performance Rights
1,000,000
1,000,000
1,885,715
500,000
600,000
2,000,000
2,000,000
3,000,000
$179,136
$59,494
$161,926
$77,935
43,535
$63,108
$32,436
$48,654
$666,225
TOTAL
1 These performance rights were on issue at 30 June 2020. Refer to the June 2020 Annual Report for the fair value
11,985,715
assumptions and vesting conditions attached to these performance rights.
During the year, the Company issued the Performance Rights outlined below to its Executive Directors as an incentive
and as remuneration for services. The issue of the Performance Rights was subject to shareholder approval which
was obtained on 9 June 2021 and the Performance Rights were issued 30 June 2021.
Performance Rights
STI 2022 Performance Rights
STI 2023 Performance Rights
LTI 2023 Performance Rights
TOTAL
Tim Levy
Crispin Swan
1,000,000
1,000,000
1,500,000
3,500,000
1,000,000
1,000,000
1,500,000
3,500,000
The STI 2022 Performance Rights, STI 2023 Performance Rights and LTI Performance Rights issued to Tim Levy
and Crispin Swan have been value using the Black & Scholes Option Pricing Model based on the following key
assumptions
Tim Levy
Vesting Date
STI 2022
Performance
Rights
Unvested
30-Jun-22
STI 2023
Performance
Rights
Unvested
30-Jun-23
LTI
Performance
Rights
Unvested
30-Jun-23
Total
71
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Number of PR issued
Share price at grant date
Exercise Price
Volatility
Risk Free Rate
Fair value per Performance Right
Total Value of PR
Total Expense for Period
1,000,000
1,000,000
1,500,000
3,500,000
$0.58
nil
80.00%
0.11%
$0.58
$580,000
$31,554
$0.58
nil
80.00%
0.11%
$0.58
$580,000
$16,218
$0.58
nil
80.00%
0.11%
$0.58
$870,000
$2,030,000
$24,327
$72,099
Crispin Swan
STI 2022
Performance
Rights
STI 2023
Performance
Rights
LTI Performance
Rights
Total
Vesting Date
Number of PR issued
Share price at grant date
Exercise Price
Volatility
Risk Free Rate
Fair value per Performance
Right
Total Value of PR
Total Expense for Period
Unvested
30-Jun-22
1,000,000
$0.58
nil
80.00%
0.11%
$0.58
$580,000
$31,554
Unvested
30-Jun-23
1,000,000
$0.58
nil
80.00%
0.11%
$0.58
$580,000
$16,218
Unvested
30-Jun-23
1,500,000
$0.58
nil
80.00%
0.11%
$0.58
$870,000
$24,327
3,500,000
$2,030,000
$72,099
Each of the Performance Rights above will vest when the applicable vesting condition(s) outlined per Note 18.
Management have assessed the probability of achieving the vesting condition, as at reporting date. If it was assessed
that the hurdle was likely to be met prior to the expiry date the share based payment expense has been adjusted to
reflect a shorter vesting period. Management have assessed non-market hurdles as having a 100% probability of
achievement.
All other existing performance rights on issue have continued to be expensed and recognised for the year ended 30
June 2021.
Class C Performance Rights and F Performance Rights have lapsed on 29 August 2020 as vesting conditions were
not met. A total of $893,070 of previous recognised vesting expense for the Class C Performance Rights and a total
of $210,358 of previous recognised vesting expense for the Class F Performance Rights was reversed through the
current year statement of profit or loss. The Executive Performance Rights which also had the QRR vesting condition
to be met on 30 June 2021 did not vest at year end and as a result, a total of 5,875,000 Executive Rights have lapsed
and prior period expense of $128,950 was also reversed out of the Performance Rights reserves.
7. Performance Shares issued to employees
There were no new Performance Shares issued or lapsed in the current financial period.
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTE 21: 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
Depreciation and amortisation
Revaluation of contingent consideration
Interest expense
Loan forgiveness1
Changes in Assets and Liabilities
Increase / (Decrease) in Trade and Other Payables
Increase / (Decrease) in Deferred Revenue
(Increase)/ Decrease in Inventory
(Increase)/ Decrease in Trade and Other Receivables
Increase/ (Decrease) in Provisions
Cash flows used in operations
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
2021
$
2020
$
(21,930,395)
(17,617,120)
1,896,905
2,605,522
46,190
111,448
-
2,898,035
4,272,372
(122,935)
(5,935,503)
680,716
2,915,880
4,164,248
87,582
31,881
(327,124)
938,605
2,270,051
(92,841)
(855,080)
206,944
(15,477,646)
(8,276,974)
1 In FY2020, the Group received funding from the US Small Business Administration agency to provide assistance through COVID-
19. This loan had conditions attached, which if met, the loan would be forgiven. At 30 June 2020, all attaching conditions had
been met and therefore the loan was forgiven and recognised as other income in the Statement of Profit or Loss and Other
Comprehensive Income.
Non-cash financing and investing activities
During the year the Group issued equity securities as payment for services to the value of $111,213 (2020: $507,143).
These issue costs are not reflected in the Statement of Cashflows.
NOTE 22: FINANCIAL INSTRUMENTS
(a)
Financial Risk Management Objectives and Policies
The Group’s principal financial instruments comprise cash, receivables, payables and lease liabilities.
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, foreign currency, 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.
73
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
(c) Categorisation of Financial Instruments
Details of each category in accordance with Australian Accounting Standard AASB 9 Financial Instruments, 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
Credit risk is managed on a group basis. Credit risk arises predominantly from credit exposures to customers,
including outstanding receivables and committed transactions. The key elements to manage credit risk are; for
banks and financial institutions, only independently rated parties with a minimum rating of “A” are accepted and for
customers to review aged trade debtors on a regular basis. There are no significant concentrations of credit risk
through exposure to individual customers.
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
Cash and cash equivalents
Trade and other receivables
Total Financial Assets
2021
$
2020
$
34,933,166
8,971,405
43,904,571
5,807,193
4,739,118
10,546,311
Financial assets as at 30 June 2021 are not impaired (excluding the provision for expected credit loss totalling
$95,877). 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 3(c), (d) for the
Group’s accounting policy and Note 9 for further details on the Group’s Trade and other receivables balance.
(ii)
Interest Rate Risk
The Group’s maximum exposure to interest rates at the reporting date was:
Range
of
Interest Rate Exposure
Effective Carrying
Interest
Amount
Rate
(%)
$
Variable
Interest
Rate
$
Non
Interest
Bearing
$
Fixed
Interest
Rate
$
Total
$
0 – 1
34,933,166
34,933,166
-
-
34,933,166
0
442,295
-
442,295
-
442,295
2021
Financial Assets
Cash and cash equivalents
Financial Liabilities
Borrowings
74
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
2020
Financial Assets
Cash and cash equivalents
Financial Liabilities
Borrowings
0 – 1
5,807,193
5,807,193
-
-
5,807,193
14
1,272,510
-
-
1,272,510
1,272,510
(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
Trade and other payables
Borrowings
Lease liabilities
Total financial liabilities
(ii) Contractual Maturity Risk
2021
$
2020
$
10,127,135
442,295
2,869,158
14,438,588
1,973,621
1,272,510
225,642
3,471,773
The following table discloses the contractual maturity analysis at the reporting date:
2021
Financial Instrument
0-6 months
6-12 months
$
$
Over 1 to 5
years
$
More than 5
years
$
Total
$
Financial Assets
Cash
Trade and other receivables
Total financial assets
Financial Liabilities
Trade and other payables
Borrowings
Lease liabilities
34,933,166
8,971,405
43,904,571
10,127,135
284,406
439,891
-
-
-
-
-
-
-
-
-
-
-
-
-
34,933,166
8,971,405
43,904,571
10,127,135
157,889
-
442,295
485,073
2,866,452
-
3,791,416
75
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Total financial liabilities
10,851,432
485,073
3,024,341
-
14,360,846
2020
Financial Instrument
0-6 months
$
6-12 months
$
Over 1 to 5
years
$
More than 5
years
$
Total
$
Financial Assets
Cash
Trade and other receivables
Total financial assets
5,807,193
4,739,118
10,546,311
Financial Liabilities
Trade and other payables
1,973,621
-
-
-
-
-
53,156
53,156
-
-
-
-
-
5,807,193
4,792,274
10,599,467
1,973,621
1,272,510
-
-
-
1,272,510
Borrowings
Lease liabilities
112,821
112,821
156,625
Total financial liabilities
3,358,952
112,821
156,625
(g) Market Risk
(i)
Foreign exchange risk
-
-
382,267
3,628,398
The group’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollars was
as follow:
Value of NZD exposure expressed in
AUD
Value of USD exposure
expressed in AUD
2021
(258,506)
(4,224,956)
2020
(151,492)
(672,896)
2021
2020
(257,026)
(467,570)
(7,434,203)
(2,237,084)
Net assets (liabilities)
Net profit (Loss)
Foreign Currency sensitivity:
Based on the net liability position of the foreign subsidiaries at 30 June 2021, 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 $422,496 higher/$422,496 lower (2020: $67,290 higher/$67,290 lower),
and the effect on equity would have been $25,851 higher/$25,851 lower (2020: $15,149 higher/$15,149 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 $743,420 higher/$743,420 lower (2020:
$223,708 higher/$223,708 lower), and the effect on equity would have been $25,703 higher/$25,703 lower (2020:
$46,757 higher/$46,757 lower).
76
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
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
22(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, if changes in the relevant risk occur.
2021
Financial Assets - Current
Cash and cash equivalents
Trade Receivables
Financial Liabilities - Current
Trade and other payable
Borrowings
2020
Financial Assets - Current
Cash and cash equivalents
Trade Receivables
Financial Liabilities - Current
Trade and other payable
Borrowings
Carrying
Amount
$
Interest Rate Risk
+1%
-1%
Profit
$
Equity
$
Profit
$
Equity
$
34,933,166
8,971,405
349,332
-
349,332
-
(349,332)
-
(349,332)
-
10,127,135
284,406
-
-
-
-
-
-
-
-
5,807,193
4,739,118
58,072
-
58,072
-
(58,072)
-
(58,072)
-
1,973,621
1,272,510
-
(12,725)
-
(12,725)
-
12,725
-
12,725
77
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
(j) Fair value measurement
Fair value hierarchy
The following tables detail the consolidated entity's assets and liabilities, measured or disclosed at fair value, using a three
level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly
Level 3: Unobservable inputs for the asset or liability
Consolidated - 2021
Level 1
Level 2
Level 3
Total
Liabilities
Deferred consideration payable
Total liabilities
-
-
-
-
(3,499,474)
(3,499,474)
(3,499,474)
(3,499,474)
There were no transfers between levels during the financial year.
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair
values due to their short-term nature.
Level 3 assets and liabilities
Movements in level 3 assets and liabilities during the current and previous financial year are set out below:
Balance at 1 July 2019
Gains recognised in profit or loss
Gains recognised in other comprehensive income
Balance at 30 June 2020
Losses recognised in profit or loss
Gains recognised in other comprehensive income
Additions
Balance at 30 June 2021
Deferred
Consideration
Payable
-
-
-
-
Total
-
-
-
-
-
-
(3,499,474)
(3,499,474)
-
-
(3,499,474)
(3,499,474)
The level 3 assets and liabilities unobservable inputs and sensitivity are as follows:
Description
Unobservable inputs
Sensitivity
Deferred Consideration
Payable
Annual Recurring
Revenue
5% change would increase/decrease fair value
by $378,294
78
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTE 23: 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.
The chief operating decision maker has been identified as the Board of Directors.
The Group has three main operating segments being, 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. This is consistent with the internal reporting provided to the chief operating decision maker.
30-Jun-21
Australia
Segment Income
$
New
Zealand
$
USA
$
Corporate
$
Total
$
Sales revenue
3,048,256
Other income
Total Income
4,306,202
7,354,458
977,635
2,743
980,378
4,936,374
220
-
4,936,374
4
224
8,962,485
4,308,949
13,271,434
30-Jun-21
Australia
$
New
Zealand
$
USA
$
Corporate
$
Total
$
Segment
Expenses
Direct Costs
Operating
expenses
Research and
Development
Share-based
payments
Loss before
depreciation and
amortisation
Depreciation and
amortisation
Loss before
Income Tax
(5,985,077)
(149,714)
(898,682)
-
(7,033,473)
(15,971,727)
(1,157,694)
(5,265,395)
(51,255)
(22,446,071)
(1,017,866)
(18,520)
(183,473)
-
(1,219,859)
-
-
-
(1,896,905)
(1,896,905)
(15,620,212)
(345,550)
(1,411,176)
(1,947,936)
(19,324,874)
(741,907)
(1,294,538)
(569,077)
-
(2,605,522)
(16,362,119)
(1,640,088)
(1,980,253)
(1,947,936)
(21,930,396)
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
30-Jun-20
Segment Income
Sales revenue
Other income
Total Income
30-Jun-20
Segment
Expenses
Direct Costs
Operating
expenses
Research and
Development
Share-based
payments
Loss before
depreciation and
amortisation
Depreciation and
amortisation
Loss before
Income Tax
30-Jun-21
Segment Assets
Segment
Liabilities
30-Jun-20
Australia
$
New Zealand
$
USA
$
Corporate
$
Total
$
2,687,735
984,428
1,347,139
70,871
5,090,173
3,061,685
5,749,420
4,916
3,375,692
989,344 1,656,203 70,898 8,465,865
309,064
27
Australia
$
New Zealand
$
USA
$
Corporate
$
Total
$
(3,480,280)
(170,400)
(874,424)
(19,405)
(4,544,509)
(9,165,513)
(1,330,566)
(2,723,486)
(44,924)
(13,264,489)
(1,016,596)
(51,309)
(125,954)
-
(1,193,859)
-
-
-
(2,915,880)
(2,915,880)
(7,912,969)
(562,931)
(2,067,661)
(2,909,311)
(13,452,872)
(930,055)
(3,046,686)
(187,505)
-
(4,164,248)
(8,843,024)
(3,609,619)
(2,255,166)
(2,909,311)
(17,617,120)
Australia
New Zealand
$
$
USA
$
Other
$
49,110,470
482,595
7,898,132
21,115
(20,012,821)
(741,101)
(8,155,158)
-
Total
$
57,512,312
(28,909,080)
Australia
$
New Zealand
$
USA
$
Other
$
Total
$
Segment Assets
8,839,091 1,618,709
3,598,089
139,665
14,195,554
Segment
Liabilities
(5,155,117)
(549,167)
(4,065,659)
(18,965)
(9,788,907)
80
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTE 24: BUSINESS COMBINATIONS
During FY2021, Family Zone entered into acquisitions resulting in business combinations. Refer below for summaries
on each acquisition.
(a) Cyber Education Pty Ltd
On 1 July 2020, the Company acquired 100% of the issued fully paid capital of Cyber Education Pty Ltd, a privately
owned company operating within the cyber security sphere, for cash consideration of $100. The key driver for the
acquisition was to grow and strengthen the Company cyber safety content and ensure it is able to continue to offer
independent expertise and cyber safety solutions to its customers as part of its cyber safety platform.
Since the acquisition the entity has contributed a loss after tax of $89 which is included within the profit or loss of the
Group.
(b) NetRef Acquisition
On 30 June 2021 Family Zone acquired an innovative classroom management technology business, NetRef. The
acquisition provides the Group a new and innovative product line plus access to specialist and highly relevant
technical and sales experts in the US which will aid in expanding the Company’s footprint in the US.
Total purchase consideration was AUD$5,969,509 which is broken down in three tranches of instalments. The First
Tranche Consideration which is paid upfront, is reflected by a cash and share consideration of AUD$1,235,018 each.
The deferred consideration component is payable on a quarterly basis until December 2021 and is represented by
Tranche 2 and 3 Consideration. Tranche 2 Consideration is payable on September 2021 and this is calculated by
applying a fixed multiple of 6.5x to the NetRef Business ARR at 30 September 2021, less the First Tranche
Consideration. Tranche 3 Consideration calculated by applying a fixed multiple of 6.5x to the Net Ref Business ARR
at 31 December 2021 less the First Tranche Consideration and the Second Tranche Consideration. Both Tranche 2
and 3 Consideration is payable 50% in cash and 50% in fully paid ordinary shares.
Details of the purchase consideration, net assets acquired and goodwill are as follows:
i.
Purchase consideration
Ordinary shares to be issued (Tranche 1 share component) 1
Consideration Payable (Tranche 1 cash component) 1
Deferred Consideration Payable (Trance 2 and 3)
Total purchase consideration
$
1,235,018
1,235,018
3,499,474
5,969,510
1 The fair value of 2,155,354 shares to be issued as part of the Tranche 1 share consideration paid for NetRef of AUD$1,235,018
(USD$928,487) was based on Annual Recurring Revenue (ARR) of USD$470,304 multiplied to a multiple of 6.5, less upfront IT
fees of USD$1.2million, totalling $USD1.856m. This amount is split 50:50 via cash and shares. Tranche 1 cash and share
consideration was settled on 1 July 2021.
81
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
ii.
The assets and liabilities recognised as a result of the acquisition are as follows:
Customer Contracts
NetRef Technology1
Prepaid IT Fees
IT Fees payable
Net identifiable assets acquired
Net assets acquired
Fair values $
934,253
5,035,257
1,596,169
(1,596,169)
5,969,509
5,969,509
1 The fair value of the acquired NetRef technology was determined with reference to a relief from royalty valuation methodology.
This required key assumptions to be made around discount rate, royalty rate, and forecast revenue.
The Group has applied provisional accounting on its measurement of its purchase price allocation permitted under
AASB 3 Business Combinations.
There were no acquisitions in the year ending 30 June 2020.
iii.
Revenue and profit contribution
The acquired business contributed revenues of $nil and profit after tax of $nil to the consolidated entity as at 30 June
2021 noting that the business was acquired on the last day of the financial year.
If the acquisition occurred on 1 July 2020 the full year contributions would have been revenues of $394,718 and loss
before tax of $1,943,654.
(c) Purchase consideration – cash inflow
Outflow of cash to acquire subsidiary, net of cash acquired
Cash consideration
Less: Balances acquired
Cash
Total balances acquired
Net inflow of cash – investing activities
Acquisition related costs
2021
$
(100)
31,499
31,499
31,399
2020
$
-
-
-
-
Acquisition related costs of $18,850 that were not directly attributable to the issue of new shares were included in the
statement of profit or loss in the reporting period ending 30 June 2022.
82
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTE 25: 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
2020
2021
Australia
-
-
Controlled entities
Family Zone Inc.
Family Zone Cyber Safety Pte. Ltd.
Family Zone NZ Cyber Safety Ltd (formerly Linewize Service Ltd)
Cyber Education Pty Ltd
NetRef Education LLC
USA
Singapore
New Zealand
Australia
USA
100%
100%
100%
100%
100%
100%
100%
100%
-
-
(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
Long service leave
Share-based payment
Total
2021
$
546,000
58,562
27,765
831,744
1,464,071
2020
$
294,281
44,628
-
908,863
1,247,772
(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 for the year ended
30 June 2021 and 30 June 2020 is as follows:
Company secretarial and financial management services
Total
2021
$
90,403
90,403
2020
$
94,839
94,839
$90,403 was paid to Grange for financial management and company secretarial services for the year ended 30 June
2021. $4,620 was outstanding and payable to Grange as at 30 June 2021 (2020: $nil).
83
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
NOTE 26: AUDITOR’S REMUNERATION
The auditor of Family Zone Cyber Safety Limited
Amounts received or due and receivable by BDO Audit (WA) Pty Ltd for:
BDO Audit (WA) Pty Ltd
- Audit and review services
BDO Rewards (WA) Pty Ltd – Review of Remuneration Package
Total remuneration of BDO Audit (WA) Pty Ltd and related firms
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
2021
$
2020
$
71,091
4,250
75,341
44,516
-
9,000
53,516
-
-
-
56,096
-
11,700
67,796
NOTE 27: COMMITMENTS AND CONTINGENT LIABILITIES
As part of the Cyber Education business combination during the year, the Group is committed to pay commissions
to the Sellers of the entity acquired which are dependent on the entity achieving future revenue targets. In addition,
profits earned by the acquired entity over a period of 2 years from the date of acquisition will be shared on a 50:50
split between the Group and the Sellers.
The Group has recently received a demand for arbitration from a service provider in respect to claims of a breach of
a technology license agreement between the parties and a failure to fully pay royalties under the technology license
agreement. It is currently not practical to estimate the potential effect of the claims. The Board believes that the
claims do not have merit and that it is not probable that a significant liability will arise. Accordingly, the Directors
have not raised a provision in the financial report.
The Group had committed to pay corporate advisory fees of $850,000 on the successful completion of the Smoothwall
acquisition.
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 2021.
NOTE 28: PARENT ENTITY DISCLOSURE
Assets
Current assets
Non-current assets
Total Assets
Liabilities
2021
$
2020
$
38,467,544
3,810,569
42,278,113
8,430,092
1,228,902
9,658,994
84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Current liabilities
Non-current liabilities
Total Liabilities
Net Assets/(Deficiency)
Equity
Issued Capital
Reserves
Accumulated losses
Total Equity
Profit/(Loss) for the year
Total comprehensive income
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
5,831,611
3,108,780
8,940,391
4,599,801
652,547
5,252,348
33,337,722
4,406,646
104,817,937
11,911,611
(83,391,826)
33,337,722
56,673,575
10,448,193
(62,715,122)
4,406,646
(21,448,852)
(21,448,852)
(10,302,656)
(10,312,251)
The parent did not have any guarantees, contingent liabilities or commitments as at 30 June 2021 (2020: nil).
NOTE 29: EVENTS OCCURRING AFTER THE REPORTING PERIOD
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has been financially positive for the
Group up to 30 June 2021, it is not practicable to estimate the potential impact, positive or negative, after the reporting
date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government and
other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic
stimulus that may be provided.
On 1 July 2021, the Company announced the issue of 42,990,654 Placement Shares at $0.535 raising $23 million.
On 1 July 2021, the Company issued 2,155,354 shares and paid $1,235,018 cash, comprising the Tranche 1
consideration and cash payable pursuant to the NetRef acquisition agreement.
Smoothwall Acquisition and Equity Raising
On 6 August 2021, the Company announced it had executed a binding offer to acquire Smoothwall, UK’s leading
provider of K-12 digital safety solutions for £75.5 million ($142.9 million) cash consideration. The acquisition was to
be funded by a fully underwritten institutional placement of $71.0 million (Placement) and pro-rata accelerated non-
renounceable entitlement offer of $75.4 million (Entitlement Offer) to raise gross proceeds of $146.4 million (Equity
Raising).
Smoothwall, is one of the world’s leading providers of digital and safeguarding serviced with a strong market position
in the UK and operations in the US. The acquisition creates the world’s most compelling K-12 digital safety solution
incorporating Family Zone’s fast growing Linewize K-12 solutions, FZO’ parental controls and Smoothwall’s scale
and world-leading solutions.
The Placement and institutional component of the Entitlement Offer completed on 9 August 2021 raising $114.1
million with a further $24.5 million raised under the retail component of the Entitlement Issue on 25 August 2021. A
further $7.8 million was raised through the placement of the shortfall shares by the Joint Lead Underwriters
completing the $146.4 million capital raising on 30 August 2021. A total of 266,123,291 Shares were issued under
Equity Raising at a price of $0.55 per Share.
The Company completed the acquisition of the Smoothwall business on 16 August 2021. The total purchase
consideration was £75.5million (AUD$142.9 million) in cash, with £65.0 million paid on completion and £10.5 million
85
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
paid on 12 September 2021.
Details of the purchase consideration, net assets acquired and goodwill are as follows:
Purchase consideration
Cash consideration
$
142,874,507
Total purchase consideration
142,874,507
The assets and liabilities recognised as a result of the acquisition are as follows:
Current Assets
Inventory
Accrued income
Trade receivable
Prepayments and other debtors
Cash
Non-Current Assets
Fixed assets
Intangible assets
Liabilities
Trade payable
Accruals and other
Deferred revenue
Tax payable
Intercompany
Fair values $
227,373
1,648,261
4,818,128
1,101,608
1,597,517
9,392,887
169,615
8,091,368
8,260,983
(2,021,103)
(2,393,655)
(29,488,861)
(2,309,239)
456,183
(35,756,675)
Net identifiable assets acquired
(18,102,805)
Add: Goodwill1
Net assets acquired
160,977,312
142,874,507
1 The goodwill of $160,977,312 is attributable to the customer contracts acquired, Monitor technology, workforce,
know-how and the expected synergies from merging this business acquired from Family Zone’s current operations.
Acquisition related costs
Acquisition related costs of $2,318,600 will be included in the statement of profit or loss in the reporting period ending
30 June 2022.
86
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2021
Information not disclosed as not yet available
At the time the financial statements were authorised for issue, the Group had not yet completed the accounting for
the acquisition of Smoothwall. In particular the fair values of the assets and liabilities disclosed above have only been
determined provisionally as the independent valuations have not been finalised. It is also not yet possible to provide
detailed information about each class of acquired receivables and any contingent liabilities of the acquired entity.
On 6 August 2021 the Company issued 887,534 Shares to employees under its Employee Security Incentive Plan.
On 19 August 2021, Family Zone announced it had been awarded a substantial contract, through Smoothwall with
Public Sector Broadband Aggregation, the public sector provider of broadband service to Wales in the UK. The 3
year deal has a contract value of ~$1.4 million.
On 8 September 2021 the Company issued 9,896,453 Performance Rights and 1,747,331 Option comprising:
· 303,924 Remuneration Performance Rights
· 2,312,529 Employee Performance Rights;
· 4,610,000 STI Executive Performance Rights 2022;
· 1,350,000 STI Executive Performance Rights 2023;
· 1,500,000 LTI Performance Rights;
· 1,247,331 Options ($0.60, 30 June 2025); and
· 500,000 Options ($0.55, 30 June 2025).
On 10 September 2021 the Company issues 228,889 Shares under its Employee Security Incentive Scheme.
On 16 September the Company issued 244,374 Employee Options ($0.60, 30 June 2021), 500,000 STI Executive
Performance Rights 2022. 500,000 STI Performance Rights 2023 and 2,000,000 LTI 2023 Options ($0.60, 30 June
2025).
Since the end of the financial year a total of 1,158,798 Shares have been issued following the exercise of 1,158,798
Options with a total of $208,583 funds received from the exercise of these Options. In addition 69,174 Performance
Rights have been exercised for nil consideration.
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.
87
Family Zone Cyber Safety Limited
Annual Report 30 June 2021
DIRECTORS’ DECLARATION
In the Directors’ opinion:
(a)
the accompanying financial statements set out on pages 33 to 87 and the Remuneration Report in the
Directors’ Report are in accordance with the Corporations Act 2001, including:
i.
ii.
(b)
(c)
giving a true and fair view of the Group’s financial position as at 30 June 2021 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;
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 2021.
This declaration is made in accordance with a resolution of the Board of Directors.
On behalf of the Directors
Tim Levy
Managing Director
24 September 2021
88
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of 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
subsidiaries (the Group), which comprises the consolidated statement of financial position as at
30 June 2021, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the year
then ended, and notes to the financial report, including a summary of significant accounting policies
and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
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.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
89
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.
Accounting for the acquisition of the business assets and liabilities of NetRef
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 24 of the financial report, the
Our audit procedures included, but were not limited to
Group completed the acquisition of the business assets
the following:
and liabilities of NetRef on 30 June 2021.
(cid:127)
Challenging management’s assessment of the
The acquisition was accounted for in accordance with
assets acquired and the liabilities assumed
AASB 3: Business Combinations and was deemed to be
constitutes a business as defined in the accounting
a key audit matter given the acquisition was material
standards;
to the Group and involved significant judgements made
by management, including the estimation of the fair
value of assets acquired, liabilities assumed and
determination of the amount of purchase
consideration, which included deferred consideration.
Notes 2 and 3 of the financial report disclose the
accounting policy for business combinations and the
significant judgements and estimates made.
(cid:127)
Reviewing the business sale agreement to
understand the key terms and conditions, and
confirming our understanding of the transaction
with management;
(cid:127)
Agreeing the acquisition date to the date at which
the Group obtained control over the business
assets and liabilities;
(cid:127)
Assessing the identification of intangible assets
acquired including software and customer
contracts, along with the valuation methodologies
used to value those assets;
(cid:127)
Assessing the appropriateness of the independent
expert to which management has engaged to
assess the fair value of specified assets acquired as
part of the acquisition;
(cid:127)
Evaluating the assumptions and methodology in
management's determination of the fair value of
assets and liabilities acquired; and
(cid:127)
Assessing the adequacy of the related disclosures
in Notes 2, 3 and 24 of the financial report.
90
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2021, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Other matter
The financial report of Family Zone Cyber Safety Limited, for the year ended 30 June 2020 was audited
by another auditor who expressed an unmodified opinion on that report on 30 June 2020.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
91
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 16 to 31 of the directors’ report for the
year ended 30 June 2021.
In our opinion, the Remuneration Report of Family Zone Cyber Safety Limited, for the year ended
30 June 2021, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Jarrad Prue
Director
Perth, 24 September 2021
92
Family Zone Cyber Safety Limited
Annual Report 30 June 2020
ASX ADDITIONAL INFORMATION
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 20 September 2021 includes the following securities:
Equity Class
Fully paid ordinary shares
Options
Performance Shares
Performance Rights
Number of holders
3,420
73
7
177
Total on issue
704,913,388
17,859,361
3,000,000
41,983,174
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
Regal Funds Management Pty Ltd1
McCusker Holdings Pty Ltd2
1) Based on substantial holder notice lodged 29 April 2021
2) Based on substantial holder notice lodged 17 August 2921
Number of Shares held
42,874,508
51,712,631
% of Total Shares
11.08%
8.00%
3.
a)
Distribution of equity securities as at 20 September 2021
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
197
768
418
1,523
514
3,420
Total Shares
117,815
2,004,401
3,260,394
56,605,595
642,925,183
704,913,388
% Total Shares
0.02%
0.28%
0.46%
8.03%
91.21%
100.00%
There were 87 holders with less than a marketable parcel of Shares based on the share price of $0.725 on 20
September 2021
b)
Options
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Holders
-
1
5
48
19
Total Options % Total Options
-
2,118
41,451
1,295,456
16,520,336
-
0.01%
0.23%
7.25%
92.50%
93
Family Zone Cyber Safety Limited
Annual Report 30 June 2020
ASX ADDITIONAL INFORMATION
4.
Number of holders and voting rights of each class of equity securities
The issued capital of the Company as at 20 September 2021 includes the following securities:
Equity Class
Fully paid ordinary shares
Options
Performance Shares
Performance Rights
Number of holders
3,420
73
7
177
Total on issue
704,913,388
17,859,361
3,000,000
41,983,174
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.
5.
Substantial holders in the Company
Substantial Shareholder
Regal Funds Management Pty Ltd1
McCusker Holdings Pty Ltd2
3) Based on substantial holder notice lodged 29 April 2021
4) Based on substantial holder notice lodged 17 August 2921
Number of Shares held
42,874,508
51,712,631
% of Total Shares
11.08%
8.00%
6.
c)
Distribution of equity securities as at 20 September 2021
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
197
768
418
1,523
514
3,420
Total Shares
117,815
2,004,401
3,260,394
56,605,595
642,925,183
704,913,388
% Total Shares
0.02%
0.28%
0.46%
8.03%
91.21%
100.00%
There were 87 holders with less than a marketable parcel of Shares based on the share price of $0.725 on 20
September 2021
d)
Options
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Totals
e)
Performance Shares
Holders
-
1
5
48
19
73
Total Options % Total Options
-
2,118
41,451
1,295,456
16,520,336
17,859,361
-
0.01%
0.23%
7.25%
92.50%
100.00%
94
Family Zone Cyber Safety Limited
Annual Report 30 June 2020
ASX ADDITIONAL INFORMATION
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Totals
f)
Performance Rights
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
-
-
-
2
5
7
Holders
-
6
44
95
32
177
Total Performance
Shares
-
-
-
118,673
2,881,327
3,000,000
Total Performance
Rights
-
23,331
352,390
2,548,409
39,059,044
41,983,174
7.
Top 20 Shareholder as at 20 September 2021
Position Holder Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
MCCUSKER HOLDINGS PTY LTD
UBS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
CS THIRD NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
BRISPOT NOMINEES PTY LTD
SISU INTERNATIONAL PTY LTD
DAVID COLBRAN / 1001 PTY LTD
TIMOTHY NOMINEES PTY LTD
MOSCH PTY LTD
CS FOURTH NOMINEES PTY LIMITED
MORGAN STANLEY AUSTRALIA SECURITIES (NOMINEE) PTY
LIMITED
BPM CAPITAL LIMITED
GASMERE PTY LTD
BNP PARIBAS NOMINEES PTY LTD
BROWN BRICKS PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
TR NOMINEES PTY LTD
% Total Performance
Shares
-
-
-
3.96%
96.04%
100.00%
% Total Performance
Rights
-
0.06%
0.84%
6.07%
93.04%
100.00%
% IC
9.34%
8.05%
7.30%
6.94%
6.56%
4.86%
3.98%
1.75%
1.62%
1.57%
1.49%
1.31%
1.12%
Holding
65,836,722
56,750,000
51,438,539
48,889,149
46,220,366
34,241,668
28,022,429
12,317,905
11,403,925
11,095,701
10,479,730
9,199,461
7,862,355
6,835,224
0.97%
6,500,000
6,228,888
5,080,860
4,673,558
4,341,279
4,301,136
0.92%
0.88%
0.72%
0.66%
0.62%
0.61%
95
Family Zone Cyber Safety Limited
Annual Report 30 June 2020
ASX ADDITIONAL INFORMATION
Total
Total issued capital - selected security class(es)
431,718,895
704,913,388
61.24%
100.00%
8.
Restricted Securities
There are no restricted securities on issue as at 20 September 2021.
9.
Unquoted Securities
The names of the security holders holding more than 20% of an unlisted class of security are listed below:
a)
Options
Holder Name
Vault (WA) Pty Ltd
Total
b)
Performance Shares
Holder Name
Michael Oliver Lawson
Scott Robert Noakes
Total
10. On-market buy back
Holding
% Total Options
6,000,000
17,859,361
33.60%
100.00%
Holding
960,000
960,000
3,000,000
% Total
Performance
Shares
32.00%
32.00%
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.
96
Family Zone Cyber Safety Limited
Annual Report 30 June 2020
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://f.hubspotusercontent40.net/hubfs/416543/Corporate%20Governance%20Statement%20-
Family%20Zone%2030%20June%202021.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 4rd
edition (February 2019) unless otherwise stated.
97