Annual Report
2023
A leader in personalised
predictive genetics
Corporate Governance
Genetic Technologies Limited and its Board of Directors are committed to implementing and
achieving an effective corporate governance framework. Our Corporate Governance Statement
can be found on our website – genetype.com
Contents
Letter from the Chair
Our Corporate Values
Letter from the CEO
Our Brand Values
Form 20-F
Consolidated Financial Statements
Appendix 4E
Auditor’s Independence Declaration
Independent Auditor’s Report
Shareholder Information
Corporate Directory
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03
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Letter from the Chair
Dear Shareholders,
On behalf of the Board of Genetic Technologies Limited (GTG), I am pleased to present the
annual report for the 2023 financial year.
I may have become somewhat repetitive over the years however I, and our loyal staff and
shareholders, still firmly believe that Genomics is indeed a revolution, with GTG leading
the way. GTG is bringing ‘life changing’ genomic tests to the masses for common serious
diseases to which 1 in 2 people will succumb during their lifetime.
In the past 12 months we have launched the geneType test in clinical practices covering
9 serious diseases and had 7 peer reviewed supportive study data published in peer
reviewed medical journals. Furthermore, we have developed the world’s first comprehensive
risk test for breast and ovarian cancers, combining familial, non-familial and clinical risk in
one easy to use saliva test.
This test not only provides risk assessment of the rare BRCA genetic mutation that only
affects 1 in 20 women who develop breast cancer, the gene that has become well known
following the well documented challenges faced by Angelina Jolie when she was diagnosed
with breast cancer, but also addresses the other 17 out of the 20 women who develop breast
cancer with no family history. Almost half of these women who were deemed to be at high
risk according to our test would have had no prior avenue to gain the awareness that they
were at high risk. This leads to more targeted screening, opportunity for active intervention
and early detection. Screening can save millions of dollars, if not billions globally, in the
cost of treating serious disease for both individuals and governments funding the public
system. Above all, ultimately, this test saves lives!
GTG’s share price is not something I usually highlight however this year was a true outlier.
In general, the median share price falls over the past 12 months for Market Caps in the
$20m-$100m range has seen a staggering 57% decline, while the S&P 100 index fell only
7% during that period. Biotech companies such as GTG have fared even worse. It has
been one of the toughest periods in my 30 years of investing in biotech with many going
to the wall, merging, or raising capital on extremely toxic terms just to survive.
In February this year GTG raised AU$7m at a premium to the 15-day VWAP; a testament to
our long-standing relationship with our U.S. bankers and Investors H.C. Wainright and to
the significant investor base in the U.S. that has actively supported GTG (or Gene as we are
known in the USA) over many years.
Genetic Technologies Limited
Our CEO Simon Morriss joined the company some 2.5 years ago and continues to establish
the foundations for a shift in market awareness and acceptance of our revolutionary
geneType platform. Additional acquisitions, key staff additions and interactions with payers
and medical practitioners in both Australia and the U.S. remains time consuming and
costly but it is starting to bring rewards. The timing of success at scale remains uncertain,
however we are committed to achieving profitability over the next 18 months. Simon will
outline our operational progress in more detail in his CEO letter.
Finally, on behalf of the Board, I would like to thank our employees, both new and old for
their perseverance during this challenging year. We are also grateful to our shareholders
for your ongoing support throughout a difficult year. We look forward to engaging with you
throughout the year and at our 2023 Annual General Meeting.
Sincerely,
Mr Peter Rubinstein
Chairman, Genetic Technologies Limited
August 30, 2023
Annual Report 2023
02
Our Corporate Values
Dynamic
Proactive, Striving,
Responsive, Motivated
Cutting edge innovation that creates
an aspirational place to work.
Collaborative
Cooperative, Receptive,
Informative, Transparent
Unity and diversity drives us
to make a positive impact on
the community.
Genetic Technologies Limited Professional
Trustworthy, Respectful,
Punctual, Accountable
Leveraging our collective
skills and knowledge to
create global partnerships.
Passionate
Enthusiastic, Inspiring,
Dedicated, Energetic
A place where you can apply
your skills and realise your
career goals.
Annual Report 2023
04
Letter from the CEO
Dear Shareholders,
GTG has had an exciting period of commercial growth over the last 12 months in our
Business to Business (B2B) channel led by geneType and our Direct to Consumer (DTC)
channel led by our EasyDNA and AffinityDNA brands. Our commitment to transforming
healthcare through personalized genetic insights continues driving meaningful
advancements, revolutionizing medical practices across the globe.
This year we have continued the transformational journey from an R&D organisation with
one polygenic risk test to an organisation with revenues anchored in 3 brands: geneType,
EasyDNA, and AffinityDNA.
Highlighting our commercial progress, the company announces revenues for the 12 months
ending June 30, 2023, of A8.686 million, an increase of +A$1.891m; +28% when compared
with 2022.
Momentum building - Growth and Partnerships:
The dedication of our team, and the power of geneType, have ignited a revolution in
healthcare. We are seeing encouraging growth in our commercial volumes for geneType, a
testament to the value and trust we are building in the medical community. Twenty medical
practices in both the US and Australia are now routinely referring patients for geneType
testing, with new practices joining our network every week. This is laying the foundation for
a healthcare landscape that embraces precision medicine and individualized care.
Empowering Precision Medicine Centers:
Our vision extends beyond testing; we are leading the way establishing partnerships in
Precision Medicine Centers of Excellence. Paving the way for a transformative approach to
patient care, harnessing the potential of geneType, creating centres that redefine medical
practices and deliver more precise diagnoses and personalized treatment strategies.
Innovating for the Future:
We were proud to announce the development of the world’s first Comprehensive Breast
& Ovarian Cancer Risk Test, a true testament to our dedication to innovation. This
groundbreaking test, showcased at the annual BRCA (BReast CAncer) conference in
Montreal, will empower women to understand their risk profile for these deadly diseases
through a simple saliva sample.
Genetic Technologies Limited Pioneering Research and Clinical Impact:
Our ground-breaking work is gaining recognition on a global scale. The science team have
successfully published seven peer reviewed manuscripts and publications in prestigious
journals across the world. These publications provide the evidence that the implementation
of the patented geneType test will identify more at risk patients, detect the disease early
and save lives.
Expanding the Frontiers of screening:
Our geneType Multi-Test Panel now encompassing an impressive nine life threatening
diseases. In phase 2 of our rollout plan, we have expanded the panel to include melanoma,
pancreatic cancer, and atrial fibrillation. This expansion enhances the test’s utility, offering
risk assessments for six cancers, two cardiovascular diseases, and one metabolic disease,
all from a single saliva sample, covering up to 70% of mortalities and morbidities annually.
Championing Partnerships:
Our strategic alliance with QIAGEN marks a monumental step forward. Together, we are
establishing a “Centre of Excellence” facility in Australasia, uniting our life science and
diagnostics expertise. This partnership amplifies our capabilities, driving commercial
opportunities, enhanced automation, and increased capacity. Our shared goal is to make
geneType accessible to a wider audience, accelerating the identification and intervention
for at-risk patients.
Our Medical Leadership:
Dr. Joel Evans, joined our team in the U.S. and is a leader in clinical and functional medicine
whose expertise and passion for personalised medicine align perfectly with our mission.
His appointment underscores our commitment to bringing cutting-edge medical insights
to our patients, reinforcing our dedication to advancing healthcare.
None of our achievements would have been possible without the unwavering support of
Key Opinion Leaders (KOLs) who are driving change in their fields. Their endorsement of
geneType has opened doors to new medical practices, expanding our reach and impact.
We are honored to collaborate with KOLs such as Dr. Carolyn Young, Dr. William Stanford,
and Dr. Lisa Larkin, whose contributions are shaping the future of healthcare.
Annual Report 2023
06
Looking Ahead:
As we reflect on these remarkable milestones, we are invigorated by the promise that
lies ahead. The journey of GeneType Group is one of transformation, empowerment, and
relentless pursuit of a healthier future. We are pioneering a new era of healthcare, where
every patient’s genetic makeup is harnessed to inform personalized treatments and
interventions. Thank you for being a part of our incredible journey.
Our team has dedicated two decades to relentlessly advancing the forefront of genetic
testing, introducing the most innovative solutions to the global stage. Over the last 18
months, Genetic Technologies has transitioned to an organization earning significant
revenues and have identified the pivotal clinical and commercialization pathways
for continued success. Looking ahead to the next 18 months, we are embarking on a
determined journey towards attaining profitability.
Sincerely,
Mr Simon Morriss
Chief Executive Officer
Genetic Technologies Limited
August 30, 2023
Genetic Technologies Limited Annual Report 2023
08
Unequalled
experience
Scientific team leveraging
their extensive research track
record in breast and colorectal
to expand our medical-grade
genetic test portfolio into further
cancers and chronic conditions.
Our Brand Values
Leading
integrated
technology
The proprietary integration of
genomic and clinical risk factors
deliver the most complete risk
assessments for serious
diseases in the world –
the foundation of geneType.
Genetic Technologies Limited Relentless
innovation
Accelerating the world’s
transition to personalised,
preventative health care
by converting genetic data
into actionable solutions for
consumers and doctors.
Setting new
standards
Setting clinical, safety and
ethical standards to ensure
the best health outcomes.
Annual Report 2023
10
Genetic Technologies Limited FORM 20-F
Annual Report 2023
12
Commission file number 000-51504
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 20-F
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EX-
CHANGE ACT OF 1934
OR
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended June 30, 2023
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
OR
☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EX-
CHANGE ACT OF 1934
Date of event requiring this shell company report . . . . . . . . . . . . . . . . . . .
Genetic Technologies Limited
GENETIC TECHNOLOGIES LIMITED
(Exact name of Registrant as specified in its charter
and translation of Registrant’s name into English)
Australia
(Jurisdiction of incorporation or organization)
60-66 Hanover Street, Fitzroy, Victoria, 3065, Australia
(Address of principal executive offices)
Simon Morriss,
Chief Executive Officer
60-66 Hanover Street, Fitzroy, Victoria, 3065, Australia
Telephone: +61 3 8412 7000
(Name, telephone, e-mail and/or facsimile number and address of company contact person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
N/A
Trading Symbol
N/A
Name of each exchange on which regis-
tered
N/A
Securities registered or to be registered pursuant to Section 12(g) of the Act: American Depositary Shares, each
representing 600 Ordinary Shares.
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period
covered by the annual report. There were 11,541,658,143 Ordinary Shares outstanding as of June 30, 2023.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐Yes ☒ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pur-
suant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
☐ Yes ☒ No
Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒ Yes ☐ No
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Annual Report 2023
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit such files).
☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer
or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒
Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised finan-
cial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting
Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report.”
☐ Yes ☒ No
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements
of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
☐ Yes ☒ No
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of
incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period
pursuant to §240.10D-1(b).
☐ Yes ☒ No
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included
in this filing:
U.S. GAAP ☐
International Financial Reporting Standards as issued y the
International Accounting Standards Board ☒
Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item
the registrant has elected to follow.
☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act).
☐ Yes ☒ No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE
YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12,
13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed
by a court. ☐ Yes ☐ No
Genetic Technologies Limited
TABLE OF CONTENTS
Item 1.
Item 2.
Item 3.
Item 3.A
Item 3.B
Item 3.C
Item 3.D
Item 4.
Item 4.A
Item 4.B
Item 4.C
Item 4.D
Item 4A.
Identity of Directors, Senior Management and Advisers
Offer Statistics And Expected Timetable
Key Information
Reserved
Capitalisation and Indebtedness
Reasons for the Offer and Use of Proceeds
Risk Factors
Information on the Company
History and Development of the Company
Business Overview
Organizational Structure
Property, Plant and Equipment
Unresolved Staff Comments
Operating and Financial Review and Prospects
Operating Results
Liquidity and Capital Resources
Research and Development, Patents and Licenses, etc.
Trend Information
Critical Accounting Estimates
Directors, Senior Management and Employees
Directors and Senior Management
Compensation
Board Practices
Employees
Share Ownership
Major Shareholders and Related Party Transactions
Major Shareholders
Related Party Transactions
Interests of Experts and Counsel
Financial Information
Consolidated Statements and Other Financial Information
Significant Changes
The Offer and Listing
Offer and Listing Details
Plan of Distribution
Markets
Selling Shareholders
Dilution
Expenses of the Issue
Additional Information
Item 5.
Item 5.A
Item 5.B
Item 5.C
Item 5.D
Item 5.E
Item 6.
Item 6.A
Item 6.B
Item 6.C
Item 6.D
Item 6.E
Item 7.
Item 7.A
Item 7.B
Item 7.C
Item 8.
Item 8.A
Item 8.B
Item 9.
Item 9.A
Item 9.B
Item 9.C
Item 9.D
Item 9.E
Item 9.F
Item 10.
Item 10.A Share Capital
Item 10.B Our Constitution
Item 10.C Material Contracts
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Annual Report 2023
Defaults, Dividend Arrearages and Delinquencies
Material Modifications to The Rights Of Security Holders and Use Of Proceeds
Controls and Procedures
Taxation
Dividends and Paying Agents
Item 10.D Exchange Controls
Item 10.E
Item 10.F
Item 10.G Statement by Experts
Item 10.H Documents on Display
Subsidiary Information
Item 10.I
Annual Report to Security Holders
Item 10.J
Quantitative And Qualitative Disclosures About Market Risk
Item 11.
Item 12.
Description Of Securities Other Than Equity Securities
Item 12.A Debt Securities
Item 12.B Warrants and Rights
Item 12.C Other Securities
Item 12.D American Depositary Shares
Item 13.
Item 14.
Item 15.
Item 15.A Disclosure controls and procedures
Item 15.B Management’s annual report on internal control over financial reporting
Item 15.C Attestation report of the registered public accounting firm
Item 15.D Changes in internal control over financial reporting
Item 16
Item 16.A Audit Committee Financial Expert
Item 16.B
Item 16.C
Item 16.D Exemptions From The Listing Standards For Audit Committees
Item 16.E
Item 16.F
Item 16.G Corporate Governance
Item 16.H Mine Safety Disclosure
Item 16.I
Item 16.J
Item 17.
Item 18.
Item 19.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Insider Trading Policies
Financial Statements
Financial Statements
Exhibits
Purchases Of Equity Securities By The Issuer And Affiliated Purchasers
Change in Registrant’s Certifying Accountant
Code Of Ethics
Principal Accountant Fees and Services
Reserved
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Genetic Technologies Limited INTRODUCTION
In this Annual Report, the “Company,” “Genetic Technologies”, "GTG", "the Group", “we,” “us” and “our”
refer to Genetic Technologies Limited and its consolidated subsidiaries.
Our consolidated financial statements are set out beginning on page F1 of this Annual Report (refer to Item 18
“Financial Statements”).
References to the “ADSs” are to our ADSs described in Item 12.D “American Depositary Shares” and references
to the “Ordinary Shares” are to our Ordinary Shares described in Item 10.
Our fiscal year ends on June 30 and references in this Annual Report to any specific fiscal year are to the
twelve-month period ended on June 30 of such year.
FORWARD-LOOKING STATEMENTS
This Annual Report contains forward-looking statements that involve risks and uncertainties. We use words
such as “anticipates”, “believes”, “plans”, “expects”, “future”, “intends” and similar expressions to identify such
forward-looking statements. This Annual Report also contains forward-looking statements attributed to certain third
parties relating to their estimates regarding the growth of Genetic Technologies and related markets and spending. You
should not place undue reliance on these forward-looking statements, which apply only as of the date of this Annual
Report. Our actual results could differ materially from those anticipated in these forward-looking statements for many
reasons, including the risks faced by us described below under the caption “Risk Factors” and elsewhere in this Annual
Report.
Although we believe that the expectations reflected in such forward-looking statements are reasonable at this
time, we can give no assurance that such expectations will prove to be correct. Given these uncertainties, readers are
cautioned not to place undue reliance on such forward-looking statements. Important factors that could cause actual
results to differ materially from our expectations are contained in cautionary statements in this Annual Report including,
without limitation, in conjunction with the forward-looking statements included in this Annual Report and specifically
under Item 3.D “Risk Factors”.
All subsequent written and oral forward-looking statements attributable to us are expressly qualified in their
entirety by reference to these cautionary statements.
AUSTRALIAN DISCLOSURE REQUIREMENTS
Our ordinary shares are primarily quoted on the Australian Securities Exchange (“ASX”) in addition to our
listing of our ADSs on the NASDAQ Global Select Market. As part of our ASX listing, we are required to comply with
various disclosure requirements as set out under the Australian Corporations Act 2001 and the ASX Listing Rules.
Information furnished under the sub-heading “Australian Disclosure Requirements” is intended to comply with ASX
listing and Corporations Act 2001 disclosure requirements and is not intended to fulfill information required by this
Annual report on Form 20-F.
ENFORCEMENT OF LIABILITIES AND SERVICE OF PROCESS
We are incorporated under the laws of Western Australia in the Commonwealth of Australia. All of our directors
and executive officers, and any experts named in this Annual Report, reside outside the U.S. Substantially all of our
assets, our directors’ and executive officers’ assets and such experts’ assets are located outside the U.S. As a result, it
may not be possible for investors to affect service of process within the U.S. upon us or our directors, executive officers
or such experts, or to enforce against them or us in U.S. courts, judgments obtained in U.S. courts based upon the
civil liability provisions of the federal securities laws of the U.S. In addition, we have been advised by our Australian
solicitors that there is doubt that the courts of Australia will enforce against us, our directors, executive officers and
experts named herein, judgments obtained in the U.S. based upon the civil liability provisions of the federal securities
laws of the U.S. or will enter judgments in original actions brought in Australian courts based upon the federal securities
laws of the U.S.
18
Annual Report 2023 PART I
Item 1. Identity of Directors, Senior Management and Advisers
Not applicable
Item 2. Offer Statistics and Expected Timetable
Not applicable.
Item 3. Key Information
Item 3.A Reserved
Item 3.B Capitalisation and Indebtedness
Not applicable.
Item 3.C Reasons for the Offer and Use of Proceeds
Not applicable.
Item 3.D Risk Factors
Before you purchase our ADSs, you should be aware that there are risks, including those described below. You should
consider carefully these risk factors together with all of the other information contained elsewhere in this Annual Report before you
decide to purchase our ADSs.
Risk Factor Summary
Risk Related to our Business
● A variety of risks associated with commercializing our products and product candidates internationally could materially
adversely affect our business.
● Our Company has a history of incurring losses.
● We may not be successful in transitioning from our existing product portfolio to our next generation of risk assessment tests,
and our newly developed approach to marketing and distribution of such products may not generate revenues.
● Our products may never achieve significant market acceptance.
● We face additional risks as a result of the EasyDNA and AffinityDNA acquisitions and may be unable to integrate our
businesses successfully and realize the anticipated synergies and related benefits of these acquisitions or do so within the
anticipated time frame.
●
●
Failure to demonstrate the clinical utility of our products could have a material adverse effect on our financial condition and
results of operations.
If our competitors develop superior products, our operations and financial condition could be affected.
● We have important relationships with external parties over whom we have limited control.
● We may be subject to liability and our insurance may not be sufficient to cover damages.
●
Security breaches, privacy issues, loss of data and other incidents could compromise sensitive or personal information related
to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect our
business and our reputation.
● We use potentially hazardous materials, chemicals and patient samples in our business and any disputes relating to improper
handling, storage or disposal of these materials could be time consuming and costly.
● Our industry is subject to rapidly changing technology and new and increasing amounts of scientific data related to genes and
genetic variants and their role in disease.
● We depend on the collaborative efforts of our academic and corporate partners for research, development and commercialization
of our products. A breach by our partners of their obligations, or the termination of the relationship, could deprive us of
valuable resources and require additional investment of time and money.
●
●
If our sole laboratory facility becomes inoperable, we may be unable to perform our tests and our business will be harmed.
The loss of key members of our senior management team or our inability to attract and retain highly skilled scientists,
clinicians and salespeople could adversely affect our business.
Genetic Technologies Limited ●
Changes in the way that the Food & Drug Administration (FDA) regulates our tests could result in the delay or additional
expense in offering our tests and tests that we may develop in the future.
● Our business could be harmed from the loss or suspension of a license or imposition of a fine or penalties under, or future
changes in, or changing interpretations of, Clinical Laboratory Improvements Amendments (CLIA) or state laboratory
licensing laws to which we are subject.
●
Failure to establish and comply with appropriate quality standards to assure that the highest level of quality is observed in the
performance of our testing services and in the design, manufacture and marketing of our products could adversely affect the
results of our operations and adversely impact our reputation.
● We could be adversely affected by violations of the Foreign Corrupt Practices Act (FCPA) and other worldwide anti-bribery
laws.
●
●
●
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report
our financial results or prevent fraud.
Failure to comply with health information privacy laws, including Health Insurance Portability and Accountability Act of
1996 (HIPAA) or other U.S. federal or state health information privacy and security laws, as applicable, may negatively
impact our business.
If we or our partners fail to comply with the complex federal, state, local and foreign laws and regulations to the extent that
apply to our business, we could suffer severe consequences that could materially and adversely affect our operating results
and financial condition.
● A failure to comply with any of federal or state laws to the extent such are applicable to our business, particularly laws related
to the elimination of healthcare fraud, may adversely impact our business.
● We face risks associated with currency exchange rate fluctuations, which could adversely affect our operating results.
● Government regulation of genetic research or testing may adversely affect the demand for our services and impair our business
and operations.
●
Failure in our information technology systems could significantly increase testing turn-around times or impact on the billing
processes or otherwise disrupt our operations.
● Any significant disruption in service on our website or in our computer or logistics systems, whether due to a failure with
our information technology systems or that of a third-party vendor, could harm our reputation and may result in a loss of
customers.
●
●
●
Breaches of network or information technology, natural disasters or terrorist attacks could have an adverse impact on our
business.
Ethical and other concerns surrounding the use of genetic information may reduce the demand for our services.
Risks associated with our intellectual property.
● We rely heavily upon patents and proprietary technology that may fail to protect our business.
● We may face difficulties in certain jurisdictions in protecting our intellectual property rights, which may diminish the value of
our intellectual property rights in those jurisdictions.
● Our operations may be adversely affected by the effects of extreme weather conditions or other interruptions in the timely
transportation of specimens.
● Our Consumer Initiated Testing (CIT) Platform will expose us to various risks.
● Discontinuation or recalls of existing testing products or our customers using new technologies to perform their own tests
could adversely affect our business.
●
●
The Polygenic Risk Score (PRS) test may not be able to obtain necessary regulatory clearance, and therefore we may not
generate any revenue.
If the PRS test is required to obtain and maintain FDA approvals, it will be subject to continuing governmental regulations
and additional foreign regulations.
● Declining general economic or business conditions may have a negative impact on our business.
Risk Related to our Securities
● Our ADSs may be delisted from the NASDAQ Capital Market.
● Our stock price is volatile and can fluctuate significantly based on events not in our control and general industry conditions.
As a result, the value of your investment may decline significantly.
●
The fact that we do not expect to pay cash dividends may lead to decreased prices for our stock.
● You may have difficulty in effecting service of legal process and enforcing judgments against us and our management.
20
Annual Report 2023 ●
Because we are not required to provide you with the same information as an issuer of securities based in the United States,
you may not be afforded the same protection or information you would have if you had invested in a public corporation based
in the United States.
● As a foreign private issuer, we are permitted to adopt certain home country practices in relation to corporate governance
matters that differ significantly from Nasdaq corporate governance listing standards and these practices may afford less
protection to shareholders than they would enjoy if we complied fully with Nasdaq corporate governance listing standards.
● As a result of being a U.S. public company, we are subject to additional regulatory compliance requirements, including
Section 404, and if we fail to maintain an effective system of internal controls, we may not be able to accurately report our
financial results or prevent fraud.
● We will incur significant costs as a result of operating as a company with ADSs that are publicly traded in the United States,
and our management will be required to devote substantial time to new compliance initiatives.
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The dual listing of our ordinary shares and the ADSs may negatively impact the liquidity and value of the ADSs.
● Australian takeover laws may discourage takeover offers being made for us or may discourage the acquisition of a significant
position in our ordinary shares or ADSs.
● Our Constitution and Australian laws and regulations applicable to us may adversely affect our ability to take actions that
could be beneficial to our shareholders.
● A lack of significant liquidity for our ADSs may negatively affect your ability to resell our securities.
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In certain circumstances, holders of ADSs may have limited rights relative to holders of Ordinary Shares.
Risk Related to Taxation
● We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax
consequences for U.S. holders.
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If a United States person is treated as owning at least 10% of our ordinary shares, such holder may be subject to adverse U.S.
federal income tax consequences.
Changes to tax laws could materially adversely affect our company and reduce net returns to our shareholders.
Tax authorities may disagree with our positions and conclusions regarding certain tax positions, resulting in unanticipated
costs, taxes or non-realization of expected benefits.
Risks Related to our Business
A variety of risks associated with commercializing our products and product candidates internationally could materially
adversely affect our business.
We, or our licensing partners, may seek regulatory approval for our products or product candidates in multiple jurisdictions,
accordingly, we expect that we will be subject to additional risks for our products and product candidates related to operating in for-
eign countries if we obtain the necessary approvals, including:
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differing regulatory requirements in foreign countries;
the potential for so-called parallel importing, when a local seller, faced with high or higher local prices, opts to
import goods from a foreign market (with low or lower prices) rather than buying them locally;
unexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements;
economic weakness, including inflation, or political instability in particular foreign economies and markets;
compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;
foreign taxes, including withholding of payroll taxes;
foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other
obligations incident to doing business in another country;
difficulties staffing and managing foreign operations;
● workforce uncertainty in countries where labor unrest is more common than in Australia or the U.S.;
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challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not
respect and protect intellectual property rights to the same extent as in Australia or the U.S.;
production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad;
and
business interruptions resulting from geo-political actions, including war and terrorism.
Genetic Technologies Limited These and other risks associated with our or our licensing partners’ international operations may materially adversely affect our
ability to attain or maintain profitable operations.
Our Company has a history of incurring losses.
We have incurred operating losses in every year since the year ended June 30, 2011. As at June 30, 2023, the Company
had accumulated losses of A$156,715,687 and the extent of any future losses and whether or not the Company can generate profits
in future years remains uncertain. The Company currently does not generate sufficient revenue to cover its operating expenses. We
expect our capital outlays and operating expenditures to remain constant for the foreseeable future as we continue to focus on R&D
and new product development, IP creation and the introduction of predictive genetic testing products. If we fail to generate sufficient
revenue and eventually become profitable, or if we are unable to fund our continuing losses by raising additional financing when
required, our shareholders could lose all or part of their investments.
We may not be successful in expanding our revenues, and therefore improving operational profitability, of the recently
acquired EasyDNA and AffinityDNA businesses or achieve significant commercial sales of the portfolio to our next generation of
geneType risk assessment tests.
Although GTG have recently achieved a significant increase in product revenues, which are largely attributable to the
recently acquired EasyDNA and AffinityDNA businesses and the Company has recently developed, launched and marketed our
geneType Multi-risk test, we believe that our future success is dependent upon our ability to grow revenues from our existing
product offerings and to successfully introduce and sell our newly developed products including our innovative hereditary breast
and ovarian cancer test, due for launch in financial year 2024. Although we believe that we now have world class products that are
poised to be an important part of making predictive genetic testing a mainstream healthcare activity, we may not be successful in
transitioning from our existing products to these products, and there can be no assurance that the demand for these new products will
develop. Furthermore, we plan to introduce our new products to healthcare providers through a global network of distribution partners
instead of through our own sales force. Although we believe that we are building worthwhile sales and distribution relationships
with experienced distribution firms, there can be no assurance that we will be able to enter into distribution arrangements on terms
satisfactory to us, and that our marketing strategy will be successful and result in significant revenues.
Our products may never achieve significant market acceptance.
We may expend substantial funds and management effort on the development and marketing of our predictive genetic
testing products with no assurance that we will be successful in selling our products or services. Our ability to enter into distribution
arrangements to successfully sell our molecular risk assessment and predictive genetic testing products and services will depend
significantly on the perception that our products and services can reduce patient risk and improve medical outcomes, and that our
products and services are superior to existing tests. Our business could also be adversely affected if we expend money without any
return.
We face additional risks as a result of the EasyDNA and AffinityDNA acquisitions. We may be unable to integrate
our businesses successfully and realize the anticipated synergies and related benefits of these acquisitions or do so within our
anticipated timeframes. Including:
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difficulties in integrating and managing the combined operations of EasyDNA and AffinityDNA, and realizing the anticipated
economic, operational, and other benefits in a timely manner, which could result in substantial costs and delays or other
operational, technical, or financial problems;
disruptions to the EasyDNA and AffinityDNA businesses and their operations and relationships with service providers and
other third parties;
loss of key employees of EasyDNA and AffinityDNA and other challenges associated with integrating new employees into our
culture, as well as reputational harm if integration is not successful;
diversion of management time and focus from operating our business to addressing the EasyDNA and AffnityDNA operations
integration challenges;
diversion of significant resources from the ongoing development of our existing products, services, and operations;
failure to successfully realize our intended business strategy;
increase in the operating losses that we expect to incur in future periods;
regulatory complexities of integrating or managing the combined operations or expanding into other industries or parts of the
healthcare industry;
regulatory developments or enforcement trends focusing on corporate practice of medicine;
greater than anticipated costs related to the integration of the EasyDNA and AffinityDNA businesses and operations;
increase in compliance and related costs associated with the addition of a regulated business;
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Annual Report 2023 ●
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responsibility for the liabilities of EasyDNA and AffinityDNA, including those that were not disclosed to us or exceed our
estimates, as well as, without limitation, liabilities arising out of their failure to maintain effective data protection and privacy
practices controls and comply with applicable regulations; and
potential accounting charges to the extent intangibles recorded in connection with the EasyDNA and AffinityDNA acquisitions,
such as goodwill, trademarks, client relationships, or intellectual property, are later determined to be impaired and written
down in value.
Failure to demonstrate the clinical utility of our geneType products could have a material adverse effect on our financial
condition and results of operations.
The Company believes that its current GeneType risk assessment tests, along with the pipeline of new tests for additional
disease indications under development have the capacity to transform health outcomes for entire populations. However, it is critical
for the Company to demonstrate the clinical utility of its new products at scale. Clinical utility is the usefulness of a test for clinical
practice. If the Company is unable to demonstrate clinical utility, or if the data is deemed insufficient to validate utility, there may be
insufficient demand for the Company’s products.
If our competitors develop superior products, our operations and financial condition could be affected.
We are currently subject to increased competition from biotechnology and diagnostic companies, academic and research
institutions and government or other publicly-funded agencies that are pursuing products and services which are substantially similar
to our molecular risk assessment testing products, or which otherwise address the needs of our customers and potential customers.
Our competitors in the predictive genetic testing and assessment market include private and public sector enterprises
located in Australia, the U.S. and elsewhere. Many of the organizations competing with us are much larger and have more ready
access to needed resources. In particular, they would have greater experience in the areas of finance, research and development,
manufacturing, marketing, sales, distribution, technical and regulatory matters than we do. In addition, many of the larger current and
potential competitors have already established name / brand recognition and more extensive collaborative relationships.
Our competitive position in the molecular risk assessment and predictive testing area is based upon, amongst other things,
our ability to:
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continue to strengthen and maintain scientific credibility through the process of obtaining scientific validation through
clinical trials supported by peer-reviewed publication in medical journals;
create and maintain scientifically advanced technology and offer proprietary products and services;
continue to strengthen and improve the messaging regarding the importance and value that our cancer risk assessment tests
provide to patients and physicians;
diversify our product offerings in disease types;
obtain and maintain patent or other protection for our products and services;
obtain and maintain required government approvals and other accreditations on a timely basis; and
successfully market our products and services.
If we are not successful in meeting these goals, our business could be adversely affected. Similarly, our competitors may
succeed in developing technologies, products or services that are more effective than any that we are developing or that would render
our technology, products and services obsolete, noncompetitive or uneconomical.
We have important relationships with external parties over whom we have limited control.
We have relationships with academic consultants, research collaborators at other institutions and other advisers who are
not employed by us. Accordingly, we have limited control over their activities and can expect only limited amounts of their time
to be dedicated to our activities. These persons may have consulting, employment or advisory arrangements with other entities that
may conflict with or compete with their obligations to us. Our consultants typically sign agreements that provide for confidentiality
of our proprietary information and results of studies. However, we may not be able to maintain the confidentiality of our technology,
the dissemination of which could hurt our competitive position and results of operations. To the extent that our scientific consultants,
collaborators or advisors develop inventions or processes that may be applicable to our proposed products, disputes may arise as to
the ownership of the proprietary rights to such information, and we may not be successful with any dispute outcomes.
Genetic Technologies Limited We may be subject to liability and our insurance may not be sufficient to cover damages.
Our business exposes us to potential liability risks that are inherent in the testing, manufacturing, marketing and sale
of molecular risk assessment and predictive tests. The use of our products and product candidates, whether for clinical trials or
commercial sale, may expose us to professional and product liability claims and possible adverse publicity. We may be subject
to claims resulting from incorrect results of analysis of genetic variations or other screening tests performed using our products.
Litigation of such claims could be costly. Further, if a court were to require us to pay damages to a plaintiff, the amount of such
damages could be significant and severely damage our financial condition. Although we have public and product liability insurance
coverage under broad form liability and professional indemnity policies, the level or breadth of our coverage may not be adequate
to fully cover any potential liability claims. In addition, we may not be able to obtain additional liability coverage in the future at
an acceptable cost. A successful claim or series of claims brought against us in excess of our insurance coverage and the effect of
professional and/or product liability litigation upon the reputation and marketability of our technology and products, together with
the diversion of the attention of key personnel, could negatively affect our business.
Security breaches, privacy issues, loss of data and other incidents could compromise sensitive or personal information
related to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect
our business and our reputation.
In the ordinary course of our business, we collect and store sensitive data, including Protected Health Information, (PHI),
personally identifiable information, genetic information, credit card information, intellectual property and proprietary business
information owned or controlled by ourselves or our customers, payers and other parties. We manage and maintain our applications
and data utilizing a combination of on-site systems, managed data center systems and cloud-based systems. We also communicate
PHI and other sensitive patient data through our various customer tools and platforms. In addition to storing and transmitting sensitive
data that is subject to multiple legal protections, these applications and data encompass a wide variety of business-critical information
including research and development information, commercial information, and business and financial information. We face a
number of risks relative to protecting this critical information, including loss of access risk, inappropriate disclosure, inappropriate
modification, and the risk of our being unable to adequately monitor and modify our controls over our critical information. Any
technical problems that may arise in connection with our data and systems, including those that are hosted by third-party providers,
could result in interruptions to our business and operations or exposure to security vulnerabilities. These types of problems may be
caused by a variety of factors, including infrastructure changes, intentional or accidental human actions or omissions, software errors,
malware, viruses, security attacks, fraud, spikes in customer usage and denial of service issues. In addition, there has recently been
a significant increase in ransomware and cyber security attacks related to the ongoing conflict between Russia and Ukraine, which
could result in substantial harm to internal systems necessary for running our critical operations and revenue generating services.
The secure processing, storage, maintenance and transmission of this critical information are vital to our operations and
business strategy, and we devote significant resources to protecting such information. Although we take what we believe to be
reasonable and appropriate measures, including a formal, dedicated enterprise security program, to protect sensitive information from
various compromises (including unauthorized access, disclosure, or modification or lack of availability), our information technology
and infrastructure may be vulnerable to attacks by hackers or viruses or breached due to employee error, malfeasance or other
disruptions. For example, we have been subject to phishing incidents in the past, and we may experience additional incidents in the
future. Any such breach or interruption could compromise our networks, and the information stored therein could be accessed by
unauthorized parties, altered, publicly disclosed, lost or stolen.
Unauthorized access, loss or dissemination could also disrupt our operations (including our ability to conduct our analyses,
provide test results, bill payers or patients, process claims and appeals, provide customer assistance, conduct research and development
activities, collect, process and prepare company financial information, provide information about our tests and other patient and
physician education and outreach efforts through our website, and manage the administrative aspects of our business) and damage
our reputation, any of which could adversely affect our business.
In addition to data security risks, we also face privacy risks. Should we actually violate, or be perceived to have violated,
any privacy commitments we make to patients or consumers, we could be subject to a complaint from an affected individual or
interested privacy regulator, such as the FTC, a state Attorney General, an EU Member State Data Protection Authority, or a data
protection authority in another international jurisdiction. This risk is heightened given the sensitivity of the data we collect.
Any security compromise that causes an apparent privacy violation could also result in legal claims or proceedings;
liability under federal, state, foreign, or multinational laws that regulate the privacy, security, or breach of personal information,
such as but not limited to the Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health
Information Technology for Economic and Clinical Health Act of 2009, or HITECH, state data security and data breach notification
laws, the European Union’s General Data Protection Regulation, or GDPR, and the UK Data Protection Act of 2018; and related
regulatory penalties. Penalties for failure to comply with a requirement of HIPAA or HITECH vary significantly, and, depending
on the knowledge and culpability of the HIPAA-regulated entity, may include civil monetary penalties of up to US$1.5 million per
calendar year for each provision of HIPAA that is violated. A person who knowingly obtains or discloses individually identifiable
health information in violation of HIPAA may face a criminal penalty of up to US$50,000 and up to one-year imprisonment.
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Annual Report 2023 The criminal penalties increase if the wrongful conduct involves false pretenses or the intent to sell, transfer or use
identifiable health information for commercial advantage, personal gain or malicious harm. Penalties for unfair or deceptive acts or
practices under the FTC Act or state Unfair and Deceptive Acts and Practices, or UDAP, statutes may also vary significantly.
There has been unprecedented activity in the development of data protection regulation around the world. As a result, the
interpretation and application of consumer, health-related and data protection laws in the United States, Europe and elsewhere are
often uncertain, contradictory and in flux. The GDPR took effect on May 25, 2018. The GDPR applies to any entity established in the
EU as well as extraterritorially to any entity outside the EU that offers goods or services to, or monitors the behavior of, individuals
who are located in the EU. The GDPR imposes strict requirements on controllers and processors of personal data, including enhanced
protections for “special categories” of personal data, which includes sensitive information such as health and genetic information
of data subjects. The GDPR also grants individuals various rights in relation to their personal data, including the rights of access,
rectification, objection to certain processing and deletion. The GDPR provides an individual with an express right to seek legal
remedies if the individual believes his or her rights have been violated. Failure to comply with the requirements of the GDPR or the
related national data protection laws of the member states of the EU, which may deviate from or be more restrictive than the GDPR,
may result in significant administrative fines issued by EU regulators. Maximum penalties for violations of the GDPR are capped at
20M euros or 4% of an organization’s annual global revenue, whichever is greater.
Additionally, the implementation of GDPR has led other jurisdictions to either amend or propose legislation to amend
their existing data privacy and cybersecurity laws to resemble the requirements of GDPR. For example, on June 28, 2018, California
adopted the California Consumer Privacy Act of 2018, or the CCPA. The CCPA regulates how certain for-profit businesses that
meet one or more CCPA applicability thresholds collect, use, and disclose the personal information of consumers who reside in
California. Among other things, the CCPA confers to California consumers the right to receive notice of the categories of personal
information that will be collected by a business, how the business will use and share the personal information, and the third parties
who will receive the personal information. The CCPA also confers rights to access, delete, or transfer personal information; and the
right to receive equal service and pricing from a business after exercising a consumer right granted by the CCPA. In addition, the
CCPA allows California consumers the right to opt out of the “sale” of their personal information, which the CCPA defines broadly
as any disclosure of personal information to a third party in exchange for monetary or other valuable consideration. The CCPA also
requires a business to implement reasonable security procedures to safeguard personal information against unauthorized access, use,
or disclosure. The CCPA does not apply to PHI collected by certain parties subject to HIPAA, or to de-identified data as defined under
HIPAA. The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches resulting
from a business’s failure to implement and maintain reasonable data security procedures that is expected to increase data breach
litigation. On January 1, 2023, the California Privacy Rights Act, or CPRA, is scheduled to go into effect and will substantially amend
the CCPA. The CPRA would, among other things, amend the CCPA to give California residents the ability to limit the use of their
sensitive information, provide for penalties for CPRA violations concerning California residents under the age of 16, and establish a
new California Privacy Protection Agency to implement and enforce the law.
Virginia, Colorado, and Utah have recently enacted similar privacy acts, and dozens of other states in the United States
are currently considering similar consumer data privacy laws, which could impact our operations if enacted. Some observers have
noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States, which could
increase our potential liability and adversely affect our business, results of operations, and financial condition.
It is possible the GDPR, CCPA and other emerging United States and international data protection laws may be interpreted
and applied in a manner that is inconsistent with our practices. If so, this could result in government-imposed fines or orders requiring
that we change our practices, which could adversely affect our business. In addition, these privacy laws and regulations may differ
from country to country and state to state, and our obligations under these laws and regulations vary based on the nature of our
activities in the particular jurisdiction, such as whether we collect samples from individuals in the local jurisdiction, perform testing
in the local jurisdiction, or process personal information regarding employees or other individuals in the local jurisdiction. Complying
with these various laws and regulations could cause us to incur substantial costs or require us to change our business practices and
compliance procedures in a manner adverse to our business. We can provide no assurance that we are or will remain in compliance
with diverse privacy and data security requirements in all of the jurisdictions in which we do business. Failure to comply with privacy
and data security requirements could result in a variety of consequences, including civil or criminal penalties, litigation, or damage
to our reputation, any of which could have a material adverse effect on our business.
We use potentially hazardous materials, chemicals and patient samples in our business and any disputes relating to
improper handling, storage or disposal of these materials could be time consuming and costly.
Our research and development, production and service activities involve the controlled use of hazardous laboratory
materials and chemicals, including small quantities of acid and alcohol, and fluid (i.e. saliva, blood) as well as tissue samples from
customers. We do not knowingly deal with infectious samples. We, our collaborators and service providers are subject to stringent
Australian federal, state and local laws and regulations governing occupational health and safety standards, including those governing
the use, storage, handling and disposal of these materials and certain waste products.
Genetic Technologies Limited However, we could be liable for accidental contamination or discharge or any resultant injury from hazardous materials,
and conveyance, processing, and storage of and data on patient samples. If we, our collaborators or service providers fail to comply
with applicable laws or regulations, we could be required to pay penalties or be held liable for any damages that result and this
liability could exceed our financial resources. Further, future changes to environmental health and safety laws could cause us to incur
additional expense or restrict our operations.
In addition, our collaborators and service providers may be working with these same types of hazardous materials, including
hazardous chemicals, in connection with our collaborations. In the event of a lawsuit or investigation, we could be held responsible
for any injury caused to persons or property by exposure to, or release of, these hazardous materials or customer samples that may
contain infectious materials. The cost of this liability could exceed our resources. While we maintain broad form liability insurance
coverage for these risks, the level or breadth of our coverage may not be adequate to fully cover potential liability claims.
Our industry is subject to rapidly changing technology and new and increasing amounts of scientific data related to
genes and genetic variants and their role in disease.
Our failure to develop tests to keep pace with these changes could make us obsolete. In recent years, there have been
numerous advances in methods used to analyze very large amounts of genomic information and the role of genetics and gene variants
in disease and treatment therapies. Our industry has and will continue to be characterized by rapid technological change, increasingly
larger amounts of data, frequent new testing service introductions and evolving industry standards, all of which could make our tests
obsolete. Our future success will also depend on our ability to keep pace with the evolving needs of our customers on a timely and
cost-effective basis and to pursue new market opportunities that develop as a result of technological and scientific advances. Our
tests could become obsolete and our business adversely affected unless we continually update our offerings to reflect new scientific
knowledge about genes and genetic variations and their role in diseases and treatment therapies.
We depend on the collaborative efforts of our academic and corporate partners for research, development and
commercialization of our products. A breach by our partners of their obligations, or the termination of the relationship, could
deprive us of valuable resources and require additional investment of time and money.
Our strategy for research, development and commercialization of our products has historically involved entering into
various arrangements with academic, corporate partners and others. As a result, the success of our strategy depends, in part, upon
the strength of those relationships and these outside parties undertaking their responsibilities and performing their tasks to the best
of their ability and responding in a timely manner. Our collaborators may also be our competitors. We cannot necessarily control the
amount and timing of resources that our collaborators devote to performing their contractual obligations and we have no certainty that
these parties will perform their obligations as expected or that any revenue will be derived from these arrangements.
If our collaborators breach or terminate their agreement with us or otherwise fail to conduct their collaborative activities
in a timely manner, the development or commercialization of the product candidate or research program under such collaborative
arrangement may be delayed. If that is the case, we may be required to undertake unforeseen additional responsibilities or to devote
unforeseen additional funds or other resources to such development or commercialization, or such development or commercialization
could be terminated. The termination or cancellation of collaborative arrangements could adversely affect our financial condition,
intellectual property position and general operations. In addition, disagreements between collaborators and us could lead to delays in
the collaborative research, development, or commercialization of certain products or could require or result in formal legal process
or arbitration for resolution. These consequences could be time-consuming and expensive and could have material adverse effects
on the Company.
We rely upon scientific, technical and clinical data supplied by academic and corporate collaborators, licensors, licensees,
independent contractors and others in the evaluation and development of potential therapeutic methods. There may be errors or
omissions in this data that would materially adversely affect the development of these methods.
If our sole laboratory facility becomes inoperable, we may be unable to perform our tests and our business will be
harmed.
We rely heavily upon our sole laboratory facilities in Melbourne, Australia, which has been certified under the U.S. CLIA.
Our current lease of laboratory premises expires February 28, 2025. The facility and the equipment we use to perform our tests would
be costly to replace and could require substantial lead time to repair or replace. If we were to lose our CLIA certification or other
required certifications or licenses, or if the facility is harmed or rendered inoperable by natural or man-made disasters, including
flooding and power outages, it will be difficult or impossible for us to perform our tests for some period of time. The inability to
perform our tests or the backlog of tests that could develop if our facility is inoperable for even a short period of time may result in
the loss of customers or harm our reputation, and we may be unable to regain those customers in the future.
If we no longer had our own facility and needed to rely on a third party to perform our tests, we could only use another facility
with established state licensure and CLIA accreditation. We cannot assure you that we would be able to find another CLIA certified
facility willing to comply with the required procedures, that this laboratory would be willing to perform the tests on commercially
reasonable terms, or that it would be able to meet our quality standards.
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Annual Report 2023 In order to establish a redundant clinical reference laboratory facility, we would have to spend considerable time and money
securing adequate space, constructing the facility, recruiting and training employees, and establishing the additional operational and
administrative infrastructure necessary to support a second facility. We may not be able, or it may take considerable time, to replicate
our testing processes or results in a new facility. Additionally, any new clinical reference laboratory facility would be subject to
certification under CLIA and licensing by several states, including California and New York, which could take a significant amount
of time and result in delays in our ability to begin operations.
The loss of key members of our senior management team or our inability to attract and retain highly skilled scientists,
clinicians and salespeople could adversely affect our business.
Our success depends largely on the skills, experience and performance of key members of our executive management team
and others in key management positions. The efforts of each of these persons together will be critical as we continue to develop our
technologies and testing processes, continue our international expansion and transition to a company with multiple commercialized
products. If we were to lose one or more of these key employees, we may experience difficulties in competing effectively, developing
our technologies and implementing our business strategies.
Our research and development programs and commercial laboratory operations depend on our ability to attract and retain
highly skilled scientists and technicians, including licensed laboratory technicians, chemists, biostatisticians and engineers. We may
not be able to attract or retain qualified scientists and technicians in the future due to the competition for qualified personnel among
life science businesses. In addition, if there were to be a shortage of clinical laboratory scientists in coming years, this would make
it more difficult to hire sufficient numbers of qualified personnel. We also face competition from universities and public and private
research institutions in recruiting and retaining highly qualified scientific personnel. Our success also depends on our ability to attract
and retain salespeople with extensive experience in oncology and have close relationships with medical oncologists, pathologists and
other hospital personnel. We may have difficulties sourcing, recruiting or retaining qualified salespeople, which could cause delays
or a decline in the rate of adoption of our tests. If we are not able to attract and retain the necessary personnel to accomplish our
business objectives, we may experience constraints that could adversely affect our ability to support our research and development
and sales programs.
Changes in the way that the FDA regulates our tests could result in the delay or additional expense in offering our
tests and tests that we may develop in the future.
Historically, the U.S. Food and Drug Administration (“FDA”) has exercised enforcement discretion with respect to most
Laboratory Developed Tests (“LDTs”) and has not required laboratories that furnish LDTs to comply with the agency’s requirements
for medical devices (e.g., establishment registration, device listing, quality systems regulations, premarket clearance or premarket
approval, and post-market controls). In recent years, however, the FDA publicly announced its intention to regulate certain LDTs and
issued two draft guidance documents that set forth a proposed phased-in risk-based regulatory framework that would apply varying
levels of FDA oversight to LDTs. However, these guidance documents were withdrawn at the end of the Obama administration
and replaced by an informal discussion paper reflecting some of the feedback that FDA had received on LDT regulation. The FDA
acknowledged that the discussion paper in January 2017 does not represent the formal position of the FDA and is not enforceable.
Nevertheless, the FDA wanted to share its synthesis of the feedback that it had received in the hope that it might advance public
discussion on future LDT oversight. Notwithstanding the discussion paper, the FDA continues to exercise enforcement discretion and
may decide to regulate certain LDTs on a case-by-case basis at any time, which could result in delay or additional expense in offering
our tests and tests that we may develop in the future.
As a matter of policy, the FDA generally does not review Direct-to-Consumer LDTs that are created and performed in a
single laboratory, if they are offered to patients only when prescribed by a health care provider.
Legislative proposals addressing the FDA’s oversight of LDTs have been introduced in the current and previous Congresses,
and we expect that new legislative proposals will be introduced from time-to-time. On May 17, 2022, the Senate Health, Education,
Labor and Pensions (HELP) Committee released an FDA user fees reauthorization legislative package, which incorporates contents
from the Verifying Accurate Leading-edge IVCT Development (VALID) Act that would establish a new category of in vitro clinical
tests (IVCTs) comprised of traditional in vitro diagnostics and LDTs, and grant the FDA authority to review and approve them pre-
market. Such arrangement increased the likelihood for Congress to pass a legislation that will give the FDA clear authority to regulate
LDTs, but the eventual result is difficult to predict at this time.
If the FDA ultimately regulates certain LDTs, whether via final guidance, final regulation, or as instructed by Congress,
our tests may be subject to certain additional regulatory requirements. Complying with the FDA’s requirements can be expensive,
time-consuming, and subject us to significant or unanticipated delays. Insofar as we may be required to obtain premarket clearance
or approval to perform or continue performing an LDT, we cannot assure you that we will be able to obtain such authorization. Even
if we obtain regulatory clearance or approval where required, such authorization may not be for the intended uses that we believe are
commercially attractive or are critical to the commercial success of our tests. As a result, the application of the FDA’s requirements to
our tests could materially and adversely affect our business, financial condition, and results of operations.
Genetic Technologies Limited Our business could be harmed from the loss or suspension of a license or imposition of a fine or penalties under, or
future changes in, or changing interpretations of, CLIA or state laboratory licensing laws to which we are subject.
The clinical laboratory testing industry is subject to extensive federal and state regulation. The regulations implementing
CLIA set out federal regulatory standards that apply to virtually all clinical laboratories operating in the U.S. (regardless of the
location, size or type of laboratory), including those operated by physicians in their offices, by requiring that they be certified by
the federal government or by a federally approved accreditation agency. CLIA is a U.S. federal law regulating clinical laboratories
that perform testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or
treatment of disease. CLIA is intended to ensure the quality and reliability of clinical laboratories in the U.S. by mandating specific
standards in the areas of personnel qualifications, administration, and participation in proficiency testing, patient test management,
quality control, quality assurance and inspections.
Certain US States also require state laboratory licenses in order to test specimens received from patients residing in those
states or requests received from ordering physicians in those states. We currently hold out-of-state laboratory licenses in California,
New York, Maryland, Rhode Island, and Pennsylvania.
Further, CLIA does not pre-empt state law, which in some cases may be more stringent than federal law and require
additional personnel qualifications, quality control, record maintenance and proficiency testing. The sanction for failure to comply
with CLIA and state requirements may be suspension, revocation or limitation of a laboratory’s CLIA certificate, which is necessary
to conduct business, as well as significant fines, civil and criminal penalties, the imposition of directed plan of correction, and on-site
monitoring. If we were to be found out of compliance with CLIA program requirements and subjected to sanctions, our business and
reputation could be harmed. Several states have similar laws, and we may be subject to similar penalties. If the CLIA certification of
one laboratory owned by the Company is suspended or revoked that may preclude the Company from owning or operating any other
CLIA regulated laboratory for two years. Further, even if it were possible for us to bring our laboratory back into compliance, we
could incur significant expenses and potentially lose revenue in doing so.
We cannot assure you that applicable statutes and regulations will not be interpreted or applied by a prosecutorial, regulatory
or judicial authority in a manner that would adversely affect our business. Potential sanctions for violation of these statutes and
regulations include significant fines and the suspension or loss of various licenses, certificates and authorizations, which could have
a material adverse effect on our business. In addition, compliance with future legislation could impose additional requirements on us,
which may be costly.
Failure to establish and comply with appropriate quality standards to assure that the highest level of quality is observed
in the performance of our testing services and in the design, manufacture and marketing of our products could adversely affect
the results of our operations and adversely impact our reputation.
The provision of clinical testing services, and the design, manufacture and marketing of diagnostic products involve certain
inherent risks. The services that we provide and the products that we design, manufacture and market are intended to provide
information for healthcare providers in providing patient care. Therefore, users of our services and products may have a greater
sensitivity to errors than the users of services or products that are intended for other purposes. Similarly, negligence in performing
our services can lead to injury or other adverse events. We may be sued under common law, physician liability or other liability law
for acts or omissions by our laboratory personnel. We are subject to the attendant risk of substantial damages awards and risk to our
reputation.
We could be adversely affected by violations of the FCPA and other worldwide anti-bribery laws.
We are subject to the FCPA, which prohibits companies and their intermediaries from making payments in violation of law
to non-U.S. government officials for the purpose of obtaining or retaining business or securing any other improper advantage. We are
increasing our direct sales and operations personnel outside the United States, in which we have limited experience. We use a limited
number of independent distributors to sell our tests internationally, which requires a high degree of vigilance in maintaining our policy
against participation in corrupt activity, because these distributors could be deemed to be our agents, and we could be held responsible
for their actions. Other U.S. companies in the medical device and pharmaceutical fields have faced criminal penalties under the FCPA
for allowing their agents to deviate from appropriate practices in doing business with these individuals. We are also subject to similar
anti-bribery laws in the jurisdictions in which we operate, including anti-bribery laws in Australia which also prohibits commercial
bribery and makes it a crime for companies to fail to prevent bribery. These laws are complex and far-reaching in nature, and, as a
result, we cannot assure you that we would not be required in the future to alter one or more of our practices to be in compliance with
these laws or any changes in these laws or the interpretation thereof. Any violations of these laws, or allegations of such violations,
could disrupt our operations, involve significant management distraction, involve significant costs and expenses, including legal fees,
and could result in a material adverse effect on our business, prospects, financial condition or results of operations. We could also
incur severe penalties, including criminal and civil penalties, disgorgement and other remedial measures.
28
Annual Report 2023 If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately
report our financial results or prevent fraud.
Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together
with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to design and implement an effective
system of internal control may reveal deficiencies in our internal controls over financial reporting that are deemed to be material
weaknesses. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which
could have a negative effect on the trading price of the ADSs and our Ordinary Shares.
As of June 30, 2020, we had identified a material weakness in our internal control over financial reporting in relation to
segregation of duties. Such material weakness was remedied as of June 30, 2021.
As of June 30, 2023, our Chief Executive Officer and Chief Financial Officer assessed the effectiveness of our internal
control over financial reporting. We did not identify any material weakness in our internal control over financial reporting during the
year. However, we cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient
to prevent potential future material weaknesses.
Failure to comply with health information privacy laws, including HIPAA or other U.S. federal or state health
information privacy and security laws, as applicable, may negatively impact our business.
Pursuant to the Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health
Information Technology for Economic and Clinical Health Act of 2009, or HITECH, covered entities (including health plans,
healthcare clearinghouses, and certain healthcare providers), as well as their respective “business associates” that create, receive,
maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding
the privacy, security and transmission of individually identifiable health information. Individuals and entities who are subject to
HIPAA must comply with comprehensive privacy and security standards with respect to the use and disclosure of protected health
information, as well as standards for electronic transactions, including specified transaction and code set rules. Under HITECH,
HIPAA was expanded, including requirements to provide notification of certain identified data breaches, direct patient access to
laboratory records, the extension of certain HIPAA privacy and security standards directly to business associates, and heightened
penalties for noncompliance, and enforcement efforts. Failure to comply with HIPAA or other U.S. federal and state health information
privacy and security laws, as applicable, could result in significant penalties
If we or our partners fail to comply with the complex federal, state, local and foreign laws and regulations to the extent
that apply to our business, we could suffer severe consequences that could materially and adversely affect our operating results
and financial condition.
Our operations are subject to extensive federal, state, local and foreign laws and regulations, all of which are subject to
change. The U.S. laws and regulations that may apply to our business include, among other things:
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CLIA, which requires that laboratories obtain certification from the federal government, and state licensure laws;
FDA laws and regulations;
HIPAA, which imposes comprehensive federal standards with respect to the privacy and security of protected health
information and requirements for the use of certain standardized electronic transactions; amendments to HIPAA under
HITECH, which strengthen and expand HIPAA privacy and security compliance requirements, increase penalties for
violators, extend enforcement authority to state attorneys general and impose requirements for breach notification;
state laws regulating genetic testing and protecting the privacy of genetic test results, as well as state laws protecting the
privacy and security of health information and personal data and mandating reporting of breaches to affected individuals
and state regulators;
federal and state fraud and abuse laws, such as false claims and anti-kickback laws, and prohibitions on self-referral;
Section 216 of the federal Protecting Access to Medicare Act of 2014 (“PAMA”), which requires applicable laboratories
to report private payer data in a timely and accurate manner;
state laws that impose reporting and other compliance-related requirements; and
similar foreign laws and regulations that apply to us in the countries in which we operate.
These laws and regulations are complex and are subject to interpretation by the courts and by government agencies. Our
failure to comply could lead to significant administrative civil or criminal penalties, exclusion from participation in state and federal
health care programs, imprisonment, disgorgement, and prohibitions or restrictions on our laboratory’s ability to provide or receive
payment for our services. We believe that we are in material compliance with all statutory and regulatory requirements that apply to
us, but there is a risk that one or more government agencies could take a contrary position, or that a private, party could file suit under
the qui tam provisions of the federal False Claims Act or a similar state law. Such occurrences, regardless of their outcome, could
damage our reputation and adversely affect important business relationships with third parties, including managed care organizations,
and other private third-party payers.
Genetic Technologies Limited A failure to comply with any of federal or state laws to the extent such are applicable to our business, particularly laws
related to the elimination of healthcare fraud, may adversely impact our business.
The healthcare industry is subject to changing political, economic, and regulatory influences that may affect our business.
During the past several years, the healthcare industry has been subject to an increase in governmental regulation and subject to
potential disruption due to legislative initiatives and government regulation, as well as judicial interpretations thereof. While these
regulations may not directly impact us or our offerings in every instance, they will affect the healthcare industry as a whole and
may impact patient use of our services. We currently accept payments only from our customers not any third-party payers, such as
government healthcare programs or health insurers. Because of this approach, we are not subject to many of the laws and regulations
that impact many other participants in the healthcare industry.
If the government asserts broader regulatory control over companies like ours or if we determine that we will change our
business model and accept payment from and/or participate in third-party payer programs, the complexity of our operations and our
compliance obligations will materially increase. Failure to comply with any applicable federal, state, and local laws and regulations
could have a material adverse effect on our business, financial condition, and results of operations.
While we seek to conduct our business in compliance with all applicable healthcare laws and regulations, regulatory
or law enforcement authorities may not agree with our interpretation of these laws and regulations and may seek to enforce legal
remedies or penalties against us for violations. Any action brought against us for violation of these or other laws or regulations,
even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention
from the operation of our business. If our operations are found to be in violation of any of the federal, state, fraud and abuse or
other healthcare laws and regulations that apply to us, we may be subject to penalties, including significant criminal, civil, and
administrative penalties, damages and fines, disgorgement, additional reporting requirements and oversight, and imprisonment for
individuals, as well as contractual damages and reputational harm. We could also be required to curtail or cease our operations. Any of
the foregoing consequences could seriously harm our business and our financial results. From time to time we may need to change our
operations, particularly pricing or billing practices, in response to changing interpretations of these laws and regulations or regulatory
or judicial determinations with respect to these laws and regulations. These occurrences, regardless of their outcome, could damage
our reputation and harm important business relationships that we have with healthcare providers, payers and others.
We face risks associated with currency exchange rate fluctuations, which could adversely affect our operating results.
We receive a portion of our revenues and pay a portion of our expenses in currencies other than the Australian dollar, such
as the U.S. dollar, the Euro and the British pound. As a result, we are at risk for exchange rate fluctuations between such foreign
currencies and the Australian dollar, which could affect the results of our operations. If the Australian dollar strengthens against
foreign currencies, the translation of these foreign currency denominated transactions will result in decreased revenues and operating
expenses. We may not be able to offset adverse foreign currency impact with increased revenues. Other than holding foreign currency
bank accounts in which revenues from foreign currency denominated sales are held, offering a natural hedge against some foreign
currency expenditures, we do not currently utilize other hedging strategies to mitigate foreign currency risk. Even if we were to
implement hedging strategies to mitigate foreign currency risk, these strategies might not eliminate our total exposure to foreign
exchange rate fluctuations and would involve costs and risks of their own, such as ongoing management time and expertise, external
costs to implement the strategies and potential accounting implications.
Government regulation of genetic research or testing may adversely affect the demand for our services and impair our
business and operations.
In addition to the regulatory framework governing healthcare, genetic research and testing has been the focus of public
attention and regulatory scrutiny. From time to time, federal, state and/or local governments adopt regulations relating to the conduct
of genetic research and genetic testing. In the future, these regulations could limit or restrict genetic research activities as well as
genetic testing for research or clinical purposes. In addition, if such regulations are adopted, these regulations may be inconsistent
with, or in conflict with, regulations adopted by other government bodies. Regulations relating to genetic research activities could
adversely affect our ability to conduct our research and development activities. Regulations restricting genetic testing could adversely
affect our ability to market and sell our products and services. Accordingly, any regulations of this nature could increase the costs of
our operations or restrict our ability to conduct our testing business.
Failure in our information technology systems could significantly increase testing turn-around times or impact on the
billing processes or otherwise disrupt our operations.
Our laboratory operations depend, in part, on the continued performance of our information technology systems. Our
information technology systems are potentially vulnerable to physical or electronic break-ins, computer viruses and similar
disruptions. Sustained system failures or interruption of our systems in our laboratory operations could disrupt our ability to process
laboratory requisitions, perform testing, and provide test results in a timely manner and/or billing process. Failure of our information
technology systems could adversely affect our business and financial condition.
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Annual Report 2023 Any significant disruption in service on our website or in our computer or logistics systems, whether due to
a failure with our information technology systems or that of a third-party vendor, could harm our reputation and may result in
a loss of customers.
Customers purchase and access our services through our websites. Our reputation and ability to attract, retain and serve
our customers, patients, and members is dependent upon the reliable performance of our website, network infrastructure and content
delivery processes. Interruptions in any of these systems, whether due to system failures, computer viruses or physical or electronic
break-ins, could affect the security or availability of our website, including our databases, and prevent our customers, patients, and
members from accessing and using our services.
Our systems and operations are also vulnerable to damage or interruption from fire, flood, power loss, telecommunications
failure, terrorist attacks, acts of war, electronic and physical break-ins, earthquake and similar events. For example, our headquarters
are located in Melbourne, Australia where increased bush fire and flood activity has recently been experienced. In the event of any
catastrophic failure involving our website, we may be unable to serve our web traffic. In addition, our sole laboratory in Melbourne,
Australia is responsible for a significant portion of our operations of our geneType risk assessment tests, these operations would
be materially disrupted in the event any of these events were to occur. The occurrence of any of the foregoing risks could result in
damage to our systems or could cause them to fail completely, and our insurance may not cover such risks or may be insufficient to
compensate us for losses that may occur.
Additionally, our business model is dependent on our ability to deliver kits to customers and have kits processed and
returned to us. This requires coordination between our logistics providers and third-party shipping services. Operational disruptions
may be caused by factors outside of our control such as hostilities, political unrest, terrorist attacks, natural disasters, pandemics (such
as COVID-19) and public health emergencies, affecting the geographies where our operations and customers are located. We may
not be effective at preventing or mitigating the effects of such disruptions, particularly in the case of a catastrophic event. In addition,
operational disruptions may occur during the holiday season, causing delays or failures in deliveries of our kits. Any such disruption
may result in lost revenues, a loss of customers and reputational damage, which would have an adverse effect on our business, results
of operations and financial condition.
Breaches of network or information technology, natural disasters or terrorist attacks could have an adverse impact on
our business.
Cyber-attacks or other breaches of information technology security, natural disasters, or acts of terrorism or war may result
in hardware failure or disrupt our product testing or research and development activities. There has been a substantial increase in
frequency of successful and unsuccessful cyber-attacks on companies in recent years. Such an event may result in our inability, or
the inability of our collaborative partners, to operate the facilities to conduct and complete the necessary activities, which even if
the event is for a limited period of time, may result in significant expenses and/ or significant damage or delay to our commercial or
research activities. While we maintain insurance cover for some of these events, the potential liabilities associated with these events
could exceeded the cover we maintain.
Ethical and other concerns surrounding the use of genetic information may reduce the demand for our services.
Public opinion regarding ethical issues related to the confidentiality and appropriate use of genetic testing may influence
government authorities to call for limits on, or regulation of the use of, genetic testing. In addition, such authorities could prohibit
testing for genetic predisposition to certain conditions, particularly for those that have no known cure. Furthermore, adverse publicity
or public opinion relating to genetic research and testing, even in the absence of any governmental regulation, could reduce the
potential markets for our products and services.
Risks associated with our intellectual property.
The patenting of genes and issues surrounding access to genetic knowledge are the subjects of extensive and ongoing public
debate in many countries. By way of example, the Australian Law Reform Commission has previously conducted two inquiries into
the social uses of genetic information. The patents we hold in respect of “non-coding” DNA have broad scope and have also been
the subject of debate and some criticism in the media. Individuals or organizations, in any one of the countries in which these patents
have issued, could take legal action to seek their amendment, revocation or invalidation, something which has happened previously,
on several occasions in various jurisdictions, though we have prevailed in all such cases. Furthermore, any time that we initiate legal
action against parties that infringe our patents we face a risk that the infringer will defend itself through a counterclaim of patent
invalidity or other such claims. Subsequent legal action could potentially overturn, invalidate or limit the scope of our patents.
Genetic Technologies Limited We rely heavily upon patents and proprietary technology that may fail to protect our business.
We rely upon our portfolio of patent rights, patent applications and exclusive licenses to patents and patent applications
relating to genetic technologies. We expect to aggressively patent and protect our proprietary technologies. However, we cannot
be certain that any additional patents will be issued to us because of our domestic or foreign patent applications or that any of our
patents will withstand challenges by others. Patents issued to, or licensed by us may be infringed or third parties may independently
develop the same or similar technologies. Similarly, our patents may not provide us with meaningful protection from competitors,
including those who may pursue patents which may prevent, limit or interfere with our products or which may require licensing and
the payment of significant fees or royalties by us to such third parties in order to enable us to conduct our business. We may sue or be
sued by third parties regarding our patents and other intellectual property rights. These suits are often costly and would divert valuable
funds, time and technical resources from our operations and cause a distraction to management.
We also rely upon unpatented proprietary technologies and databases. Although we require employees, consultants and
collaborators to sign confidentiality agreements, we may not be able to adequately protect our rights in such unpatented proprietary
technologies and databases, which could have a material adverse effect on our business. For example, others may independently
develop substantially equivalent proprietary information or techniques or otherwise gain access to our proprietary technologies or
disclose our technologies to our competitors.
We may face difficulties in certain jurisdictions in protecting our intellectual property rights, which may diminish the
value of our intellectual property rights in those jurisdictions.
The laws of some jurisdictions do not protect intellectual property rights to the same extent as the laws in the United States
and Australia and many companies have encountered significant difficulties in protecting and defending such rights in such other
jurisdictions. If we or our collaboration partners encounter difficulties in protecting, or are otherwise precluded from effectively
protecting, the intellectual property rights for our business in such jurisdictions, the value of those rights may be diminished and we
may face additional competition from others in those jurisdictions. In addition, many countries limit the enforceability of patents
against governments agencies or government contractors. In those countries, the patent owner may have limited remedies, which
could materially diminish the value of such patent.
Our operations may be adversely affected by the effects of extreme weather conditions or other interruptions in the
timely transportation of specimens.
We may be required to transport specimens from the U.S. or other distant locations to our laboratory located in Melbourne,
Australia. Our operations may be adversely impacted by extreme weather conditions or other interruptions such as was the case with
the COVID pandemic in the timely transportation of such specimens or otherwise to provide our services, from time to time. The
occurrence of any such event and/or a disruption to our operations as a result may harm our reputation and adversely impact our
results of operations.
Our CIT Platform will expose us to various risks.
Our Consumer Initiated Testing platform (CIT), allows consumers to directly request any of our tests online with a
practitioner involved in the process, will be subject to various risks, including:
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The risk of failure to protect personal medical information;
The risk of breach of cyber security for the platform; and
The risk that the platform will fail to perform as expected.
Our ability to conduct our services in a particular U.S. state or non-U.S. jurisdiction is dependent upon the applicable laws governing
remote healthcare, the practice of medicine and healthcare delivery in general in such location which are subject to changing political,
regulatory and other influences, and corporate practice of medicine limitations. Some state medical boards have established new rules
or interpreted existing rules in a manner that limits or restricts the practice of telemedicine. The extent to which a U.S. state or non-
U.S. jurisdiction considers particular actions or relationships to constitute practicing medicine is subject to change and to evolving
interpretations by (in the case of U.S. states) medical boards and state attorneys general, among others, and (in the case of non-U.S.
jurisdictions) the relevant regulatory and legal authorities, each with broad discretion. Accordingly, we must monitor our compliance
with law in every jurisdiction in which we operate, on an ongoing basis, and we cannot provide assurance that our activities and
arrangements, if challenged, will be found to be in compliance with the law. If a successful legal challenge or an adverse change in
the relevant laws were to occur, we could be subject to significant penalties. Further, if we were unable to adapt our business model
to comply with such laws, our operations in the affected jurisdictions would be disrupted, which could have a material adverse effect
on our business, financial condition and results of operations.
32
Annual Report 2023 Discontinuation or recalls of existing testing products or our customers using new technologies to perform their own
tests could adversely affect our business.
Discontinuation or recalls of existing testing products or our customers using new technologies to perform their own tests
could adversely affect the Company’s business. Manufacturers may discontinue or recall reagents, test kits or instruments used by
us to perform laboratory testing. Such discontinuations or recalls could adversely affect our costs, testing volume and revenue. In
addition, advances in technology may lead to the development of more cost-effective technologies such as point-of-care testing
equipment that can be operated by physicians or other healthcare providers in their offices or by patients themselves without requiring
the services of freestanding clinical laboratories. Development of such technology and its use by our customers could reduce the
demand for our laboratory testing services and the utilization of certain tests offered by us and negatively impact our revenues.
The PRS test may not be able to obtain necessary regulatory clearance, we may not generate any revenue.
All of our existing products are subject to regulation in Australia by the Therapeutic Goods Association (TGA), the U.S.
by the FDA and/or other domestic and international governmental, public health agencies, regulatory bodies or non-governmental
organizations. The process of obtaining required approvals or clearances for a potential new product varies according to the nature of
and uses for a specific product. These processes can involve lengthy and detailed laboratory testing, human clinical trials, sampling
activities, and other costly, time-consuming procedures. The submission of an application to a regulatory authority does not guarantee
that the authority will grant an approval or clearance for the product. Each authority may impose its own requirements and can delay
or refuse to grant approval or clearance, even though a product has been approved in another country. The time taken to obtain
approval or clearance varies depending on the nature of the application and may result in the passage of a significant period of
time from the date of submission of the application. Delays in the approval or clearance processes increase the risk that we will not
succeed in introducing or selling the subject products, and we may be required to abandon the PRS after devoting substantial time
and resources to its development.
If our PRS test is required to obtain and maintain FDA approvals, it will be subject to continuing governmental
regulations and additional foreign regulations.
If the FDA determines that enforcement discretion is not appropriate or that LDTs are generally subject to FDA regulation
and that premarket review, including clearance or approval, is required for our PRS tests or any of our future tests, diagnostic test kits
that we may develop, or other products that would be classified as medical devices, the process of obtaining regulatory clearances
or approvals to market a medical device can be costly and time consuming, and we may not be able to obtain these clearances or
approvals on a timely basis, if at all. In particular, the FDA permits commercial distribution of a new medical device only after the
device has received clearance under Section 510(k) of the Federal Food, Drug and Cosmetic Act, or is the subject of an approved
premarket approval application, or PMA or reclassification of the device through the De Novo classification process, unless the device
is specifically exempt from those requirements. The FDA will clear marketing of a lower risk medical device through the 510(k)
process if the manufacturer demonstrates that the new product is substantially equivalent to other 510(k)-cleared products. High
risk devices deemed to pose the greatest risk, such as life-sustaining, life-supporting, or implantable devices, or devices not deemed
substantially equivalent to a previously cleared device, require the approval of a PMA. The PMA process is more costly, lengthy and
uncertain than the 510(k)-clearance process. A PMA application must be supported by extensive data, including, but not limited to,
technical, preclinical, clinical trial, manufacturing and labeling data, to demonstrate to the FDA’s satisfaction the safety and efficacy
of the device for its intended use. The De Novo classification process is an alternate pathway to classify medical devices that are
automatically classified into Class III but which are low to moderate risk. A manufacturer can submit a petition for direct De Novo
review if the manufacturer is unable to identify an appropriate predicate device and the new device or new use of the device presents
moderate or low risk. De Novo classification may also be available after receipt of a “not substantially equivalent” letter following
submission of a 510(k) to FDA. Our currently commercialized products have not received FDA clearance or approval, as they are
marketed under the FDA’s enforcement discretion for LDTs. Even if regulatory clearance or approval of a product is required and
granted, such clearance or approval may be subject to limitations on the intended uses for which the product may be marketed and
reduce our potential to successfully commercialize the product and generate revenue from the product. If the FDA determines that
our promotional materials, labeling, training or other marketing or educational activities constitute promotion of an unapproved use,
it could request that we cease or modify our training or promotional materials or subject us to regulatory enforcement actions.
We are also subject to other federal, state, and foreign regulation concerning the manufacture and sale of our products. Our
failure to comply with U.S. federal, state and foreign governmental regulations could lead to the issuance of warning letters or untitled
letters, government investigation, the imposition of injunctions, suspensions or loss of regulatory clearance or approvals, product
recalls, termination of distribution, product seizures or civil penalties. In the most extreme cases, criminal sanctions or closure of our
manufacturing facility are possible, any of which could adversely affect our business, operating results and prospects.
The FDA and similar foreign governmental authorities have the authority to require the recall of regulated products in the
event of material deficiencies or defects in design or manufacture. In the case of the FDA, the authority to require a recall must be
based on an FDA finding that there is a reasonable probability that the device would cause serious injury or death. In addition, foreign
governmental bodies have the authority to require the recall of our products in the event of material deficiencies or defects in design
or manufacture.
Genetic Technologies Limited Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found. A government-
mandated or voluntary recall by us could occur as a result of component failures, manufacturing errors, design or labeling defects
or other deficiencies and issues. Recalls of any of our products would divert managerial and financial resources and have an adverse
effect on our financial condition and results of operations. The FDA requires that certain classifications of recalls be reported to FDA
within 10 working days after the recall is initiated. Companies are required to maintain certain records of recalls, even if they are
not reportable to the FDA. We may initiate voluntary recalls involving our products in the future that we determine do not require
notification of the FDA. If the FDA disagrees with our determinations, they could require us to report those actions as recalls. A
future recall announcement could harm our reputation with customers and negatively affect our sales. In addition, the FDA could take
enforcement action for failing to report the recalls when they were conducted.
Declining general economic or business conditions may have a negative impact on our business.
If the current economic climate deteriorates, our business, including our access to patient samples and the addressable
market for diagnostic tests that we may successfully develop, as well as the financial condition of our suppliers and our third-party
payers, could be adversely affected, resulting in a negative impact on our business, financial condition, results of operations and cash
flows.
RISKS RELATED TO OUR SECURITIES
Our ADSs may be delisted from the NASDAQ Capital Market.
On March 13, 2020, the Company received a determination letter (the “Letter”) from NASDAQ indicating that we did
not comply with the stockholders’ equity rule. The Letter indicated that Listing Rule 5815(d)(4)(B) does not permit an issuer that is
deficient in stockholders’ equity to present a plan of compliance to the NASDAQ Staff if such issuer has failed to comply with that
provision within one year of a Hearing Panel (the “Panel”) determination of compliance. The Letter stated that since the Company was
not compliant with the equity rule within one year of the Compliance Letter, the Staff cannot allow us to submit a plan of compliance.
We requested an appeal hearing with the Panel to review the delisting determination. Upon NASDAQ’s receipt of the hearing request
by the Company, NASDAQ stayed the suspension of our securities and the filing of the Form 25-NSE pending the Panel’s decision.
An oral hearing took place on April 30, 2020 and in a letter dated May 12, 2020, the Panel granted the Company the full 180-day
extension until September 9, 2020, to publicly disclose full compliance with the minimum shareholder equity requirement under
NASDAQ rules. The Company subsequently regained compliance with NASDAQ Listing Rule 5550(b)(1) as of August 25, 2020.
On July 21, 2020, we closed a registered direct offering of 1,025,000 ADSs, each representing six hundred (600) of the
Company’s ordinary shares, at a purchase price of United States Dollars (US$) US$5.00 per ADS - or in Australian dollars A$0.012
per ordinary share. The gross proceeds for this offering were approximately US$5.1 million. Against the offering, the Company
agreed to issue 39,975,000 warrants exercisable at US$0.0104 each, expiring in 5 years from issue date, to H.C. Wainwright & Co
which would form part of cost of raising capital.
On January 25, 2021, we closed a registered direct offering of 1,250,000 ADSs, each representing six hundred (600) of the
Company’s ordinary shares, at a purchase price of United States Dollars (US$) US$5.25 per ADS - or in Australian dollars A$0.01125
per ordinary share. The gross proceeds for this offering were approximately US$6.56 million. Against the offering, the Company
agreed to issue 48,750,000 warrants exercisable at US$0.010938 each, expiring in 5 years from issue date, to H.C. Wainwright &
Co which would form part of cost of raising capital. The said warrants were subject to shareholder approval, which was granted by
shareholders at the Company's Annual General Meeting (AGM) held 24 November 2021.
On February 8, 2023, we closed a registered direct offering of 3,846,155 ADSs, each representing six hundred (600) of the
Company’s ordinary shares, at a purchase price of United States Dollars (US$) US$1.30 per ADS. The gross proceeds for this offering
were approximately US$5 million. Against the offering, the Company agreed to issue 250,000 warrants exercisable at US$1.625 each,
expiring in 5 years from issue date, to H.C. Wainwright & Co which would form part of cost of raising capital. The said warrants are
subject to shareholder approval.
On July 17, 2023, the Company received notification from The Nasdaq Stock Market LLC that it is not in compliance with
the minimum bid price requirement of Nasdaq Listing Rule 5550(a)(2) for continued listing on the Nasdaq Capital Market, since the
closing bid price for the Company’s American Depositary Shares (ADS) on the Nasdaq Capital Market was below US$1.00 for 34
consecutive trading days. Nasdaq Listing Rule 5550(a)(2) requires the ADS to maintain a minimum bid price of US$1.00 per share
(the “Minimum Bid Requirement”), and Nasdaq Listing Rule 5810(c)(3)(A) provides that failure to meet such requirement exists
if the deficiency continues for a period of 30 consecutive business days. The Notification has no immediate effect on the listing of
the Company’s ADS on the Nasdaq Capital Market. Under Nasdaq Listing Rule 5810(c)(3)(A), the Company has a period of 180
calendar days from the date of Notification, which was July 17, 2023, to regain compliance with the minimum bid requirement,
during which time the ADS will continue to trade on the Nasdaq Capital Market. If at any time before January 15, 2024, the bid
price of the ADS closes at or above US$1.00 per ADS for a minimum of 10 consecutive business days, the Company will regain
compliance with the Minimum Bid Requirement. In the event the Company does not regain compliance with the Minimum Bid
Requirement by January 15, 2024, the Company may be eligible for an additional period of 180 calendar days to regain compliance
or may be subject to delisting of the ADS from the Nasdaq Capital Market. The Company will continuously monitor the closing bid
price of its ADS between now and January 15, 2024, and will evaluate its options to regain compliance with Nasdaq Listing Rule
5550(a)(2) before such date.
34
Annual Report 2023 However, there can be no assurance that the Company will continue to be successful in maintaining net assets and minimum
bid compliance and that our securities will remain listed on the NASDAQ Capital Market. The delisting of our ADSs by NASDAQ
would have material negative impacts on the liquidity of our securities and our ability to raise future capital.
Our stock price is volatile and can fluctuate significantly based on events not in our control and general industry
conditions. As a result, the value of your investment may decline significantly.
The biotechnology sector can be particularly vulnerable to abrupt changes in investor sentiment. Stock prices of companies
in the biotechnology industry, including ours, can swing dramatically, with little relationship to operating performance. Our stock
price may be affected by a number of factors including, but not limited to:
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global economic uncertainty and financial market volatility caused by political instability, changes in international trade
relationships and international conflicts, such as the conflict between Russia and Ukraine;
product development events;
the outcome of litigation;
decisions relating to intellectual property rights;
the entrance of competitive products or technologies into our markets;
new medical discoveries;
the establishment of strategic partnerships and alliances;
changes in pricing policies or other practices related to the healthcare industry; or
other industry and market changes or trends.
Since our listing on the Australian Securities Exchange in August 2000, the price of our Ordinary Shares has ranged from a low of
A$0.002 to a high of A$0.88 per share. Further fluctuations are likely to occur due to events which are not within our control and
general market conditions affecting the biotechnology sector or the stock market generally.
In addition, low trading volume may increase the volatility of the price of our ADSs. A thin trading market could cause the
price of our ADSs to fluctuate significantly more than the stock market as a whole. For example, trades involving a relatively small
number of our ADSs may have a greater impact on the trading price for our ADSs than would be the case if the trading volume were
higher.
The fact that we do not expect to pay cash dividends may lead to decreased prices for our stock.
We have never declared or paid a cash dividend on our Ordinary Shares and we do not anticipate doing so in the foreseeable
future. We intend to retain future cash earnings, if any, for reinvestment in the development and expansion of our business. Whether
we pay cash dividends in the future will be at the discretion of our Board of Directors and may be dependent on our financial
condition, results of operations, capital requirements and any other factors our Board of Directors decides is relevant. As a result, an
investor may only recognize an economic gain on an investment in our stock from an appreciation in the price of our stock, which
is uncertain and unpredictable. There is no guarantee that our Ordinary Shares will appreciate in value or even maintain the price at
which an investor purchased the Ordinary Shares.
You may have difficulty in effecting service of legal process and enforcing judgments against us and our management.
We are a public company limited by shares, registered and operating under the Australian Corporations Act 2001. All of our directors
and officers named in this Annual Report reside outside the U.S. Substantially all, or a substantial portion of, the assets of those
persons are also located outside the U.S. As a result, it may not be possible to affect service on such persons in the U.S. or to
enforce, in foreign courts, judgments against such persons obtained in U.S. courts and predicated on the civil liability provisions of
the federal securities laws of the U.S. Furthermore, substantially all of our directly owned assets are located outside the U.S., and,
as such, any judgment obtained in the U.S. against us may not be collectible within the U.S. There is doubt as to the enforceability
in the Commonwealth of Australia, in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities
predicated solely upon federal or state securities laws of the U.S., especially in the case of enforcement of judgments of U.S. courts
where the defendant has not been properly served in Australia.
Genetic Technologies Limited Because we are not required to provide you with the same information as an issuer of securities based in the United
States, you may not be afforded the same protection or information you would have if you had invested in a public corporation
based in the United States.
We are exempt from certain provisions of the Securities Exchange Act of 1934, as amended, commonly referred to as the
Exchange Act, that are applicable to U.S. public companies, including (i) the rules under the Exchange Act requiring the filing with
the SEC of quarterly reports on Form 10-Q and current reports on Form 8-K; (ii) the sections of the Exchange Act regulating the
solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; and (iii) the sections
of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders
who profit from trades made in a short period of time. The exempt provisions would be available to you if you had invested in a U.S.
corporation.
However, in line with the Australian Securities Exchange regulations, we disclose our reviewed financial results on a
semi-annual basis (under International Standard on Review Engagements) and our audited financial results on an annual basis (under
International Standards on Auditing). The information, which may have an effect on our stock price on the Australian Securities
Exchange, will be disclosed to the Australian Securities Exchange and also the Securities Exchange Commission. Other relevant
information pertaining to our Company will also be disclosed in line with the Australian Securities Exchange regulations and
information dissemination requirements for listed companies. We provide our semi-annual results and other material information
that we make public in Australia in the U.S. under the cover of an SEC Form 6-K. Nevertheless, you may not be afforded the same
protection or information, which would be made available to you, were you investing in a United States public corporation because
the requirements of a Form 10-Q and Form 8-K are not applicable to us.
As a foreign private issuer, we are permitted to adopt certain home country practices in relation to corporate governance
matters that differ significantly from Nasdaq corporate governance listing standards and these practices may afford less protection
to shareholders than they would enjoy if we complied fully with Nasdaq corporate governance listing standards.
As a foreign private issuer listed on Nasdaq, we will be subject to their corporate governance listing standards. However,
Nasdaq rules permit foreign private issuers to follow the corporate governance practices of its home country. Some corporate
governance practices in Australia may differ from Nasdaq corporate governance listing standards. For example, we could include
non-independent directors as members of our Remuneration committee, and our independent directors may not necessarily hold
regularly scheduled meetings at which only independent members of the board of directors are present. Currently, we follow home
country practice to the maximum extent possible. Therefore, our shareholders may be afforded less protection than they otherwise
would have under corporate governance listing standards applicable to U.S. domestic issuers.
We may lose our foreign private issuer status in the future, which could result in significant additional cost and expense.
While we currently qualify as a foreign private issuer, the determination of foreign private issuer status is made annually on the last
business day of an issuer’s most recently completed second fiscal quarter and, accordingly, our next determination will be made on
December 31, 2023. In the future, we would lose our foreign private issuer status if we to fail to meet the requirements necessary
to maintain our foreign private issuer status as of the relevant determination date. For example, if 50% or more of our securities are
held by U.S. residents and more than 50% of our senior management or directors are residents or citizens of the United States, we
could lose our foreign private issuer status. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic
issuer may be significantly more than costs we incur as a foreign private issuer. If we are not a foreign private issuer, we will be
required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and
extensive in certain respects than the forms available to a foreign private issuer. We would be required under current SEC rules to
prepare our financial statements in accordance with U.S. GAAP rather than IFRS, and modify certain of our policies to comply with
corporate governance practices required of U.S. domestic issuers. Such conversion of our financial statements to U.S. GAAP would
involve significant time and cost. In addition, we may lose our ability to rely upon exemptions from certain corporate governance
requirements on U.S. stock exchanges that are available to foreign private issuers such as the ones described above and exemptions
from procedural requirements related to the solicitation of proxies.
As a result of being a U.S. public company, we are subject to additional regulatory compliance requirements, including
Section 404, and if we fail to maintain an effective system of internal controls, we may not be able to accurately report our
financial results or prevent fraud.
Pursuant to Section 404, our management will be required to assess and attest to the effectiveness of our internal control
over financial reporting in connection with issuing our consolidated financial statements as of and for the fiscal year ending June 30,
2023. Section 404 also requires an attestation report on the effectiveness of internal control over financial reporting be provided by
our independent registered public accounting firm beginning with our annual report following the date on which we are no longer
a non-accelerated filer. The cost of complying with Section 404 will significantly increase and management’s attention may be
diverted from other business concerns, which could adversely affect our results. We may need to hire more employees in the future
or engage outside consultants to comply with these requirements, which will further increase expenses. If we fail to comply with the
requirements of Section 404 in the required timeframe, we may be subject to sanctions or investigations by regulatory authorities,
including the SEC and Nasdaq.
36
Annual Report 2023 Furthermore, if we are unable to attest to the effectiveness of our internal control over financial reporting, we could lose investor
confidence in the accuracy and completeness of our financial reports, and the market price of our ordinary shares and ADSs could
decline. Failure to implement or maintain effective internal control over financial reporting could also restrict our future access
to the capital markets and subject each of us, our directors and our officers to both significant monetary and criminal liability. In
addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty
for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws,
regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their
application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in
continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance
practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in
increased general and administrative expense and a diversion of management’s time and attention from revenue generating activities
to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by
regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal
proceedings against us and our business, financial position, results and prospects may be adversely affected.
We will incur significant costs as a result of operating as a company with ADSs that are publicly traded in the United
States, and our management will be required to devote substantial time to new compliance initiatives.
As a company whose ADSs are publicly traded in the United States, we have incurred and will continue to incur significant
legal, accounting, insurance and other expenses. In addition, the Sarbanes-Oxley Act, Dodd-Frank Wall Street Reform and Consumer
Protection Act and related rules implemented by the United States Securities and Exchange Commission, or SEC, and Nasdaq have
imposed various requirements on public companies listed in the United States including requiring establishment and maintenance of
effective disclosure and financial controls. Our management and other personnel will need to devote a substantial amount of time to
these compliance initiatives, and we will need to add additional personnel and build our internal compliance infrastructure. Moreover,
these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming
and costly. These laws and regulations could also make it more difficult and expensive for us to attract and retain qualified persons
to serve on our board of directors, our board committees or as our senior management. Furthermore, if we are unable to satisfy our
obligations as a public company listed in the United States, we could be subject to delisting of the ADSs, fines, sanctions and other
regulatory action and potentially civil litigation.
The dual listing of our ordinary shares and the ADSs may negatively impact the liquidity and value of the ADSs.
Our ADSs are listed on Nasdaq and our ordinary shares are listed on the ASX. We cannot predict the effect of this dual
listing on the value of our ordinary shares and ADSs. However, the dual listing of our ordinary shares and ADSs may dilute the
liquidity of these securities in one or both markets and may negatively impact the development of an active trading market for the
ADSs in the United States. The price of the ADSs could also be negatively impacted by trading in our ordinary shares on the ASX.
Australian takeover laws may discourage takeover offers being made for us or may discourage the acquisition of a
significant position in our ordinary shares or ADSs.
We are incorporated in Australia and are subject to the takeover laws of Australia. Among other things, we are subject to
the Corporations Act 2001. Subject to a range of exceptions, the Corporations Act 2001 prohibits the acquisition of a direct or indirect
interest in our issued voting shares if the acquisition of that interest will lead to a person’s voting power in us increasing to more than
20%, or increasing from a starting point that is above 20% and below 90%. Australian takeover laws may discourage takeover offers
being made for us or may discourage the acquisition of a significant position in our ordinary shares. This may have the ancillary effect
of entrenching our board of directors and may deprive or limit our shareholders’ opportunity to sell their ordinary shares and may
further restrict the ability of our shareholders to obtain a premium from such transactions.
Our Constitution and Australian laws and regulations applicable to us may adversely affect our ability to take actions
that could be beneficial to our shareholders.
As an Australian company we are subject to different corporate requirements than a corporation organized under the laws
of the United States. Our Constitution, as well as the Corporations Act 2001, sets forth various rights and obligations that apply to us
as an Australian company and which may not apply to a U.S. corporation. These requirements may operate differently than those of
many U.S. companies. You should carefully review the summary of these matters set forth under our Constitution, which is included
as an exhibit to this annual report, prior to investing in our securities.
A lack of significant liquidity for our ADSs may negatively affect your ability to resell our securities.
Our ADSs have traded on the NASDAQ Capital Market since June 30, 2010. An active trading market for the ADSs,
however, may not be maintained in the future. If an active trading market is not maintained, the liquidity and trading prices of the
ADSs could be negatively affected.
Genetic Technologies Limited In certain circumstances, holders of ADSs may have limited rights relative to holders of Ordinary Shares.
The rights of holders of ADSs with respect to the voting of Ordinary Shares and the right to receive certain distributions
may be limited in certain respects by the deposit agreement entered into by us and The Bank of New York Mellon. For example,
although ADS holders are entitled under the deposit agreement, subject to any applicable provisions of Australian law and of our
Constitution, to instruct the depositary as to the exercise of the voting rights pertaining to the Ordinary Shares represented by
the American Depositary Shares, and the depositary has agreed that it will try, as far as practical, to vote the Ordinary Shares so
represented in accordance with such instructions, ADS holders may not receive notices sent by the depositary in time to ensure that
the depositary will vote the Ordinary Shares. This means that, from a practical point of view, the holders of ADSs may not be able to
exercise their right to vote. In addition, under the deposit agreement, the depositary has the right to restrict distributions to holders of
the ADSs in the event that it is unlawful or impractical to make such distributions. We have no obligation to take any action to permit
distributions to holders of our American Depositary Receipts, or ADSs. As a result, holders of ADSs may not receive distributions
made by us.
RISKS RELATED TO TAXATION
We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax
consequences for U.S. holders.
In general, a non-U.S. company will be considered a passive foreign investment company, or PFIC, for U.S. federal income
tax purposes for any taxable year in which (1) 75% or more of its gross income consists of passive income (the “income test”) or
(2) 50% or more of the average quarterly value of its assets is attributable to assets that produce, or are held for the production of,
passive income (the “asset test”). For purposes of these tests, passive income generally includes dividends, interest, gains from the
sale or exchange of investment property and certain rents and royalties. In addition, for purposes of the above calculations, a non-
U.S. corporation that directly or indirectly owns at least 25% by value of the shares of another corporation is treated as if it held its
proportionate share of the assets and received directly its proportionate share of the income of such other corporation.
Based on the nature and composition of our income, assets, activities and market capitalization, we believe that we were
classified as a PFIC for our taxable year ended June 30, 2023. However, our PFIC status is based on an annual determination that is
subject to a number of uncertainties and may change from year to year. Our PFIC status will depend on the composition of our income
(including with respect to the R&D Tax Credit) and the composition and value of our assets, which may be determined in large part
by reference to the market value of the ADSs and our Ordinary Shares, which may be volatile, from time to time. Our status may
also depend, in part, on how quickly we utilize the cash we raise in any offering of our securities. There can be no assurance that we
will not be considered a PFIC in any past, current or future taxable year, and our U.S. counsel expresses no opinion regarding our
conclusions or our expectations regarding our PFIC status.
If we are a PFIC for any taxable year during which a U.S. holder (as defined in the section titled “Item 10.E. Additional
Information—Taxation, United States Federal Income Taxation”) holds the ADSs or Ordinary Shares, the U.S. holder may be subject
to adverse tax consequences regardless of whether we continue to qualify as a PFIC, including ineligibility for any preferred tax
rates on capital gains or on actual or deemed dividends, interest charges on certain taxes treated as deferred, and additional reporting
requirements. We will continue to be treated as a PFIC with respect to such U.S. holder in all succeeding years during which the
U.S. holder owns the ADSs or Ordinary Shares, regardless of whether we continue to meet the income or asset tests described above,
unless the U.S. holder makes a valid and timely qualified electing fund (QEF) or mark-to-market election, or makes a deemed sale
election once we cease to be a PFIC; however, we do not currently intend to provide the information necessary for a U.S. holder to
make a QEF election. For further discussion of the PFIC rules and the adverse U.S. federal income tax consequences to U.S. holders
in the event we are classified as a PFIC, see “Item 10.E. Additional Information—Taxation, United States Federal Income Taxation—
Passive Foreign Investment Company Rules.”
If a United States person is treated as owning at least 10% of our ordinary shares, such holder may be subject to adverse
U.S. federal income tax consequences.
If a U.S. holder (as defined in the section titled “Item 10.E. Additional Information—Taxation, United States Federal Income
Taxation”) is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of our Ordinary
Shares or ADSs, such U.S. holder may be treated, for U.S. federal income tax purposes, as a “United States shareholder” with respect
to each “controlled foreign corporation” in our group, if any. Because our group includes a U.S. subsidiary (geneType Inc., previously
the named Phenogen Sciences Inc.), certain of our current and future non-U.S. subsidiaries will be treated as controlled foreign
corporations, regardless of whether we are treated as a controlled foreign corporation. A United States shareholder of a controlled
foreign corporation may be required to annually report and include in its U.S. taxable income its pro rata share of “Subpart F income,”
“global intangible low-taxed income” and investments in U.S. property by controlled foreign corporations, regardless of whether we
make any distributions. An individual that is a United States shareholder with respect to a controlled foreign corporation generally
would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a
U.S. corporation. We cannot provide any assurances that we will furnish to any United States shareholder information that may be
necessary to comply with the reporting and payment obligations described above.
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Annual Report 2023 Failure to comply with such obligations may subject a United States shareholder to significant monetary penalties and stall the
beginning of the statute of limitations period for relevant U.S. federal income tax returns. U.S. holders should consult their tax
advisors regarding the potential application of these rules to their investment in the Ordinary Shares or ADSs.
Changes to tax laws could materially adversely affect our company and reduce net returns to our shareholders.
Our tax treatment is subject to the enactment of, or changes in, tax laws, regulations and treaties, or the interpretation
thereof, tax policy initiatives and reforms under consideration and the practices of tax authorities in jurisdictions in which we operate,
including those related to the Organization for Economic Co-Operation and Development’s Base Erosion and Profit Shifting Project,
the European Commission’s state aid investigations and other initiatives. Such changes may include (but are not limited to) the
taxation of operating income, investment income, dividends received or (in the specific context of withholding tax) dividends paid.
We are unable to predict what tax reform may be proposed or enacted in the future or what effect such changes would have on our
business, but such changes, to the extent they are brought into tax legislation, regulations, policies or practices, could affect our
financial position and overall or effective tax rates in the future in countries where we have operations, reduce post-tax returns to our
shareholders, and increase the complexity, burden and cost of tax compliance.
Tax authorities may disagree with our positions and conclusions regarding certain tax positions, resulting in
unanticipated costs, taxes or non-realization of expected benefits.
A tax authority may disagree with tax positions that we have taken, which could result in increased tax liabilities. For example, the
U.S. Internal Revenue Service or another tax authority could challenge our allocation of income by tax jurisdiction and the amounts
paid between our affiliated companies pursuant to our intercompany arrangements and transfer pricing policies, including amounts
paid with respect to our intellectual property development. Similarly, a tax authority could assert that we are subject to tax in a
jurisdiction where we believe we have not established a taxable connection, often referred to as a “permanent establishment” under
international tax treaties, and such an assertion, if successful, could increase our expected tax liability in one or more jurisdictions.
A tax authority may take the position that material income tax liabilities, interest and penalties are payable by us, in which case, we
expect that we might contest such assessment. Contesting such an assessment may be lengthy and costly and if we were unsuccessful
in disputing the assessment, the implications could increase our anticipated effective tax rate, where applicable.
Item 4. Information on the Company
Item 4.A History and Development of the Company
Originally incorporated under the laws of Western Australia on January 5, 1987, as Concord Mining N.L. the Company
operated as a mining company. On August 13, 1991, the Company changed its name to Consolidated Victorian Gold Mines N.L. On
December 2, 1991, the Company changed its name to Consolidated Victorian Mines N.L. On March 15, 1995, the Company changed
its name to Duketon Goldfields N.L.
On October 15, 1999, the Company’s corporate status was changed from a No Liability Company to a company limited
by shares. On August 29, 2000, following the acquisition of Swiss company GeneType AG, the Company changed its name to
Genetic Technologies Limited, which is its current name. At that time, the mining activities were phased out to focus on becoming
a biotechnology company, following which its stock exchange listing was duly transferred from the mining board of the ASX to the
industrial board and its shares were thereafter classified under the industry Company “Health and Biotechnology”, completing its
transformation from a mining company into a biotechnology company. The Company’s current activities in biotechnology primarily
concentrate on one clearly defined area of activity which is covered under Item 4.B “Business Overview”.
In October 2009, a new strategic direction was established to focus efforts in creating a portfolio of tests that would be
aimed at assisting medical clinicians with cancer management. This would comprise tests that were created by the Company and in-
licensed from third parties which would then be marketed by us in the Asia-Pacific region.
On April 14, 2010, the Company announced that it had acquired certain assets from Perlegen Sciences, Inc. in California,
with the main asset being the BREVAGen™ breast cancer risk assessment test (“BREVAGen™”). On June 28, 2010, the Company
incorporated a wholly owned subsidiary named Phenogen Sciences Inc, whose name changed to geneType Inc. on 4 April 2022, in
the State of Delaware which commenced selling the BREVAGen™ test in the U.S. marketplace in June 2011. In October 2014, the
Company released its next generation breast cancer risk assessment test BREVAGenplus.
On November 19, 2014, the Company completed the sale of its Heritage Australian Genetics business to Specialist
Diagnostic Services Ltd (SDS), the wholly owned pathology subsidiary of Primary Health Care Ltd.
Genetic Technologies Limited In November 2016, the Company executed an exclusive worldwide license agreement with The University of Melbourne,
for the development and commercialization of a novel colorectal cancer (CRC) risk assessment test, providing the Company with an
opportunity to enhance its pipeline of risk assessment products. Additionally, in June 2017, the Company executed an investigator-
initiated Research Agreement with The Ohio State University, reflecting the growing awareness of the Company’s expertise in SNP-
based risk assessment.
During 2018, the Company executed a further collaborative research and services agreement with The University of
Melbourne, with the research designed to broaden the applicability of BREVAGenplus, enabling its use by women with extended
family history of breast cancer as well as increase the range of factors analyzed in assessing breast cancer.
In May 2019, the Company announced the development of two new cancer risk assessment tests branded as “GeneType
for Colorectal Cancer” and “GeneType for Breast Cancer.” The new breast cancer test provides substantial improvement over its
legacy breast cancer test BREVAGenplus, by incorporating multiple additional clinical risk factors. This test will provide healthcare
providers and their patients with a 5-year and lifetime risk assessment of the patient developing breast cancer. The colorectal cancer
test will provide healthcare providers and their patients a 5-year, 10-year, and lifetime risk assessment of the patient developing
colorectal cancer.
In June 2020, the Company received US Patent No: US10,683,549, Methods for assessing risk of developing breast cancer.
The Company is the first company in the world to successfully commercialize a polygenic risk test for breast cancer. The granted
patent covers the Company’s proprietary panels of single nucleotide polymorphisms (SNPs) and the combination of clinical and
phenotypic risk models to create the most comprehensive risk assessment tool on the market: GeneType for Breast Cancer.
The Company hired and trained a new internal sales employee to educate doctors on the Company’s polygenic risk score
(PRS) tests and introduce them to preventative health strategies. The Company received a positive response from doctors. Initial test
results showed 10 per cent of subjects were high risk and 41 per cent were moderate risk. The Company believes that these results
will help create personalized strategies specifically designed for the patient risk profile. We think early indications show the tests lead
to better screening compliance and to the development of personalized screening solutions. This confirms the Company’s objective
of focusing on preventative health rather than ‘after the fact’ medicine.
At the same time, the Company continued to refine existing, and to develop other, risk assessment tests across a range of
diseases including:
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Breast cancer
Colorectal cancer
● Ovarian cancer
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Prostate cancer
Coronary artery disease
Type 2 diabetes
Pancreatic cancer
● Melanoma
● Atrial fibrillation
The Company has developed a polygenic risk score (PRS) test for COVID-19 in 2022, which may enable an assessment
of the risk of people developing a serious disease should they contract the virus. The test aims to predict disease severity using a
combination of genetic and clinical information. The Company has built strong relationships with international biobanks and health
studies, including UK Biobank. They allow us to secure additional, current COVID-19 patient data to continuously develop, refine,
and validate the COVID-19 risk test.
The Company's single nucleotide polymorphism (SNP) array panels are supplied by US-based Thermo Fisher Scientific
Inc., a world leader in genetic testing and the Company’s manufacturing partner for geneType products. The SNP array panel is a key
reagent the Company needs to process the polygenic risk test portion of the COVID-19 risk test. The test aims to categorize subjects
as being at high, average, or low risk of developing life-threatening conditions due to COVID-19.
The Company filed a provisional patent application for its COVID-19 risk test with IP Australia, an agency of Department
of Industry, Innovation and Science (Intellectual Property Australia) (2020901739 - Methods of assessing risk of developing a severe
response to Coronavirus infection). The provisional patent covers the specific single nucleotide polymorphism (SNP) algorithm the
Company designed to calculate a PRS and the testing model that combines PRS and the clinical risk factors that together constitute the
COVID-19 risk test. Subsequently this patent has been granted in the United States and pending grant in several other key markets.
40
Annual Report 2023 The Company executed an acquisition agreement (“Acquisition Agreement”) on July 19th, 2021 to acquire the
direct-to-consumer eCommerce business and distribution rights associated with General Genetics Corporation and its associated
brands trading as EasyDNA, from BelHealth Investment Fund LP. The Acquisition Agreement provides for the acquisition of all
brands, websites and agency reseller agreements associated with EasyDNA. This includes over 70 websites in 40 countries and six
brand identities. Under the terms of the Acquisition Agreement, the Company acquired 100% of EasyDNA’s brands and assets within
the General Genetics Corporation business for a purchase price of US$4 million, comprising cash consideration of US$2.5 million
and US$1.5 million of ADSs.
The Company executed an asset purchase agreement ("APA") on July 14th, 2022 to acquire the direct-to-consumer
eCommerce business, laboratory testing and distribution agreements associated with AffinityDNA. The APA provides for the
acquisition of all brands and websites associated with AffinityDNA. This includes the AffinityDNA Amazon sales channel rights.
Under the terms of the APA, the Company acquired 100% of AffinityDNA's brands and assets for a purchase price of GBP555,000,
comprising cash consideration of GBP227,500 on completion and GBP227,500 payable in July 2023 subject to the AffinityDNA
business attaining certain financial performance parameters. The second payment was payable on the achievement of a gross profit
target for the 12-month period from the acquisition date. This target was not achieved and therefore no further payment is to be made
in respect of the acquisition of AffinityDNA.
On 3 February 2023, GTG announced the launch of the first Comprehensive Risk Test for Breast & Ovarian Cancer. The
test evaluates a woman’s risk of developing Breast and/or Ovarian Cancer either from a hereditary genetic mutation or from the far
more common familial or sporadic cancer. In combination with other clinical risk factors, the test provides a comprehensive risk
assessment in a simple saliva test.
SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC and state the address of that site (http:// www.sec.gov). The Company's website address is
https://genetype.com. The information contained on our website is not incorporated by reference into this annual report on Form 20-F.
Corporate Information
The Company’s registered office, headquarters and laboratory is located at 60-66 Hanover Street, Fitzroy, Victoria, 3065,
Australia and its telephone number is +61 3 8412 7000. The office of its U.S. subsidiary, geneType Inc. (formerly Phenogen Sciences
Inc.), is located at 1300 Baxter Street, Suite 255, Charlotte, North Carolina, 28204 U.S.A. The telephone number for the geneType Inc.
office is (704) 926 5700. The Company’s website address is www.genetype.com. The information in its website is not incorporated by
reference into this Annual Report and should not be considered as part of this Annual Report.
The Company’s Australian Company Number (ACN) is 009 212 328. The Company’s Australian Business Number (ABN)
is 17 009 212 328. The Company operates pursuant to its constitution, the Australian Corporations Act 2001, the Listing Rules of the
Australian Securities Exchange, the Marketplace Rules of The NASDAQ Stock Market, and where applicable, local, state and federal
legislation in the countries in which the Company operates.
Item 4.B Business Overview Description of Business
Founded in 1989, Genetic Technologies listed its Ordinary Shares on the ASX (GTG) in 2000 and its ADSs on NASDAQ’s
Capital Market (GENE) in 2005. Genetic Technologies is a molecular diagnostics company that offers predictive testing and
assessment tools to help physicians proactively manage people’s health. The Company’s legacy product, BREVAGenplus, was a
clinically validated risk assessment test for non-hereditary breast cancer and was first in its class. BREVAGenplus improved upon
the predictive power of the first generation BREVAGen™ test and was designed to facilitate better informed decisions about breast
cancer screening and preventive treatment plans. BREVAGenplus expanded the application of BREVAGen™ from Caucasian women
to include African Americans and Hispanics and was directed towards women aged 35 years or above who have not had breast cancer
and have one or more risk factors for developing breast cancer.
The Company successfully launched the first generation BREVAGen™ test across the U.S. via its U.S. subsidiary Phenogen
Sciences Inc. (now geneType Inc.), and BREVAGenplus was launched in October 2014. The Company marketed BREVAGenplus
to healthcare professionals in comprehensive breast health care and imaging centers, as well as to obstetricians/gynecologists
(OBGYNs) and breast cancer risk assessment specialists (such as breast surgeons).
In May 2019, the Company announced that it had developed two new cancer risk assessment tests branded as ‘geneType
for Colorectal Cancer’ and ‘geneType for Breast Cancer’. The new breast cancer test provides substantial improvement over the
Company’s legacy breast cancer test BREVAGenplus, by incorporating multiple additional clinical risk factors. This test will provide
healthcare providers and their patients with a 5-year and lifetime risk assessment of the patient developing breast cancer. The
colorectal cancer test will provide healthcare providers and their patients a 5-year, 10-year, and lifetime risk assessment of the patient
developing colorectal cancer.
Genetic Technologies Limited In June 2020, the Company received US Patent No: US 10,683,549, Methods for assessing risk of developing breast cancer.
The Company is the first company in the world to successfully commercialize a polygenic risk test for breast cancer. The granted
patent covers the Company’s proprietary panels of single nucleotide polymorphisms (SNPs) and the combination of clinical and
phenotypic risk models to create the most comprehensive risk assessment tool on the market: geneType for Breast Cancer.
In February 2022 the Company received US Patent No: US 11,257,569, Methods of assessing risk of developing a severe
response to Coronavirus infection. The granted US patent covers the proprietary technology incorporated into GTG’s geneType
COVID- 19 Risk Test, which provides a probability that a person will develop severe symptoms requiring hospitalization should they
become infected.
During the 2023 financial year the Company continued to refine existing, and develop other, risk assessment tests across a
range of diseases, including:
●
●
Breast cancer
Colorectal cancer
● Ovarian cancer
●
●
●
●
Prostate cancer
Coronary artery disease
Type 2 diabetes
Pancreatic cancer
● Melanoma
● Atrial fibrillation
The Company’s Genetic Testing Business
Following the acquisition of Genetype AG in 1999 and the subsequent renaming to Genetic Technologies Limited, the
Company focused on establishing a genetic testing business, which over the following decade saw it become the largest provider of
paternity and related testing services in Australia. The Company’s service testing laboratory in Melbourne became the leading non-
Government genetic testing service provider in Australia. The genetic testing services of the Company expanded to include at certain
times:
● Medical testing
● Animal Testing
●
●
Forensic Testing
Plant Testing
The acquisition of GeneType AG also provided the Company with ownership rights to a potentially significant portfolio
of issued patents. During the intervening years, this portfolio has since been expanded by both organic growth and the acquisition
of intellectual property assets from third parties. The patent portfolio is constantly reviewed to ensure that the Company maintains
potentially important patents but at the same time keep costs to a minimum by no longer pursuing less commercially attractive and
relevant intellectual property.
A strategic alliance with Myriad Genetics Inc. delivered to the Company exclusive rights in Australia and New Zealand to
perform DNA testing for susceptibility to a range of cancers. In April 2003, the Company established its cancer susceptibility testing
facility within its Australian laboratory. In June 2003, this facility was granted provisional accreditation by the National Association
of Testing Authorities, Australia (“NATA”).
In November 2003, the Company joined the world-wide genetic testing network GENDIA as the sole reference laboratory
for the network in Australia and New Zealand. GENDIA consists of more than 50 laboratories from around the world, each
contributing expertise in their respective disciplines to create a network capable of providing more than 2,000 different genetic tests.
This provided the Company with the ability to offer comprehensive testing services to its customer base in the Asia-Pacific region as
well as increasing its exposure to other markets.
In April 2010 the Company purchased various assets from Perlegen Sciences, Inc. of Mountain View, California, which
included a breast cancer non-familial risk assessment test, BREVAGen™. The Company then began validating the test in our
Australian laboratory and initiated the process for obtaining CLIA certification which would enable the Company to undertake the
testing of samples received from the U.S. market. By July 2010, a new U.S. subsidiary named Phenogen Sciences Inc, now named
geneType Inc., had been incorporated by the Company in Delaware to market and distribute the BREVAGen™ test across the United
States.
42
Annual Report 2023 In October 2014, the Company announced the U.S. release of BREVAGenplus, an easy-to-use predictive risk test for the
millions of women at risk of developing sporadic, or non-hereditary, breast cancer, representing a marked enhancement in accuracy
and broader patient applicability, over its first generation BREVAGen™ product. The Company also made a pivotal change of sales
and marketing emphasis toward large comprehensive breast treatment and imaging centers, which are more complex entities with a
longer sales cycle, but higher potential.
GeneType for Breast Cancer; a State-of-the-Art Breast Cancer Risk Assessment Test designed to enable a more personalized
breast cancer risk assessment in a greater number of women
The identification, in 2007, of a number of single nucleotide polymorphisms (SNPs), each with an associated small
relative risk of breast cancer, led to the development of the first commercially available genetic risk test for sporadic breast cancer,
BREVAGen™. The Company launched the product in the U.S. in June 2011. In October 2014, the Company released its next
generation breast cancer risk assessment test, BREVAGenplus. This new version of the test incorporated a 10-fold expanded panel of
genetic markers (SNPs), known to be associated with the development of sporadic breast cancer, providing an increase in predictive
power relative to its first-generation predecessor test. In addition, the new test was clinically validated in a broader population
of women including, African American and Hispanic women. This increased the applicable market beyond the Caucasian only
indication of the first-generation test, and simplified the marketing process in medical clinics and breast health centers in the U.S.
The expanded panel of SNPs incorporated into our breast cancer tests were identified from multiple large-scale genome-
wide association studies and subsequently tested in case-control studies utilizing specific Caucasian, African American and Hispanic
patient samples.
BREVAGenplus was a first-in-class, clinically validated, predictive risk test for sporadic breast cancer which examined
a woman’s clinical risk factors, combined with seventy-seven scientifically validated genetic biomarkers (SNPs), to allow for more
personalized breast cancer risk assessment and risk management.
In May 2019, the Company announced the development of its next generation breast cancer risk assessment test, ‘GeneType
for Breast Cancer’. The new breast cancer test provides substantial improvement over its legacy breast cancer test BREVAGenplus
by incorporating multiple additional clinical risk factors. This test will provide healthcare providers and their patients with a 5-year
and lifetime risk assessment of the patient developing breast cancer.
Germline genetic testing for mutations in BRCA1 and BRCA2 allows for the identification of individuals at significantly
increased risk for breast and other cancers. However, such mutations are relatively rare in the general population and account for less
than 10% of all breast cancer cases. The remaining 90% of non-familial or sporadic breast cancer have to be defined by other genetic/
clinical markers common to the population at large and this is where the Company has focused its attention.
The newly developed ‘geneType for Breast Cancer’ test is aimed at risk detection of non-BRCA related sporadic breast
cancer (that is, for those women who do not have an identified family history of breast cancer). Importantly, this means that the
Company’s new test covers 95% of women.
In June 2020, the Company received the approval for its U.S. patent number US 10,683,549, “Methods for Assessing Risk
of Developing Breast Cancer.” The granted patent covers the Company’s proprietary panels of single nucleotide polymorphisms
(SNPs) and the combination of clinical and phenotypic risk models to create the most comprehensive risk assessment tool on the
market: geneType for Breast Cancer.
GeneType for Colorectal; a State-of-the-Art Risk Assessment Test for Colorectal Cancer
Next generation risk assessments combine multiple clinical and genetic risk factors to better stratify individuals at
increased risk of developing disease. ‘geneType for Colorectal Cancer’ incorporates the most impactful risk factors in order to
define an individual’s risk of developing colorectal cancer, so the healthcare provider can make screening and preventative care
recommendations that are tailored to their patient’s personalized risk.
Colorectal cancer is the third most commonly diagnosed cancer in the U.S., yet 1 in 3 adults are not receiving the appropriate
colorectal cancer screening for their age. In addition, rates of colorectal cancer among 20-49 year old is steadily increasing. Identifying
patients who are most at risk for colorectal cancer can lead to enhanced screening protocols and better outcomes. Most individuals
diagnosed with colorectal cancer do not have a significant family history of the disease. ‘geneType for Colorectal Cancer’ evaluates
the genometric risk of developing colorectal cancer for men and women over age 30 who do not have a known pathogenic gene
variant.
In sporadic colorectal cancer, no single gene mutation is causal of disease. Rather, common DNA variations or SNPs,
each contribute a small but measurable risk of developing disease. ‘geneType for Colorectal Cancer’ analyses a patient’s DNA for
more than 40 SNPs that have been clinically validated in their association with colorectal cancer. By combining the effects of all of
these SNPs into a single polygenic risk score (PRS), ‘geneType for Colorectal Cancer’ will provide a superior risk stratification over
standard risk assessments that incorporate only clinical factors.
Genetic Technologies Limited ‘geneType for Colorectal Cancer’ is clinically validated for men and women of 30 years of age or older and for individuals
of Caucasian descent.
Commercial launch of geneType Multi-Risk Test
The geneType brand was re-launched globally in October 2021 following redevelopment of the Company's websites,
marketing and advertising, media releases and announcements to the ASX and NASDAQ. The commercial launch of the geneType
Multi-Risk Test in February 2022 included the first phase launch to cover risk assessment for six serious diseases including breast,
colorectal, prostate, and ovarian cancers, coronary artery disease and Type-2 diabetes covering more than 50% of all serious diseases,
all in one test sample. The geneType Multi-Test received simultaneous NATA accreditation and CMS certification in Australia and
USA respectively. The first phase of the geneType Multi-Test became available to Health Care Professionals (HCPs) in February
2022.
World’s First Comprehensive Risk Test for Breast & Ovarian Cancer
In February 2023 the Company announced the development of a ‘World First’ Comprehensive Risk Assessment Test which
evaluates a women’s risk of developing Breast and/or Ovarian Cancer either from a hereditary genetic mutation or from the far more
common familial or sporadic cancer. Combined with other clinical risk factors the test provides a comprehensive risk assessment in
a simple saliva test.
The Company intend to provide updates as it continuously improves its tests and add fully validated models for additional
ethnicities.
Direct-to-consumer channel of lifestyle genetic tests
The Company's acquisition of EasyDNA in August 2021, gave us our direct-to-consumer channel for the sale and distribution
of lifestyle genetic tests. The EasyDNA brand of tests can be completed by the customer without the need to consult a healthcare
professional. The laboratory testing of the EasyDNA genetic tests is performed by contracted laboratories in the US, Europe and
Australia. EasyDNA customers order their tests online using our network of websites covering 40 countries.
In May 2022, the Company announced the acquisition of AffinityDNA and the business began integration when the first
payment due under the acquisition agreement was settled on 14 July 2022. AffinityDNA joins EasyDNA as the Company’s Direct to
Consumer (DTC) avenues to the market for DNA testing. During the first part of the financial year, we have focused on the integration
of our people, products and AffinityDNA platform to deliver a “One Company-Multi-brand and Mult-channel” approach for GTG
– EasyDNA, AffinityDNA and geneType. The acquisition expands GTG’s portfolio of tests to 51 in 14 categories available in more
than 40 countries.
Further integration will continue as the Company leverages its well-established worldwide marketplace (including
Amazon). This marketplace will also be used to provide an avenue to promote the Company’s geneType portfolio.
The Company has a strong 'whole of life' portfolio of high-quality products both in the market and under development and
a substantial international platform for the distribution of the direct-to-consumer products.
Government Regulations
CLIA AND FDA Regulations
In April 2011, the Company obtained certification of its Australian laboratory under the U.S. Clinical Laboratories
Improvements Amendments of 1988 (“CLIA”), as regulated by the Centers for Medicare and Medicaid. This certification enables the
Company to accept and test samples from U.S. residents, and was the culmination of preparations required for the U.S. launch of the
Company’s BREVAGen™ test which occurred in June 2011.
In July 2013, the Company was inspected by a representative of the New York State Department of Health, Clinical
Laboratory Evaluation Program (“CLEP”). The Company’s laboratory received an inspection result with no deficiencies reported
and, on August 30, 2013, the Company announced that it had received its Clinical Laboratory Permit from the New York State
Department of Health. This permit, which allows the Company to offer its risk assessment tests to residents of New York State, allows
the Company to provide testing services to all 50 U.S. states.
From its headquarters in Melbourne, Victoria, the Company’s laboratory holds a number of accreditations including:
●
●
The CLIA license required for all laboratories offering testing the U.S.;
The CLEP license, an additional certification required to offer tests in New York State; and
● A Medical Device Establishment License (MDEL) required for Canada.
44
Annual Report 2023 Physicians who order clinical tests for their patients have historically represented the primary source of its testing volume.
Fees invoiced to patients and third parties are based on its fee schedule, which may be subject to limitations imposed by third-
party payers. The clinical laboratory industry is highly regulated and subject to significant and changing Federal and state laws and
regulations. These laws and regulations affect key aspects of the Company’s business, including licensure and operations, billing
and payment for laboratory services, sales and marketing interactions with ordering physicians, security and confidentiality of health
information, and environmental and occupational safety. Oversight by government officials includes regular inspections and audits.
The Company seek to and believe that it conducts business in compliance with all applicable laws and regulations.
CLIA, extends Federal licensing requirements to all clinical laboratories (regardless of the location, size or type of
laboratory), including those operated by physicians in their offices, based on the complexity of the tests they perform. CLIA also
establishes a stringent proficiency testing program for laboratories and includes substantial sanctions, such as suspension, revocation
or limitation of a laboratory’s CLIA certificate (which is necessary to conduct business), and significant fines and/or criminal penalties.
The geneType tests on samples provided are processed at its laboratory in Melbourne, Australia. The Company’s laboratory
completed its first CLIA inspection under CLIA guidelines and received its certificate of compliance effective November 17, 2011.
A re-certification from CMS i.e., paper survey, was performed in November 2013 and another on-site re-certification followed up in
February 2016. Paper surveys were also conducted in November 2017 and December 2019. Furthermore, the Company’s laboratory
completed its first CLEP inspection under the NYS DOH CLEP guidelines and received its certificate of compliance effective August
30, 2013. Since the initial survey, the laboratory has been successful in submitting documents via the NYS eCLEP Health Commerce
System for each subsequent year to date. Although no firm date has been provided, the laboratory is expecting an on-site visit in the
coming 12 months.
The Company believes that it is in compliance with all applicable federal and state laboratory requirements. Under CLIA,
the Company remains subject to state and local laboratory regulations. CLIA provides that a state may adopt laboratory regulations
that are more stringent than those under federal law, and some states require additional personnel qualifications, quality control,
record maintenance and other requirements.
Following a successful CLIA audit during the year, the Company renewed its status as a fully NATA and CLIA – accredited
laboratory. The Company in a unique position to service both the Australian and US markets subject to regulatory approvals.
Although the U.S. Food and Drug Administration (“FDA”) has consistently claimed that it has the authority to regulate
laboratory-developed tests (“LDTs”) that are developed, validated and performed only by a CLIA certified laboratory, it has
historically exercised enforcement discretion in not otherwise regulating most LDTs and has not required laboratories that furnish
LDTs to comply with the agency’s requirements for medical devices (e.g., establishment registration, device listing, quality systems
regulations, premarket clearance or premarket approval, and post-market controls). As a matter of policy, the FDA generally does
not review Direct-to-Consumer LDTs that are created and performed in a single laboratory, if they are offered to patients only when
prescribed by a healthcare provider. More recently, the FDA has indicated that it will apply a risk-based approach to determine the
regulatory pathway for all in-vitro diagnostics, which includes LDTs, as it does with all medical devices. Accordingly, the regulatory
pathway for the Company’s LDTs will depend on the level of risk to patients, based on the intended use of the LDT and the controls
necessary to provide a reasonable assurance of the LDTs safety and effectiveness. The two primary types of marketing pathways
for medical devices are clearance of a premarket notification under Section 510(k) of the Federal Food, Drug, and Cosmetic Act, or
510(k), and approval of a premarket approval application, or PMA. Legislative proposals addressing the FDA’s oversight of LDTs
have been introduced in the current and previous Congresses, and we expect that new legislative proposals will be introduced from
time-to-time. The likelihood that Congress will pass such legislation and the extent to which such legislation may affect the FDA’s
plans to regulate certain LDTs as medical devices is difficult to predict at this time.
HIPAA and other privacy laws
The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), established comprehensive federal standards
for the privacy and security of health information. The HIPAA standards apply to three types of organizations: health plans, healthcare
clearing houses, and healthcare providers that conduct certain healthcare transactions electronically (“Covered Entities”). Title
II of HIPAA, the Administrative Simplification Act, contains provisions that address the privacy of health data, the security of
health data, the standardization of identifying numbers used in the healthcare system and the standardization of certain healthcare
transactions. The privacy regulations protect medical records and other protected health information by limiting their use and release,
giving patients the right to access their medical records and limiting most disclosures of health information to the minimum amount
necessary to accomplish an intended purpose. The HIPAA security standards require the adoption of administrative, physical, and
technical safeguards and the adoption of written security policies and procedures.
On February 17, 2009, Congress enacted Subtitle D of the Health Information Technology for Economic and Clinical
Health Act, or HITECH, provisions of the American Recovery and Reinvestment Act of 2009. HITECH expanded and strengthened
HIPAA, created new targets for enforcement, imposed new penalties for noncompliance and established new breach notification
requirements for Covered Entities. Regulations implementing major provisions of HITECH were finalized on January 25, 2013,
through publication of the HIPAA Omnibus Rule (the “Omnibus Rule”).
Genetic Technologies Limited Under HITECH’s breach notification requirements, Covered Entities must report breaches of protected health information
that has not been encrypted or otherwise secured in accordance with guidance from the Secretary of the U.S. Department of Health
and Human Services (the “Secretary”). Required breach notices must be made as soon as is reasonably practicable, but no later than
60 days following discovery of the breach. Reports must be made to affected individuals and to the Secretary and, in some cases
depending on the size of the breach; they must be reported through local and national media. Breach reports can lead to investigation,
enforcement and civil litigation, including class action lawsuits.
In addition to the federal privacy and security regulations, there are a number of state laws regarding the privacy and
security of health information and personal data that are applicable to clinical laboratories. Many states have also implemented
genetic testing and privacy laws imposing specific patient consent requirements and protecting test results by strictly limiting the
disclosure of those results. State requirements are particularly stringent regarding predictive genetic tests, due to the risk of genetic
discrimination against healthy patients identified through testing as being at a high risk for disease. The Company believes that it has
taken the steps required to comply with health information privacy and security statutes and regulations, including genetic testing and
genetic information privacy laws in all jurisdictions, both state and federal. However, these laws constantly change, and the Company
may not be able to maintain compliance in all jurisdictions where it does business. Failure to maintain compliance, or changes in state
or federal laws regarding privacy or security could result in civil and/or criminal penalties, significant reputational damage and could
have a material adverse effect on the Company’s business.
Transparency Laws and Regulations
In the U.S., the Physician Payments Sunshine Act (the “Sunshine Act”) requires medical device manufacturers to track and
report to the federal government certain payments and other transfers of value made to physicians, other healthcare providers (such
as physicians assistants and nurse practitioners), and teaching hospitals and ownership or investment interests held by physicians
and their immediate family members. There are also state “sunshine” laws that require manufacturers to provide reports to state
governments on pricing and marketing information. Several states have enacted legislation requiring medical device manufacturers
to, among other things, establish marketing compliance programs, file periodic reports with the state, make periodic public disclosures
on sales and marketing activities, and such laws may also prohibit or limit certain other sales and marketing practices. These laws may
adversely affect our sales, marketing, and other activities by imposing administrative and compliance burdens on us. If the Company
fail to track and report as required by these laws or to otherwise comply with these laws, it could be subject to the penalty provisions
of the pertinent state and federal authorities.
Other Healthcare Compliance Requirements.
Our operations in the U.S. may subject us to healthcare regulation and enforcement by the U.S. federal government and
the states in which we conduct our business, including federal fraud and abuse laws (such as anti-kickback and false claims laws and
transparency laws). Failure to comply with such laws may result in significant penalties, including civil, administrative, and criminal
penalties, fines, imprisonment, disgorgement, exclusion from participation in federal health care programs, and other penalties
Environmental and Safety Laws and Regulations
The Company is subject to laws and regulations related to the protection of the environment, the health and safety of
employees and the handling, transportation and disposal of medical specimens, infectious and hazardous waste and radioactive
materials. For example, the U.S. Occupational Safety and Health Administration (“OSHA”) has established extensive requirements
relating specifically to workplace safety for healthcare employers in the U.S. This includes requirements to develop and implement
multi-faceted programs to protect workers from exposure to blood-borne pathogens, including preventing or minimizing any exposure
through needle stick injuries. For purposes of transportation, some biological materials and laboratory supplies are classified as
hazardous materials and are subject to regulation by one or more of the following agencies: the U.S. Department of Transportation,
the U.S. Public Health Service, the U.S. Postal Service and the International Air Transport Association. The Company generally use
third- party vendors to dispose of regulated medical waste, hazardous waste and radioactive materials and contractually require them
to comply with applicable laws and regulations.
The Company’s operations are also subject to environmental regulations under Australian State legislation. In particular,
the Company is subject to the requirements of the Environment Protection Act 1993. A license has been obtained under this Act to
produce listed waste.
Product Distribution
Despite significant resource allocation and efforts by a dedicated sales team, sales of BREVAGenplus were insufficient to
defray the costs of the sales team. By late 2017, management decided that its sales strategy was not working and disbanded much of
the sales infrastructure in the U.S. and transitioned to an ecommerce-based solution that allowed consumers to initiate testing online.
Management then designed a “pivot plan” in an effort to reposition the Company, refine and improve products and reload with a
newly developed approach to market.
46
Annual Report 2023 With COVID-19 social distancing impacting on the Company’s ability to fully engage with physicians, the Company
introduced a consumer-initiated testing (CIT) platform. This sales pipeline deviates from a traditional sales approach that targets
clinicians. Instead, it allows patients to request a test directly, with clinician oversight of the testing process through an independent
provider network and telemedicine.
The COVID-19 Risk Test was launched in the US market in June 2021. The Company entered into a license agreement
with Infinity BiologiX LLC in May 2021 for the online sale and distribution of the COVID-19 Risk Test to customers in the USA.
The Company acquired the EasyDNA business acquired in August 2021 and the AffinityDNA business in July 2022,
distributing its consumer and lifestyle DNA tests direct to customers through its website portals and network of laboratory partners
in North America, Europe and Australia.
The Company launched the geneType Multi-Test for breast and colon cancer in February 2022 for the Australian and
US markets to be distributed to Health Care Professionals through the Company's website portals. The Company is finalizing the
development and verification in its Australian laboratory of the phase two elements of the geneType Multi-Test product to include
tests for prostate and ovarian cancers, coronary heart disease and Type-2 Diabetes. The Company expects to launch the complete suite
of tests in the Multi-Test in 2022.
In March 2023, the Company announced the commercial release of a Melanoma, Atrial Fibrillation, and Pancreatic
geneType risk assessment tests.
In April 2023, the Melbourne facility successfully completed a NATA audit with no findings from the assessors.
Reimbursement and Clinical Studies
Beginning in April 1, 2017, the Company converted to a direct pay relationship with patients in an effort to foster economic
and process certainty to the transaction for the healthcare provider and the patient. The change addressed reimbursement issues from
third-party payers, including low levels of reimbursement, prolonged payment time, patient confusion around eligibility and financial
responsibility and poor coverage.
This shift also has reduced the Company’s reliance on clinical utility studies that had been designed as a means to achieve
reimbursement coverage through the private insurers. The Company recognized however that scientific and clinical data are key
drivers to help strengthen our commercial position. The Company intends to explore opportunities to engage in further research
collaborations to support clinical utility. Physicians and the major breast health centers seek multiple points of confirmation that the
medical device works as intended and leads to a meaningful improvement in women’s health. Therefore, the more papers that are
published regarding the Company’s genetic tests, profiling product performance characteristics including clinical validity and utility,
the more likely physicians will be to use the tests.
In June 2022 the Company completed an independently developed and validated customizable Budget Impact Model
("BIM"), which demonstrates significant health and economic benefits directly attributed to the implementation of geneType Breast
Cancer Risk Assessment Test for US customers. The BIM was independently developed and validated by ALVA10, whose mission is
to create an economic ecosystem that pulls technology into healthcare, aligning effective healthcare solutions to payer economics. The
BIM illustrates the clinical pathways patients would experience and the economic implications of commercialization and utilization
of a test or device. The main finding of the BIM is the potential for US payers to reduce the annual costs of breast cancer treatment
by US$1.4 billion.
US payers, including commercial insurers, large employers, and benefit groups such as Medicare, are typically reluctant to
cover new diagnostic tools, with reimbursement often taking years to receive. Critically, GTG’s customizable BIM enables US payers
to accelerate their understanding of the economic impact of implementing GTG’s geneType Breast Cancer Risk Assessment Test prior
to commercialization. This could provide a faster and more certain outcome and minimizing their technology adoption risk. GTG’s
BIM is a comprehensive and dynamic tool and can be customized for any US payer. Importantly it will also enable GTG to identify
those US Payers who are most likely to be fast adopters.
Research & Development Projects
During the year ended June 30, 2023, the Company supported the following research and development programs, details
of which are provided below:
●
Breast Cancer Risk Assessment Test (geneType for Breast Cancer)
Genetic Technologies Limited ●
●
●
●
●
●
Colorectal Cancer Risk Assessment Test (geneType for Colorectal Cancer)
Research Agreement executed with Memorial Sloan Kettering New York
Research collaboration with The University of Melbourne
Research collaboration with Ohio State University
Research collaboration with Washington State University
Expanded range of other cancer and disease target predictive risk assessment tests
In previous years, other projects, which have since been terminated or otherwise commercialized, have also been supported
by the Company. The Company is constantly seeking new opportunities and plans to focus more on research and development
activities in the future. In addition, the Company plans on having its science and management team engage with the world’s leading
scientific experts working on predictive genetic testing and its role within world health systems. Historically, some projects have
arisen from new inventions made by the Company while some have been made by others who have approached the Company seeking
collaboration and support for their activities.
Collaboration with The University of Melbourne
On November 29, 2016, the Company announced the signing of an exclusive worldwide license agreement with The
University of Melbourne for the development and commercialization of a novel colorectal cancer (CRC) risk assessment test. The
core technology behind this test was developed by a research team at the University’s Centre for Epidemiology and Biostatistics,
with results from preliminary modelling studies first published online in Future Oncology on 1 February 2016, in a Paper entitled
“Quantifying the utility of single nucleotide polymorphisms to guide colorectal cancer screening,” 2016 Feb: 12(4), 503-13. This
simulated case-control study of 1 million patients indicated that a panel of 45 known susceptibility SNPs can stratify the population
into clinically useful CRC risk categories. In practice, the technology could be used to identify people at high risk for CRC who
should be subjected to intensive screening, ultimately reducing the risk of occurrence and death from the disease. Those identified as
low risk of CRC can be spared expensive and invasive screening, thereby preventing adverse events and unjustified expenses.
A scientific validation study supporting this work has been completed, and a report of the research program progress has
been delivered to the Company. Whilst the terms of the agreement are confidential, these events represent an important first milestone
in the development of a new test as the Company seeks to diversify its product pipeline and become a key player in the SNP-based
cancer risk assessment landscape. We continue to identify new and exciting ways to collaborate with the University of Melbourne to
improve the standard of care for practitioners and their patients.
Research Collaboration Memorial Sloan Kettering New York
In early 2019, the Company’s U.S. subsidiary entered into a Research Agreement with Memorial Sloan Kettering Cancer
Center of New York and the University of Cambridge. This collaborative research study is to be led by Mark Robson, MD, Chief of
the Breast Medicine Service at Sloan Kettering. The study is intended to assess whether the provision of individual risk information
informed by a polygenic risk score reduces decisional conflict among BRCA mutation carriers considering preventive surgery.
The Company believes this collaboration will benefit its engagement and collaboration with high profile cancer genetics
researchers who are at the forefront of risk assessment research, and by providing us with data that may potentially be beneficial in
developing additional risk assessment products.
Competition
The medical diagnostics and biotechnology industries are subject to intense competition. As more information regarding
cancer genomics and personalized medicine becomes available to the public, the Company anticipates that more products aimed at
identifying cancer risk will be developed and that these may compete with its products. The use of Single Nucleotide Polymorphisms
(SNPs), for disease risk prediction is still a relatively new field of medicine.
Organizations such as Ancestry.com, 23andMe and Color Genomics in the U.S. have developed SNP based risk tests, are
attracting significant consumer interest in genetic tests that predict clinical risk of contracting serious diseases. A number of other
organizations, including deCODE (Iceland), Intergenetics, and ThermoFisher have attempted to commercialize SNP-based genetic
tests, to both physicians and consumers, to assess sporadic cancer risk in relevant patient populations. New entrants that the Company
are aware of that are in the product development stage include Counsyl Inc. and Invitae Corporation in the U.S.
We believe our major direct-to-consumer EasyDNA and AffinityDNA product competitors are AncestryDNA, 23andMe,
MyHeritage, Gene by Gene and Color Genomics.
48
Annual Report 2023 Australian Disclosure Requirements
Business Strategies and Prospects for Future Years
The Company’s competitive position in the genetic testing market is based upon, amongst other things, its ability to:
●
●
●
●
●
●
●
continue to strengthen and maintain scientific credibility through the process of obtaining scientific validation through clinical
trials supported by peer-reviewed publication in medical journals;
create and maintain scientifically advanced technology and offer proprietary products and services;
continue to strengthen and improve the messaging regarding the importance and value that the Company’s cancer risk
assessment tests provide to patients and physicians;
diversify the Company’s product offerings into other serious disease types;
obtain and maintain patent or other protection for the Company’s products and services;
obtain and maintain required government approvals and other accreditations on a timely basis; and
successfully market the Company’s products and services.
If the Company is not successful in meeting these goals, its business could be adversely affected. Similarly, the
Company’s competitors may succeed in developing technologies, products or services that are more effective than any that it is
developing or that would render the Company’s technology and services obsolete, noncompetitive or uneconomical.
Dividends
No dividends were paid during the course of the fiscal year ended June 30, 2023. There are no dividends or distributions
recommended or declared for payment to members, but not yet paid, during the year.
Genetic Technologies Limited Item 4.C Organizational Structure
The diagram below shows the Company’s organizational structure as of the date of this Annual Report. All of the Company’s
subsidiaries in the chart below are wholly owned.
Genetic
Technologies
Limited
Helix Genetics
Limited
(EasyDNA)
geneType Inc.
(formerly known
as Phenogen
Sciences Inc.)
Genetic
Technologies
Corporation Pty
Ltd
Genetype UK Ltd
DORMANT
GeneType
Corporation Inc
Genetic
Technologies HK
Ltd
GeneVentures
Pty Ltd
GeneType Pty
Ltd
Hainan Aocheng
Genetic
Technologies Co.
Ltd
Hong Kong
United Kingdom
Australia
United States
Malta
Item 4.D Property, Plant and Equipment
As at date of this Report, the Company has executed four leases in respect of premises occupied by the Company.
Fitzroy, Victoria
The Company rents offices and a laboratory premises at 60-66 Hanover Street, Fitzroy, Victoria, Australia (an inner suburb
of Melbourne) from Crude Pty. Ltd. The current lease will expire on February 28, 2025. The total rental charge in respect of the year
ended June 30, 2023 was A$233,634 (2022: A$230,940).
Charlotte, North Carolina
GeneType Inc. (formerly named Phenogen Sciences Inc.), the Company’s U.S. subsidiary, rents office premises located at
1300 Baxter Street, Suite 255, Charlotte, North Carolina, U.S. from Midtown Area Partners LLC. The current lease will expire on
July 31, 2023. A lease agreement was signed on March 27, 2023 for a three-year term, commencing on August 1, 2023 and expiring
July 31, 2026. The total rental expense towards the premise for the year ended June 30, 2023 was A$19,724 (2022: A$23,300).
Slacks Creek, Queensland
The Company rents office premises located at Suite 1B/1 Sesame Court, Slacks Creek, Queensland, Australia from Kennedy
Family Slacks Creek Pty. Ltd. The Company relocated its office premise from 1 July 2022 through a new two-year lease, expiring on
June 30, 2024, with Growth Steel Australia Pty. Ltd. The property was subsequently sold to Kennedy Family Slacks Creek Pty. Ltd.
in December 2022. The total rental charge in respect of the year ended June 30, 2023 was A$31,335 (2022: A$12,871).
Hove, East Sussex
The Company rents office premises located at 60 Lansdowne Place, Hove, East Sussex, United Kingdom from Andrew,
Chris & Stephen Tugwell. The current lease will expire on May 30, 2025. The total rental charge in respect of the year ended June
30, 2023 was A$25,206 (2022: Nil).
50
Annual Report 2023 Item 4A. Unresolved Staff Comments
Not applicable
Item 5. Operating and Financial Review and Prospects
The following discussion and analysis should be read in conjunction with the Company’s financial statements, the notes
to the financial statements and other financial information appearing elsewhere in this Annual Report. In addition to historical
information, the following discussion and other parts of this Annual Report contain forward-looking statements that reflect the
Company’s plans, estimates, intentions, expectations and beliefs. The Company’s actual results could differ materially from those
discussed in the forward-looking statements. See the “Risk Factors” section of Item 3 and other forward-looking statements in this
Annual Report for a discussion of some, but not all, factors that could cause or contribute to such differences.
Item 5.A Operating Results
Overview
Founded in 1989, Genetic Technologies is an established Australian-based molecular diagnostics company that offers
predictive genetic testing and risk assessment tools. During the year ended June 30, 2015, the Company divested its interest in other
genetic testing services, which up until then, together with licensing of non-coding technology, had provided the main source of
income to fund operations, to concentrate on the principal activity of the provision of molecular risk assessment tests for cancer.
The Company’s revenues during its years ended June 30, 2021 and 2020 were generated principally by sales of its ‘geneType
for Colorectal Cancer’ and ‘geneType for Breast Cancer’ genetic tests to healthcare providers through a global network of distribution
partners and the Company's website portals. The Company's revenues during its years ended June 30, 2022 and 2023 were generated
principally by sales of its EasyDNA and AffinityDNA branded genetic test products through its international network of proprietary
EasyDNA and AffinityDNA branded websites as well as Amazon (AffinityDNA). The company acquired the business and assets
of EasyDNA and AffinityDNA in August 2021 and July 2022, respectively. The acquisition of AffinityDNA has resulted in a new
business segment within the Company's segment information as compared to the prior year.
Since inception up to June 30, 2023, the Company has incurred A$156,715,687 in accumulated losses. The Company’s
losses have resulted principally from costs incurred in research and development, general and administrative and sales and marketing
costs associated with its operations. Further losses are anticipated as the Company continues to invest in new genetic testing product
research and development, and explore optimal distribution methodologies to commercialize its product offering. Refer to the
Financial Statements section in Item 18.
Fiscal year
As an Australian company, the Company’s fiscal, or financial, year ends on June 30 each year. The Company produces
audited consolidated accounts at the end of June each year and furnish half-yearly accounts for the periods ending on December
31 each year, both of which are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board.
Comparison of the year ended June 30, 2023 to the year ended June 30, 2022
The presentation of the Statement of Profit or Loss and Other Comprehensive Income is in line with the Company
management's monthly reporting of the Group's results and performance presented to the Board of Directors. For the financial year
ended June 30, 2023, the Company reports a total comprehensive loss of A$11,650,334 (2022: A$7,103,134), the result includes a
non-cash impairment expense of A$2,125,725 (2022: A$564,161).
Revenues from operations
During the 2023 financial year, the Company’s consolidated gross revenues from continuing operations, excluding other
revenue, increased by A$1,891,302 (28%) from A$6,794,816 to A$8,686,118 from the previous year. The increase in revenue
is mainly due to increase in sales of EasyDNA (A$1,708,823) direct-to-consumer genetic tests as well as sales of AffinityDNA
(A$944,508), following the acquisition of the AffinityDNA business on 14 July 2022.
Finance income
Finance income increased by A$183,905 (507%) from A$36,256 to A$220,161 when compared to the previous year. The
increase is due to the combination of higher interest rates and additional interest income gained from fixed deposits placed during the
year following the receipt of funds from the capital raised in February 2023.
Genetic Technologies Limited Other income
Other income decreased by A$946,569 (34%) from A$2,783,391 to A$1,836,822 when compared to the previous year. The
majority of the Other income recorded for the financial year is largely the research and development tax incentive refund received
from the Australian Taxation Office. Research and development tax incentive income (or “R&D tax credit”) recorded for the financial
year was A$1,616,064 (2022: A$2,397,552). The R&D tax incentive is recognized on an accruals basis when realizable. The lower
R&D tax credit is due to the decreasing external R& D expenses.
Raw materials and changes in inventory
The Company’s raw materials and changes in inventory costs increased by A$1,321,731 (44%) from A$3,013,534 to
A$4,335,265 from the prior financial year. The increase in raw materials is in line with the increase in product revenues from
EasyDNA and AffinityNDA experienced during the financial year.
Commissions
Commissions increased to A$236,019 (2022: A$156,625), the increase being attributable to commissions paid/payable in
respect to agency sales for EasyDNA and AffinityDNA.
Employee benefits expenses
Employee benefits expense increased by A$339,411 (6%) to A$6,208,066 during the financial year (2022: A$5,868,655).
The increase is largely the result of an increase in number of employees from 52 to 60 following the acquisition of the AffinityDNA
business and an expansion of commercialization staff for the geneType test.
Advertising and promotional expenses
Advertising and promotional expenses increased to A$2,712,353, a 44% increase from comparative period (2022:
A$1,885,402) (44%). The majority of this increase is attributable to pay-per-click advertising costs, A$1,556,627 (2022: A$987,460)
for the EasyDNA and AffinityDNA businesses. Additionally, other marketing costs increased to A$861,639 in the current financial
year against A$675,493 in the prior year as the Company expanded the geneType branded genetic tests in the Australian and U.S.
markets.
Professional fees
Professional fees decreased by A$474,804 (26%) from A$1,835,444 to A$1,360,640 when compared to the previous year.
The decrease is mainly related to the decrease in consulting fees, A$558,987 (2022: A$994,275).
Research and development expenses
Laboratory, research and development costs increased by A$575,650 (82%) from A$705,507 to A$1,281,157 when
compared to the previous year. This category of expenditure includes patent application and annual renewal fees. Laboratory, research
and development costs increased as the Company continued development, and accelerated commercialization of its pipeline of the
new PRS tests for a range of human disease types. Also under development are a suite of gene-panel tests for a range of hereditary
cancers. The research and development activities cover the following diseases: breast cancer, colorectal cancer, prostate cancer,
ovarian cancer, pancreatic cancer, melanoma, Type-2-diabetes, cardiovascular disease, and atrial fibrillation.
Depreciation and amortization
Depreciation and amortization expense attributable to the laboratory testing equipment, computer equipment, office
equipment, leases amortization and other intangible assets was A$676,583 (2022: A$578,668), with the increase related to an increase
in laboratory testing equipment depreciation as a result of prior period purchase and first-time recognition of lease amortization for
the AffinityDNA office lease.
Impairment expenses
Impairment expenses increased to A$2,125,725 for the 2023 financial year (2022: A$564,161). Impairment expense is mainly
the result of an impairment expense recognized against the goodwill associated with the acquisition of EasyDNA, A$1,845,000, as
initial product revenues has not met expectations. The balance of the expense recorded for the financial year is the result of additional
allowance for un-collectability of certain debtor balances outstanding as at June 30, 2023.
52
Annual Report 2023 Other expenses
Other expenses increased to A$3,687,030 (2022: A$2,154,375) during the financial year. The increase is mainly related
to increase in IT and communication expenses (A$585,875), travel and entertainment expenses (A$299,622) and administrative
expenses (A$249,387).
Finance costs
Finance costs increased to A$29,515 (2022: A$15,215). Finance costs relate to non-cash lease interest charges required to
be recognized under accounting standard AASB16.
Income tax credit
Income tax credit recognized for the financial year was A$158,329 (2022: A$32,125) which mainly relates to the
recognition of deferred tax assets to offset against the remaining deferred tax liabilities arising from the acquisition of EasyDNA and
AffinityDNA's brands and other identifiable intangible assets.
Comparison of the year ended June 30, 2022 to the year ended June 30, 2021
The current presentation is in line with the Company management's monthly reporting of the Group's results and performance
presented to the Board of Directors. For the financial year ended June 30, 2022, the Company reports a total comprehensive loss of
A$7,103,134 (2021: A$7,115,087).
Revenues from operations
During the 2022 financial year, the Company’s consolidated gross revenues from continuing operations, excluding other
revenue, increased by A$6,674,262 (5,536%) from A$120,554 to A$6,794,816 when compared to previous year. The increase in
revenue is mainly due to sales of EasyDNA direct-to-consumer genetic tests following the acquisition of the EasyDNA business on
August 13th, 2021.
Finance income
Finance income decreased by A$26,138 (42%) from A$62,394 to A$36,256 when compared to the previous year. The
decrease was due to the reduction in cash balances as at year-end of A$11,731,325 as compared to A$20,902,282 in the prior year.
Other income
Other income mainly consists of research and development tax incentive refund received from the Australian Taxation
Office. The Research and development tax incentive refund (or “R&D tax credit”) increased by 140% from A$997,908 to A$2,397,552
when compared to the previous year. The R&D tax credit is recognized on an accruals basis when realizable. The higher R&D tax
credit was due to increased expenditure on the R&D activities. The increase was offset by reduction in Government grants income
for COVID-19 relief received in prior year amounting to A$287,883. The increase was also attributable to foreign currency gains
amounting to A$359,884 as compared to A$57,899 in the prior year, as a result of a weakening of the Australian dollar against the
United States Dollar during the financial year.
Raw materials and changes in inventory
The Company’s raw materials and changes in inventory costs increased by A$2,843,077 (1,668%) from A$170,457 in the
previous financial year to A$3,013,534 in the current financial year. Direct materials utilized for geneType for breast and colorectal
cancer as well as EasyDNA direct-to-consumer genetic testing products, increased by A$2,867,386 (2,473%) from A$115,934 to
A$2,983,320 due to an increased number of tests conducted during the year. There was a decrease in inventories written-off by
A$24,309 to A$30,214 in the current financial year when compared to A$54,523 in the previous financial year.
The EasyDNA and geneType/Corporate segments contributed A$2,951,815 and A$61,719, respectively of the total cost of
sales in the 2022 financial year. The EasyDNA business incurred the majority of the costs in line with the sale of genetic tests since
its acquisition in August 2021.
Commissions
Commissions were A$156,625 for the 2022 financial year, no commissions expenditure was recorded for the comparative
period. Commissions paid were in respect to agency sales for EasyDNA.
Genetic Technologies Limited Employee benefits expenses
Employee benefits expense increased by A$2,000,324 (52%) to A$5,868,655 during the 2022 financial year when compared
to A$3,868,331 in the previous financial year. The increase is mainly related to the increase in number of employees from 18 to 52 as
a result of the acquisition of the EasyDNA business during the year.
Advertising and promotional expenses
Advertising and promotional expenses increased by A$1,449,128 (332%) from A$436,274 to A$1,885,402 when compared
to the previous year. The major movement during the year related to pay-per-click advertising costs incurred of A$987,460 (2021:
Nil) for the EasyDNA business. Additionally, other marketing costs increased to A$675,493 for the 2022 financial year against
A$310,960 in the prior year as the Company launched the geneType branded genetic tests for breast and colorectal cancer in the
Australian and US markets.
Professional fees
Professional fees increased by A$374,043 (26%) from A$1,461,401 to A$1,835,444 when compared to the previous year.
The increase was mainly related to the increase in consulting fees by A$410,549 to A$994,275 during the 2022 financial year when
compared to A$583,726 in the previous financial year.
Research and development expenses
Laboratory, research and development costs decreased by A$460,024 (39%) from A$1,165,531 to A$705,507 when
compared to the previous year. Laboratory, research and development costs increased as the Company continued development, and
accelerated commercialization of its pipeline of the new PRS tests for a range of human disease types. Also under development are a
suite of gene-panel tests for a range of hereditary cancers. The research and development activities cover the following diseases: breast
cancer, colorectal cancer, prostate cancer, ovarian cancer, melanoma, Type-2-diabetes, coronary artery disease, atrial fibrillation, and
COVID severity.
Depreciation and amortization
Depreciation and amortization expense attributable to the laboratory testing equipment and other intangible assets increased
by A$192,391 (50%) from A$386,277 to A$578,668 in 2022 financial year due to the purchase of laboratory equipment.
Impairment expenses
Impairment expenses increased by A$532,113 (1660%) to A$564,161 during the financial year when compared to A$32,048
in the previous financial year. Impairment expense was a result of management's judgement on the collectability of debtor balances
outstanding as at June 30, 2022.
Other expenses
Other expenses increased by A$870,504 (68%) to A$2,154,375 during the financial year when compared to A$1,283,871
in the previous financial year. The increase mainly related to an increase in buildings and facilities expenses such as country office
charges (A$226,827), service charges (A$116,752) and credit card merchant charges (A$253,098) attributable to EasyDNA sales.
Finance costs
Finance costs decreased by A$1,123 (7%) from A$16,338 to A$15,215 when compared to the previous year. Finance costs
incurred in 2022 and 2021 were primarily lease interest charges.
Income tax credit/(expense)
Income tax credit recognized during the 2022 financial year related to reversal of deferred tax liabilities arising from the
acquisition of EasyDNA's brands and other intangible assets. No tax impact was recorded in the 2021 financial year.
54
Annual Report 2023 Australian Disclosure Requirements
Significant Changes in the State of Affairs
There have been no significant changes within the state of affairs during the year ended June 30, 2023 except as noted in the
“Important Corporate Developments” section included in Item 4.A.
Likely Developments and Expected Results of Operations
At the date of the Directors' Report there no other matters not already disclosed within the Company's Directors' Report and financial
statements, and related notes, for the 2023 financial year.
Environmental Regulations
Our operations are not subject to any significant environmental regulations under either Commonwealth of Australia or
State/Territory legislation. We consider that adequate systems are in place to manage our obligations and are not aware of any breach
of environmental requirements pertaining to us.
Item 5.B Liquidity and Capital Resources
Summary
Since inception, the Company’s operations have been financed primarily from capital contributions by our stockholders,
proceeds from our licensing activities and revenues from operations, grants, and interest earned on the Company’s cash and cash
equivalents.
Currently the Company’s overall cash position depends on completion of its research and development activities, overall
market acceptance of, and revenue generated by, its new genetic testing products. The Company’s cash and cash equivalents were
A$7,851,197 as of June 30, 2023.
During the years ended June 30, 2023, 2022 and 2021 the Company incurred total comprehensive losses of A$11,650,334,
A$7,103,134 and A$7,115,087, respectively.
During the years ended June 30, 2023, 2022 and 2021 the Company’s net cash flows used in continuing operations were
A$9,723,095, A$5,659,456 and A$6,295,929, respectively.
The Company will continue to bring its comprehensive suite of risk assessment tests and direct to consumer portfolio to
major global markets across global markets. The Company can also expand and upgrade the laboratory to incorporate next generation
sequencing and high-density SNP arrays. These will allow-for the first time-risk assessments for 100 per cent of a person’s genomic
risk, including monogenic, polygenic, clinical risk factors, and family history.
Going Concern. For the year ended June 30, 2023, the Company incurred a total comprehensive loss of A$11,650,334
(2022: A$7,103,134) and net cash outflow from operations of A$9,723,095 (2022: A$5,659,456). As at June 30, 2023, the Company
held total cash and cash equivalents of A$7,851,197 and total net current assets of A$7,185,750.
The company expects to continue to incur losses and cash outflows for the foreseeable future as it continues to invest
resources in research and development activities for geneType risk assessment tests and to invest in the commercialization activities
for geneType, EasyDNA and AffinityDNA, via marketing, sales and distribution channels.
The continuing viability of the company and its ability to continue as a going concern, and meet its debts and commitments
as they fall due, is dependent on the satisfactory completion of an equity raising forecast for the early part of the 2024 calendar year.
The Company does not currently have binding commitments from any party to subscribe for shares and any raise will be subject to
maintaining active listing on the NASDAQ exchange as well as compliance with the Group’s obligations under ASX Listing Rule 7.1.
On July 17, 2023, the company received notification from The Nasdaq Stock Market LLC that it is not in compliance with
the minimum bid price requirement of Nasdaq Listing Rule 5550(a)(2) for continued listing on the Nasdaq Capital Market, since the
closing bid price for the company’s American Depositary Shares (ADS) on the Nasdaq Capital Market was below US$1.00 for 34
consecutive trading days.
The Notification has no immediate effect on the listing of the Company’s ADS on the Nasdaq Capital Market. Under
Nasdaq Listing Rule 5810(c)(3)(A), the company has a period of 180 calendar days from the date of Notification to regain compliance
with the minimum bid requirement, during which time the ADS will continue to trade on the Nasdaq Capital Market. If at any time
before January 15, 2024, the bid price of the ADS closes at or above US$1.00 per ADS for a minimum of 10 consecutive business
days, the Company will regain compliance with the Minimum Bid Requirement.
Genetic Technologies Limited Re-compliance with the NASDAQ’s minimum bid price requirement can be cured with positive business developments
(announced to the market), leading to an increase in the ADS price to above US$1 or a stock split. The company also has the option of
applying for an extension of time, a further 180 days, to regain compliance. This development isn’t expected to impede the company’s
ability to raise additional equity capital.
Due to the uncertainty surrounding the timing, quantum or the ability to raise additional equity, there is a material uncertainty
that may cast significant doubt on the Group’s ability to continue as a going concern and therefore, that it may be unable to realize
its assets and discharge its liabilities in the normal course of business. However, the Directors believe that the Company will be
successful in its equity raising endeavours, and has a strong track record in this regard, and accordingly, have prepared the financial
report on a going concern basis. As such no adjustments have been made to the financial statements relating to the recoverability
and classification of the asset carrying amounts or classification of liabilities that might be necessary should the Group not be able to
continue as a going concern.
Operating Activities. The Company’s net cash used in operating activities was A$9,723,095, A$5,659,456 and A$6,295,929
for the years ended June 30, 2023, 2022 and 2021, respectively. Cash used in operating activities for each period consisted primarily of
losses incurred in operations reduced by non-cash items such as impairment expenses, depreciation and amortization expenses, share
based payments expenses, foreign exchange movements and unrealized profits and losses relating to investments. In approximate
order of magnitude, cash outflows typically consist of staff-related costs, marketing expenses, service testing expenses, general and
administrative expenses, legal/patent fees and research and development costs.
Investing Activities. The Company’s net cash used in investing activities was A$311,937, A$3,461,163 and A$748,706
for the years ended June 30, 2023, 2022 and 2021, respectively. During the year ended June 30, 2023 the Company paid A$486,188
for the acquisition of the AffinityDNA business, representing the first tranche payment due under the acquisition agreement. During
the 2022 financial year the Company made a cash payment contribution of A$3,400,625 towards the acquisition of EasyDNA from
General Genetics Corporation. The purchase of plant and equipment was A$17,552, A$63,926 and A$748,706 in the past 3 finan-
cial years, respectively. There were no further significant capital expenditures for the years ended June 30, 2023, 2022 and 2021.
Financing Activities. The Company’s net cash (used in)/from financing activities was A$5,919,943, A$(279,064), and
A$13,689,996 for the years ended June 30, 2023, 2022 and 2021, respectively. During the year ended June 30, 2023, the Company
generated cash flows of A$7,172,399 from the issue of Ordinary Shares less costs associated with the transactions of A$851,624.
There were no capital raising during the year ended June 30, 2022. During the 2021 financial year the Company raised equity capital
which contributed A$13,940,938 net of costs.
Leases. The Company has four property leases in place at June 30, 2023. These leases relate to the premises occupied
by the Company in Fitzroy, Victoria, Australia and Slacks Creek, Queensland, Australia, by its U.S. subsidiary, geneType Inc.
(formerly Phenogen Sciences Inc.), in Charlotte, North Carolina, U.S. and by its U.K. subsidiary, GeneType UK Limited in Hove,
East Sussex, United Kingdom. The total rental charge in respect of the year ended June 30, 2023 was A$233,634, A$31,335,
A$19,724 and A$25,206, respectively.
The future minimum lease payments in respect of the four leases that were in place and had remaining non-cancellable lease
terms as of June 30, 2023 were A$551,879.
Item 5.C Research and Development, Patents and Licenses, etc.
Our principal business industry is biotechnology, with a historical emphasis on genomics and genetics, the licensing of our
non- coding patents, reduction to practice of our fetal cell patents and expansion of the related service testing business. Research and
development expenditure as below is reflective of the intense focus by the scientific and laboratory team to develop and market a suite
of world-leading predictive genetic tests.
The following table details historic R&D expenditure by project.
Polygenic Risk Testing
Total R&D expense
Other expenditure
Total expenditure
R&D as a % of total expenditure
2023
A$
3,679,139
3,679,139
18,973,214
22,652,353
2022
A$
4,204,919
4,204,919
12,572,667
16,777,586
16.7 %
25.1 %
2021
A$
986,622
986,622
7,833,906
8,820,528
11.19 %
56
Annual Report 2023
Item 5.D Trend Information
See Item 5.A. “Operating Results” and Item 5.B. “Liquidity and Capital Resources” above.
Item 5.E Critical Accounting Estimates
Not applicable
Item 6. Directors, Senior Management and Employees
(Start of the Remuneration Report (Audited) for Australian Disclosure Requirements)
The Genetic Technologies Limited Board of Directors (“the Board”) presents the 2022/2023 Remuneration Report, which has been
prepared in accordance with the relevant Corporations Act 2001 and accounting standards requirements. The remuneration report
sets out remuneration information for our company’s key management personnel (“KMP”) as defined in the International Accounting
Standards 24 ‘Related Party Disclosures’ and the Australian Corporations Act 2001 for the financial year ended June 30, 2023. The
remuneration report which complies with s300A of the Corporations Act 2001 has been audited as required by s308 (3C) of the
Corporations Act 2001.
Item 6.A Directors and Senior Management
The Directors of the Company as of the date of this Annual Report are:
Mr. Peter Rubinstein, BEc. LLB (Independent Non-Executive and Chairman)
Mr. Rubinstein was appointed to the Board on January 31, 2018 and appointed as Chairman in April 2020. He has over 20
years’ experience in early-stage technology commercialization through to public listings on the ASX. He is a lawyer, having worked
at a large national firm prior to moving in-house at Montech, the commercial arm of Monash University.
Mr. Rubinstein has had significant exposure to the creation, launch and management of a diverse range of technology
companies in biotech, digital payments and renewable energy. Mr. Rubinstein is also a Non-Executive Director of DigitalX Limited
(ASX: DCC).
Dr. Jerzy (George) Muchnicki, MBBS (Non-Independent Non-Executive)
Dr. Muchnicki was appointed to the Board on January 31, 2018 and acted as Interim Chief Executive Officer from September
2019 till the appointment of Mr. Simon Morriss to the role. Dr. Muchnicki graduated from Monash University and has held positions
in private practice for over 25 years and was Head of Student Health at The University of Melbourne. For the past 14 years, he has
been involved in commercialization and funding R&D in the biotechnology sector from gene silencing to regenerative medicine.
Dr. Muchnicki brings with him strong commercial and medical skills, including broad interests in software development,
blockchain and sustainable building materials. He is a co-founder and Non-Executive Director of Speed Panel Holdings a world
leader in fire rated and acoustic wall solutions. He is also the co-founder of Candlebets, a software development company that is
creating blockchain enabled platforms for the gaming industry.
Dr. Lindsay Wakefield, MBBS (Independent Non-Executive)
Dr. Wakefield was appointed to the Board on September 24, 2014. He started Safetech Pty Ltd in 1985 and over the next
25 years, Safetech became a force in the Australian material handling and lifting equipment market, designing and manufacturing a
wide range of industrial products. In 1993, he left medicine to become the full-time CEO of Safetech. In 2006, Safetech was awarded
the Telstra Australian National Business of the Year. In 2013, Safetech merged and ultimately acquired Tiemen Materials Handling.
Dr Wakefield continues as the CEO of Safetech. It is Australia's largest manufacturer and supplier of dock equipment,
freight hoists and custom lifting solutions. Safetech employs approximately 100 people. Dr Wakefield has been a biotech investor for
more than 20 years.
Mr. Nick Burrows, B.Com. FAICD, FCA, FGIA, FTIA, F Fin (Independent Non-Executive)
Mr. Burrows has over 30 years' commercial experience and was appointed to the Board on September 1, 2019. He is a
contemporary independent Non-Executive Director across the Listed, government and private sectors with significant expertise in
corporate governance, and strategic, commercial, financial and risk management oversight, underpinned by his background as a
chartered accountant.
Mr. Burrows was Chief Financial Officer and Company Secretary of Tassal Group Limited for 21 years from 1988 to
2009, and accordingly brings to the Board strong independent C-suite commercial experience and the benefits of an extensive and
contemporary senior executive ASX200 listed entity background.
Genetic Technologies Limited Mr. Burrows current and past Board and advisory portfolio encompasses listed and regulated entities, government business
enterprises, state-owned and local government entities and authorities, large private/ family companies community organizations,
membership-based bodies and Not-for-Profits.
Mr Burrows’ expertise spans a raft of industry sectors encompassing water and sewerage, infrastructure, renewable energy,
forestry, agribusiness, public transport, tourism and hospitality, education and the vocational education sector, aquaculture, civil
engineering, construction, and finance and valuations.
Mr Burrows is a Fellow of the Australian Institute of Company Directors, Institute of Chartered Accountants Australia,
Governance Institute of Australia Ltd, Taxation Institute of Australia and the Financial Services Institute of Australasia and is also a
Chartered Accountant. Mr Burrows also served as National President of the Governance Institute of Australia in 2002 and served on
their National Board for 6 years.
Senior Management
The Company has a professional team of qualified and experienced personnel, including a number of research and
development scientists and technicians. The Company currently has 60 full-time-equivalent employees in addition to the four Non-
Executive Directors listed above.
Mr. Simon Morriss, GAICD (Chief Executive Officer)
Mr. Morriss was appointed as Chief Executive Officer on February 1, 2021 and brings over 20 years’ experience within
the Pharmaceutical, Healthcare and FMCG industries having held senior executive positions at Sanofi and Blackmores. He brings a
wealth of experience in managing teams and successfully executing across sales, marketing and brand building.
Additionally, Mr. Morriss has been critical in leading commercialization across these industries and understands the unique
pressures and opportunities. He has led companies through strategic adaptation to execution and will be driving Genetic Technologies
commercialization strategy and continue to drive innovation across the business.
Mr. Tony Di Pietro, BComm, CA, AGIA, MAICD (Company Secretary/Chief Financial Officer)
Mr Tony Di Pietro was appointed Company Secretary & Chief Financial Officer November 28, 2022. Mr Di Pietro is a
Chartered Accountant with significant corporate accounting experience, gained both in Australia and the UK. He holds a Graduate
Diploma of Applied Corporate Governance from the Governance Institute of Australia and is a member of the Australian Institute
of Company Directors. Tony is a finance executive with extensive technical accounting, corporate tax, and company secretarial
experience. Mr Di Pietro has held senior roles within the Biotechnology/MedTech industry for the past 20 years including INOVIQ
Ltd (ASX:IIQ), BARD1 Life Sciences Ltd (ASX:BD1), Sienna Cancer Diagnostics Ltd (SDX), and Acrux Ltd (ASX:ACR). Tony
played a significant role in the ASX listing of both Sienna and Acrux and the merger between Sienna and BARD1. He has also gained
valuable experience in other industry sectors, employed by companies such as BHP Ltd, ExxonMobil Ltd, HSBC Ltd and Wilson
Group.
Dr. Richard Allman, PhD (Scientific Advisor, former Chief Scientific Officer)
Dr. Allman joined the Company in December 2004 and was appointed as Scientific Director in December 2012 and Chief
Scientific Officer in 2016. He has over 20 years of scientific and research experience in both the academic arena in the UK and the
commercial sector in Australia. He has wide experience in research leadership, innovation management, and intellectual property
strategy, covering oncology, diagnostics, and product development. Prior to entering the biotech sector, Dr. Allman’s academic career
encompassed oncology research, drug development, and assay design. Dr. Allman ceased full-time employment with the Company
on October 6, 2022. Dr. Allman has continued his association with the Company as a consulting Scientific Advisor.
Mr. Carl Stubbings (Chief Commercial Officer)
Mr Stubbings joined the Company in 2021 and was appointed as Chief Commercial Officer on September 1, 2021. Mr
Stubbings is an experienced senior leader in the biotechnology and diagnostics industry with a focus on commercialization, sales,
marketing and business development.
He has considerable experience commercializing diagnostic products, both locally and globally. Based in the USA for 13
years, he served as Senior Vice President for Panbio USA Ltd and Vice-President of Sales and Marketing for Focus Diagnostics, a
subsidiary of Quest Diagnostics (NASDAQ:DGX), one of the world’s largest pathology laboratories.
In July 2012, Mr Stubbings moved back to Australia where he was appointed Chief Business Officer at Benitec
Biopharma Limited (ASX: BLT, NASDAQ: BNTC). More recently he has assisted several Australian biotech companies with their
commercialization strategies. These companies include BCAL Diagnostics, a start-up company developing a blood test for breast
cancer, Minomic,
58
Annual Report 2023 an Immuno Oncology company with a test for prostate cancer, and Biotron (ASX: BIT), a listed company that is developing
and commercializing anti-viral small molecule therapies. In 2019 Mr Stubbings was appointed CEO and Managing Director of Sienna
Cancer Diagnostics Ltd (ASX: SDX). In that role, he helped lead the successful merger between Sienna and BARD1 Life Sciences
(ASX:BD1). Following the merger, Mr Stubbings was appointed Chief Operating Officer of the merged entity BARD1 Life Sciences.
Mr Stubbings has a Bachelor of Applied Science (Medical Technology) from the Queensland University of Technology.
Mr. Kevin Camilleri (Chief Executive Officer of EasyDNA)
Mr Camilleri joined the Company in 2021 and was appointed as Chief Executive Officer of EasyDNA on August 16, 2021.
He was founder member of the EasyDNA brand in 2001 and grew the business over time into a leading international online provider
of genetic testing services. A business graduate from the University of Bath in the UK, Mr. Camilleri has over the years accumulated
a broad range of skills covering most aspects of business management including strategic, financial, organizational, operational and
commercial skills. He brings to the company the ability to manage a cross-border organization in line with Genetic Technologies
strategy for international expansion.
Mr. Mike Tonroe, BSc, FCA, MAICD (former Company Secretary/Chief Financial Officer)
Mr. Tonroe joined the company on June 15, 2021, resigning November 28, 2022. Mike has over 25 years of experience with
private and listed companies in Australia, UK, US and Canada.
Mike held the role of Chief Financial Officer and Company Secretary at dual-listed Opthea and was Chief Financial Officer
and Company Secretary at the Australian Synchrotron in Melbourne and he also has extensive accounting expertise having worked
for both Deloitte and KPMG in the UK and Hong Kong.
Mr. Tonroe is a fellow of the Institute of Chartered Accountants in England and Wales, a member of the Australian Institute
of Company Directors and holds a graduate degree in Business Studies from Buckingham University, UK.
Item 6.B Compensation
Elements of compensation
Independent external advice is sought from remuneration consultants when required, however no advice has been sought
during the period ended June 30, 2023, or comparative period. The board aims to ensure that remuneration practices are:
●
●
●
●
competitive and reasonable, enabling the Company to attract and retain key talent
aligned to the Company’s strategic and business objectives and the creation of shareholder value
transparent and easily understood, and
acceptable to shareholders.
Element
Purpose
Performance metrics
Fixed annual remuneration (FR)
Provide competitive market salary including
superannuation and non-monetary benefits
Nil
Short-Term Incentive (STI)
Reward for in-year performance and reten-
Company and individual performance
tion
goals
Long-Term Incentive (LTI)
Alignment to long-term shareholder value
Share price, capital raised, company
and individual performance goals
(i)
Fixed annual remuneration (FR)
Objective
The Remuneration Committee oversees the setting of fixed remuneration on an annual basis. The process consists of
a review of Company, divisional and individual performance, relevant comparative remuneration in the market and internally
and, where appropriate, external advice on policies and practices. The members of the Committee have access to external advice
independent of Management.
Genetic Technologies Limited
Structure
Fixed remuneration consists of some or all of the following components:
●
●
●
base salary;
non-monetary benefits, for example health insurance; and
superannuation benefits, which includes employer contributions,
With the exception of the employer contributions to superannuation, Executives are given some flexibility to decide the
composition of their total fixed remuneration and the allocation between cash and other benefits. It is intended that the manner of
payment chosen will be optimal for the recipient without creating any additional cost for the Company.
Fixed remuneration is reviewed annually with reference to individual performance, market benchmarks for individual roles
and the overall financial performance of the Company. Any changes to the fixed remuneration of Executives are first approved by the
Remuneration Committee.
All employee remuneration is evaluated on a regular basis using a set of variables and taking into account the addition
of the statutory superannuation contribution. An assessment of existing base salaries is made annually using comparisons against
independent market data which provides information on salaries and other benefits paid for comparable roles within the biotech
and pharmaceutical industries, using third party salary survey data. Annual performance reviews with each employee are based on
a rating system which is used to assess his or her eligibility for salary increases. Other qualitative factors, including the specialized
knowledge and experience of the individual and the difficulty of replacing that person, are also taken into account when considering
salary adjustments.
Remuneration Committee membership
As at the date of this Report, the composition of the committee is as follows:
● Dr. Lindsay Wakefield – Chairman of the Committee
● Mr. Nicholas Burrows (Member)
● Mr. Peter Rubinstein (Member)
(ii)
Short-Term Incentives (STI)
Short Term Incentive (STI) is an annual plan that applies to Executives and other senior employees that is based on the performance
of both the Company and the individual during a given financial year. STI ranges vary depending on the role, responsibilities and
deliverables achieved by each individual. Actual STI payments granted to the relevant employee will depend on the extent to which
the pre-agreed specific targets are met within a financial year. Specific targets are quantifiable with the agreed method of measurement
defined at the beginning of the financial year. The ongoing performance of the Executive or senior employee is evaluated regularly
during the performance cycle.
Company objectives, and their relative weighting, vary depending on the position and responsibility of the respective
individual, but in respect of the year ended June 30, 2023 include, amongst other things, the achievement of:
●
●
●
achieving targets for cost reduction or efficiency gains;
contributing to business growth and expansion; and
performance or the delivery of results which exceed agreed targets.
These measures are chosen as they represent the key drivers for the short-term success of the business and provide a
framework for delivering long term value. Personal and operating objectives vary according to the role and responsibility of the
Executive and include objectives such as service delivery to customers, project delivery, compliance outcomes, intellectual property
management and various staff management and leadership objectives.
Achievement of an individual’s targets or objectives is documented and assessed by both the individual and his or her direct
manager. The individual will participate in an annual performance review and must provide evidence of the objectives that he or she
has delivered during the period under review. Each objective is then rated on an achievement scale. Depending on the aggregate of
the ratings, the individual may be eligible to receive an STI payment.
60
Annual Report 2023
STI payments, if any, are generally paid in August or September of each year subject to the completion of the performance
review process and the receipt of a satisfactory rating. The Remuneration Committee conducts this process in the case of the CEO.
During the financial year ended June 30, 2023, no Short-Term Incentive payments were made to Executives and other senior
employees.
(iii)
Long-Term Incentives (LTI)
The objective of the Company’s LTI arrangements is to reward Executives and senior employees in a manner that aligns
their remuneration with the creation of shareholder wealth. As such, significant LTI grants are generally only made to Executives
who are able to influence the generation of shareholder wealth and have an impact on the Company’s long-term profitability. There
are share price targets to be met before performance rights vest in respect of the LTI grants made to Executives. Options with a
vesting period also serve as a retention tool and may reduce the likelihood of high performing Executives and senior employees being
targeted by other companies.
Long Term Incentive (LTI) grants to Executives and senior employees are delivered in the form of options over
unissued ordinary shares in the Company which are granted under the terms and conditions of the Company’s Employee Option
Plan. Selected Executives who contribute significantly to the long-term profitability of the Company are invited to participate in
the Employee Option Plan. The remuneration value of these grants varies and is determined with reference to the nature of the
individual’s role, as well as his or her individual potential and specific performance.
In cases where an Executive ceases employment prior to the vesting of his or her options, the options are forfeited
after a prescribed period if they have not been exercised. The prescribed period ranges from two to six months, depending on the
circumstances under which they left the Company, e.g. resignation, retirement, termination or death. In the event of a change of
control of the Company, the performance period end date will be brought forward to the date of the change of control and awards will
vest over this shortened period.
Link between remuneration and performance
Statutory performance indicators
The Company aims to align executive remuneration to the Company’s strategic and business objectives and the creation of
shareholder wealth. The table below shows measures of the Company’s financial performance over the last five years as required by
the Corporations Act 2001. However, these are not necessarily consistent with the measures used in determining the variable amounts
of remuneration to be awarded to KMPs. As a consequence, there may not always be a direct correlation between the statutory key
performance measures and the variable remuneration awarded.
Loss for the year attributable to owners (A$)
11,750,923
7,130,998
7,077,619
6,294,775
6,425,604
Basic earnings per share (cents)
Share price at year end (A$)
(0.1)
0.003
(0.1)
0.003
(0.1)
0.009
(0.1)
0.005
(0.2)
0.006
2023
2022
2021
2020
2019
The Company’s earnings have remained negative since inception due to the nature of the business. Shareholder wealth
reflects this speculative and volatile market sector. No dividends have ever been declared by the Company. The Company will
continue its research and development activities, leading to an expansion of its intellectual property portfolio, as well as continued
growth of product revenues from its three key brands; geneType, EasyDNA and AffinityDNA. The overall objective is to achieve key
development and commercial milestones in order to add further shareholder value.
Genetic Technologies Limited
Remuneration expenses
Details of the nature and amount of each major element of the compensation of each director of the Company and each of
the named officers of the Company and its subsidiaries, for services in all capacities during the financial year ended June 30, 2023 are
listed below. All figures are stated in Australian dollars (A$).
Name and title
Short-term benefits
Post-
employment
Other
long-
term
benefits
Share-
based
payments
Equity
Percentage (%)
Salary/
fees
A$
67,462
154,769
67,462
Year
2023
2023
2023
STI#
A$
Other
**
A$
Superannuation
***
A$
****
A$
*****
A$
Totals
A$
Fixed
Rem.
-
-
-
-
-
-
7,084
9,951
7,084
-
-
-
-
-
-
74,546
164,720
74,546
100
100
100
Vari-
able
Rem.
-
-
-
Non-Executive
Directors
Dr. Lindsay Wakefield
Mr. Peter Rubinstein
Mr. Nicholas Burrows
Non-Independent Non-
Executive Director
Dr. Jerzy Muchnicki
2023
58,330
-
-
6,125
-
-
64,455
100
-
Management
Dr. Richard Allman
Mr. Mike Tonroe (3)
Mr. Simon Morriss (2)
Mr. Tony Di Pietro (6)
Mr. Carl Stubbings (4)
Mr. Kevin Camilleri (5)
2023
2023
2023
2023
2023
2023
48,162
21,707
3,007
7,336
7,071
63,584
17,031
4,192
330,565
24,188
13,985
158,958
-
10,131
223,444
14,205
(1,335)
233,276
14,725
1,276
6,444
25,375
15,028
24,953
4,131
-
-
87,283
91,251
-
2,285
191,346
587,744
313
-
184,430
100
1,309
34,368
296,944
-
27,739
281,147
75
81
63
84
85
82
25
19
37
-
16
15
18
Totals
2023
1,406,012
91,856
31,256
113,511
10,978
253,453 1,907,066
Referencing the table above:
# Represents the payment of short-term incentives for the 2022 financial year, no short-term incentive was payable for the 2023
financial year
** Other includes movement in Annual Leave component
*** Post-employment benefits as per Corporations Regulation 2M.3.03 (1) Item 7
**** Other long-term benefits as per Corporations Regulation 2M.3.03 (1) Item 8
***** Equity settled share-based payments as per Corporations Regulation 2M.3.03 (1) Item 11
62
Annual Report 2023
-
-
-
-
-
-
-
-
-
-
8,683
10,400
Details of the nature and amount of each major element of the compensation of each director of the Company and each of
the named officers of the Company and its subsidiaries, for services in all capacities during the financial year ended June 30, 2022 are
listed below. All figures are stated in Australian dollars (A$).
Name and title
Short-term benefits
Post-
employment
Other
long-
term
benefits
Share-
based
payments
Equity
Percentage
(%)
STI*
A$
Other
**
A$
Superannuation
***
A$
****
A$
*****
A$
Totals
A$
Fixed
Rem.
6,746
9,477
6,746
-
-
-
4,010
78,218
5,347
169,593
95
97
-
74,208
100
Vari-
able
Rem.
5
3
-
Salary/
fees
A$
67,462
154,769
67,462
Year
2022
2022
2022
Non-Executive
Directors
Dr. Lindsay Wakefield
Mr. Peter Rubinstein
Mr. Nicholas Burrows
Non-Independent Non-
Executive Director
Dr. Jerzy Muchnicki
2022
145,117
Management
Dr. Richard Allman
Mr. Mike Tonroe (3)
Mr. Simon Morriss (2)
Mr. Stanley Sack (1)
Mr. Carl Stubbings (4)
Mr. Kevin Camilleri (5)
2022
2022
2022
2022
2022
2022
195,365
289,531
346,688
43,750
18,606
107,188
201,850
211,982
-
-
-
-
3,205
22,355
8,194
-
6,684
159,995
96
4
17,366
3,231
-
224,645
100
27,500
27,500
472
780
101,043
428,946
191,346
628,670
-
-
35,438
142,626
18,765
3,528
314
26,459
250,593
-
16,719
254,584
76
63
75
89
93
0
24
37
25
11
7
Totals
2022
1,787,414
43,750
63,249
125,822
4,797
387,046
2,412,078
Referencing the table above:
* Represents the payment of short-term incentives for the 2021 financial year
** Other includes movement in Annual Leave component
*** Post-employment benefits as per Corporations Regulation 2M.3.03 (1) Item 7
**** Other long-term benefits as per Corporations Regulation 2M.3.03 (1) Item 8
***** Equity settled share-based payments as per Corporations Regulation 2M.3.03 (1) Item 11
Notes pertaining to changes during the year:
During the financial year ended June 30, 2020, the Board approved to obtain consulting services in relation to capital raises,
compliance, NASDAQ hearings and investor relations from its Non-Executive director and current Chairman, Mr. Peter Rubinstein.
The services procured were through Mr. Peter Rubinstein’s associate entity, ValueAdmin.com Pty Ltd, and amounted to A$60,000
for the year ended June 30, 2023 (2022: A$60,000).
(1) Mr. Sack was appointed as Chief Operating Officer (COO) on May 18, 2020. He resigned on April 30, 2022.
(2) Mr. Morriss was appointed as Chief Executive Officer (CEO) on February 1, 2021.
(3) Mr. Tonroe was appointed as Chief Financial Officer (CFO) on June 15, 2021. He resigned on November 28, 2022.
(4) Mr Stubbings was appointed as Chief Commercial Officer (CCO) on September 1, 2021.
(5) Mr Camilleri was appointed as Chief Executive Officer of EasyDNA on August 16, 2021.
(6) Mr Di Pietro was appointed as Company Secretary & Chief Financial Officer on November 28, 2022.
Genetic Technologies Limited
Contractual agreements with the directors and other key management personnel
Name:
Position:
Dr. Jerzy Muchnicki
Non-Independent Non-Executive Director
Fixed remuneration:
A$64,455 (inclusive of superannuation)
Name:
Position:
Fixed remuneration:
Consulting fee:
Name:
Position:
Mr. Peter Rubinstein
Non-Executive Director and Chairman
A$104,720 (inclusive of superannuation)
A$60,000 (excluding GST)
Dr. Lindsay Wakefield
Non-Executive Director
Fixed remuneration:
A$74,546 (inclusive of superannuation)
Name:
Position:
Mr. Nicholas Burrows
Non-Executive Director
Fixed remuneration:
A$74,546 (inclusive of superannuation)
Name:
Position:
Mr. Simon Morriss
Chief Executive Officer
Fixed remuneration:
A$365,274 (inclusive of superannuation)
Name:
Position:
Mr. Mike Tonroe
former Chief Financial Officer
Fixed remuneration:
A$300,000 (inclusive of superannuation)
Name:
Position:
Mr. Tony Di Pietro
Company Secretary & Chief Financial Officer
Fixed remuneration:
A$300,000 (inclusive of superannuation)
Name:
Position:
Fixed remuneration:
Dr. Richard Allman
Chief Scientific Officer until October 6,2022/Scientific Advisor (Consultant)
A$200,530 (inclusive of superannuation) when employed as Chief Scientific Officer/
Remains on call and invoices the company for his time on a project by project basis.
Name:
Position:
Mr. Carl Stubbings
Chief Commercial Officer
Fixed remuneration:
A$257,415 (inclusive of superannuation)
Name:
Position:
Mr. Kevin Camilleri
Chief Executive Officer, EasyDNA
Fixed remuneration:
A$233,276
64
Annual Report 2023
Key Terms and Conditions:
The key provisions contained in the agreements of the directors of the Company include the following:
● The Company does not have a set tenure for directors, and under the Corporations Act 2001 and the Constitution, the
directorship can cease under prescribed circumstances (example, bankruptcy, conviction of an offence). In addition, the
director may resign by providing notice in writing at any time.
● No form of remuneration linked to short term incentives has been issued to any of the directors.
●
The following are the key provisions contained in the agreements of the other Key Management Personnel:
Mr. Simon Morriss
● Genetic Technologies or Mr. Morriss may terminate the employment agreement by providing two weeks written notice within
the first six months of employment. Thereafter the notice period is 4 months written notice. Genetic Technologies may, at its
own election, make payment in lieu of notice.
● Mr. Morriss shall be subject to restrictions on competing with Genetic Technologies Limited and its related bodies corporate
during the employment and for a period of up to 24 months after the employment ends. Mr. Morriss is also prevented from
soliciting Genetic Technologies employees’ customers or suppliers to cease employment or conducting business with the
Company.
● Mr. Morriss’ CEO employment agreement otherwise contains standard terms and conditions for agreements of its nature,
including confidentiality, retention of intellectual property and leave.
Mr. Mike Tonroe (resigned on November 28, 2022)
● Genetic Technologies or Mr. Tonroe may terminate the employment agreement by providing two weeks written notice within
the first six months of employment. Thereafter the notice period is 4 months written notice. Genetic Technologies may, at its
own election, make payment in lieu of notice.
● Mr. Tonroe shall be subject to restrictions on competing with Genetic Technologies Limited and its related bodies corporate
during the employment and for a period of up to 24 months after the employment ends. Mr. Tonroe is also prevented from
soliciting Genetic Technologies employees’ customers or suppliers to cease employment or conducting business with the
Company.
● Mr. Tonroe’s CFO employment agreement otherwise contains standard terms and conditions for agreements of its nature,
including confidentiality, retention of intellectual property and leave.
Mr. Tony Di Pietro (appointed November 28, 2022)
● Genetic Technologies or Mr. Di Pietro may terminate the employment agreement by providing two weeks written notice
within the first six months of employment. Thereafter the notice period is 4 months written notice. Genetic Technologies may,
at its own election, make payment in lieu of notice.
● Mr. Di Pietro shall be subject to restrictions on competing with Genetic Technologies Limited and its related bodies corporate
during the employment and for a period of up to 24 months after the employment ends. Mr. Di Pietro is also prevented from
soliciting Genetic Technologies employees’ customers or suppliers to cease employment or conducting business with the
Company.
● Mr. Di Pietro’s CFO employment agreement otherwise contains standard terms and conditions for agreements of its nature,
including confidentiality, retention of intellectual property and leave.
Dr. Richard Allman
●
Towards termination, the agreement states that the Company or the employee may terminate at any time by providing a 30-day
notice to the other party or the agreement will be terminated on the expiration of that notice.
● On termination of this agreement the Company will pay the employee the salary package due up to and including the date of
termination.
Mr. Carl Stubbings
● Genetic Technologies or Mr. Stubbings may terminate the employment agreement by providing two weeks written notice
within the first six months of employment. Thereafter the notice period is 4 months written notice. Genetic Technologies may,
at its own election, make payment in lieu of notice.
● Mr. Stubbings shall be subject to restrictions on competing with Genetic Technologies Limited and its related bodies corporate
during the employment and for a period of up to 24 months after the employment ends. Mr. Stubbings is also prevented from
soliciting Genetic Technologies employees’ customers or suppliers to cease employment or conducting business with the
Company.
Genetic Technologies Limited ● Mr. Stubbings’s CCO employment agreement otherwise contains standard terms and conditions for agreements of its nature,
including confidentiality, retention of intellectual property and leave.
Mr. Kevin Camilleri
● Genetic Technologies or Mr. Camilleri may terminate the employment agreement by providing two weeks written notice
within the first six months of employment. Thereafter the notice period is 4 months written notice. Genetic Technologies may,
at its own election, make payment in lieu of notice.
● Mr. Camilleri shall be subject to restrictions on competing with Genetic Technologies Limited and its related bodies corporate
during the employment and for a period of up to 12 months after the employment ends. Mr. Camilleri is also prevented from
soliciting Genetic Technologies employees’ customers or suppliers to cease employment or conducting business with the
Company.
● Mr. Camilleri’s EasyDNA CEO employment agreement otherwise contains standard terms and conditions for agreements of
its nature, including confidentiality, retention of intellectual property and leave.
The details of those Executives nominated as Key Management Personnel under section 300A of the Corporations Act
2001 have been disclosed in this Report. No other employees of the Company meet the definition of “Key Management Personnel”
as defined in IAS 24 Related Party Disclosures, or “senior manager” as defined in the Corporations Act 2001.
Executive officers are those officers who were involved during the year in the strategic direction, general management
or control of the business at a company or operating division level. The remuneration paid to Executives is set with reference to
prevailing market levels and comprises a fixed salary, short-term incentives (which are linked to agreed key performance indicators),
and an option or performance share component (long term incentive). Options/Performance shares are granted to Executives in line
with their respective levels of experience and responsibility.
Share Based Payments
Option holdings and details of options exercised, granted, and forfeited, as part of remuneration
No options were issued under employee incentive scheme during the financial year ended June 30, 2023 and June 30, 2022.
On December 21, 2020, the Company issued 5,000,000 options to Executives and 7,850,000 to other employees, under an employee
incentive scheme. The options have an exercise price of A$0.008 (0.8 cents) per option and expire on December 1, 2023. During the
financial year ending June 30, 2023 250,000,000 options lapsed due to expiry (2022: 10,000,000, 2021: 5,000,000). No options were
exercised during the financial years ending June 30, 2023, 2022 and 2021.
Details of the options held by the Executives and Directors nominated as Key Management Personnel at the year ended
June 30, 2023 are set out below.
Option holdings of Key Management Personnel June 30, 2023
Options
Balance at
start of the
year
Granted as
remuneration
Granted as
part of cost
of capital
Exercised
Lapsed
Balance at
end of the
year
Vested and
exercisable
Dr. Lindsay Wakefield
-
Mr. Peter Rubinstein
125,000,000
Dr. Jerzy Muchnicki
125,000,000
Dr. Richard Allman
5,000,000
Mr. Stanley Sack
Mr. Mike Tonroe
Mr. Carl Stubbings
Mr. Kevin Camilleri
-
-
-
-
Total
255,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(125,000,000)
(125,000,000)
-
-
-
-
-
-
-
-
-
-
-
5,000,000
5,000,000
-
-
-
-
-
-
-
-
(250,000,000)
5,000,000
5,000,000
66
Annual Report 2023 The Company introduced a Staff Share Plan on November 30, 2001. On November 19, 2008, the shareholders of the
Company approved the introduction of a new Employee Option Plan. Collectively, these Plans establish the eligibility of our
employees and those of any subsidiaries, and of consultants and independent contractors to a participating company who are declared
by the Board to be eligible, to participate. Broadly speaking, the respective Plans permits us, at the discretion of the Board, to issue
traditional options (with an exercise price). The Plans conform to the IFSA Executive Share and Option Scheme Guidelines and,
where participation is to be made available to staff who reside outside Australia, there may have to be modifications to the terms of
grant to meet or better comply with local laws or practice.
As of June 30, 2023, there was one executive and 7 employees who held options that had been granted under the Company’s
respective option plans. Options issued under the Plan carry no rights to dividends and no voting rights.
As of the date of this Annual Report, there was a total of 8,000,000 unlisted employee options outstanding.
Options granted under the Employee Option Plan carry no rights to dividends and no voting rights and generally have an
expiry date of five years from the date of the offer to grant options.
During the year ended June 30, 2023, the Company did not record a share-based payments expense in respect of the options
granted (2022: Nil).
The following is additional information relating to the options granted under the Employee Share Option Plan as of June
30, 2023:
Options outstanding
Options exercisable
Range of exercise
prices
Number of
options
Weighted average
exercise price
A$
Remaining weighted
average contractual
life (years)
Number of
options
Weighted average
exercise price
A$
A$0.008
8,400,000
0.008
0.42
8,400,000
0.008
Unlisted performance rights holdings and details of performance rights exercised, granted, and forfeited, as part of
remuneration
Performance Rights are not currently quoted on the ASX and as such have no ready market value. The Performance
Rights each grant the holder a right of grant of one ordinary Share in the Company upon vesting of the Performance Rights for nil
consideration. Accordingly, the Performance Rights may have a present value at the date of their grant. Various factors impact upon
the value of Performance Rights including:
●
●
●
the period outstanding before the expiry date of the Performance Rights;
the underlying price or value of the securities into which they may be converted;
the proportion of the issued capital as expanded consequent upon conversion of the Performance Rights into Shares (i.e.
whether or not the shares that might be acquired upon exercise of the options represent a controlling or other significant
interest); and
●
the value of the shares into which the Performance Rights may be converted.
Key management personnel, being the recipients of the performance rights, must remain employed by the Company for the
relevant performance right to vest.
No new performance rights were issued during the financial year. (2022: 80,000,000). The performance rights issued to
Mr Michael Tonroe, 40,000,000, in the prior financial year lapsed upon his resignation in November 2022 (2022: 15,000,000). No
performance rights were exercised during the financial year (2022: 3,937,500).
Valuation of performance rights granted in the year ended June 30, 2022
During the year ended June 30, 2022, the Board has approved for the following Performance Rights to be issued to the Key
Management Personnel below:
●
●
●
40,000,000 Performance Rights to Mr. Michael Tonroe
20,000,000 Performance Rights to Mr. Carl Stubbings
20,000,000 Performance Rights to Mr. Kevin Camilleri
Genetic Technologies Limited
Performance hurdles
Key management personnel, being the recipients of the performance rights, must remain engaged by the Company at the
time of satisfaction of the performance hurdle in order for the relevant Performance Right to vest.
The performance rights for key management personnel vest and are exercisable upon the Share price reaching A$0.016
while or greater for more than 15-day consecutive ASX trading days.
There are various formulae which can be applied to determining the theoretical value of performance rights (including the
formula known as the Black-Scholes Model valuation formula and the Binomial model).
The Company commissioned an independent valuation of these performance rights. The independent valuer has applied the Binomial
model in providing the valuation of the performance rights.
Inherent in the application of the Binomial model are a number of inputs, some of which must be assumed. The data relied upon in
applying the Binomial model was:
a)
exercise price being 0.0 cents per Performance Right for all classes;
b) VWAP hurdle for key management personnel (15 days consecutive share price hurdle) equaling A$0.016 for Performance
Rights;
sales and market cap hurdles as listed above for Performance Rights;
the continuously compounded risk-free rate is as per table below (calculated based on yield of Australian government bonds,
as at the grant dates for a 2 or 3 year period matching the expected life of Performance Rights);
the expected option life of 3 years for key management personnel and 2 years for others; and
a volatility measure between 149% to 161%.
c)
d)
e)
f)
Based on the independent valuation of the performance rights, the Company agrees that the total value of these performance
rights to be issued to each member of key management personnel (depending on the share price at issue) is as follows:
Performance rights issued during prior year, vested during the year
Number of
Performance
Rights issued
20,000,000
20,000,000
40,000,000
Valuation
(cents)
0.52
0.42
Total fair value
of Performance
Rights
A$
Expense
accounted for in
2022
A$
Expense
accounted for
during the year
A$
103,104
83,216
186,320
26,459
16,719
43,178
34,368
27,739
62,107
Mr. Carl Stubbings
Mr. Kevin Camilleri
Total
Performance rights issued during prior year, lapsed during the financial year ending June30, 2023
Number of
Performance
Rights issued
40,000,000
40,000,000
Valuation
(cents)
0.73
Total fair value
of Performance
Rights
A$
Expense
accounted for in
2022
A$
Expense
accounted for
during the year
A$
291,428
291,428
101,043
101,043
-
-
Mr. Michael Tonroe
Total
Valuation of performance rights granted in prior years
Based on the independent valuation of the performance rights, the Company agrees that the total value of the outstanding
performance rights issued to key management personnel (depending on the share price at issue) is as follows:
68
Annual Report 2023
Valuation of Class A Performance Rights granted prior to the year ended June 30, 2022
Performance hurdles
The Class A Performance Rights vest and are exercisable upon the Share price reaching A$0.012 or greater for more than
10-day consecutive ASX trading days.
The Class B Performance Rights vest and are exercisable upon the Share price reaching A$0.014 or greater for more than
10-day consecutive ASX trading days and sales commence on the Consumer Initiated Testing (CIT) platform in either Australia or
the United States of America.
The Class C Performance Rights vest and are exercisable upon a minimum of 4,000 tests being processed in any 12-month
period or the market cap of GTG reaching A$100 million or above and being sustained for more than 10 consecutive ASX trading
days, whichever happens sooner.
The Class D Performance Rights vest and are exercisable upon the Share price reaching A$0.016 or greater for more than
15-day consecutive ASX trading days.
The Class E Performance Rights vest and are exercisable upon the first commercial sale of the Company’s COVID-19 risk
test with IBX (Infinity BioLogix).
The Company commissioned an independent valuation of these performance rights. The independent valuer has applied
the Binomial model in providing the valuation of these performance rights. Inherent in the application of the Binomial model are a
number of inputs, some of which must be assumed. The data relied upon in applying the Binomial model was:
a)
exercise price being 0.0 cents per Performance Right for all classes;
b) VWAP hurdle (10 days consecutive share price hurdle) equaling A$0.012 for Class A and A$0.014 for Class B, and (15 days
consecutive share price hurdle) equaling A$0.016 for Class D Performance Rights;
sales and market cap hurdles as listed above for Class C and Class E Performance Rights;
the continuously compounded risk-free rate being 0.111% for all classes of Performance Rights (based on a 3 year Australian
Government yield as at December 21, 2020);
the expected option life of 2 years for Class E Performance Rights and 3 years for all other classes of Performance Rights; and
a volatility measure of 158.23%.
c)
d)
e)
f)
The values calculated are set out below and are recognized as a share-based payment expense is included within general
and administrative costs in the statement of profit or loss and other comprehensive income. Performance rights issued during prior
years, lapse during the year
Valuation of class A performance rights granted in prior years, and held by key management personnel at June 30,
2023
Number of
Performance
Rights issued
Valuation
per Class A
(cents)
5,000,000
5,000,000
7,500,000
7,500,000
25,000,000
0.6702
0.6702
0.6702
0.6702
Total fair value
of Class A
Performance
Rights
A$
Expense
accounted in 2021
A$
Expense
accounted for
during the
year
A$
33,512
33,512
50,268
50,268
167,560
33,512
33,512
50,268
50,268
167,560
-
-
-
-
-
Dr. Lindsay Wakefield
Mr. Nicholas Burrows
Dr. Jerzy Muchnicki
Mr. Peter Rubinstein
Total
Genetic Technologies Limited
Valuation of class B performance rights granted in prior years, and held by key management personnel at June 30,
2023
Number of
Performance
Rights issued
Valuation
per Class B
(cents)
Total fair
value of Class B
Performance
Rights
A$
Expense
accounted in
2021
A$
Expense
accounted for
during the
year
A$
25,000,000
25,000,000
50,000,000
0.6646
0.6646
166,158
166,158
332,316
166,158
166,158
332,316
-
-
-
Dr. Jerzy Muchnicki
Mr. Peter Rubinstein
Valuation of class C performance rights granted in prior years, and held by key management personnel at June 30,
Total
2023
Total
2023
Dr. Jerzy Muchnicki
Mr. Peter Rubinstein
Number of
Performance
Rights issued
25,000,000
25,000,000
50,000,000
Valuation
per Class C
(cents)
0.6702
0.6702
Total fair value
of Class C
Performance Rights
A$
167,541
167,541
335,082
Expense
accounted in
2021
A$
Expense
accounted
for during
the year
A$
-
-
-
-
-
-
Valuation of class D performance rights granted in prior years, and held by key management personnel at June 30,
Number of
Performance
Rights issued
60,000,000
Total fair value
of Class D
Performance
Rights
A$
Expense
accounted in
2022
A$
Expense
accounted for
during the
year
A$
Valuation
per Class
D (cents)
0.96
574,037
191,346
191,346
Mr Simon Morriss
Valuation of class E performance rights granted in prior years and exercised in the financial year ending June 30,
2022
Mr Stanley Sack
Number of
Performance
Rights issued
3,937,500
Total fair value
of Class E
Performance
Rights
A$
Expense
accounted in
2021
A$
Expense
accounted for
during the
year
A$
Valuation
per Class
E (cents)
0.90
35,438
4,622
-
Class A performance rights issued in prior years, that lapsed during the financial year ending June 30, 2022
Dr. Lindsay Wakefield
Dr. Jerzy Muchnicki
Mr. Peter Rubinstein
Total
Number of
Performance
Rights issued
3,750,000
6,250,000
5,000,000
15,000,000
Valuation
per Class
A (cents)
0.77
0.77
0.77
Total fair value
of Class A
Performance
Rights
A$
Expense
accounted in
2022
A$
Expense
accounted for
during the
year
A$
28,875
48,125
38,500
115,500
4,010
6,684
5,347
16,041
-
-
-
-
70
Annual Report 2023
The values calculated as set out above are recognized as a share-based payment expense is included within general and
administrative costs in the statement of profit or loss and other comprehensive income for the relevant period.
The following is the reconciliation of Performance Rights for the year ended June 30, 2023 held by Key Management
Personnel:
Performance Rights
Dr. Lindsay Wakefield
Mr. Peter Rubinstein
Mr. Nicholas Burrows
Dr. Jerzy Muchnicki
Dr. Richard Allman
Mr. Tony Di Pietro
Mr. Mike Tonroe
Mr. Simon Morriss
Mr. Carl Stubbings
Mr. Kevin Camilleri
Total
Balance at
start of the
year
5,000,000
57,500,000
5,000,000
57,500,000
-
-
40,000,000
60,000,000
20,000,000
20,000,000
265,000,000
Granted as
remuneration
Exercised
Lapsed/
Forfeited
Balance at the
end of year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(40,000,000)
5,000,000
57,500,000
5,000,000
57,500,000
-
-
-
-
-
-
60,000,000
20,000,000
20,000,000
(40,000,000)
225,000,000
Performance rights included in the balance at start of the financial year
The unlisted performance rights granted and outstanding as of June 30, 2023 are as follows:
Director
Mr. Peter Rubinstein (Class A)
Mr Nick Burrows (Class A)
Dr. Jerzy Muchnicki (Class A)
Mr. Lindsay Wakefield (Class A)
Mr. Peter Rubinstein (Class B)
Dr. Jerzy Muchnicki (Class B)
Mr. Peter Rubinstein (Class C)
Dr. Jerzy Muchnicki (Class C)
2023
Fair Value
A$
Expiration Date
7,500,000
5,000,000
7,500,000
5,000,000
25,000,000
25,000,000
25,000,000
25,000,000
50,268
33,512
50,268
33,512
21-Dec-2023
21-Dec-2023
21-Dec-2023
21-Dec-2023
166,158
166,158
21-Dec-2023
21-Dec-2023
167,541
167,541
21-Dec-2023
21-Dec-2023
Mr. Simon Morriss (Class D)
60,000,000
574,037
4-Feb-2024
Mr. Carl Stubbings
Mr. Kevin Camilleri
20,000,000
20,000,000
103,104
83,216
22-Sep-2024
22-Nov-2024
Balance at the end of the financial year
225,000,000
1,595,315
Genetic Technologies Limited
The following is additional information relating to the performance rights granted, as of June 30, 2023:
Performance rights outstanding
Performance
rights exercisable
Range of exercise
prices
Number of
Performance
Rights
Weighted average
exercise price
A$
Remaining Weighted
average contractual
life (years)
Number of
Perf. rights
Weighted average
exercise price
A$
A$0.00 - A$0.00
225,000,000
0.000
0.66
225,000,000
0.00
Australian disclosure requirements: ordinary shares of Genetic Technologies Limited held by key management personnel at
the date of this Directors’ report are as follows:
Balance at start
of the year1
Granted as
remuneration
Received on
exercised
options
Other Chang-
es2
Balance at the
end of year
Ordinary Shares
Dr. Lindsay Wakefield
Mr. Peter Rubinstein
Mr. Nicholas Burrows
Dr. Jerzy Muchnicki
Dr. Richard Allman
Mr. Tony Di Pietro
Mr. Mike Tonroe
Mr. Simon Morriss
Mr. Carl Stubbings
Mr. Kevin Camilleri
9,418,104
308,132,009
1,670,000
263,085,885
553,338
-
-
-
-
-
Total
582,859,336
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(38,400,000)
-
500,000
-
-
9,418,104
308,132,009
1,670,000
224,685,885
553,338
500,000
-
-
750,000
750,000
-
-
(37,150,000)
545,709,336
1. Balance may include shares held prior to individuals becoming KMP. For individuals who became KMP during the period, the
balance is as at the date they became KMP.
2. Other changes incorporate changes from acquisition and disposals of ordinary share transactions.
Indemnification and Insurance with respect to Directors
We are obligated pursuant to an indemnity agreement, to indemnify the current Directors and executive officers and former
Directors against all liabilities to third parties that may arise from their position as Directors or officers of the Company and our
controlled entities, except where to do so would be prohibited by law. In addition, the Company does currently carry insurance in
respect of Directors’ and officers’ liabilities for current and former Directors, Company Secretary and executive officers or employees
under certain circumstances as specified in the insurance policy.
Loans to Key Management Personnel
There have been no loans to KMP’s during the financial year or prior financial year.
Voting and comments at the Company’s 2022 Annual General Meeting
The Company received 84.49% of the vote in favor of its Remuneration Report for the 2022 financial year. The Company
did not receive any specific feedback at the AGM on its remuneration policies.
(End of the Remuneration Report (Audited) for Australian Disclosure Requirements)
72
Annual Report 2023
Other Australian Disclosure Requirements
Auditor’s Independence Declaration
There were no former partners or directors of Grant Thornton Audit Pty Ltd, the Company’s auditor, who were or were at
any time during the financial year, an officer of the Company.
A copy of the auditor’s independence declaration under Section 307C of the Corporations Act 2001 in relation to the audit
for the year ended June 30, 2023 is included in Exhibit 15.4 of this annual report on Form 20-F.
Directors’ resolution
The components of our directors’ report are incorporated in various places within this annual report on the Form 20-F. A
table charting these components is included within ‘Exhibit 15.3 Appendix 4E’.
This report is made in accordance with a resolution of directors.
/s/ Peter Rubinstein
Director
Melbourne
August 30, 2023
Genetic Technologies Limited
Item 6.C Board Practices
The Board of Directors
Under the Company’s Constitution, its Board of Directors is required to comprise at least three Directors. As of the date of
this Annual Report, our Board comprised four Directors.
The role of the Board includes:
(a)
(b)
(c)
(d)
(e)
(f)
Reviewing and making recommendations in remuneration packages and policies applicable to directors, senior executives and consultants.
Nomination of external auditors and reviewing the adequacy of external audit arrangements.
Establishing the overall internal control framework over financial reporting, quality and integrity of personnel and investment appraisal. In
establishing an appropriate framework, the board recognized that no cost-effective internal control systems will preclude all errors and irreg-
ularities.
Establishing and maintaining appropriate ethical standards in dealings with business associates, suppliers, advisers and regulators, competitors,
the community and other employees.
Identifying areas of significant business risk and implementing corrective action as soon as practicable after a risk is identified.
Nominating audit and remuneration committee members.
The Board meets to discuss business regularly throughout the year, with additional meetings being held when circumstances
warrant. Included in the table below are details of the meetings of the Board and the sub-committees of the Board that were held
during the 2023 financial year.
Directors’ meetings
Audit & Risk Committee
meetings
Remuneration Committee
meetings
Attended
Eligible
Attended
Eligible
Attended
Eligible
Dr. Lindsay Wakefield
Dr. Jerzy Muchnicki
Mr. Peter Rubinstein
Mr. Nicholas Burrows
11
9
12
12
12
12
12
12
6
-
6
6
6
-
6
6
3
-
3
3
3
-
3
3
Committees of the Board
The Board has established an Audit & Risk Committee which operates under a specific Charter approved by the Board.
It is the Board’s responsibility to ensure that an effective internal control framework exists within the Company. This includes
internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the
maintenance of proper accounting records, and the reliability of financial information as well as non-financial considerations such as
the benchmarking of operational key performance indicators.
The Board has delegated the responsibility for the establishment and maintenance of a framework of internal control and
ethical standards for the management of the Company to the Audit & Risk Committee. The Audit & Risk Committee also provides the
Board with assurance regarding the reliability of financial information for inclusion in the financial reports. As at date of this report,
all of the members of the Audit & Risk Committee are independent Non-Executive Directors.
The Remuneration Committee is, amongst other things, responsible for determining and reviewing remuneration
arrangements for the Directors, the Chief Executive Officer and the Senior Leadership Team. The Chairman of the Committee is an
independent non-executive director.
The Remuneration Committee assesses the appropriateness of the nature and amount of remuneration paid to Directors and Executives
on a periodic basis by reference to relevant employment market conditions, with the overall objective of ensuring maximum
shareholder benefit from the retention of a high-quality Board and senior leadership team.
74
Annual Report 2023
Committee membership
As at the date of this Report, the composition of these two Sub-Committees are:
Audit & Risk Committee:
Mr. Nicholas Burrows — Chairman of the Committee
Mr. Peter Rubinstein
Dr. Lindsay Wakefield
Remuneration Committee:
Dr. Lindsay Wakefield — Chairman of the Committee
Mr. Peter Rubinstein
Mr. Nicholas Burrows
Compliance with NASDAQ Rules
NASDAQ listing rules require that the Company disclose the home country practices that we will follow in lieu of compliance
with NASDAQ corporate governance rules. The following describes the home country practices and the related NASDAQ rule:
Majority of Independent Directors: The Company follows home country practice rather than NASDAQ’s requirement
in Marketplace Rule 4350(c) (1) that the majority of the Board of each issuer be comprised of independent directors as defined in
Marketplace Rule 4200. As of the date of this Annual Report, with there were three independent Directors namely Mr. Nick Burrows,
Mr. Peter Rubinstein and Dr. Lindsay Wakefield which led to our Board of Directors being comprised of a majority of independent
directors.
Compensation of Officers: The Company follows home country practice rather than NASDAQ’s requirement in Marketplace
Rule 4350(c) (3) that chief executive compensation be determined or recommended to the Board by the majority of independent
directors or a compensation committee of independent directors. Similarly, compensation of other officers is not determined or
recommended to the Board by a majority of the independent directors or a compensation committee comprised solely of independent
directors. These decisions are made by the Company’s remuneration committee.
Nomination: The Company follow home country practice rather than NASDAQ’s requirement in Marketplace Rule 4350(c)
(4) that director nominees be selected or recommended by a majority of the independent directors or by a nominations committee
comprised of independent directors. These decisions are made by the Company’s full Board which is comprised of a majority of
independent directors which constitute Mr. Nick Burrows, Mr. Peter Rubinstein, Dr. Jerzy Muchnicki and Dr. Lindsay Wakefield.
The ASX does not have a requirement that each listed issuer have a nominations committee or otherwise follow the
procedures embodied in NASDAQ’s Marketplace Rule. Furthermore, no law, rule or regulation of the ASIC has such a requirement
nor does the applicable corporate law legislation. Accordingly, selections or recommendations of director nominees by a committee
that is not comprised of a majority of directors that are not independent is not prohibited by the laws of Australia.
Quorum: The Company follows home country practice rather than NASDAQ’s requirement in Marketplace Rule 4350(f)
that each issuer provides for a quorum of at least 33 1/3 percent of the outstanding shares of the issuer’s ordinary stock (voting stock).
Pursuant to the Company’s Constitution it is currently required to have a quorum for a general meeting of three persons. The practice
followed by the Company is not prohibited by Australian law.
Shareholder Approval for Capital Issuance: The Company has elected to follow certain home country practices in lieu of
NASDAQ Marketplace Rule 5635. For example, the Company is entitled to an annual 15% of capital placement capacity under ASX
Listing Rule 7.1 without shareholder approval. If this amount of annual entitlement is aggregated with an additional placement of
Ordinary Shares, including through the grant of options over Ordinary Shares, that exceeds 20% of the outstanding share capital,
only the excess over the 15% annual allowance requires shareholder approval under Australian law. Such home country practice is
not prohibited by the laws of Australia.
Genetic Technologies Limited
Board diversity matrix
Board Diversity Matrix (As of June 30, 2023)
Country of Principal Executive Offices
Australia
Foreign Private Issuer
Disclosure Prohibited under Home Country Law
Total Number of Directors
Yes
No
4
Female
Male
Non-Binary
Did Not
Disclose
Gender
-
4
-
-
Part I: Gender Identity
Directors
Part II: Demographic Background
Underrepresented Individual in Home Country Jurisdiction
LGBTQ+
Did Not Disclose Demographic Background
1
-
-
As at 7th August 2023 the Company has less than 5 Directors and at that date does not have a diverse director on the Board.
Accordingly, we are not in compliance with Nasdaq Rule 5605(f) as we did not meet the applicable board diversity objective by the
end of the phase-in period on that date.
The Company’s Directors acknowledge the importance of board diversity and this is considered as part of the Company’s regular
director skills assessment process. In considering the output from this skills assessment process, the Board has formally identified
the need to address and prioritize Board diversity. Accordingly, one of the key People and Culture strategic pillar initiatives from the
Company’s current strategic plan, is to identify and appoint a suitable female director over the course of the financial year ended June
30, 2024. The Company’s Remuneration Committee will oversee this process, consistent with its Charter, and will provide a formal
recommendation to the Board.
Item 6.D Employees
As of the date of this Annual Report, the Company comprising the Company and its subsidiaries, employed 60 full-time
equivalent employees. The number of full-time equivalent employees as of the end of each respective financial year ended June 30
are as follows:
2023
2022
2021
Item 6.E Share Ownership
60
52
18
The relevant interest of the directors in the share capital of the Company as notified by them to the Australian Securities Exchange in
accordance with section 205G(1) of the Corporations Act 2001 as of the date of this Annual Report is as follows:
Director
Dr. Lindsay Wakefield
Dr. Jerzy Muchnicki
Mr. Peter Rubinstein
Mr. Nicholas Burrows
Ordinary
shares
9,418,104
224,685,885
308,132,009
1,670,000
Percent-
age of
Capital held
0.10 %
2.85 %
3.34 %
0.02 %
76
Annual Report 2023
Item 7. Major Shareholders and Related Party Transactions
Item 7.A Major Shareholders
As at the date of this Annual Report, no shareholders hold a beneficial ownership of 5% or more of our voting securities.
The number of Ordinary Shares on issue in Genetic Technologies Limited as of the date of this Annual Report was
11,541,658,143. The number of holders of Ordinary Shares in Genetic Technologies Limited as of the date of this Annual Report was
approximately 4,846 (August 21, 2023).
The Company is not aware of any direct or indirect ownership or control of it by another corporation(s), by any foreign
government or by any other natural or legal person(s) severally or jointly. Principal shareholders do not enjoy any special or different
voting rights from those to which other holders of Ordinary Shares are entitled. The Company does not know of any arrangements,
the operation of which may at a subsequent date result in a change in control of the Company.
Record Holders
As of August 21, 2023, there were 4,846 holders of record of our ordinary shares, of which 33 record holders, holding
approximately 0.02% of our ordinary shares, had registered addresses in the United States. These numbers are not representative of
the number of beneficial holders of our shares nor are they representative of where such beneficial holders reside, since many of these
ordinary shares were held of record by brokers or other nominees. The majority of trading by our U.S. investors is done by means of
ADSs that are held of record by HSBC Custody Nominees (Australia) Ltd., which held 70.35% of our ordinary shares as of such date.
Item 7.B Related Party Transactions
During the year ended June 30, 2023, 2022 and 2021, the only transactions between entities within the Company and
other related parties occurred, are as listed below. Except where noted, all amounts were charged on similar to market terms and at
commercial rates.
Transactions within the Company and with other related parties
During the year ended June 30, 2023, other than compensation paid to directors and other members of key management
personnel, see “Item 6.B Compensation”, the only transactions between entities within the Company and other related parties are as
listed below. Except where noted, all amounts were charged on similar to market terms and at commercial rates.
Mr. Phillip Hains (Former Chief Financial Officer)
On July 15, 2019, the Company announced that it had appointed Mr. Phillip Hains (MBA, CA) as the Chief Financial
Officer who has over 30 years of extensive experience in roles with a portfolio of ASX and NASDAQ listed companies and provides
CFO services through his firm The CFO Solution. Prior to this point the Company had a similar arrangement with The CFO Solution,
where it would engage and provide services of overall CFO, accounting and other finance related activities.
In the prior reporting period, the Company paid A$91,615 to The CFO Solution towards provision of overall CFO,
accounting and other finance related activities. During the reporting period, the Company did not transact with The CFO Solution.
Mr. Stanley Sack (former Chief Operating Officer)
On May 18, 2020, the Company appointed Mr. Stanley Sack who provides consulting in the capacity of Chief Operating
Officer. Mr. Sack had spent 15 years in large listed entities in executive positions managing large business divisions. He has worked
with a high-net-worth family managing all their operating businesses and private equity activities. Mr. Sack built an Allied Health
Business in the aged care and community care space which became the biggest Mobile Allied Health Business in Australia, and was
recently sold to a large medical insurance company.
During the reporting period, the Company had no transactions (2022: A$107,188) with Mr. Stanley Sack’s entity Cobben
Investments Pty Ltd towards provision of consulting services in relation to provision of duties related to Chief Operating Officer of
the Company.
Mr. Peter Rubinstein (Non-Executive Director and Chairman)
During the financial year ended June 30, 2020, the Board approved to obtain consulting services in relation to capital raises,
compliance, NASDAQ hearings and investor relations from its Non-Executive Director and current Chairman, Mr. Peter Rubinstein.
The services procured were through Mr. Peter Rubinstein’s associate entity ValueAdmin.com Pty Ltd and amounted to A$60,000
(2022: A$60,000), which is included as part of the cash salary and fees in the remuneration report as at June 30, 2023.
Genetic Technologies Limited
There were no transactions with parties related to Key Management Personnel during the year other than that disclosed
above.
Dr. Jerzy Muchnicki (Non-Independent Non-Executive Director)
During the financial year ended June 30, 2022, the Board approved to obtain consulting services in relation to PRS and
Germline Integration; Epigenetics; Somatic Testing; NIPT; Carrier testing and related marketing advice from its Non-Independent
Non-Executive Director, Dr. Jerzy Muchnicki. The services procured were through Dr. Jerzy Muchnicki’s private consultancy and
amounted to A$50,000 (2021: Nil) that is included as part of the cash salary and fees in the remuneration report as at June 30, 2022.
There were no transactions with parties related to Key Management Personnel during the year other than that disclosed
above.
Performance Rights Issuance
After receiving another requisite shareholder approval on December 10, 2020, the Company issued additional 125,000,000
Performance Rights to Directors of the Company as follows:
●
●
●
●
5,000,000 Class A Performance Rights to Dr. Lindsay Wakefield
7,500,000 Class A Performance Rights, 25,000,000 Class B Performance Rights and 25,000,000 Class C Performance Rights
to Dr. Jerzy Muchnicki
7,500,00 Class A Performance Rights, 25,000,000 Class B Performance Rights and 25,000,000 Class C Performance Rights
to Mr. Peter Rubinstein
5,000,000 Class A Performance Rights to Mr. Nicholas Burrows
During the year ended June 30, 2021, the Board has approved for the following Performance Rights to be issued to the
Chief Executive Officer and Chief Operating Officer:
●
●
60,000,000 Class D Performance Rights to Mr. Simon Morriss
3,937,500 Class E Performance Rights to Mr. Stanley Sack
During the year ended June 30, 2022 the Board has approved for the following Performance Rights to be issued to the Key
Management Personnel below:
●
●
●
40,000,000 Performance Rights to Mr. Michael Tonroe
20,000,000 Performance Rights to Mr. Carl Stubbings
20,000,000 Performance Rights to Mr. Kevin Camilleri
The Company has accounted for these Performance Rights in accordance with its accounting policy for share-based
payment transactions, recording A$125,500 (2022: A$437,508, 2021: A$622,725) of associated expense in the current reporting
period. During the financial year ending June 30, 2023 the Performances Rights issued to Mr. Michael Tonroe were forfeit as Mr.
Tonroe resigned from his position as CFO.
Item 7.C Interests of Experts and Counsel
Not applicable.
Item 8. Financial Information
Item 8.A Consolidated Statements and Other Financial Information
The information included in Item 18 of this Annual Report is referred to and referenced into this Item 8.A.
Legal Proceedings
We are not currently a party to any legal proceedings. From time to time, we may be a party to litigation or subject to
claims incident to the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty,
we currently believe that the final outcome of these ordinary course matters will not have a significant effect on our financial position
or profitability. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs,
diversion of management resources and other factors.
78
Annual Report 2023
Dividends
Until our businesses are profitable beyond our expected research and development needs, our Directors are unlikely to be
able to recommend that any dividend be paid to our shareholders. Our Directors will not resolve a formal dividend policy until we
generate profits. Our current intention is to reinvest our income in the continued development and expansion of our businesses.
Item 8.B Significant Changes
There have been no significant changes in the operational or financial condition of the Company since June 30, 2023.
Item 9. The Offer and Listing
Item 9.A Offer and Listing Details
The Company’s Ordinary Shares have been listed on the Australian Securities Exchange (the “ASX”) since July 1987 and
trade there under the symbol GTG. The Company’s securities are also listed on NASDAQ’s Capital Market (under the ticker GENE)
in the form of American Depositary Shares, each of which represents 600 Ordinary Shares.
Item 9.B Plan of Distribution
Not applicable.
Item 9.C Markets
See “Item 9.A Offer and Listing Details.”
Item 9.D Selling Shareholders
Not applicable.
Item 9.E Dilution
Not applicable.
Item 9.F Expenses of the Issue
Not applicable.
Item 10. Additional Information
Item 10.A Share Capital
Not applicable.
Item 10.B Our Constitution
Our registration number is 009 212 328. Our Constitution has been posted on the Company’s website and has been filed
with the SEC.
Purposes and Objects
Our Constitution does not specify any purposes or objects of the Company.
The Powers of the Directors
Under the provisions of our Constitution our Directors may exercise all of the powers of our company, other than those that
are required by our Constitution or the Corporations Act 2001 of Australia to be exercised at a general meeting of shareholders. A
director may participate in a meeting and vote on a proposal, arrangement or contract in which he or she is materially interested, so
long as the director’s interest is declared in accordance with the Corporations Act 2001. The authority of our directors to enter into
borrowing arrangements on our behalf is not limited, except in the same manner as any other transaction by us.
Genetic Technologies Limited Rights Attached to Our Ordinary Shares
The concept of authorized share capital no longer exists in Australia and as a result, our authorized share capital is unlimited.
All our outstanding Ordinary Shares are validly issued, fully paid and non-assessable. The rights attached to our Ordinary Shares are
as follows:
Dividend rights. If our board of directors recommends a dividend, registered holders of our Ordinary Shares may declare a
dividend by ordinary resolution in a general meeting. The dividend, however, cannot exceed the amount recommended by our board
of directors. Our board of directors may declare an interim dividend.
Voting rights. Holders of Ordinary Shares have one vote for each Ordinary Share held on all matters submitted to a vote
of shareholders. Such voting rights may be affected by the grant of any special voting rights to the holders of a class of shares with
preferential rights that may be authorized in the future.
The quorum required for an ordinary meeting of shareholders consists of at least three shareholders represented in person
or by proxy. A meeting adjourned for lack of a quorum generally is adjourned to the same day in the following week at the same time
and place or any time and place as the directors designate in a notice to the shareholders. At the reconvened meeting, the required
quorum consists of any two members present in person or by proxy.
An ordinary resolution, such as a resolution for the declaration of dividends, requires approval by the holders of a majority
of the voting rights represented at the meeting, in person, by proxy or by written ballot and voting thereon. Under our Constitution, a
special resolution, such as amending our Constitution, approving any change in capitalization, winding-up, authorization of a class of
shares with special rights, or other changes as specified in our Constitution, requires approval of a special majority, representing the
holders of no less than 75% of the voting rights represented at the meeting in person, by proxy or by written ballot, and voting thereon.
Pursuant to our Constitution, our directors are elected at our annual general meeting of shareholders by a vote of the holders
of a majority of the voting power represented and voting at such meeting.
Rights in our profits. Our shareholders have the right to share in our profits distributed as a dividend and any other permitted
distribution.
Rights in the event of liquidation. In the event of our liquidation, after satisfaction of liabilities to creditors, our assets will
be distributed to the holders of Ordinary Shares in proportion to the nominal value of their holdings. This right may be affected by the
grant of preferential dividend or distribution rights to the holders of a class of shares with preferential rights that may be authorized
in the future.
Changing Rights Attached to Shares
According to our Constitution, in order to change the rights attached to any class of shares, unless otherwise provided by
the terms of the class, such change must be adopted by a general meeting of the shareholders and by a separate general meeting of the
holders of the affected class with a majority of 75% of the voting power participating in such meeting.
Annual and Extraordinary Meetings
Our Board of Directors must convene an annual meeting of shareholders at least once every calendar year, within five
months of our last fiscal year-end. Notice of at least 28 days prior to the date of the meeting is required. An extraordinary meeting
may be convened by the board of directors, it decides or upon a demand of any directors, or of one or more shareholders holding in the
aggregate at least five percent of our issued capital. An extraordinary meeting must be called not more than 21 days after the request
is made. The meeting must be held not later than two months after the request is given.
Limitations on the Rights to Own Securities in Our Company
Neither our Constitution nor the laws of the Commonwealth of Australia restrict in any way the ownership or voting of our
shares. However, acquisitions and proposed acquisitions of securities in Australian companies may be subject to review and approval
by the Australian Federal Treasurer under the Takeovers Act as described under Item 10.D below.
Changes in Our Capital
Pursuant to the Listing Rules of the ASX, without shareholder approval, we may not issue more than 25% of our outstanding
Ordinary Shares in any twelve month period other than by a pro rata rights offering or a share purchase plan offer (of shares with a
value at the issue price of up to A$30,000 per shareholder to a maximum of 30% of our outstanding shares) in each case to the then
existing shareholders.
80
Annual Report 2023
Takeovers Act
There are no limitations, either under the laws of Australia or under the Company’s Constitution, to the right of non-
residents to hold or vote our Technologies Ordinary Shares other than the Commonwealth Foreign Acquisitions and Takeovers Act
1975 (the “Takeovers Act”). The Takeovers Act may affect the right of non-Australian residents, including U.S. residents, to hold
Ordinary Shares but does not affect the right to vote, or any other rights associated with, any Ordinary Shares held in compliance with
its provisions. Acquisitions of shares in Australian companies by foreign interests are subject to review and approval by the Treasurer
of the Commonwealth of Australia under the Takeovers Act. The Takeovers Act applies to any acquisition of outstanding shares of
an Australian company that exceeds, or results in a foreign person or persons controlling the voting power of more than a certain
percentage of those shares. The thresholds are 15% where the shares are acquired by a foreign person, or Company of associated
foreign persons, or 40% in aggregate in the case of foreign persons who are not associated. Any proposed acquisition that would
result in an individual foreign person (with associates) holding more than 15% must be notified to the Treasurer in advance of the
acquisition. There are statutory limitations in Australia on foreign ownership of certain businesses, such as banks and airlines, not
relevant to the Company. However, there are no other statutory or regulatory provisions of Australian law or Australian Securities
Exchange requirements that restrict foreign ownership or control of the Company.
Corporations Act 2001
As applied to the Company, the Corporations Act 2001 prohibits any legal person (including a corporation) from acquiring
a relevant interest in Ordinary Shares if after the acquisition that person or any other person’s voting power in the Company increases
from 20% or below to more than 20%, or from a starting point that is above 20% and below 90%.
This prohibition is subject to a number of specific exceptions set out in section 611 of the Corporations Act 2001 which
must be strictly complied with to be applicable.
In general terms, a person is considered to have a “relevant interest” in a share in the Company if that person is the holder
of that share, has the power to exercise, or control the exercise of, a right to vote attached to that share, or has the power to dispose
of, or to control the exercise of a power to dispose of that share.
It does not matter how remote the relevant interest is or how it arises. The concepts of “power” and “control” are given
wide and extended meanings in this context in order to deem certain persons to hold a relevant interest. For example, each person who
has voting power above 20% in a company or a managed investment scheme which in turn holds shares in the Company is deemed
to have a relevant interest in those shares. Certain situations (set out in section 609 of the Corporations Act 2001) which would
otherwise constitute the holding of a relevant interest are excluded from the definition.
A person’s voting power in the Company is that percentage of the total votes attached to Ordinary Shares in which that
person and its associates (as defined in the Corporations Act 2001) holds a relevant interest.
Item 10.C Material Contracts
During the financial years ending June 30, 2021, 2022, and 2023, the Company entered into agreements with H.C.
Wainwright & Co, to act as placement agents to the share offerings made on multiple occasions the Company raised a total of
A$22,881,958 before costs of the transactions. Towards the cost of these transactions, the Company issued the following securities:
●
●
●
●
156,000,000 warrants issued to H.C. Wainwright & Co. LLC on December 21, 2020 exercisable at US$0.004166 expiring on
December 21, 2025, amounting to A$1,462,442. The warrants are exercisable for fully paid ordinary shares.
39,975,000 warrants issued to H.C. Wainwright & Co. LLC on December 21, 2020, exercisable at US$0.0104 expiring on
December 21, 2025, amounting to A$360,017. The warrants are exercisable for fully paid ordinary shares.
48,750,000 warrants issued to H.C. Wainwright & Co. LLC on November 24, 2021, exercisable at US$0.00109375 expiring 5
years after date of issue, amounting to A$476,297. The warrants are exercisable for fully paid ordinary shares.
250,000 warrants to be issued to H.C. Wainwright & Co. LLC, subject to shareholder approval scheduled for the 2023 Annual
General Meeting (AGM), exercisable at US$1.625 expiring 5 years after date of issue, amounting to A$134,956. The warrants
are exercisable for fully paid ordinary shares.
As at June 30, 2023, the following warrants remain outstanding and exercisable and relate to capital raising activities prior
to June 30, 2021.
●
40,114,200 warrants issued to H.C. Wainwright & Co. LLC on April 3, 2020, exercisable at US$0.00365 each and expiring on
April 1, 2025, amounting to A$175,137. The warrants are exercisable for fully paid ordinary shares.
Genetic Technologies Limited ●
28,177,578 warrants issued to H.C. Wainwright & Co. LLC on April 22, 2020, exercisable at US$0.00417 each and expiring
on April 19, 2025, amounting to A$149,693. The warrants are exercisable for fully paid ordinary shares.
The Company executed an acquisition agreement (“Acquisition Agreement”) on July 19, 2021 to acquire the direct-to-
consumer eCommerce business and distribution rights associated with General Genetics Corporation and its associated brands
trading as EasyDNA, from BelHealth Investment Fund LP. The Acquisition Agreement provides for the acquisition of all brands,
websites and agency reseller agreements associated with EasyDNA. This includes over 70 websites in 40 countries and six brand
identities. Under the terms of the Acquisition Agreement, the Company acquired 100% of EasyDNA’s brands and assets within the
General Genetics Corporation business for a purchase price of US$4 million, comprising cash consideration of US$2.5 million and
US$1.5 million of ADSs.
The Company executed an asset purchase agreement ("APA") on July 14, 2022 to acquire the direct-to-consumer eCommerce
business, laboratory testing and distribution agreements associated with AffinityDNA. The APA provides for the acquisition of all
brands and websites associated with AffinityDNA. This includes the AffinityDNA Amazon sales channel rights. Under the terms of
the APA, the Company acquired 100% of AffinityDNA's brands and assets for a purchase price of GBP555,000, comprising cash
consideration of GBP227,500 on completion and GBP227,500 payable in July 2023 subject to the AffinityDNA business attaining
certain financial performance parameters. The second payment was payable on the achievement of a gross profit target for the
12-month period from the acquisition date. This target was not achieved and therefore no further payment is to be made in respect of
the acquisition of AffinityDNA.
There were no other material contracts entered into during the two years preceding the date of this Annual Report which
were outside the ordinary course of business.
Item 10.D Exchange Controls
Under existing Australian legislation, the Reserve Bank of Australia does not inhibit the import and export of funds,
and, generally, no permission is required to be given to the Company for the movement of funds in and out of Australia. However,
payments to or from (or relating to) Iraq, its agencies or nationals, the government or a public authority of Libya, or certain Libyan
undertakings, the authorities in the Federal Republic of Yugoslavia (Serbia and Montenegro) or their agencies, the Taliban (also
referred to as the Islamic Emirate of Afghanistan), or the National Union for the Total Independence of Angola (also known as
UNITA), its senior officials or the adult members of their immediate families, may not be made without the specific approval of the
Reserve Bank of Australia.
Accordingly, at the present time, remittances of any dividends, interest or other payment by the Company to non-resident
holders of our securities in the U.S. are not, subject to the above, restricted by exchange controls or other limitations.
Item 10.E Taxation
The following summary is based on the tax laws of the United States (including the Internal Revenue Code of 1986, as
amended, or the Code, its legislative history, existing and proposed regulations thereunder, published rulings and court decisions)
and on the Australian tax law and practice, in each case as in effect on the date hereof. In addition, this summary is based on the
Convention between the Government of the United States of America and the Government of Australia for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, signed on August 6, 1982, as amended and currently
in force, or the. The foregoing laws and legal authorities as well as the Treaty are subject to change (or changes in interpretation),
possibly with retroactive effect. Finally, this summary is based in part upon the representations of our ADS Depositary and the
assumption that each obligation in the Deposit Agreement and any related agreement will be performed in accordance with its terms.
The discussion does not address any aspects of U.S. taxation other than federal income taxation or any aspects of Australian
taxation other than federal income taxation, stamp duty and goods and services tax. This discussion does not necessarily address
all aspects of U.S. or Australian federal tax considerations that may be important to particular investors in light of their individual
investment circumstances.
Prospective investors are urged to consult their tax advisers regarding the U.S. and Australian federal, state and local tax
consequences and any other tax consequences of owning and disposing of ADSs and Ordinary Shares.
Australian Tax Consequences
In this section, we discuss Australian tax considerations that apply to non-Australian tax residents who are residents of the
United States with respect to the ownership and disposal by the absolute beneficial owners of ADSs. This summary does not discuss
any foreign or state tax considerations, other than stamp duty.
82
Annual Report 2023 Nature of ADSs for Australian Taxation Purposes
ADSs held by a U.S. holder will be treated for Australian taxation purposes as being held under a “bare trust” for that
holder. Consequently, the underlying Ordinary Shares will be regarded as owned by the ADS holder for Australian income tax and
capital gains tax purposes. Dividends paid on the underlying Ordinary Shares will also be treated as dividends paid to the ADS holder,
as the person beneficially entitled to those dividends. Therefore, in the following analysis, we discuss the tax consequences to non-
Australian resident holders of Ordinary Shares which, for Australian taxation purposes, will be the same as to U.S. holders of ADSs.
Taxation of Dividends
Australia operates a dividend imputation system under which dividends may be declared to be “franked” to the extent of tax
paid on company profits. Fully franked dividends are not subject to dividend withholding tax. Dividends payable by our company to
non-Australian resident stockholders will be subject to dividend withholding tax, to the extent the dividends are unfranked. Dividend
withholding tax will be imposed at 30%, unless a stockholder is a resident of a country with which Australia has a double taxation
agreement. Under the provisions of the Treaty, the Australian tax withheld on unfranked dividends paid by us to which a resident of
the United States is beneficially entitled is generally limited to 15% if the U.S. resident holds less than 10% of the voting rights of
our company, unless the shares are effectively connected to a permanent establishment or fixed base in Australia through which the
stockholder carries on business or provides independent personal services, respectively. Where a U.S. corporate resident holds 10%
or more of the voting rights of our company, the withholding tax rate is reduced to 5%.
Tax on Sales or other Dispositions of Shares - Capital Gains Tax
Non-Australian resident stockholders who hold their shares in us on capital account will not be subject to Australian capital
gains tax on any gain made on a sale or other disposal of our shares, unless they hold 10% or more of our issued capital and the
Company holds real property situated in Australia, the market value of which is 50% or more of the market value of the Company.
The Australian Taxation Office maintains the view that the Treaty does not limit Australian capital gains tax. Australian capital gains
tax applies to net capital gains charged at a taxpayer’s marginal tax rate but, for certain stockholders, a discount of the capital gain
may apply if the shares have been held for 12 months or more. For individuals, this discount is 50%. For superannuation funds, the
discount is 33%. There is no discount for a company that derives a net capital gain. Net capital gains are calculated after deducting
capital losses, which may only be offset against such gains.
Tax on Sales or other Dispositions of Shares - Stockholders Holding Shares on Revenue Account
Some non-Australian resident stockholders may hold shares on revenue rather than on capital account, for example,
share traders. These stockholders may have the gains made on the sale or other disposal of the shares included in their assessable
income under the ordinary income provisions of the income tax law, if the gains are sourced in Australia. Non-Australian resident
stockholders assessable under these ordinary income provisions in respect of gains made on shares held on revenue account would be
assessed for those gains at the Australian tax rates for non-Australian residents, which start at a marginal rate of 32.5%. Some relief
from the Australian income tax may be available to non-Australian resident stockholders under the Treaty, for example, because the
stockholder derives business profits not through a permanent establishment in Australia. To the extent an amount would be included
in a non-Australian resident stockholder’s assessable income under both the capital gains tax provisions and the ordinary income
provisions, the capital gain amount would generally be reduced, so that the stockholder would not be subject to double tax on any
part of the income gain or capital gain.
Dual Residency
If a stockholder were a resident of both Australia and the United States under the respective domestic taxation laws of those
countries, that stockholder may be subject to tax as an Australian resident. If, however, the stockholder is determined to be a U.S.
resident for the purposes of the Treaty, the Australian tax would be subject to limitation by the Treaty. Stockholders should obtain
specialist taxation advice in these circumstances.
Stamp Duty
Any transfer of shares through trading on the Australian Securities Exchange, whether by Australian residents or foreign
residents, is not subject to stamp duty within Australia.
Australian Death Duty
Australia does not have estate or death duties. Further, no capital gains tax liability is realized upon the inheritance of a
deceased person’s shares. However, the subsequent disposal of the shares by beneficiaries may give rise to a capital gains tax liability.
Genetic Technologies Limited Goods and Services Tax
The issue or transfer of shares will not incur Australian goods and services tax and does not require a stockholder to register
for Australian goods and services tax purposes.
United States Federal Income Taxation
The following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership
and disposition of the ADSs or Ordinary Shares by a U.S. holder (as defined below). This summary applies only to U.S. holders that
hold such ADSs or Ordinary Shares as capital assets (generally, property held for investment) for U.S. federal income tax purposes.
This summary does not address all U.S. federal income tax considerations that may be relevant to a particular U.S. holder and does
not represent a detailed discussion of all of the U.S. federal income tax considerations applicable to a holder of our ADSs or Ordinary
Shares that may be subject to special tax rules including, without limitation:
•
•
banks, financial institutions or insurance companies;
brokers, dealers or traders in securities, currencies, commodities, or notional principal contracts;
•
or 408A of the Code (as defined below), respectively;
tax-exempt entities or organizations, including an “individual retirement account” or “Roth IRA” as defined in Section 408
•
real estate investment trusts, regulated investment companies or grantor trusts;
•
as a position in a “straddle” for U.S. federal income tax purposes;
persons that hold ADSs or Ordinary Shares as part of a “hedging,” “integrated,” “wash sale” or “conversion” transaction or
•
purposes, or U.S. holders who hold the ADSs or Ordinary Shares through such an entity;
S corporations, partnerships, or other entities or arrangements classified as passthrough entities for U.S. federal income tax
•
certain former citizens or long-term residents of the United States;
•
compensation for the performance of services;
persons that received ADSs or Ordinary Shares pursuant to the exercise of any employee share option or otherwise as
•
persons who have elected mark-to-market accounting;
•
ADSs or Ordinary Shares; and
holders that own or have owned directly, indirectly, or through attribution 10% or more of the voting power or value of
•
holders that have a “functional currency” other than the U.S. dollar.
Each holder of the ADSs or Ordinary Shares who fall within one of the categories above is advised to consult their tax
advisers regarding the specific tax consequences which may apply to their particular situation.
If a partnership (or any other entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds the
ADSs or Ordinary Shares, the tax consequences relating to an investment in such ADSs or Ordinary Shares will depend in part upon
the status of the partner and the activities of the partnership. Such a partner or partnership should consult its tax advisers regarding
the U.S. federal income tax considerations of owning and disposing of the ADSs or Ordinary Shares in its particular circumstances.
The discussion in this section is based on the Code, existing, proposed and temporary U.S. Treasury Regulations
promulgated thereunder, administrative and judicial interpretations thereof, and the Treaty, in each case as in effect and available on
the date hereof. Such authorities are subject to change, which change could apply retroactively, and to differing interpretations, all of
which could affect the tax considerations described below. There can be no assurance that the U.S. Internal Revenue Service, or the
IRS, will not take a position concerning the tax consequences of the ownership and disposition of ADSs or Ordinary Shares or that
such a position would not be sustained by a court. U.S. holders should consult their own tax advisers concerning the U.S. federal,
state, local and non-U.S. tax consequences of owning and disposing of ADSs or Ordinary Shares in their particular circumstances.
This summary does not address the estate or gift tax considerations, alternative minimum tax considerations, the potential
application of the Medicare contribution tax on net investment income, the special tax accounting rules under Section 451(b) of the
Code, or any U.S. state, local, or non-U.S. tax considerations applicable to the acquisition, ownership and disposition of ADSs or
Ordinary Shares.
84
Annual Report 2023 As used herein, a “U.S. holder” is a beneficial owner of an ADS that is, for U.S. federal income tax purposes, (i) an
individual who is a citizen or resident of the United States, (ii) a corporation (or an entity taxable as a corporation) created or
organized in or under the laws of the United States, any State thereof or the District of Columbia, (iii) an estate the income of which is
subject to U.S. federal income tax without regard to its source or (iv) a trust if (1) a court within the United States is able to exercise
primary supervision over the ad- ministration of the trust, and one or more United States persons have the authority to control all
substantial decisions of the trust, or (2) the trust has a valid election in effect under applicable U.S. Treasury Regulations to be treated
as a United States person.
GIVEN THE COMPLEXITY OF THE TAX LAWS AND BECAUSE THE TAX CONSEQUENCES TO ANY PARTICULAR
INVESTOR MAY BE AFFECTED BY MATTERS NOT DISCUSSED HEREIN, ALL CURRENT AND PROSPECTIVE HOLDERS
OF ORDINARY SHARES AND THE ADSs ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO
THE SPECIFIC TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF ADSs, INCLUDING
THE APPLICABILITY AND EFFECT OF U.S. FEDERAL, STATE AND LOCAL TAX LAWS, AS WELL AS AUSTRALIAN
AND OTHER NON-U.S. TAX LAWS.
Nature of ADSs for U.S. Federal Income Tax Purposes
In general, for U.S. federal income tax purposes, a holder of an ADS will be treated as the owner of the underlying Ordinary
Shares. Accordingly, except as specifically noted below, the tax consequences discussed below with respect to ADSs will be the same
as for Ordinary Shares. Exchanges of Ordinary Shares for ADSs, and ADSs for Ordinary Shares, generally will not be subject to U.S.
federal income tax.
Distributions
In general, subject to the passive foreign investment company rules discussed below, a distribution on an ADS or Ordinary
Share will constitute a dividend for U.S. federal income tax purposes to the extent that it is made from our current or accumulated
earnings and profits as determined under U.S. federal income tax principles. If a distribution exceeds our current and accumulated
earnings and profits, it generally will be treated as a non-taxable reduction of basis to the extent of the U.S. holder’s tax basis in
the ADS or Ordinary Share on which it is paid, and to the extent it exceeds that basis it generally will be treated as capital gain.
The Company has not maintained and does not plan to maintain calculations of earnings and profits under U.S. federal income tax
principles. Accordingly, it is unlikely that U.S. holders will be able to establish that a distribution by the Company is in excess of
its current and accumulated earnings and profits (as computed under U.S. federal income tax principles). Therefore, a U.S. holder
should expect that a distribution by the Company will generally be treated as taxable in its entirety as a dividend to U.S. holders for
U.S. federal income tax purposes even though the distribution may be treated in whole or in part as a non-taxable distribution for
Australian tax purposes.
The gross amount of any dividend on an ADS or Ordinary Share (which will include the amount of any Australian taxes
withheld) generally will be subject to U.S. federal income tax as foreign source dividend income, and will not be eligible for the
corporate dividends received deduction. In general, the amount of a dividend paid in Australian dollars will be its value in U.S.
dollars based on the prevailing spot market exchange rate in effect on the day the U.S. holder receives the dividend or, in the case of
a dividend received in respect of an ADS, on the date the Depositary receives it, whether or not the dividend is converted into U.S.
dollars at that time. A U.S. holder will have a tax basis in any distributed Australian dollars equal to its U.S. dollar amount on the
date of receipt, and any gain or loss realized on a subsequent conversion or other disposition of Australian dollars generally will be
treated as U.S. source ordinary income or loss. If dividends paid in Australian dollars are converted into U.S. dollars on the date they
are received by a U.S. holder, the U.S. holder generally should not be required to recognize foreign currency gain or loss in respect
of the dividend.
Subject to certain exceptions, a dividend that a non-corporate holder receives on an ADS or Ordinary Share may qualify for
the preferential rates of taxation with respect to dividends on the ADSs or Ordinary Shares applicable to long-term capital gains (i.e.,
gains from the sale of capital assets held for more than one year) and “qualified dividend income” (as discussed below). A dividend
on an ADS or Ordinary Share will be a qualified dividend if (i) either (a) the ADSs or Ordinary Shares, as applicable, are readily
tradable on an established market in the United States or (b) we are eligible for the benefits of a comprehensive income tax treaty
with the United States that the Secretary of the Treasury determines is satisfactory for purposes of these rules and that includes an
exchange of information program, and (ii) we were not, in the year prior to the year the dividend was paid, and are not, in the year
the dividend is paid, a passive foreign investment company (“PFIC”). The ADSs are listed on the NASDAQ Capital Market, which
should qualify them as readily tradable on an established securities market in the United States. In any event, the Treaty satisfies the
requirements of clause (i)(b), and we believe we qualify as a resident of Australia entitled to the benefits of the Treaty (though there
can be no assurance in this regard). However, based on our audited financial statements and relevant market and shareholder data,
we believe we were a PFIC for U.S. federal income tax purposes for our taxable year ended June 30, 2023. Therefore, in light of the
discussion in the section entitled “Passive Foreign Investment Company Rules,” you should assume that dividends generally will not
constitute qualified dividend income eligible for reduced rates of taxation.
Any Australian withholding tax imposed on dividends received with respect to the ADSs or Ordinary Shares will be treated
as a foreign income tax eligible for credit against a U.S. holder’s U.S. federal income tax liability, subject to generally applicable
limitations under U.S. federal income tax law.
Genetic Technologies Limited Alternatively, any Australian withholding tax may be taken as a deduction against taxable income, provided the U.S. holder takes a
deduction and not a credit for all foreign income taxes paid or accrued in the same taxable year. The rules relating to the determination
of the foreign tax credit are complex and subject to numerous limitations that must be applied on an individual basis. In addition, the
creditability of foreign taxes could be affected by actions taken by intermediaries in the chain of ownership between the holders of
the ADSs and our company if, as a result of such actions, the holders of the ADSs are not properly treated as beneficial owners of the
underlying Ordinary Shares. U.S. holders are urged to consult with their own tax advisers to determine whether and to what extent
they will be entitled to foreign tax credits as well as with respect to the determination of the foreign tax credit limitation.
Sale, Exchange or Other Taxable Disposition
Subject to the passive foreign investment company rules discussed below, on a sale, exchange or other taxable disposition
of an Ordinary Share or ADS, a U.S. holder generally will recognize capital gain or loss in an amount equal to the difference between
the U.S. holder’s adjusted tax basis in the Ordinary Share or ADS and the amount realized on the sale, exchange or other taxable
disposition, each determined in U.S. dollars. The adjusted tax basis in the ADSs or Ordinary Shares generally will be equal to the cost
of such ADSs or Ordinary Shares. Capital gain from the sale, exchange or other taxable disposition of the ADSs or Ordinary Shares
by a non-corporate U.S. holder is generally eligible for a preferential rate of taxation applicable to long-term taxable capital gains if
the non-corporate U.S. holder’s holding period determined at the time of such sale, exchange or other taxable disposition for such
securities exceeds one year. Capital gains recognized by corporate U.S. holders generally are subject to U.S. federal income tax at the
same rate as ordinary income. The deductibility of capital losses is subject to limitations. Any gain or loss a U.S. holder recognizes
generally will be U.S. source for U.S. foreign tax credit purposes. The rules relating to the determination of the foreign tax credit are
complex, and U.S. holders are urged to consult with their own tax advisers regarding the application of such rules.
For a cash basis taxpayer, units of foreign currency paid or received are translated into U.S. dollars at the spot rate on the
settlement date of the purchase or sale. In that case, no foreign currency exchange gain or loss will result from currency fluctuations
between the trade date and the settlement date of such a purchase or sale.
An accrual basis taxpayer may elect the same treatment required of cash basis taxpayers with respect to purchases and sales
of our Ordinary Shares or ADSs that are traded on an established securities market, provided the election is applied consistently from
year to year. Such election may not be changed without the consent of the IRS. For an accrual basis taxpayer who does not make such
election, units of foreign currency paid or received are translated into U.S. dollars at the spot rate on the trade date of the purchase or
sale. Such an accrual basis taxpayer may recognize exchange gain or loss based on currency fluctuations between the trade date and
the settlement date. Any foreign currency gain or loss a U.S. holder realizes will be U.S. source ordinary income or loss.
Passive Foreign Investment Company Rules
A special set of U.S. federal income tax rules applies to a foreign corporation that is a PFIC for U.S. federal income tax
purposes. As noted above, based on our audited financial statements and relevant market and shareholder data, we believe that we
were a PFIC for U.S. federal income tax purposes for our taxable year ended June 30, 2023. There can be no assurance that we will
not be considered a PFIC in any past, current or future taxable year. However, our PFIC status is based on an annual determination
and may change from year to year. Our status as a PFIC will depend on the composition of our income (including with respect to the
R&D Tax Credit) and the composition and value of our assets, which may be determined in large part by reference to the market value
of the ADSs and Ordinary Shares, which may be volatile, from time to time. Our status may also depend, in part, on how quickly we
utilize the cash we raise in any offering of our securities. Our U.S. counsel expresses no opinion regarding our conclusions or our
expectations regarding our PFIC status.
In general, a non-U.S. corporation is a PFIC if at least 75% of its gross income for the taxable year is passive income (the
“income test”) or if at least 50% of the average quarterly value of its total gross assets for the taxable year (which would generally
be measured by fair market value of our assets, and for which purpose the total value of our assets may be determined in part by the
market value of the ADSs and Ordinary Shares, which are subject to change) produce passive income or are held for the production
of passive income (the “asset test”). Passive income for this purpose generally includes dividends, interest, royalties, rents, gains
from commodities and securities transactions, the excess of gains over losses from the disposition of assets which produce passive
income, and includes amounts derived by reason of the temporary investment of funds raised in offerings of our securities. If a non-
U.S. corporation owns directly or indirectly at least 25% by value of the stock of another corporation or the partnership interests in
a partnership, the non-U.S. corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the
other corporation or partnership and as receiving directly its proportionate share of the other corporation’s or partnership’s income.
If we are classified as a PFIC in any year with respect to which a U.S. holder owns ADSs or Ordinary Shares, we will
continue to be treated as a PFIC with respect to such U.S. holder in all succeeding years during which the U.S. holder owns the ADSs
or Ordinary Shares, regardless of whether we continue to meet the tests described above unless we cease to be a PFIC and the U.S.
holder has made a “deemed sale” election under the PFIC rules. If the “deemed sale” election is made, a U.S. holder will be deemed
to have sold the securities the U.S. holder holds at their fair market value as of the date of such deemed sale and any gain from such
deemed sale would be subject to the rules described below.
86
Annual Report 2023 After the deemed sale election, so long as we do not become a PFIC in a subsequent taxable year, the U.S. holder’s securities with
respect to which such election was made will not be treated as shares in a PFIC and the U.S. holder will not be subject to the rules
described below with respect to any “excess distribution” the U.S. holder receives from us or any gain from an actual sale or other
disposition of the securities. U.S. holders should consult their tax advisors as to the possibility and consequences of making a deemed
sale or other “purging” election if such election becomes available.
If we are a PFIC, and you are a U.S. holder that does not make one of the elections described herein, a special tax regime
will apply to both (a) any “excess distribution” by us to you (generally, your ratable portion of distributions in any year, other than
the taxable year in which your holding period in the Ordinary Shares or ADSs begins, which are greater than 125% of the average
annual distribution received by you in the shorter of the three preceding years or the portion of your holding period for the ADSs or
Ordinary Shares that preceded the year of the distribution) and (b) any gain realized on the sale or other disposition of the ADSs or
Ordinary Shares. Under this regime, any excess distribution and realized gain will be treated as ordinary income and will be subject
to tax as if (a) the excess distribution or gain had been realized ratably over your holding period, (b) the amount deemed realized in
each year had been subject to tax in each year of that holding period at the highest marginal rate for such year (other than income
allocated to the current period or any taxable period before we became a PFIC, which would be subject to tax at the U.S. holder’s
regular ordinary income rate for the current year and would not be subject to the interest charge discussed below) and (c) the interest
charge generally applicable to underpayments of tax had been imposed on the taxes deemed to have been payable in those years. In
addition, dividend distributions made to you will not qualify for the lower rates of taxation applicable to qualified dividends discussed
above under “Distributions.”
Certain elections may alleviate some of the adverse consequences of PFIC status and would result in an alternative treatment
of our Ordinary Shares or ADSs. If a U.S. holder makes a mark-to-market election with respect to their Ordinary Shares or ADSs,
the U.S. holder generally will recognize as ordinary income any excess of the fair market value of such Ordinary Shares or ADSs at
the end of each taxable year over their adjusted tax basis, and will recognize an ordinary loss in respect of any excess of the adjusted
tax basis of such Ordinary Shares or ADSs over their fair market value at the end of the taxable year (but only to the extent of the
net amount of income previously included as a result of the mark-to-market election). If a U.S. holder makes the election, the U.S.
holder’s tax basis in their Ordinary Shares or ADSs will be adjusted to reflect these income or loss amounts. Any gain recognized on
the sale or other disposition of Ordinary Shares or ADSs in a year in which we are a PFIC will be treated as ordinary income and any
loss will be treated as an ordinary loss (but only to the extent of the net amount of income previously included as a result of the mark-
to-market election). The mark-to-market election is available only if we are a PFIC and the Ordinary Shares or ADSs are “regularly
traded” on a “qualified exchange.” Our Ordinary Shares or ADSs will be treated as “regularly traded” in any calendar year in which
more than a de minimis quantity of our Ordinary Shares or ADSs are traded on a qualified exchange on at least 15 days during each
calendar quarter (subject to the rule that trades that have as one of their principal purposes the meeting of the trading requirement
are disregarded). The NASDAQ Capital Market is a qualified exchange for this purpose and, consequently, if the ADSs are regularly
traded, the mark-to-market election will be available to a U.S. holder. It should be noted that it is intended that only the ADSs and not
the Ordinary Shares will be listed on the NASDAQ Capital Market. Consequently, the Ordinary Shares may not be marketable if the
ASX (where the Ordinary Shares are currently listed) does not meet the applicable requirements. U.S. holders should consult their tax
advisors regarding the availability of the mark-to-market election for Ordinary Shares that are not represented by ADSs.
However, a mark-to-market election generally cannot be made for equity interests in any lower-tier PFICs that we own,
unless shares of such lower-tier PFIC are themselves “marketable.” As a result, even if a U.S. holder validly makes a mark-to-market
election with respect to our Ordinary Shares or ADSs, the U.S. holder may continue to be subject to the PFIC rules (described above)
with respect to its indirect interest in any of our investments that are treated as an equity interest in a PFIC for U.S. federal income tax
purposes. U.S. holders should consult their tax advisors as to the availability and desirability of a mark-to-market election, as well as
the impact of such election on interests in any lower-tier PFICs.
We do not currently intend to provide the information necessary for U.S. holders to make qualified electing fund elections
if we were treated as a PFIC for any taxable year. U.S. holders should consult their tax advisors to determine whether any of the
other elections described above would be available and if so, what the consequences of the alternative treatments would be in their
particular circumstances.
If we are determined to be a PFIC, the general tax treatment for U.S. holders described in this section would apply to
indirect distributions and gains deemed to be realized by U.S. holders in respect of any of our subsidiaries that also may be determined
to be PFICs. U.S. holders should consult their tax advisors regarding the application of the PFIC rules to our subsidiaries. If a U.S.
holder owns Ordinary Shares or ADSs during any taxable year in which we are a PFIC, the U.S. holder may be required to file an
IRS Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund) with
respect to the company, generally with the U.S. holder’s federal income tax return for that year. You should consult your tax advisor
concerning any filing requirements arising from the PFIC rules.
The U.S. federal income tax rules relating to PFICs are complex. Prospective U.S. investors are urged to consult their own
tax advisors with respect to the acquisition, ownership and disposition of our Ordinary Shares or ADSs, the consequences to them
of an investment in a PFIC, any elections available with respect to Ordinary Shares and ADSs and the IRS information reporting
obligations with respect to the acquisition, ownership and disposition of Ordinary Shares and ADSs.
Genetic Technologies Limited Information Reporting and Backup Withholding
U.S. holders generally will be subject to information reporting requirements with respect to dividends on the Ordinary
Shares or ADSs and on the proceeds from the sale, exchange or disposition of the Ordinary Shares or ADSs that are paid within
the United States or through U.S.-related financial intermediaries, unless the U.S. holder is an “exempt recipient.” In addition, U.S.
holders may be subject to backup withholding on such payments unless the U.S. holder provides a taxpayer identification number and
a duly executed IRS Form W-9 or otherwise establishes an exemption. Backup withholding is not an additional tax, and the amount
of any backup withholding will be allowed as a credit against a U.S. holder’s U.S. federal income tax liability and may entitle such
holder to a refund, provided that the required information is timely furnished to the IRS.
Reporting Obligations of Individual Owners of Foreign Financial Assets
Subject to certain exceptions (including an exception for property held in accounts maintained by U.S. financial institutions),
Section 6038D of the Code generally requires certain individual U.S. holders (and certain entities that are closely held by U.S.
individuals) to report information relating to an interest in the Ordinary Shares or ADSs by filing IRS Form 8938 (Statement of
Specified Foreign Financial Assets) with their U.S. federal income tax return. Such U.S. holders (or entities) who fail to timely furnish
the required information may be subject to penalties. Additionally, if any such U.S. holder (or entity) does not report the required
information, the statute of limitations with respect to tax returns of the U.S. holder (or entity) to which the information relates may
not close until three years after such information is reported. U.S. holders are urged to consult their tax advisors regarding their
information reporting obligations, if any, with respect to their ownership and disposition of the Ordinary Shares or ADSs.
THE DISCUSSION ABOVE IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX
CONSIDERATIONS APPLICABLE TO AN INVESTMENT IN ORDINARY SHARES OR ADSs. EACH CURRENT AND
POTENTIAL HOLDER IS URGED TO CONSULT THEIR OWN TAX ADVISERS CONCERNING THE TAX CONSEQUENCES
RELEVANT TO THEM IN THEIR PARTICULAR SITUATION.
Item 10.F Dividends and Paying Agents
No dividends were declared or paid to members for the year ended June 30, 2023 (2022: nil). The Company’s franking
account balance was nil at June 30, 2023 (2022: nil).
Item 10.G Statement by Experts
Not applicable.
Item 10.H Documents on Display
The documents concerning the Company which are referred to in this Annual Report may be inspected at the offices of the
Company at 60-66 Hanover Street, Fitzroy, Victoria 3065 Australia. As a “foreign private issuer” we are subject to the information
requirements of the U.S. Securities Exchange Act of 1934, as amended, and, in accordance therewith, we are required to file reports,
including annual reports on Form 20-F, and other information with the U.S. Securities and Exchange Commission in electronic form.
Any filings we make electronically are available to the public over the Internet at the Commission’s website at http://www.sec.gov.
We also maintain a website at www.genetype.com. Information on our website and websites linked to it do not constitute a part of
this Annual Report.
Item 10.I Subsidiary Information
Not applicable.
Item 10.J Annual Report to Security Holders
Not applicable.
Item 11. Quantitative and Qualitative Disclosures about Market Risk
Our market risk relates primarily to exposure to changes in foreign currency exchange rates and interest rates. Refer Note
31 of the attached financial statements for further analysis surrounding market risk.
Interest Rate Risk. As of June 30, 2023, we had A$7,851,197 in cash and cash equivalents of which A$6,216,646 was
subject to interest rate risk. Interest income earned on the cash balances is affected by changes in the levels of market interest rates.
We invest excess cash in interest-bearing, investment-grade securities and time deposits in high-quality institutions. We do not utilize
derivative financial instruments, derivative commodity instruments, positions or transactions in any material matter.
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Annual Report 2023 Accordingly, we believe that, while the investment-grade securities and time-deposits we hold are subject to changes in
financial standing of the issuer of such securities, the principal is not subject to any material risks arising from changes in interest
rates, foreign currency exchange rates, commodity prices, equity prices or other market changes that affect market risk sensitive
instruments. Since we hold cash and cash equivalents in Banks which are located outside Australia, we are subject to certain cross-
border risks, though due to the size of the holdings these risks are not generally significant.
Foreign Currency Exchange Rate Risk. We operate in Australia with active operations in the U.S.A., United Kingdom and
Europe, and are accordingly subject to certain foreign currency exposure. This includes foreign-currency denominated receivables,
payables, and other balance sheet positions as well as future cash flows resulting from anticipated transactions including intra-
company transactions. Historically, currency translation gains and losses have been reflected as adjustments to stockholders’ equity,
while transaction gains and losses have been reflected as components of income and loss. Transaction gains and losses could be
material depending upon changes in the exchange rates between the Australian dollar and the U.S. dollar. A significant amount of
our current revenue is denominated in U.S. dollars which provides us with a limited natural hedge against exchange rate movements.
Item 12. Description of Securities Other Than Equity Securities
Item 12.A Debt Securities
Not applicable.
Item 12.B Warrants and Rights
Not applicable.
Item 12.C Other Securities
Not applicable
Item 12.D American Depositary Shares Fees and Charges Payable by ADS Holders
The table below summarizes the fees and charges that a holder of our ADSs may have to pay, directly or indirectly, to our
depositary, The Bank of New York Mellon, or BNYM, pursuant to the Deposit Agreement, which was filed as Exhibit 2.1 to our
Registration Statement on Form F-6 filed with the SEC on January 14, 2002, and the types of services and the amount of the fees
or charges paid for such services. The disclosure under this heading “Fees and Charges Payable by ADS Holders” is subject to and
qualified in its entirety by reference to the full text of the Deposit Agreement. The holder of an ADS may have to pay the following
fees and charges to BNYM in connection with ownership of the ADS:
Persons Depositing or Withdrawing Shares Must
● US$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
● Issuance of ADSs, including issuances resulting from a distri-
Pay:
For:
● US$0.02 (or less) per ADS
● A fee equivalent to the fee that would be payable if
securities distributed to you had been shares and the shares
had been deposited for issuance of ADSs
● US$1.50 (or less) per ADR
● Expenses of the depositary
bution of shares or rights or other property
● Cancellation of ADSs for the purpose of withdrawal, including
if the deposit agreement terminates
● Any cash distribution to you
● Distribution of securities distributed to holders of deposited
securities which are distributed by the depositary to ADS holders
● Transfers, combination and split-up of ADRs
● Cable, telex and facsimile transmissions (when expressly
provided in the deposit agreement)
● Converting foreign currency to U.S. dollars
The depositary collects its fees for issuance and cancellation of ADSs directly from investors depositing shares or
surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making
distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to
pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly
billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may generally refuse
to provide fee-attracting services until its fees for those services are paid.
Genetic Technologies Limited
charging the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee-attracting
services until its fees for those services are paid.
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
Not applicable.
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
Not applicable.
Item 15. Controls and Procedures
Item 15.A Disclosure controls and procedures
We maintain disclosure controls and procedures as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the “Exchange Act”), as amended, that are designed to ensure that information required to be
disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and
procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our
reports filed or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to management, including
our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Our Management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls
and procedures or our internal control over financial reporting are designed and operated to be effective at the reasonable assurance
level. However, our Management does not expect that our disclosure controls and procedures and our internal control over financial
reporting will prevent all error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met. Additionally, the design of a control system must reflect the
fact that there are resource constraints, and the benefit of controls must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of
fraud, if any, have been detected or that our control system will operate effectively under all circumstances. Moreover, the design of
any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential future conditions.
Our Management has carried out an evaluation, under the supervision and with the participation of our Chief Executive
Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of June 30, 2023. Based on
that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and
procedures were effective as of June 30, 2023.
Item 15.B Management’s annual report on internal control over financial reporting
Our Management is responsible for establishing and maintaining adequate internal control over financial reporting. The
Securities Exchange Act of 1934 defines internal control over financial reporting in Rules 13a-15(f) and 15d-15(f) as a process designed
by, or under the supervision of, the Company’s Chief Executive Officer and Chief Financial Officer effected by the Company’s Board
of Directors, Management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes
those policies and procedures that:
●
●
●
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of
the assets of the Company;
Provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made
only in accordance with authorizations of Management and directors of the Company; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the
Company’s assets that could have a material effect on the consolidated financial statements.
Our Management, under the supervision and with participation of our Chief Executive Officer and Chief Financial Officer,
has assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, 2023. Based on that evaluation,
the Chief Executive Officer and the Chief Financial Officer concluded that the Company's internal control over financial reporting
was effective as of June 30, 2023. In making this assessment, Management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission, or COSO, in Internal Control-Integrated Framework (2013).
90
Annual Report 2023 This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding
internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public
accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only Management’s
report in this Annual Report.
Item 15.C Attestation report of the registered public accounting firm
Not applicable.
Item 15.D Changes in Internal Control over Financial Reporting
There were no changes in the internal control over financial reporting during the year ended June 30, 2023.
Item 16. Reserved
Reserved.
Item 16.A Audit Committee Financial Expert
On September 2, 2019, the Company appointed Mr. Nick Burrows to the Board as an independent Non-Executive Director.
Mr. Burrows is a financial expert and hence the Company subsequently appointed Mr. Burrows as the Chairman of the Audit & Risk
Committee replacing Mr. Peter Rubinstein, former Chairman of the Audit & Risk Committee.
Item 16.B Code of Ethics
We have adopted a Code of Ethics (styled “Code of Conduct”) that applies to all of our Directors and employees, including
our principal executive officer, principal financial officer and principal accounting officer or controller. The Code can be downloaded
at our website (www.genetype.com). Additionally, any person, upon request, can ask for a hard copy or electronic file of the Code. If
we make any substantive amendment to the Code or grant any waivers, including any implicit waiver, from a provision of the Code,
we will disclose the nature of such amendment or waiver on our website. During the year ended June 30, 2023, no such amendment
was made, or waiver granted.
Item 16.C Principal Accountant Fees and Services
The following table sets forth the fees billed to us by our Independent Registered Public Accounting Firms, Grant Thornton
Audit Pty Ltd and PricewaterhouseCoopers, during the financial years ended June 30, 2023 and 2022, respectively:
Services rendered
PricewaterhouseCoopers in respect of:
Audit fees (1)
Audit-related fees (2)
All other fees (3)
Grant Thornton Audit Pty Ltd in respect of:
Audit fees (1)
Audit-related fees (2)
All other fees (3)
2023
A$
2022
A$
-
-
-
320,569
-
-
20,000
-
-
241,882
-
30,000
(1) Audit fees consist of services that would normally be provided in connection with statutory, half year review and regulatory filings
or engagements, including services that generally only the independent accountant can reasonably provide such as comfort letters.
(2) Audit-related fees consist of fees billed for assurance and related services that generally only the statutory auditor could reasonably
provide to a client.
(3) All other fees consist of fees billed for financial and information technology due diligence services in respect of the Company’s
acquisition of the business and assets associated with the EasyDNA brand that completed on August 13th, 2021
Genetic Technologies Limited
Audit Committee Pre-Approval Policies and Procedures
Our Board of Directors has established pre-approval and procedures for the engagement of its Independent Registered
Public Accounting Firm for audit and non-audit services. The Board of Directors reviews the scope of the services to be provided,
before their commencement, in order to ensure that there are no independence issues and the services are not prohibited services, as
defined by the Sarbanes-Oxley Act of 2002. The Board of Directors has considered advice received from the Audit & Risk Committee
and is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The directors are satisfied that the provision of the non-audit services as set out above, did not
compromise the auditor independence requirements of the Corporations Act 2001 because the services are not deemed to undermine
the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.
Item 16.D Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16.E Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Not applicable.
Item 16.F Change in Registrant’s Certifying Accountant
Not applicable.
Item 16.G Corporate Governance
Refer to Item 6C regarding the Company’s Corporate Governance practices and the key differences between the Listing
Rules of the Australian Securities Exchange and NASDAQ’s Marketplace Rules as they apply to us.
Item 16.H Mine Safety Disclosure
Not applicable.
Item 16.I Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
Item 16.J insider Trading Policies
The Company has adopted a Securities Trading Policy which covers insider trading. Refer to exhibit 4.13 for further details.
PART III
Item 17. Financial Statements
The Company has responded to Item 18 in lieu of responding to this Item.
Item 18. Financial Statements
The full text of the Company’s audited financial statements for the fiscal years ended June 30, 2023 and 2022 begins on page F-1 of
this Annual Report on Form 20-F.
Australian Disclosure Requirements
Directors’ Declaration
In the directors’ opinion:
(a) the financial statements and Notes set out on pages 97 to 151 are in accordance with the Corporations Act 2001,
including:
(i) Complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements, and
(ii) Giving a true and fair view of the consolidated entity’s financial position as at June 30, 2023 and of its
performance for the fiscal year ended on that date, and
92
Annual Report 2023
(b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
Note 1 ‘Basis of preparation’ confirms that the financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
The directors have been given the declarations by the chief executive officer and chief financial officer required by section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
/s/ Peter Rubinstein
Chairman
Melbourne, August 30, 2023
Item 19. Exhibits
1.1
2.1
2.2
2.5
2.6
2.7
2.8
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
The following documents are filed as exhibits to this Annual Report on Form 20-F:
Constitution of the Registrant (incorporated by reference to Exhibit 1.1 to the Company’s Registration Statement on
Form 20-F filed with the Commission on December 21, 2010)
Deposit Agreement, dated as of January 14, 2002, by and among Genetic Technologies Limited, The Bank of New
York Mellon, as Depositary, and the Owners and Holders of American Depositary Receipts (such agreement is
incorporated herein by reference to the Registration Statement on Form F-6 relating to the ADSs (File No. 333-
14270) filed with the Commission on January 14, 2002).
Description of Securities (incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 20-F
filed with the Commission on October 22, 2020)
Form of Compensation Warrant issued on April 3, 2020 (incorporated by reference to Exhibit 10.3 of the Company’s
Report on Form 6-K filed with the Commission on April 2, 2020)
Form of Pre-funded Warrant (incorporated by reference to Exhibit 4.5 to the Company’s registration statement on
Form F-1/A filed on May 12, 2020)
Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.6 to the Company’s registration statement
on Form F-1/A filed on May 12, 2020)
Staff Share Plan 2001 dated November 30, 2001 (incorporated by reference to Exhibit 4.2 to the Company’s
Registration Statement on Form 20-F filed with the Commission on August 19, 2005)
Placement Agent Agreement effective March 30, 2020 (incorporated by reference to Exhibit 10.2 of the Company’s
Report on Form 6-K filed with the Commission on April 2, 2020)
Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.9 to the Company’s registration
statement on Form F-1/A filed on May 12, 2020)
Renewal of Lease over premises in Fitzroy, Victoria, Australia with an effective date of September 1, 2018
(incorporated by reference to 20-F filed October 3, 2019)
Form of Securities Purchase Agreement dated July 16, 2020 (incorporated by reference to Exhibit 10.1 of the
Company’s Report on Form 6-K filed with the Commission on July 20, 2020)
Form of Securities Purchase Agreement dated January 21, 2021 (incorporated by reference to Exhibit 10.1 of the
Company’s Report on Form 6-K filed with the Commission on January 5, 2021)
Registration Rights Agreement dated August 12, 2021 (incorporated by reference to Exhibit 4.11 of the Company’s
Annual Report on Form 20-F filed with the Commission on August 31, 2021)
Non-Solicitation Agreement dated July 18, 2021 (incorporated by reference to Exhibit 4.12 of the Company’s Annual
Report on Form 20-F filed with the Commission on August 31, 2021)
Sale of Business Agreement dated July 14, 2022 (incorporated by reference to Exhibit 4.12 of the Company’s Annual
Report on Form 20-F filed with the Commission on August 30, 2022)
Securities Trading Policy
Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Report on
Form 6-K filed with the Commission on February 7, 2023)
Genetic Technologies Limited
12.01
12.02
13.01
13.02
15.1
15.2
15.3
101.
INS
101.
SCH
101.
CAL
101.
DEF
101.
LAB
101.
PRE
104
Section 302 Certification of the Chief Executive Officer
Section 302 Certification of the Chief Financial Officer
Section 906 Certification of the Chief Executive Officer
Section 906 Certification of the Chief Financial Officer
Appendix 4E
Auditor’s Independence Declaration
Independent Auditor’s Report
XBRL Instance Document
XBRL Schema Document
XBRL Calculation Linkbase Document
XBRL Definition Linkbase Document
XBRL Labels Linkbase Document
XBRL Presentation Linkbase Document
Cover Page Interactive Data File (embedded within the Inline XBRL document)
*Certain information which constitutes a clearly unwarranted invasion of personal privacy pursuant to Item 601(a)(6) of Regulation
S-K has been omitted.
94
Annual Report 2023
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and
authorised the undersigned to sign this Annual Report on its behalf.
Dated: August 30, 2023
GENETIC TECHNOLOGIES LIMITED
By:
/s/ Simon Morriss
Name:
Simon Morriss
Title:
Chief Executive Officer
Genetic Technologies Limited
GENETIC TECHNOLOGIES LIMITED
2023 Financial Report
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Genetic Technologies Limited - Consolidated Statements of Profit or Loss and Other Comprehensive
Income/(Loss) for the years ended June 30, 2023, 2022 and 2021.
Genetic Technologies Limited - Consolidated Statements of Financial Position as of June 30, 2023 and
2022.
Genetic Technologies Limited - Consolidated Statements of Cash Flows for the years ended June 30,
2023, 2022 and 2021.
Genetic Technologies Limited - Consolidated Statements of Changes in Equity for the years ended June
30, 2023, 2022 and 2021.
Genetic Technologies Limited - Notes to Consolidated Financial Statements.
Page
100
101
102
103
104
96
Annual Report 2023
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME
For the year ended June 30, 2023
(in Australian dollars, except number of shares)
Revenue
Finance income
Other income
Year ended
June 30, 2023
A$
Year ended
June 30, 2022
A$
Year ended
June 30, 2021
A$
8,686,118
220,161
1,836,822
6,794,816
36,256
2,783,391
120,554
62,394
1,559,961
Note
4A
8
5
Changes in inventories
72,257
(321,223)
14,463
Raw materials
Commissions
Employee benefits expenses
Advertising and promotional expenses
Professional fees
Research and development expenses
Depreciation and amortization
Impairment expenses
Other expenses
Finance costs
Loss from operations before income tax
Income tax credit
Loss for the year
Other comprehensive income/(loss)
Exchange gains/(losses) on translation of
controlled foreign operations
Other comprehensive income/(loss) for
the year, net of tax
Total comprehensive loss attributable to
the members of Genetic Technologies Ltd
Loss per share (cents per share)
Basic and diluted net loss per ordinary
share
Weighted-average shares outstanding
6
7
8
9
10
10
(4,407,522)
(236,019)
(6,208,066)
(2,712,353)
(1,360,640)
(1,281,157)
(676,583)
(2,125,725)
(3,687,030)
(29,515)
(11,909,252)
158,329
(11,750,923)
(2,692,311)
(156,625)
(5,868,655)
(1,885,402)
(1,835,444)
(705,507)
(578,668)
(564,161)
(2,154,375)
(15,215)
(7,163,123)
32,125
(7,130,998)
(184,920)
-
(3,868,331)
(436,274)
(1,461,401)
(1,165,531)
(386,277)
(32,048)
(1,283,871)
(16,338)
(7,077,619)
-
(7,077,619)
100,589
100,589
27,864
27,864
(37,468)
(37,468)
(11,650,334)
(7,103,134)
(7,115,087)
(0.012)
(0.08)
(0.08)
10,138,075,003
9,220,348,281
8,544,157,979
The above consolidated statement of profit or loss and comprehensive income should be read in conjunction with the
accompanying notes.
Genetic Technologies Limited
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at June 30, 2023
(in Australian dollars)
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
Non-current assets
Right-of-use assets
Property, plant and equipment
Goodwill
Other intangible assets
Other non-current assets
Deferred tax asset
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Contract liabilities
Provisions
Lease liabilities
Total current liabilities
Non-current liabilities
Provisions
Lease liabilities
Deferred tax liability
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total equity
Note
2023
A$
2022
A$
11
12
13
20
14
15
16
9
18
4C
19
20
19
20
9
21
22
23
7,851,197
1,921,657
325,893
399,048
10,497,795
509,553
89,623
3,116,893
520,472
-
121,901
4,358,442
14,856,237
1,617,333
849,212
541,930
303,570
3,312,045
30,439
229,276
121,901
381,616
3,693,661
11,162,576
11,731,325
2,421,238
398,150
166,087
14,716,800
647,150
306,175
4,506,653
624,920
-
-
6,084,898
20,801,698
2,122,379
814,150
611,060
264,130
3,811,719
22,499
388,396
148,013
558,908
4,370,627
16,431,071
161,342,707
6,535,556
(156,715,687)
11,162,576
155,138,636
11,498,651
(150,206,216)
16,431,071
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
98
Annual Report 2023
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended June 30, 2023
(in Australian dollars)
2023
A$
Note
2022
A$
2021
A$
Cash flows from/(used in) operating activities
Receipts from customers
Payments to suppliers and employees
R&D tax incentive and other grants received
Net cash flows (used in) operating activities
11
8,771,325
5,745,162
121,190
(20,453,567)
1,959,147
(9,723,095)
(13,802,170)
2,397,552
(5,659,456)
(7,747,186)
1,330,067
(6,295,929)
Cash flows from/(used in) investing activities
Purchases of plant and equipment
Purchases of intangible assets
Interest received
Payment for purchase of business, net of cash
acquired
Net cash flows (used in) investing activities
Cash flows from/(used in) financing activities
Proceeds from the issue of shares
Equity transaction costs
Principal elements of lease payments
Interest paid
Net cash flows from/(used in) financing activities
(17,552)
-
191,803
(63,926)
(32,868)
36,256
17
(486,188)
(311,937)
(3,400,625)
(3,461,163)
(748,706)
-
-
-
(748,706)
7,172,399
(916,060)
(336,396)
-
5,919,943
-
15,897,629
(10,474)
(1,956,691)
(268,590)
-
(279,064)
(236,893)
(14,049)
13,689,996
Net (decrease)/ increase in cash and cash equiv-
alents
Cash and cash equivalents at beginning of year
Net foreign exchange difference
Cash and cash equivalents at end of year
11
(4,115,089)
11,731,325
234,961
7,851,197
(9,399,683)
20,902,282
228,726
11,731,325
6,645,361
14,214,160
42,761
20,902,282
The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.
Genetic Technologies Limited
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended June 30, 2023
(in Australian dollars)
Balance at June 30, 2020
Loss for the year
Other comprehensive loss
Total comprehensive loss
Transactions with owners in their
capacity as owners
Contributions of equity, net of transaction
costs and tax
Exercise of options/warrants
Issue of performance rights
Options expired
Issue of options/warrants
Balance at June 30, 2021
Loss for the year
Other comprehensive income
Total comprehensive loss
Transactions with owners in their
capacity as owners
Contributions of equity, net of transaction
costs
Issue of performance rights
Balance at June 30, 2022
Loss for the year
Other comprehensive income
Total comprehensive loss
Transactions with owners in their
capacity as owners
Contributions of equity, net of transaction
costs
Valuation of warrants
Exercise of performance rights
Options/warrants expired
Issue of performance rights
Contributed
equity
A$
Reserves
A$
Accumulat-
ed losses
A$
140,111,073
9,928,571
(136,047,037)
-
-
-
-
(7,077,619)
-
(37,468)
(37,468)
(7,077,619)
(7,115,087)
Total equity
A$
13,992,607
(7,077,619)
(37,468)
11,764,379
-
1,699,522
(973,467)
-
-
-
13,463,901
153,574,974
-
-
-
622,725
(49,438)
1,542,356
1,142,176
11,033,279
-
27,864
27,864
-
-
-
49,438
-
49,438
(143,075,218)
(7,130,998)
-
11,764,379
726,055
622,725
-
1,542,356
14,655,515
21,533,035
(7,130,998)
27,864
(7,130,998)
(7,103,134)
1,563,662
-
1,563,662
-
437,508
437,508
-
-
-
1,563,662
437,508
2,001,170
155,138,636
11,498,651
(150,206,216)
16,431,071
-
-
-
-
(11,750,923)
(11,750,923)
100,589
100,589
-
100,589
(11,750,923)
(11,650,334)
6,256,339
(134,956)
82,688
-
-
-
134,956
(82,688)
(5,241,452)
125,500
-
-
-
5,241,452
-
6,204,071
(5,063,684)
5,241,452
6,256,339
-
-
-
125,500
6,381,839
11,162,576
Balance at June 30, 2023
161,342,707
6,535,556
(156,715,687)
The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes.
100
Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended June 30, 2023
1. CORPORATE INFORMATION
Genetic Technologies Limited (the “Company”) is a molecular diagnostics company that offers predictive genetic testing
and risk assessment tools. These consolidated financial statements comprise the Company and its subsidiaries (together
referred to as the "Group"). The Financial Report of the Company for the year ended June 30, 2023 was authorized
for issue in accordance with a resolution of the Directors dated on August 30, 2023. Genetic Technologies Limited is
incorporated in Australia and is a company limited by shares. The Directors have the power to amend and reissue the
financial statements.
The Company’s Ordinary Shares are publicly traded on the Australian Securities Exchange under the symbol GTG and,
via Level II American Depositary Receipts, on the NASDAQ Capital Market under the ticker GENE.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
(i) Compliance with International Financial Reporting Standards as issued by the International Accounting Standards
Board
The general purpose financial statements of Genetic Technologies Limited and its subsidiaries have been prepared
in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting
Standards Board and Australian equivalent International Financial Reporting Standards, as issued by the Australian
Accounting Standards Board. Genetic Technologies Limited is a for-profit entity for the purpose of preparing the
financial statements.
(ii) Historical cost convention
These financial statements have been prepared under the historical cost convention except for financial assets and
liabilities (including derivative instruments) which are measured at fair value.
(iii) Critical accounting estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires
Management to exercise its judgement in the process of applying the Company’s accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are critical to the
financial statements, are disclosed in Note 3.
(iv) Going concern
For the year ended June 30, 2023, the Company incurred a total comprehensive loss of A$11,650,334 (2022:
A$7,103,134) and net cash outflow from operations of A$9,723,095 (2022: A$5,659,456). As at June 30, 2023, the
Company held total cash and cash equivalents of A$7,851,197 and total net current assets of A$7,185,750.
The company expects to continue to incur losses and cash outflows for the foreseeable future as it continues to
invest resources in research and development activities for geneType risk assessment tests and to invest in the
commercialization activities for geneType, EasyDNA and AffinityDNA, via marketing, sales and distribution
channels.
The continuing viability of the company and its ability to continue as a going concern, and meet its debts and
commitments as they fall due, is dependent on the satisfactory completion of an equity raising forecast for the
early part of the 2024 calendar year. The Company does not currently have binding commitments from any party to
subscribe for shares and any raise will be subject to maintaining active listing on the NASDAQ exchange as well as
compliance with the Group’s obligations under ASX Listing Rule 7.1.
On July 17, 2023, the company received notification from The Nasdaq Stock Market LLC that it is not in compliance
with the minimum bid price requirement of Nasdaq Listing Rule 5550(a)(2) for continued listing on the Nasdaq
Capital Market, since the closing bid price for the company’s American Depositary Shares (ADS) on the Nasdaq
Capital Market was below US$1.00 for 34 consecutive trading days.
Genetic Technologies Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(a) Basis of preparation (cont.)
(iv) Going concern (cont.)
Under Nasdaq Listing Rule 5810(c)(3)(A), the company has a period of 180 calendar days from the date of
Notification to regain compliance with the minimum bid requirement, during which time the ADS will continue to
trade on the Nasdaq Capital Market. If at any time before January 15, 2024, the bid price of the ADS closes at or
above US$1.00 per ADS for a minimum of 10 consecutive business days, the Company will regain compliance with
the Minimum Bid Requirement.
Due to the uncertainty surrounding the timing, quantum or the ability to raise additional equity, there is a material
uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern and therefore, that
it may be unable to realize its assets and discharge its liabilities in the normal course of business. However, the
Directors believe that the Company will be successful in its equity raising endeavours, and has a strong track record
in this regard, and accordingly, have prepared the financial report on a going concern basis. As such no adjustments
have been made to the financial statements relating to the recoverability and classification of the asset carrying
amounts or classification of liabilities that might be necessary should the Group not be able to continue as a going
concern.
(v) New standards and interpretations
The Group has applied the following standards and amendments for the first time for its annual reporting period
commencing 1 July 2022:
• Onerous Contracts – Cost of Fulfilling a Contract –Amendments to IAS 37
• Annual Improvements to IFRS Standards 2018–2020
•
•
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16
Reference to the Conceptual Framework – Amendments to IFRS 3
The amendments listed above did not have any impact on the amounts recognized in prior periods and are not
expected to significantly affect the current or future periods.
(vi) New standards and interpretations not yet adopted.
There are no standards that are not yet effective and that would be expected to have a material impact on the
Company in the current or future reporting years and on foreseeable future transactions.
(b) Principles of consolidation
(i) Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Company has control. The Company controls
an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the Company
and has the ability to affect those returns through its power to direct the activities of the Company. Subsidiaries are
fully consolidated from the date on which control is transferred to the Company. They are deconsolidated from the
date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Company.
Intercompany transactions, balances and unrealized gains on transactions between Group companies are eliminated.
Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred
asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Company.
(ii) Loss of control
When the Group loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any
related NCI and other components of equity. Any resulting gain or loss is recognized in profit or loss. Any interest
retained in the former subsidiary is measured at fair value when control is lost.
102
Annual Report 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(c) Business combination
The Group accounts for business combinations using the acquisition method when the acquired set of activities
and assets meets the definition of a business and control is transferred to the Group (Note 2(b)(i)). In determining
whether a particular set of activities and assets is a business, the Group assesses whether the set of assets and
activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the
ability to produce outputs.
The Group has an option to apply a ‘concentration test’ that permits a simplified assessment of whether an acquired
set of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value
of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.
The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets
acquired. Any goodwill that arises is tested annually for impairment (Note 2(k)). Any gain on a bargain purchase is
recognized in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of
debt or equity securities (Note 2(u)).
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such
amounts are generally recognized in profit or loss.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent
consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured and
settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at
each reporting date and subsequent changes in the fair value of the contingent consideration are recognized in profit
or loss.
If share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s
employees (acquiree’s awards), then all or a portion of the amount of the acquirer’s replacement awards is included
in measuring the consideration transferred in the business combination. This determination is based on the market-
based measure of the replacement awards compared with the market-based measure of the acquiree’s awards and the
extent to which the replacement awards relate to pre-combination service.
(d) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The acquisition of EasyDNA in the 2022 financial year changed how the Company reports segment
information as compared to the prior year. Therefore, the 2021 financial year period presentation of segment
information was recast to conform with the current segment reporting structure.
(e) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Company’s entities are measured using the currency of
the primary economic environment in which the company operates (‘the functional currency’). The consolidated
financial statements are presented in Australian dollar ($), which is Genetic Technologies Limited’s functional and
presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of
the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are
generally recognized in profit or loss.
All foreign exchange gains and losses are presented in the consolidated statement of profit or loss on a net basis,
within other expenses or other income, respectively.
Genetic Technologies Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(e) Foreign currency translation (cont.)
(ii) Transactions and balances (cont.)
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value
are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and
liabilities such as equities held at fair value through profit or loss are recognized in profit or loss as part of the fair
value gain or loss and translation differences on non-monetary assets such as equities classified as at fair value
through other comprehensive income are recognized in other comprehensive income.
(iii) Group companies
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the presentation
currency as follows:
● assets and liabilities for each consolidated statement of financial position presented are translated at the
closing rate at the date of that consolidated statement of financial position;
● income and expenses for each consolidated statement of profit or loss and other comprehensive income
are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative
effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at
the dates of the transactions); and
● all resulting exchange differences are recognized in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and
of borrowings and other financial instruments designated as hedges of such investments, are recognized in other
comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are
repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
(f) Revenue recognition
Under IFRS 15, revenue is recognized based on contract with customers when performance obligations were
satisfied. The following recognition criteria must also be met before revenue is recognized:
(i) Revenue from sale of goods - Genetic testing revenues
Genetype
Revenues from the provision of genetic and clinical risk testing for cancer and other serious diseases under the
geneType brand are recognized at a point time when the Company has provided the customer with their test results,
the single performance obligation. Invoices are usually payable within 30 days. Where consideration is received
in advance of performance, it is initially recorded as contract liabilities and then revenue is recognized as the
performance obligations are satisfied. Revenue is recognized where consideration for collection is probable and is
above 50%. The geneType brand have more than 75% probability of being collected.
EasyDNA and AffinityDNA
Revenue from provision of genetic test direct to consumer under the EasyDNA and AffinityDNA brand is recognized
at a point in time when the Company has provided the customer with their test results, the single performance
obligation. Where consideration is received in advance of performance, it is initially recorded as contract liabilities
and then revenue is recognized as the performance obligations are satisfied. Revenue recognized under the EasyDNA
and AffinityDNA brands are mainly upfront, hence, no issue in collectability.
104
Annual Report 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(f) Revenue recognition (cont.)
(ii) Revenue from services - license fees
Revenue from contracts with service providers is recognized when the contracted sales parameters are met, the
single performance obligation. Revenue is recognized over time based on the higher of actual sales incurred or
minimum fees requirement on a quarterly basis. The Company did not recognize or receive any license fee revenue
in the current financial year. Fixed license fee revenue recognized in the prior period have been fully impaired as it
is unlikely that these amounts will be recovered.
(iii) Contract liabilities
The Group recognizes contract liabilities for consideration received in respect of unsatisfied performance obligations
and reports these amounts as deferred income in its consolidated statement of financial position. Similarly, if the
Group satisfies a performance obligation before it receives the consideration, the Group recognizes either a contract
asset or a receivable in its consolidated statement of financial position, depending on whether something other than
the passage of time is required before the consideration is due.
(g) Other income
(i) Research and development tax incentive income
The Australian government replaced the research and development tax concession with research and development
(R&D) tax incentive from July 1, 2011. The R&D tax incentive applies to expenditure incurred and the use of
depreciating assets in an income year commencing on or after July 1, 2011. A refundable tax offset is available to
eligible companies with an annual aggregate turnover of less than A$20 million. A new legislation subsequently
came into place, where for the first income year commencing on or after 1 July 2021, for companies with an
aggregated turnover below A$20 million, the refundable R&D tax offset will be a premium of 18.5 percentage points
above the claimant's company tax rate.
Management has assessed the Company’s activities and expenditure to determine which are likely to be eligible
under the incentive scheme. The Company accounts for the R&D tax incentive as a government grant. The grant is
recognized as other income over the period in which the R&D expense is recognized.
(ii) Government Grants
Income from government grants is recognized in the consolidated statement of profit or loss and comprehensive
income on a systematic basis over the periods in which the Company recognizes as expense the related costs for
which the grants are intended to compensate in accordance with IAS 20 Accounting for Government Grants and
Disclosure of Government Assistance.
The receivable for reimbursable amounts that have not been collected is reflected in trade and other receivables on
our consolidated statement of financial position.
(h) Finance income and finance costs
The Group’s finance income and finance costs include interest income and interest expenses. Interest income or
expense is recognized using the effective interest method.
(i) Income tax
The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences and to unused tax losses.
Genetic Technologies Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(i) Income tax (cont.)
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end
of the reporting period in the countries where the Company and its subsidiaries and associates operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred
tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax is also
not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the
end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the
deferred income tax liability is settled.
Deferred tax assets are recognized only if it is probable that future taxable amounts will be available to utilize those
temporary differences and losses.
(j) Leases
For any new contracts entered into on or after July 1, 2019, the Group considers whether a contract is, or contains
a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying
asset) for a period of time in exchange for consideration’. To apply this definition the Company assesses whether the
contract meets three key evaluations which are whether:
● the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified
by being identified at the time the asset is made available to the Group,
● the Company has the right to obtain substantially all of the economic benefits from use of the identified asset
throughout the period of use, considering its rights within the defined scope of the contract,
● the Company has the right to direct the use of the identified asset throughout the period of use. The Company
assess whether it has the right to direct ‘how and for what purpose’ the asset is used throughout the period of use.
Leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset is
available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance
cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset’s
useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
●
●
●
●
fixed payments (including in-substance fixed payments), less any lease incentives receivable,
amounts expected to be payable by the lessee under residual value guarantees,
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the
Group’s incremental borrowing rate.
106
Annual Report 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(j) Leases (cont.)
Right-of-use assets are measured at cost comprising the following:
● the amount of the initial measurement of lease liability,
● any lease payments made at or before the commencement date, less any lease incentives received,
● any initial direct costs, and
● restoration costs.
Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as
an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
Short-term leases and leases of low-value assets
The Group has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and
short-term leases, including IT equipment. The Group recognizes the lease payments associated with these leases as
an expense on a straight-line basis over the lease term.
(k) Impairment of assets
Non-financial asset
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is
the higher of its fair value less costs of disposal or its value in use and is determined for an individual asset, unless
the asset does not generate cash inflows that are largely independent of those from other assets or group of assets
and the asset’s value-in-use cannot be estimated to be close to its fair value. In such cases, the asset is tested for
impairment as part of the cash-generating unit to which it belongs. Cash generating unit is the smallest group of
assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets
or CGUs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or
cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment losses relating to operations are recognized as a separate line in the statement of profit or loss unless the
asset is carried at its revalued amount, in which case the impairment loss is treated as a revaluation decrease.
An assessment is made at each reporting date as to whether there is any indication that previously recognized
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount
is estimated. A previously recognized impairment loss is reversed only if there has been a change in the estimates
used to determine the asset’s recoverable amount since the last impairment loss was recognized. If so, the carrying
amount of the asset is increased to its recoverable amount. The increased amount cannot exceed the carrying amount
that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior
years. Such reversal is recognized in profit or loss unless it reverses a decrement previously charged to equity, in
which case the reversal is treated as a revaluation increase. After such a reversal, the depreciation charge is adjusted
in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over
its remaining useful life. An impairment loss in respect of goodwill is not reversed.
Financial asset
The Group records the impairment losses for financial assets as lifetime expected credit losses. These are the
expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the
financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking
information to calculate the expected credit losses using a provision matrix.
Genetic Technologies Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(l) Cash and cash equivalents
For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash
on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current
liabilities in the consolidated statement of financial position.
(m) Trade and other receivables
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the
effective interest method, less loss allowance.
Refer Note 31 for details of management of interest rate, foreign exchange and liquidity risks applicable to trade and
other payables for which, due to their short-term nature, their carrying value approximates their fair value.
(n) Inventories
(i) Raw materials and stores, work in progress and finished goods
Raw materials and stores, work in progress and finished goods are stated at the lower of cost and net realizable
value. Cost comprises direct materials, direct labor and an appropriate proportion of variable and fixed overhead
expenditure, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual
items of inventory on the basis of weighted average costs. Costs of purchased inventory are determined after
deducting rebates and discounts. Net realizable 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.
(o) Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Company and the cost
of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is
derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting
period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate their cost or revalued amounts, net of their
residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased plant
and equipment, the shorter lease term as follows:
Plant and equipment
Furniture, fittings and equipment
Leasehold improvements
Leased plant and equipment
3 - 5 years
3 - 5 years
1 - 3 years (lease term)
3 years (lease term)
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount (Note 2(k)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in
profit or loss. When revalued assets are sold, it is Company policy to transfer any amounts included in other reserves
in respect of those assets to retained earnings.
108
Annual Report 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(p) Intangible assets and goodwill
(i) Goodwill
Goodwill arises on the acquisition of a business combination. Goodwill is calculated as the excess sum of:
•
•
•
the consideration transferred;
any non-controlling interest; and
the acquisition date fair value of any previously held equity interest; over the acquisition date fair value of net
identifiable assets acquired.
Goodwill is not amortized. Instead, goodwill is tested annually for impairment, or more frequently if events or
changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment
losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.
Goodwill is allocated to the Group's cash-generating units representing the lowest level at which goodwill is
monitored.
(ii) Brand name and customer contracts
Brand, trademark, trade names and domain names acquired in a business combination that qualify for separate
recognition are recognized as intangible assets at their fair values.
Brand, trademark, trade names and domain names are amortized on a straight-lined basis over their estimated useful
lives of 5 years.
(q) Trade and other payables
Trade payables and other payables are carried at amortized cost and represent liabilities for goods and services
provided to the Company prior to the end of the financial year that are unpaid and arise when the Company becomes
obliged to make future payments in respect of the purchase of these goods and services. Trade payables and other
payables generally have terms of between 30 and 60 days.
(r) Provisions
Provisions for legal claims, service warranties and make good obligations are recognized when the Company has a
present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be
required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future
operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an
outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the
present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-
tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The
increase in the provision due to the passage of time is recognized as interest expense.
Genetic Technologies Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(s) Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave that
are expected to be settled wholly within 12 months after the end of the period in which the employees render
the related service are recognized in respect of employees’ services up to the end of the reporting period and are
measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current
employee benefit obligations in the consolidated statement of financial position.
(ii) Other long-term employee benefit obligations
In some countries, the Company also has liabilities for long service leave and annual leave that are not expected to be
settled wholly within 12 months after the end of the period in which the employees render the related service. These
obligations are therefore measured as the present value of expected future payments to be made in respect of services
provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is
given to expected future wage and salary levels, experience of employee departures and periods of service. Expected
future payments are discounted using market yields at the end of the reporting period of high-quality corporate bonds
with terms and currencies that match, as closely as possible, the estimated future cash outflows. Remeasurements as
a result of experience adjustments and changes in actuarial assumptions are recognized in general and administrative
expenses in profit or loss.
The obligations are presented as current liabilities in the consolidated statement of financial position if the Company
does not have an unconditional right to defer settlement for at least twelve months after the reporting period,
regardless of when the actual settlement is expected to occur.
(t) Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes,
the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date; and assumes that the transaction will take place
either: in the principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on
its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, are used, maximizing the use of relevant observable inputs and minimizing the
use of unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects
the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date
and transfers between levels are determined based on a reassessment of the lowest level of input that is significant
to the fair value measurement.
Fair value hierarchy levels 1 to 3 are based on the degree to which the fair value is observable:
● Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for
identical assets or liabilities;
● Level 2 fair value measurements are those derived from inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices); and
● Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset
or liability that are not based on observable market data (unobservable inputs).
110
Annual Report 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(t) Fair value measurement (cont.)
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is
either not available or when the valuation is deemed to be significant. External valuers are selected based on market
knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period
to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation
and a comparison, where applicable, with external sources of data.
(u) Contributed equity
Issued and paid-up capital is recognized at the fair value of the consideration received by the Company. Transaction
costs arising on the issue of Ordinary Shares are recognized directly in equity as a deduction, net of tax, of the
proceeds received. The Company has a share-based payment option plan under which options to subscribe for the
Company’s shares have been granted to certain executives and other employees.
(v) Loss per share
(i) Basic loss per share
Basic loss per share is calculated by dividing:
● the loss attributable to owners of the Company, excluding any costs of servicing equity other than ordinary
shares,
● by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year and excluding treasury shares.
(ii) Diluted loss per share
Diluted loss per share adjusts the figures used in the determination of basic loss per share to take into account:
● after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares,
and
● the weighted average number of additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
On the basis of the Company’s losses, the outstanding options and performance rights as at June 30, 2023 are
considered to be anti-dilutive and therefore were excluded from the diluted weighted average number of ordinary
shares calculation.
(w) Goods and services tax (GST) and other sales taxes
Receivables and payables are stated inclusive of the amount of GST and other sales taxes receivable or payable. The
net amount of GST and other taxes recoverable from, or payable to, the taxation authority is included with other
receivables or payables in the consolidated statement of financial position.
Cash flows are presented on a gross basis. The GST and other sales taxes components of cash flows arising from
investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as
operating cash flows.
(x) Parent entity financial information
The financial information for the parent entity, Genetic Technologies Limited, disclosed in Note 33 has been
prepared on the same basis as the consolidated financial statements. Loans to subsidiaries are written down to their
recoverable value as at balance date.
Genetic Technologies Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are evaluated and based on historical experience and other factors, including expectations
of future events that may have a financial impact on the Company and that are believed to be reasonable under the
circumstances.
Share-based payments transactions
The Company has determined that the fair value of the equity instruments is a critical judgement. The Company
measures the cost of equity-settled transactions with employees and service providers by reference to the value of
the equity instruments at the date on which they are granted. Management has determined the fair value by engaging
an independent valuer for more complex equity instruments, such as warrants and performance rights, by using a
Black-Scholes or Binomial model, and utilized internal resources to perform fair value by straight forward equity
instruments by using Black-Scholes model.
Goodwill
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether
goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting
policy stated in Note 2(k). The value-in-use calculation used in assessing potential impairment of goodwill
incorporates a number of key estimates and assumptions which is a critical judgement. CGUs are identified by
determining the smallest identifiable group of assets that generate largely independent cash inflows from other assets
or groups of assets. Identifying those largely independent cash inflows requires significant judgement in assessing
the Group’s sources of revenue and how assets are utilized in generating those revenues. Goodwill is required to
be allocated to the CGUs or groups of CGUs that are expected to benefit from the synergies of the combination
acquired where goodwill cannot be allocated to individual CGUs on a reasonable and consistent basis. Significant
judgement is required to assess which CGUs or groups of CGUs benefit from the synergies and thus determine how
the goodwill is allocated.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The Group assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets
at each reporting date by evaluation conditions specific to the Group 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 calculation which incorporate a number of key estimates and assumptions.
Business combination and the contingent consideration
Business combination are initially accounted for on a provisional basis. The fair value of assets acquired and
liabilities assumed are initially estimated by the Group taking into consideration all available information at the
reporting date. Fair value adjustments on the finalization 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 amortization reported.
For the AffinityDNA acquisition, a second payment of A$486,188 (£277,500) would be due to the prior owners of
the business if a pre-determined gross profit target for the 12-month period from the acquisition date is achieved.
Management used judgement by not including the second payment in the calculation of fair value of consideration
transferred.
112
Annual Report 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
4. REVENUE AND DEFERRED INCOME
4A. REVENUE
Sales of EasyDNA branded test - point in time
Sales of AffinityDNA branded test - point in time
Sales of geneType branded test - point in time
License fees - over time
2023
A$
7,698,605
944,058
43,455
-
2022
A$
5,989,782
-
7,551
797,483
2021
A$
-
-
25,347
95,207
Total revenue from contract with customers
8,686,118
6,794,816
120,554
4B. DISAGGREGATION OF REVENUE FROM CONTRACTS WITH CUSTOMERS
The Group's revenue disaggregated by primary geographical markets is as follows:
America and Canada
Europe Middle East and Africa
Latin America
Asia Pacific
Total revenue
4C. CONTRACT BALANCES
Receivables, which are included in 'net trade receivables'
Contract liabilities
2023
A$
2,242,169
4,494,626
322,033
1,627,290
8,686,118
Note
12
2022
A$
2,274,551
2,501,302
128,840
1,890,123
6,794,816
2021
A$
120,554
-
-
-
120,554
2023
A$
1,049,393
849,212
2022
A$
390,587
814,150
Contract liabilities arises from revenue for all business units, which is the consideration received in respect of unsatisfied
performance obligation. There are no contract assets as at 30 June 2023 (2022: Nil).
The amount of A$814,150 included in deferred income (contract liabilities) at 30 June 2022 has been recognized as
revenue in 2023 (2022: Nil).
No revenue was recognized in 2023 from performance obligations satisfied (or partially satisfied) in previous periods
(2022: Nil, 2021: Nil).
5. OTHER INCOME
Research and development tax incentive income (1)
Export Marketing & Development Grant
Other income
Government grant income – COVID-19 relief (2)
Net unrealized foreign exchange gain
Net realized foreign exchange gain
Total other income
2023
A$
1,616,064
-
45,724
-
152,963
22,071
2022
A$
2,397,552
-
25,955
-
244,762
115,122
2021
A$
997,908
100,000
116,271
287,883
-
57,899
1,836,822
2,783,391
1,559,961
Genetic Technologies Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
5. OTHER INCOME
(1)
R&D tax incentive
The Company’s research and development activities are eligible under an Australian government tax incentive for
eligible expenditure. Management has assessed these activities and expenditure to determine which are likely to be
eligible under the incentive scheme. Amounts are recognized when it has been established that the conditions of the tax
incentive have been met and that the expected amount can be reliably measured. For the year ended June 30, 2023, the
Company has included an item in other income of A$1,616,064, (2022: A$2,397,552, 2021: A$997,908) to recognize
income over the period necessary to match the grant on a systematic basis with the costs that they are intended to
compensate.
On December 5, 2019, the Treasury Laws Amendment (R&D Tax Incentive Bill 2019) was introduced into Parliament.
The draft bill contains proposed amendments to the R&D tax incentive regulations. Under the proposed amendments,
the refundable tax offset rate for companies with an aggregated turnover of less than A$20 million would become 41%.
In lieu of that bill, the below legislation came into place.
During the 2022 financial year new legislation came into place, where for the first income year commencing on or after
1 July 2021, for companies with an aggregated turnover below A$20 million, the refundable R&D tax offset will be a
premium of 18.5 percentage points above the claimant's company tax rate. The Company has therefore calculated the
R&D tax incentive for 2022 and 2023 by applying the legislation brought into effect during the 2022 financial year.
(2)
Government Grant income – COVID-19 Relief
The COVID-19 relief relates to government assistance received during the year, from the Australian Government (at
both federal and state level) and the U.S. Small Business Administration, in response to the economic and financial
challenges in the current economy.
6. EMPLOYEE BENEFITS EXPENSE
Salaries and wages
Director fees
Superannuation contribution
Share-based payments
Other employee costs
Total employee benefits expenses
7. OTHER EXPENSES
Buildings and facilities costs
Insurance
Investor relations and shareholder maintenance
Net unrealized foreign exchange loss
Net realized foreign exchange loss
Bank and credit card merchant charges
IT and communication
Travel and entertainment
Administrative
Other expenses
2023
A$
4,938,516
288,024
415,128
125,500
440,898
6,208,066
2022
A$
4,490,186
288,024
347,018
437,508
305,919
5,868,655
2023
A$
2022
A$
695,844
403,167
469,151
13,521
-
426,589
670,008
366,920
370,571
271,259
748,580
345,450
344,355
-
-
296,883
84,133
67,298
121,184
146,492
2021
A$
2,480,336
288,024
203,242
714,577
182,152
3,868,331
2021
A$
345,624
302,722
273,187
47,896
-
14,582
75,311
12,318
82,264
129,967
Total other expenses
3,687,030
2,154,375
1,283,871
114
Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
8. FINANCE INCOME / (FINANCE COSTS)
Interest income
Total finance income
Lease interest
Total finance costs
9. INCOME TAX CREDIT/(EXPENSE)
2023
A$
220,161
220,161
(29,515)
(29,515)
2022
A$
36,256
36,256
(15,215)
(15,215)
2021
A$
62,394
62,394
(16,338)
(16,338)
Reconciliation of income tax expense to prima facie tax
payable
Loss before income tax credit
(11,909,252)
(7,163,123)
(7,077,619)
2023
A$
2022
A$
2021
A$
Tax at the Australian tax rate of 25% (2022: 25% and 2021:
26%)
Tax effect amounts which are not deductible/(taxable) in
calculating taxable income
Share-based payments expense
Research and development tax incentive
Impairment of goodwill
Other assessable items
Income tax expenses before unrecognized tax losses
Difference in overseas tax rates
Over provision in prior years
Temporary differences not recognized
Research and development tax credit
Tax losses not recognized
Utilization of tax losses not previously recognized
Income tax credit
(2,977,313)
(1,790,781)
(1,840,181)
31,375
919,785
461,250
-
(1,564,903)
53,673
(454,928)
29,979
(404,016)
2,543,441
(361,575)
109,377
1,116,714
-
-
(564,690)
(79,604)
(348,607)
(301,694)
(599,388)
1,861,858
-
(158,329)
(32,125)
185,790
588,659
-
-
(1,065,732)
16,688
(235,653)
(419,965)
(275,631)
1,980,293
-
-
Genetic Technologies Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
9. INCOME TAX CREDIT/(EXPENSE) (cont.)
Net deferred tax assets
Deferred tax liabilities recognized
Brands and trademarks
Total deferred tax liabilities
Deferred tax assets recognized
Tax losses
Total deferred tax assets
Deferred tax assets not recognized
Property, plant and equipment
Trade debtor
Capital raising costs
Intangible assets
Provisions
Total deferred tax assets
Deferred tax liabilities not recognized
Right-of-use assets
Total deferred tax liabilities
Net deferred tax assets on temporary differences not brought
to account
Total net deferred tax assets/(liabilities)
Tax losses
Unused tax losses for which no deferred tax asset has
been recognized
2023
A$
2022
A$
2021
A$
(121,901)
(121,901)
(148,013)
(148,013)
121,901
121,901
-
-
-
222,144
582,168
1,407,570
342,252
2,554,134
-
58,041
661,863
1,456,225
442,383
2,618,512
(127,388)
(161,787)
(127,388)
(161,787)
-
-
-
-
8,004
-
975,270
1,701,477
297,907
2,982,658
(34,735)
(34,735)
(2,426,746)
(2,456,725)
2,947,923
-
(148,013)
-
2023
A$
2022
A$
2021
A$
119,096,654
105,287,311
100,694,696
Potential tax benefit @ 26% (Australia)
21,897,732
19,020,914
19,025,063
Potential tax benefit @ 21% (USA)
6,568,458
5,950,299
5,665,976
Potential tax benefit @ 35% (Malta)
Potential tax benefit @ 19% (UK)
65,895
7,427
304,115
-
-
-
Subject to the Company continuing to meet the relevant statutory tests, the tax losses are available for offset against
future taxable income.
116
Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
9. INCOME TAX CREDIT/(EXPENSE) (cont.)
At June 30, 2023, the Company had a potential tax benefit related to tax losses carried forward of A$28,539,512
(2022: A$25,275,328, 2021: A$24,691,039). Such amount includes net losses of A$6,568,458 (2022: A$5,950,299,
2021: A$5,665,976) related to subsidiaries in the United States (U.S.). The Tax Cuts and Jobs Act (TCJA) enacted
by Congress in the U.S. on December 22, 2017 cut the top corporate income tax rate from 35% to 21%. For tax years
beginning after December 31, 2017, the graduated corporate tax rate structure is eliminated and corporate taxable
income will be taxed at 21% flat rate. Additionally, the previous 20-year limitation on carry forward net operating
losses (NOL’s) has been removed, allowing the NOL’s to be carried forward indefinitely. The remaining tax losses
carried forward of A$21,897,732 (2022: A$19,020,914, 2021: A$19,025,063) are indefinite and are attributable to the
Company’s operations in Australia, as well as A$65,895 (2022: A$304,115, 2021: Nil) and A$7,427 (2022: Nil) tax
losses attributable to Company's operations in Malta and UK, respectively. As such the total unused tax losses available
to the Company, equal A$28,539,511 (2022: A$25,275,328, 2021: A$24,691,039).
As at balance date, there are unrecognized tax losses with a benefit of approximately A$28,539,511 (2022: A$25,275,328,
2021: A$24,691,039) that have not been recognized as a deferred tax asset to the Company. These unrecognized deferred
tax assets will only be obtained if:
(a)
(b)
(c)
The Company derives future assessable income of a nature and amount sufficient to enable the benefits to be
realized;
The Company continues to comply with the conditions for deductibility imposed by the law; and
No changes in tax legislation adversely affect the Company from realizing the benefit.
Management has assessed the tax position of the Company and concluded that any potential uncertainty does not have
a material impact on the financial statements.
Tax consolidation legislation
Genetic Technologies Limited and its wholly owned Australian subsidiaries implemented the tax consolidation
legislation as from July 1, 2003. The accounting policy in relation to this legislation is set out in Note 2(i).
The entities in the tax consolidated Company have entered into a Tax Sharing Agreement which, in the opinion of the
Directors, limits the joint and several liabilities of the wholly owned entities in the case of a default by the head entity,
Genetic Technologies Limited.
The entities have also entered into a Tax Funding Agreement under which the wholly owned entities fully compensate
Genetic Technologies Limited for any current tax payable assumed and are compensated by Genetic Technologies
Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are
transferred to Genetic Technologies Limited under the tax consolidation legislation. The funding amounts are determined
by reference to the amounts recognized in the respective subsidiaries’ financial statements.
The amounts receivable or payable under the Tax Funding Agreement are due upon receipt of the funding advice from
the head entity, which is issued as soon as practicable after the end of each financial year.
As at June 30, 2023, there are no unrecognized temporary differences associated with the Company’s investments in
subsidiaries, as the Company has no liability for additional taxation should unremitted earnings be remitted (2022: Nil,
2021: Nil).
Genetic Technologies Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
10. LOSS PER SHARE
The following reflects the income and share data used in the calculations of basic and diluted loss per share:
Loss for the year
Weighted average number of Ordinary Shares used in
calculating loss per share (number of shares)
2023
A$
2022
A$
2021
A$
(11,750,923)
(7,130,998)
(7,077,619)
10,138,075,003
9,220,348,281
8,544,157,979
Note: None of the 233,400,000 (2022: 757,400,000 and 2021: 725,787,500) options/performance rights over the
Company’s Ordinary Shares that were outstanding as at the reporting date are considered to be dilutive for
the purposes of calculating diluted earnings per share.
11. CASH AND CASH EQUIVALENTS
Reconciliation of cash and cash equivalents
2023
A$
2022
A$
2021
A$
Cash at bank and on hand
Total cash and cash equivalents
7,851,197
7,851,197
11,731,325
11,731,325
20,902,282
20,902,282
Reconciliation of loss for the year
Reconciliation of loss for the year after income tax to net
cash flows used in operating activities is as follows:
Loss for the year after income tax
(11,750,923)
(7,130,998)
(7,077,619)
Tax credit
158,329
32,125
-
Loss for the year before income tax
(11,909,252)
(7,163,123)
(7,077,619)
Adjust for non-cash items and non-operational items
Amortization and depreciation expenses
Depreciation of right-of-use of assets
Impairment of receivables
Impairment of goodwill
Share-based payments expense
Inventory written-off
Finance costs
Finance income
380,409
296,174
280,725
1,845,000
125,500
-
29,515
(220,161)
343,427
235,241
564,161
-
437,508
30,214
15,215
(36,256)
265,748
212,474
-
-
714,577
54,523
16,338
(62,394)
Net foreign exchange (gains) / losses
(152,963)
(9,325,053)
(244,762)
(5,818,375)
9,755
(5,866,598)
118
Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
11. CASH AND CASH EQUIVALENTS (cont.)
Reconciliation of cash and cash equivalents (cont.)
2023
A$
2022
A$
2021
A$
Adjust for changes in assets and liabilities
Decrease / (Increase) in trade and other receivables
256,213
(1,889,124)
(Increase) / Decrease in other operating assets
Decrease / (Increase) in inventories
Decrease / (Increase) in other non-current assets
(Decrease) / Increase in trade and other payables
(Decrease) / Increase in provisions
(232,961)
16,493
72,257
(351,437)
-
(432,361)
(61,190)
97,868
2,178,301
106,818
(284,971)
(182,602)
14,463
-
(14,991)
38,770
Net cash flows used in operating activities
(9,723,095)
(5,659,456)
(6,295,928)
Financing facilities available
As at June 30, 2023, the following financing facilities
had been negotiated and were available:
Total facilities
Credit cards
Facilities used as at reporting date
Credit cards
Facilities unused as at reporting date
Credit cards
188,630
190,020
190,020
(16,029)
-
(9,511)
172,601
190,020
180,509
The Company’s main interest rate risk arises in relation to its short-term deposits with various financial institutions.
If rates were to decrease, the Company may generate less interest revenue from such deposits. However, given the
relatively short duration of such deposits, the associate risk is relatively minimal.
The Company has a Short-Term Investment Policy which was developed to manage the Company’s surplus cash and
cash equivalents. In this context, the Company adopts a prudent approach that is tailored to cash forecasts rather than
seeking high returns that may compromise access to funds as and when they are required. Under the policy, the Company
deposits its surplus cash in a range of deposits over different time frames and with different institutions in order to
diversify its portfolio and minimize risk.
12. TRADE AND OTHER RECEIVABLES (CURRENT)
Trade receivables
Less: impairment loss (1)
Net trade receivables
Other receivables (2)
Total net current trade and other receivables
2023
A$
1,080,479
(888,576)
191,903
1,729,754
1,921,657
2022
A$
1,036,998
(594,798)
442,200
1,979,038
2,421,238
(1) Provision of impairment losses against trade receivables relate to licence fees from IBX contract in the prior
year. The Company did not recognize or receive any license fee revenue in the current financial year.
(2) Other receivables includes the R&D tax incentive refund accrued for the 2023 financial year A$1,616,064
(2022: A$1,943,083).
Genetic Technologies Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
13. OTHER CURRENT ASSETS
Prepayments
Bonds and deposits
Other
Total current prepayments and other assets
14. PROPERTY, PLANT AND EQUIPMENT
Laboratory equipment, at cost
Less: cost written-off during the year
Add: additions during the year
Less: accumulated depreciation
Add: accumulated depreciation written-off during the year
Net laboratory equipment
Computer equipment, at cost
Less: cost written-off during the year
Less: cost transferred
Add: additions during the year
Less: accumulated depreciation
Add: accumulated depreciation transferred
Add: accumulated depreciation written-off during the year
Net computer equipment
Office equipment, at cost
Less: cost written-off during the year
Add: cost transferred
Add: additions during the year
Less: accumulated depreciation
Less: accumulated depreciation transferred
Add: accumulated depreciation written-off during the year
Net office equipment
Total net property, plant and equipment
Reconciliation of property, plant and equipment
Opening gross carrying amount
Add: additions purchased during the year
Less: cost written-off during the year
Closing gross carrying amount
Opening accumulated depreciation and impairment losses
Add: accumulated depreciation written-off during the year
Less: cost written-off during the year
Add: foreign currency translation
Closing accumulated depreciation and impairment losses
Total net property, plant and equipment
2023
A$
381,608
17,440
-
399,048
2023
A$
975,619
(8,243)
6,402
(941,545)
8,243
40,476
292,817
(3,099)
(11,603)
11,150
(261,580)
11,897
3,099
42,681
18,709
-
11,603
(11,949)
(11,897)
-
6,466
89,623
1,284,395
17,552
(11,342)
1,290,605
(978,220)
11,342
(234,697)
593
(1,200,982)
89,623
2022
A$
147,854
13,257
4,976
166,087
2022
A$
960,872
-
14,747
(744,615)
-
231,004
251,852
-
40,965
(230,186)
-
62,631
10,495
-
8,214
(6,169)
-
12,540
306,175
1,220,469
63,926
-
1,284,395
(763,291)
-
(214,929)
-
(978,220)
306,175
120
Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
14. PROPERTY, PLANT AND EQUIPMENT (cont.)
Reconciliation of movements in property, plant and equipment by asset category for the year ended June 30,
2023
Opening
net carrying
Amount
A$
231,004
62,631
12,540
306,175
Additions
during year
A$
Transfer
during
year
A$
6,402
11,150
-
17,552
-
294
(294)
-
Depreciation
expense
A$
(196,928)
(31,394)
(6,375)
(234,697)
Foreign
currency
translation
A$
(2)
-
595
593
Closing net
carrying
amount
A$
40,476
42,681
6,466
89,623
Asset category
Laboratory equipment
Computer equipment
Office equipment
Totals
Reconciliation of movements in property, plant and equipment by asset category for the year ended June 30,
2022
Opening
net carrying
Amount
A$
412,889
34,917
9,372
457,178
Additions
during year
A$
Disposals
during year
A$
Depreciation
expense
A$
14,747
40,965
8,214
63,926
-
-
-
-
(196,632)
(13,251)
(5,046)
(214,929)
Closing net
carrying
amount
A$
231,004
62,631
12,540
306,175
Asset category
Laboratory equipment
Computer equipment
Office equipment
Totals
15. GOODWILL
The following table shows the movements in goodwill:
Gross carrying amount:
Balance at beginning of period
Acquired through business combination - AffinityDNA (Note 17)
Balance at end of period
Accumulated impairment:
Balance at beginning of period
Impairment loss recognized
Balance at end of period
Carrying amount at the end of the period
2023
A$
4,506,653
455,240
4,961,893
-
(1,845,000)
(1,845,000)
3,116,893
2022
A$
-
4,506,653
4,506,653
-
-
-
4,506,653
Management has determined that the acquisition of AffinityDNA in the current year is a single cash generating unit.
The total goodwill acquired though business combination for AffinityDNA amounted to $455,240. Further details of net
assets acquired and of goodwill is disclosed in Note 17.
Genetic Technologies Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
15. GOODWILL (cont.)
(i) Impairment testing for CGUs containing goodwill
For the purpose of impairment testing, goodwill has been allocated to the Group's CGUs as follows:
Net carrying amount at the end of the period:
EasyDNA
AffinityDNA
Goodwill allocation at 30 June
(ii) Key assumptions used for value-in-use calculations
2023
A$
2022
A$
2.661,653
4,506,653
455,240
-
3,116,893
4,506,653
The estimates below were used in the goodwill impairment assessment for the acquired EasyDNA and AffinityDNA
businesses:
Revenue growth (FY2025 to FY2028)
Gross margin
Pre-tax discount rate
Post-tax discount rate
Growth rate beyond FY2027
EasyDNA
4.3%
47.5%
22.7%
17%
4.3%
AffinityDNA
4.5%
45.0%
22.7%
17%
4.5%
The key assumptions in the value-in-use impairment tests are estimated post-tax cash flows, revenue growth rates, gross
margins and the discount rate. Management is aware that reasonably possible negative changes in the estimated post-tax
cash flows or the discount rate could cause the recoverable amount to fall below the carrying amounts of the acquired
EasyDNA and AffinityDNA businesses.
(iii) Impairment charge for goodwill
EasyDNA
Based upon the impairment testing undertaken by management for the financial year ending June 30, 2023 an impairment
loss of A$1,845,000 (2022: Nil) was recorded for the goodwill asset recorded as part of the EasyDNA business acquisition
indicating that the carrying value exceeded the recoverable amount of the CGU as at 30 June 2023. Although significant
revenue was recorded in the financial year for EasyDNA, revenue did not meet forecast expectations. Management
believes there were a number of contributing factors, including increased competition for the genetic tests offered by
EasyDNA and slowing economic activity in key markets following the actions of central banks to bring down inflation.
Following the impairment loss recognized in the Group's EasyDNA CGU, the recoverable amount was equal to the
carrying amount. Therefore, any adverse movement in a key assumption would lead to further impairment.
AffinityDNA
Management's assessment of impairment for AffinityDNA did not result in an impairment for AffinityDNA as the
recoverable amounts exceeds it’s carrying value by A$78,000.
Sensitivity analysis undertaken on the key impairment model assumptions indicates that in order for the recoverable
amount to be equal to their carrying value for AffinityDNA, the discount rate would need to increase to 17.5% and
revenue growth rate would need to decrease by 0.5%. Management is not aware of any events that are expected to have
an adverse effect on revenue growth.
122
Annual Report 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
16. OTHER INTANGIBLE ASSETS
The following table shows the movements in other intangible assets:
Other intangible assets:
Gross carrying amount
Balance at beginning of period
Brands, trademark and trade names, acquired through business combination
Domain names
Balance at end of period
Accumulated amortization:
Balance at beginning of period
Amortization for the period
Balance at end of period
2023
A$
2022
A$
753,418
41,264
-
794,682
(128,498)
(145,712)
(274,210)
720,550
32,868
753,418
-
-
(128,498)
(128,498)
Carrying amount at the end of the period
520,472
624,920
Brand, trademark, trade names and domain names acquired in a business combination that qualify for separate recognition
are recognized as intangible assets at their fair values. Brands, trademarks and trade names acquired through business
combination for EasyDNA and AffinityDNA have been recognized a one category of intangible asset for each segment
as they are interconnected elements that collectively contribute to a company's image, recognition, and legal protection.
They are essential components for establishing a strong market presence, building consumer trust, and safeguarding a
company's intellectual property.
The Brand, trademark, trade names and domain names acquired in respect of the purchase of the EasyDNA business
and its assets have been valued using the ‘relief from royalty method’. The projected royalty cashflows were discounted
to their present value assuming a weighted average cost of capital of 16%. A net royalty rate of 1.5% of projected
EasyDNA revenues has been assumed.
The Brand, trademark, trade names and domain names acquired in respect of the purchase of AffinityDNA’s business
and its assets have been valued using the ‘relief from royalty method’. The projected royalty cashflows have been dis-
counted to their present value assuming a weighted average cost of capital of 48%. A net royalty rate of 1.5% of project-
ed AffinityDNA revenues has been assumed.
Brand, trademark, trade names and domain names are amortized on a straight-line basis over their estimated useful lives
of five years.
Genetic Technologies Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
17. BUSINESS ACQUISITION
On 14 July 2022, the Company completed the acquisition of AffinityDNA’s direct-to-consumer eCommerce business
and distribution rights. The purchase consideration has two parts, A$486,188 (£277,500) on the acquisition date (which
has been paid) and a further A$486,188 (£277,500) as contingent consideration. The second payment is payable on the
achievement of certain financial targets and remained unpaid at June 30, 2023. The second payment was payable on the
achievement of a gross profit target for the 12-month period from the acquisition date. This target was not achieved and
therefore no further payment is to be made in respect of the acquisition of AffinityDNA.
Costs incurred in respect of acquisition were A$40,625, these have been recognized through profit or loss for the period.
The acquisition of AffinityDNA provides the Group with an additional and complimentary platform to further build
its existing direct-to-consumer offerings and lifestyle division. The acquisition also expands the Group's portfolio of
tests, geographic (including the UK and US markets) and demographic access. The acquisition provides the group
with operational, supply chain, distribution and commercial synergies with its existing EasyDNA direct-to-consumer
business that represents goodwill, which cannot be separately measured and identified.
Intangible assets arising on acquisition were valued by an independent valuer. Details of net assets acquired and of
goodwill are as follows:
Fair value of consideration transferred
Amount settled in cash
Total consideration
Recognized amounts of identifiable net assets
Intangible assets (1)
Deferred tax liabilities
Identifiable net assets
Goodwill on acquisition (Note 15)
A$
486,188
486,188
41,264
(10,316)
30,948
455,240
The total fair value of the contingent consideration transferred was on the basis that the probability of achieving the
earn-out payment at acquisition date was 0%.
Goodwill arises on the acquisition of a business combination. Goodwill is calculated as the excess sum of:
•
•
•
the consideration transferred;
any non-controlling interest; and
the acquisition date fair value of any previously held equity interest; over the acquisition date fair value of net
identifiable assets acquired.
Goodwill is not amortized. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in
circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment
losses on goodwill are taken to profit or loss and are not subsequently reversed.
(1) Intangible assets relate to brand, trademark, trade names and domain names acquired as part of the business acquisition
amounted to A$41,264 (refer to Note 16 for further details). The useful life of these intangibles are amortized on a
straight-line basis over their estimated useful lives of five years.
AffinityDNA reported revenue of A$944,058 and incurred an operating loss of A$89,618 from July 14, 2022 to the June
30, 2023. Given that the acquisition date was fairly close to the start of the year, the impact to consolidated revenue and
loss for the year would be immaterial, even if the acquisition had occurred on 1 July 2022.
124
Annual Report 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
17. BUSINESS ACQUISITION (cont.)
Prior year's business acquisition
On 13 August 2021, the Company completed the acquisition of EasyDNA’s assets and business. The purchase was settled
by A$3,400,625 in cash and A$1,574,136 in GTG shares. Costs incurred in respect of acquisition were A$116,682, these
have been recognized through profit or loss for the period. The acquisition provides the foundation for the Company
to grow its portfolio of serious disease test through direct-to-consumer market and additional platform for growth and
expansion into lifestyle testing. The acquisition will provide the Group with operational and sales channel synergies that
represents goodwill, which cannot be separately measured and identified.
Intangible assets arising on acquisition were valued by an independent valuer. Details of net assets acquired and of
goodwill are as follows:
Number of shares
A$
Fair value of consideration transferred
Amount settled in cash
Amount settled in shares
Total consideration
Recognized amounts of identifiable net assets
Right-of-use asset
Intangible assets (1)
Other payables
Lease liability
Employee benefit provisions
Deferred tax liability
Identifiable net assets
Goodwill on acquisition (Note 15)
209,363,400
3,400,625
1,574,136
4,974,761
42,289
720,550
(19,193)
(42,289)
(53,111)
(180,138)
468,108
4,506,653
Goodwill arises on the acquisition of a business combination. Goodwill is calculated as the excess sum of:
•
•
•
the consideration transferred;
any non-controlling interest; and
the acquisition date fair value of any previously held equity interest; over the acquisition date fair value of net
identifiable assets acquired.
Goodwill is not amortized. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in
circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment
losses on goodwill are taken to profit or loss and are not subsequently reversed.
(1) Intangible assets relate to brand, trademark, trade names and domain names acquired as part of the business acquisition
amounted to A$720,550 (refer to Note 16 for further details).
EasyDNA reported revenue of A$5,989,782 and incurred an operating loss of A$165,000 from August 13, 2021 to the
June 30, 2022. The revenue and operating loss as at June 30, 2023 for EasyDNA CGU are A$7,698,605 and A$2,871,259,
respectively (see Note 25).
There are no contingent consideration arrangements related to the acquisition.
Genetic Technologies Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
18. TRADE AND OTHER PAYABLES (CURRENT)
Trade payables
Accrued expenses
Other payables
Total current trade and other payables
19. PROVISIONS (CURRENT AND NON-CURRENT)
Current provisions
Annual leave
Long service leave
Make good (1)
Total current provisions
Non-current provisions
Long service leave
Total non-current provisions
Total provisions
2023
A$
837,952
618,163
161,218
1,617,333
2022
A$
1,153,856
953,439
15,084
2,122,379
2023
A$
2022
A$
328,924
121,416
91,590
541,930
30,439
30,439
572,369
312,665
206,805
91,590
611,060
22,499
22,499
633,559
(1)
Make good provision in respect of the lease of the Melbourne office and laboratory
Reconciliation of annual leave provision
Balance at the beginning of the financial year
Add: obligation accrued during the year
Less: utilized during the year
Less: FX on translation
Balance at the end of the financial year
Reconciliation of long service leave provision
Balance at the beginning of the financial year
Add: obligation accrued during the year
Less: reversal during the year
Less: paid off during the year
Balance at the end of the financial year
2023
A$
2022
A$
312,665
400,780
171,398
366,816
(388,457)
(225,549)
3,936
328,924
229,304
21,723
(472)
(98,700)
151,855
-
312,665
210,642
18,662
-
-
229,304
126
Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
20. RIGHT-OF-USE ASSET / (LEASE LIABILITIES)
(a) Amounts recognized in the statement of financial position
The statement of financial position shows the following amounts relating to leases:
Right-of-use assets
Right-of-use assets
Lease Liabilities
Lease liabilities - Current
Lease liabilities - Non-Current
Total
2023
A$
2022
A$
509,553
647,150
(303,570)
(229,276)
(532,846)
(264,130)
(388,396)
(652,526)
(b)
Amounts recognized in the statement of profit or loss
The statement of profit or loss under general and administrative expenses includes the following amounts relating to
leases:
Depreciation charge of right-of-use assets
Depreciation Expense (for Leased Assets)
Interest expense (included in finance costs)
Low value leases
2023
A$
2022
A$
296,174
29,515
235,241
15,215
32,094
26,408
During the financial year ended June 30, 2023, the total cash outflow was A$336,396 (2022: A$268,590).
21. CONTRIBUTED EQUITY
Issued and paid-up capital
Fully paid Ordinary Shares
Total contributed equity
2023
A$
2022
A$
161,342,707
155,138,636
161,342,707
155,138,636
Genetic Technologies Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
21. CONTRIBUTED EQUITY (cont.)
Movements in shares on issue
Year ended June 30, 2023
Balance at the beginning of the financial year
Shares issued during the year
Add: Exercise of performance rights
Less: transaction costs arising on share issue (i)
Less: valuation of warrants to be issued
Balance at the end of the financial year
Year ended June 30, 2022
Balance at the beginning of the financial year
Shares issued during the year
Less: transaction costs arising on share issue (i)
Balance at the end of the financial year
Number of
Shares
9,233,965,143
2,307,693,000
-
-
-
11,541,658,143
Number of
Shares
9,016,726,743
217,238,400
-
9,233,965,143
A$
155,138,636
7,172,399
82,688
(916,060)
(134,956)
161,342,707
A$
153,574,974
1,574,136
(10,474)
155,138,636
(i)
The details of securities arising on shares issued for the year ended June 30, 2023 and June 30 2022 are as
below:
● On July 19, 2021, the Company issued 209,363,400 new ordinary shares, at fair value of A$1,574,136 in part
consideration for the acquisition of 100% of EasyDNA.
● On November 3, 2021, the Company issued 7,875,000 new ordinary shares pursuant to the Company’s Employee
Performance Rights Plan.
● On February 7, 2023, the Company issued 3,846,155 ADSs, each representing six hundred (600) of the Company’s
ordinary shares, totaling 2,307,693,000 ordinary shares, at a purchase price of United States Dollars (US$)
US$1.30 per ADS. The gross proceeds for this offering were approximately US$5 million. Against the offering,
the Company agreed to issue 250,000 warrants exercisable at US$1.625 each, expiring in 5 years from issue
date, to H.C. Wainwright & Co which would form part of cost of raising capital. The said warrants are subject to
shareholder approval at the Company's 2023 annual general meeting.
Terms and conditions of contributed equity
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to
participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on
shares held. Ordinary shares, which have no par value, entitle their holder to one vote, either in person or by proxy, at a
meeting of the Company.
128
Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
22. RESERVES
Foreign currency translation
Share-based payments
Total reserves
Reconciliation of foreign currency translation reserve
Balance at the beginning of the financial year
Add: net currency translation gain / (loss)
Balance at the end of the financial year
Reconciliation of share-based payments reserve
Balance at the beginning of the financial year
Add: share-based payments expense
Add: Issue of performance rights
Add: Valuation of warrants
Less: Options/warrants expired
Less: Exercise of performance rights
Balance at the end of the financial year
Share Based Payments Reserve
Nature and Purpose
2023
A$
847,408
5,688,148
6,535,556
746,819
100,589
847,408
10,751,832
-
125,500
134,956
(5,241,452)
(82,688)
2022
A$
746,819
10,751,832
11,498,651
718,955
27,864
746,819
10,314,324
-
437,508
-
-
-
5,688,148
10,751,832
The share-based payment reserve records items recognized as expenses on valuation of warrants, share options,
and performance shares issued to capital raising agents, key management personnel, other employees, and eligible
contractors.
Warrants
During the financial year ended June 30, 2023, the following warrants were issued to as a part of capital raising costs.
Valuation date
Grant Date
Warrants issued
Underlying asset price
Risk free rate
Volatility
Exercise price presented in United States Dollar
Exchange rate at valuation date
Exercise price presented in Australian Dollar
Time to maturity of underlying warrants (years)
Value per warrant in Australian Dollar
Model used
Valuation amount
2023
December 20, 2022
December 20, 2022
250,000
1.525
4.1 %
75 %
1.625
1 to USD$0.669
2.429
5.12
0.5398
Black Scholes
134,956
A$
US$
A$
A$
A$
A$
Genetic Technologies Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
22. RESERVES (cont.)
No warrants were issued for the financial year ended June 30, 2022. During the financial year ended June 30, 2021, the
following warrants were issued to as a part of capital raising costs.
Valuation date
Grant Date
Warrants issued
Underlying asset price
Risk free rate
Volatility
Exercise price presented in United States Dollar
Exchange rate at valuation date
Exercise price presented in Australian Dollar
Time to maturity of underlying warrants (years)
Value per warrant in Australian Dollar
Model used
Valuation amount
Valuation date
Grant Date
Warrants issued
Underlying asset price
Risk free rate
Volatility
Exercise price presented in United States Dollar
Exchange rate at valuation date
Exercise price presented in Australian Dollar
Time to maturity of underlying warrants (years)
Value per warrant in Australian Dollar
Model used
Valuation amount
Share Options
2021
July 21, 2020
June 1, 2020
39,975,000
0.0070
0.42 %
148.66 %
0.00417
1 to US$0.7127
0.0146
5
0.009
Binomial
360,017
2021
January 25, 2021
January 25, 2021
48,750,000
0.0110
0.414 %
147.29 %
0.0109
1 to US$0.7708
0.0142
5
0.0098
Binomial
476,297
A$
US$
A$
A$
A$
A$
A$
US$
A$
A$
A$
A$
No share options were issued during the financial year ending June 30, 2023 or June 30, 2022. The following information
relates to options granted and issued against under the Employee Option Plan for the year ended June 30, 2021;
Options issued to
Grant date for
options issued
Number of options
issued
Employee Option Plan
December 21, 2020
12,850,000
130
Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
22. RESERVES (cont.)
Grant Date
Options issued
Dividend yield
Historic volatility and expected volatility
Option exercise price
Fair value of options at grant date
Weighted average exercise price
Risk-free interest rate
Expected life of an option
Model used
Valuation amount
Performance Rights
2021
December 21, 2020
12,850,000
-
155.34 %
0.008
0.007
0.008
0.111 %
3 years
Binomial
72,439
A$
A$
A$
A$
No Performance Rights were issued for financial year ended June 30, 2023. The following information relates to issued
Performance Rights for the year ended June 30, 2022;
Grant date for
performance rights
issued
Number of
performance rights
issued
March 3, 2021
June 15, 2021
September 22, 2021
November 22, 2021
2022
3,937,500
40,000,000
20,000,000
20,000,000
March 3, 2021
June 15, 2021
September 22,
2021
November
22, 2021
3,937,500
40,000,000
20,000,000
20,000,000
-
161
0.009
0.012
0.008
0.110
-
152
0.0069
0.0073
0.008
0.085
3 years
-
149
0.0047
0.0052
0.008
0.160
3 years
Binomial
291,428
Binomial
103,104
-
150 %
0.0038
0.0042
0.008
0.960 %
3 years
Binomial
83,216
2.02 years
Binomial
47,250
A$
Performance rights issued to
Adam Kramer
Mike Tonroe
Carl Stubbings
Kevin Camilleri
Grant Date
Performance rights issued
Dividend yield
Historic volatility and expected volatility
Performance rights exercise price
A$
Fair value of performance rights at grant date A$
Weighted average exercise price
A$
Risk-free interest rate
Expected life of the performance rights
Model used
Valuation amount
Foreign currency translation reserve
Nature and Purpose
Exchange differences arising on translation of the foreign controlled entities are recognized in other comprehensive
income as described in Note 2(e) and accumulated in a separate reserve within equity. The cumulative amount is
reclassified to profit or loss when the net investment is disposed of.
Genetic Technologies Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
23. ACCUMULATED LOSSES
Balance at the beginning of the financial year
Add: net loss attributable to owners of Genetic Technologies Limited
Less: Options/warrants expired
Balance at the end of the financial year
24. SHARE OPTIONS
Employee Option Plan
2023
A$
(150,206,216)
(11,750,923)
5,241,452
(156,715,687)
2022
A$
(143,075,218)
(7,130,998)
-
(150,206,216)
The fair value of options granted under an Employee Option Plan is recognized as an employee benefit expense with a
corresponding increase in equity. The fair value is measured at grant date and recognized over the vesting period over
which the service vesting conditions are to be satisfied. Employee Option Plan options have no other vesting conditions.
The fair value at grant date is determined by management with the assistance of an independent valuer, using a Black-
Scholes option pricing model or a Binomial model simulation analysis. The total amount to be expensed is determined
by reference to the fair value of the options granted;
● including any market performance conditions (e.g. the entities share price)
● excluding the impact of any service and non-market performance vesting conditions (e.g. remaining an
employee over a specified time period)
The cumulative employee benefits expense recognized at each reporting date until vesting date reflects (i) the extent to
which the vesting period has expired; and (ii) the number of awards that, in the opinion of the Directors of the Company,
will ultimately vest. This opinion is formed based on the best information available at balance date.
Where the terms of an equity-settled award are modified, as a minimum an expense is recognized as if the terms had not
been modified. In addition, an expense is recognized for any increase in the value of the transaction as a result of the
modification, as at the date of modification. Where appropriate, the dilutive effect of outstanding options is reflected as
additional share dilution in the computation of diluted earnings per share. The Company’s policy is to treat the options
of terminated employees as forfeitures if termination occurs prior to vesting conditions being reached.
On November 30, 2001, the Directors of the Company established a Staff Share Plan. On November 19, 2008, the
shareholders of the Company approved the introduction of a new Employee Option Plan. Under the terms of the respective
Plans, the Directors may, at their discretion, grant options over the ordinary shares in the Genetic Technologies Limited
to executives, consultants, employees, and former Non-Executive Directors, of the Company. The options, which are
granted at nil cost, are not transferable and are not quoted on the ASX. As at June 30, 2023, there were 1 executive and
7 employees who held options that had been granted under the Plans. Options granted under the Plans carry no rights to
dividends and no voting rights.
132
Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
24. SHARE OPTIONS (cont.)
(i) Fair value of options granted
During the year ended June 30, 2023, there were no options granted (2022: Nil). The Company, however issued various
unlisted options to underwriters and sub-underwriters as a part of capital raising costs in 2021. For valuations on the
unlisted options issued please refer to Note 22.
Set out below are summaries of all and unlisted options, including ESOP which were issued in prior periods:
2023
2022
Average exer-
cise price per
share option
A$
0.008
0.008
0.008
0.008
Number of
options
492,400,000
(481,500,000)
(2,500,000)
8,400,000
Average
exercise
price per
share
option
A$
0.008
0.012
-
Number of
options
521,850,000
(29,450,000)
-
0.008
492,400,000
Opening balance
Lapsed during the year
Forfeited during the year
Closing balance
The movements in the number of options granted under the Employee share plans are as follows:
2023
2022
Average
exercise
price per
share option
A$
Number of
options
Average
exercise
price per
share option
A$
Number of
options
Balance at the beginning of the financial year
0.008
10,900,000
0.011
27,850,000
Add: options granted during the year
Less: options lapsed during the year
Less: options forfeited during the year
Balance at the end of the financial year
-
-
-
-
0.008
0.008
(2,500,000)
8,400,000
-
-
0.010
(16,950,000)
-
-
0.008
10,900,000
Genetic Technologies Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
24. SHARE OPTIONS (cont.)
The number of options outstanding as at June 30, 2023 by ASX code, including the respective dates of expiry and
exercise prices, are tabled below. The options tabled below are not listed on ASX.
Unlisted options
Options to various underwriters (expiring
October 30, 2022)
Options to directors (expiring December 20,
2022)
Options issued Lodge Corporate Pty Ltd
(expiring March 6, 2023)
ESOP options (expiring December 1, 2023)
Total
Exercisable at the end of the financial year
2023
2022
Average
exercise
price per
share option
A$
Number of
options
Average
exercise price
per share
option
A$
Number of
options
-
-
-
-
-
-
0.008
0.008
0.008
8,400,000
8,400,000
8,400,000
0.008
229,000,000
0.008
250,000,000
0.008
0.008
0.008
2,500,000
12,850,000
494,350,000
0.008
494,350,000
The weighted average remaining contractual life of options outstanding as at June 30, 2023 was 0.42 years (2022: 0.43
years).
25. SEGMENT INFORMATION
(a) Identification of reportable segments
The Company has identified three reportable segments as reported that is consistent with the internal reporting provided
to the chief operating decision maker, Chief Executive Officer.
As of June 30, 2022, the Company changed its reportable operating segments from two geographical segments, previously
Australia and USA, to two business unit segments, EasyDNA and geneType/Corporate as a result of integrating the
EasyDNA acquisition in fiscal 2022. The Company changed its reporting structure to better reflect what the chief
operating decision maker is reviewing to make organizational decisions and resource allocations. As a result, the 2021
presentation of segment information has been recast to conform with the current segment reporting structure. In July
2022, a new business unit was created as a result of AffinityDNA acquisition.
Management considers the business from a business unit perspective and has identified three reportable segments:
EasyDNA: relates to EasyDNA branded test sales and expenses.
AffinityDNA: relates to AffinityDNA branded test sales and expenses.
GeneType / Corporate: relates to geneType branded test sales and expense, includes corporate charges.
134
Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
25. SEGMENT INFORMATION (cont.)
(b) Business unit segments
The segment information for the reportable segments is as follows:
2023
AffinityDNA
A$
EasyDNA
A$
geneType/
Corporate
A$
Total
A$
Segment revenue & other income
Revenue from contracts with customers
Other income
Finance income
Total segment revenue & other income
Segment expenses
Depreciation and amortization
Finance costs
Raw materials and change in inventories
Commissions
Employee benefits expenses
Advertising and promotional expenses
Professional fees
Research and development expenses
Impairment expenses
Other expenses
Total segment expenses
Income tax credit
Loss for the period
Total Segment Assets
Total Segment Liabilities
944,058
-
-
944,058
7,698,605
17
-
7,698,622
43,455
1,836,805
220,161
2,100,421
8,686,118
1,836,822
220,161
10,743,101
(22,310)
(2,693)
(404,660)
(42,727)
(209,219)
(35,926)
(62,522)
-
-
(253,619)
(1,033,676)
-
(89,618)
625,421
(208,468)
(30,074)
(2,132)
(3,896,000)
(193,292)
(1,593,699)
(1,681,875)
(18,414)
-
(2,125,725)
(1,028,670)
(10,569,881)
(624,199)
(24,690)
(34,605)
-
(4,405,148)
(994,552)
(1,279,704)
(1,281,157)
-
(2,404,741)
(12,513,521)
(676,583)
(29,515)
(4,335,265)
(236,019)
(6,208,066)
(2,712,353)
(1,360,640)
(1,281,157)
(2,125,725)
(3,687,030)
(22,652,353)
-
(2,871,259)
3,320,967
(1,308,206)
158,329
(10,254,771)
10,909,849
(2,176,987)
158,329
(11,750,923)
14,856,237
(3,693,661)
Genetic Technologies Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
25. SEGMENT INFORMATION (cont.)
2022
AffinityDNA
A$
EasyDNA
A$
geneType/
Corporate
A$
Total
A$
Segment revenue & other income
Revenue from contracts with customers
Other income
Finance income
Total segment revenue & other income
Segment expenses
Depreciation and amortization
Finance costs
Raw materials and change in inventories
Commissions
Employee benefits expenses
Advertising and promotional expenses
Professional fees
Research and development expenses
Impairment expenses
Other expenses
Total segment expenses
Income tax credit
Loss for the period
Total Segment Assets
Total Segment Liabilities
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,989,782
-
-
805,034
2,783,391
36,256
5,989,782
3,624,681
6,794,816
2,783,391
36,256
9,614,463
-
-
(2,951,815)
(156,625)
(1,235,657)
(1,079,291)
(21,685)
-
-
(578,668)
(15,215)
(61,719)
-
(4,632,998)
(806,111)
(1,813,759)
(705,507)
(564,161)
(578,668)
(15,215)
(3,013,534)
(156,625)
(5,868,655)
(1,885,402)
(1,835,444)
(705,507)
(564,161)
(721,226)
(6,166,299)
(1,433,149)
(10,611,287)
(2,154,375)
(16,777,586)
-
32,125
32,125
(176,517)
2,668,618
(1,969,878)
(6,954,481)
18,133,080
(2,400,749)
(7,130,998)
20,801,698
(4,370,627)
136
Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
25. SEGMENT INFORMATION (cont.)
2021
AffinityDNA
A$
EasyDNA
A$
geneType/
Corporate
A$
Total
A$
Segment revenue & other income
Revenue from contracts with customers
Other income
Finance income
Total segment revenue & other income
Segment expenses
Depreciation and amortization
Finance costs
Raw materials and change in inventories
Commissions
Employee benefits expenses
Advertising and promotional expenses
Professional fees
Research and development expenses
Impairment expenses
Other expenses
Total segment expenses
Income tax credit
Loss for the period
Total Segment Assets
Total Segment Liabilities
(c) Geographic information
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
120,554
1,559,961
62,394
1,742,909
120,554
1,559,961
62,394
1,742,909
(386,277)
(16,338)
(170,457)
-
(3,868,331)
(436,274)
(1,461,401)
(1,165,531)
(32,048)
(1,283,871)
(8,820,528)
-
(7,077,619)
22,971,688
(1,438,653)
(386,277)
(16,338)
(170,457)
-
(3,868,331)
(436,274)
(1,461,401)
(1,165,531)
(32,048)
(1,283,871)
(8,820,528)
-
(7,077,619)
22,971,688
(1,438,653)
In presenting the geographic information, segment revenue has been based on geographic location of customers.
The geographic information for the reportable segments is as follows:
2023
America and Canada
Europe Middle East and Africa
Latin America
Asia Pacific
Total revenue
AffinityDNA
A$
EasyDNA
A$
geneType/
Corporate
A$
15,056
766,040
144,727
18,235
944,058
2,190,352
3,728,586
177,306
1,602,361
7,698,605
36,761
-
-
6,694
43,455
Total
A$
2,242,169
4,494,626
322,033
1,627,290
8,686,118
Genetic Technologies Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
25. SEGMENT INFORMATION (cont.)
(c) Geographic information (cont.)
2022
America and Canada
Europe Middle East and Africa
Latin America
Asia Pacific
Total revenue
2021
America and Canada
Europe Middle East and Africa
Latin America
Asia Pacific
Total revenue
26. SHARE BASED PAYMENTS
(a) Employee option plan
AffinityDNA
A$
EasyDNA
A$
geneType/
Corporate
A$
-
-
-
-
-
2,267,474
2,501,302
128,840
1,092,166
5,989,782
7,077
-
-
797,957
805,034
Total
A$
2,274,551
2,501,302
128,840
1,890,123
6,794,816
AffinityDNA
A$
EasyDNA
A$
geneType/
Corporate
A$
Total
A$
-
-
-
-
-
-
-
-
-
-
120,554
-
-
-
120,554
120,554
-
-
-
120,554
On December 21, 2020, the Company issued 12,850,000 options with an exercise price of A$0.008 (0.8cents) per
option, expiring December 1, 2023 issued under an employee incentive scheme (2020: Nil). The Company, also issued
various unlisted options to underwriters and sub-underwriters as a part of capital raising costs in financial year ended
June 30, 2021. Please refer to further details on options on Note 23.
There were no new options issued under the Employee Option Plan during the financial years ending June 30, 2022 and
June 30, 2023.
(b) Performance Rights Issuance
After receiving requisite shareholder approval on December 10, 2020, the Company issued performance rights to
Directors of the Company as follows:
●
●
●
●
5,000,000 Class A Performance Rights to Dr. Lindsay Wakefield
7,500,000 Class A Performance Rights, 25,000,000 Class B Performance Rights and 25,000,000 Class C Performance Rights
to Dr. Jerzy Muchnicki
7,500,000 Class A Performance Rights, 25,000,000 Class B Performance Rights and 25,000,000 Class C Performance Rights
to Mr. Peter Rubinstein
5,000,000 Class A Performance Rights to Mr. Nicholas Burrows
These performance rights remain available to Directors to exercise at June 30, 2023, if vesting conditions are met.
During the financial year ending June 30, 2021, the Board has approved the issue of the following performance rights to
the Chief Executive Officer and Chief Operating Officer:
●
●
60,000,000 Class D Performance Rights to Mr. Simon Morris
3,937,500 Class E Performance Rights to Mr. Stanley Sack
138
Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
26. SHARE BASED PAYMENTS (cont.)
(b) Performance Rights Issuance (cont.)
Mr. Stanley Sack exercised his performance rights during the financial year ending June 30, 2022. The performance
rights issued to Mr. Simon Morriss remain exercisable at June 30, 2023, if vesting conditions are met.
During the financial year ending June 30, 2022, the Board has approved for the following performance rights to be
issued to the Key Management Personnel below:
●
●
●
40,000,000 Performance Rights to Mr. Michael Tonroe
20,000,000 Performance Rights to Mr. Carl Stubbings
20,000,000 Performance Rights to Mr. Kevin Camilleri
The performance rights issued to Mr. Michael Tonroe were forfeit during the 2023 financial year following his
resignation. The performance rights issued to Mr. Carl Stubbings and Mr. Kevin Camilleri remain exercisable at June
30, 2023, if vesting conditions are met.
The Company has accounted for these performance rights in accordance with its accounting policy for share-based
payment transactions and has recorded a share-based payments expense of A$125,500 in the Statement of Profit or Loss
and Other Comprehensive Income for the current reporting period (2022: A$437,508 & 2021: A$622,725).
Valuation of Performance Rights
The Performance Rights are not currently quoted on the ASX and as such have no ready market value. The performance
rights each grant the holder a right of grant of one ordinary Share in the Company upon vesting of the performance rights
for nil consideration. Accordingly, the performance rights may have a present value at the date of their grant. Various
factors impact upon the value of performance rights including:
●
●
●
●
the period outstanding before the expiry date of the performance rights;
the underlying price or value of the securities into which they may be converted;
the proportion of the issued capital as expanded consequent upon conversion of the performance rights into Shares (i.e. wheth-
er or not the shares that might be acquired upon exercise of the options represent a controlling or other significant interest); and
the value of the shares into which the performance rights may be converted.
There are various formulae which can be applied to determining the theoretical value of performance rights (including
the formula known as the Black-Scholes Model valuation formula and the Binomial model).
The Company commissioned an independent valuation of the performance rights. The independent valuer has applied
the Binomial Model in providing the valuation of the performance rights.
Valuation of Performance Rights
The Performance Rights are not currently quoted on the ASX and as such have no ready market value. The performance
rights each Inherent in the application of the Binomial model are a number of inputs, some of which must be assumed.
For the performance rights issued in the year ended June 30, 2021, the data relied upon in applying the Binomial model
was:
a)
exercise price being 0.0 cents per performance right for all classes;
b) VWAP hurdle (10 days consecutive share price hurdle) equaling A$0.012 for Class A and A$0.014 for Class B, and (15 days
consecutive share price hurdle) equaling $0.016 for Class D performance rights;
sales and market cap hurdles as listed above for Class C and Class E performance rights;
the continuously compounded risk-free rate being 0.111% for all classes of performance rights (calculated with reference to
Refinitiv – closing share price as at December 21, 2020, and 3 year Australian Government yield as at December 21, 2020);
the expected option life of 2 years for Class E performance rights and 3 years for all other classes of performance rights; and
a volatility measure of 158.23%.
c)
d)
e)
f)
Genetic Technologies Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
26. SHARE BASED PAYMENTS (cont.)
Valuation of Performance Rights (cont.)
For the performance Rights issued during the financial year ending June 30, 2022, the data relied upon in applying the
Binomial model was:
a)
exercise price being 0.0 cents per performance right for all classes;
b) VWAP hurdle for key management personnel (15 days consecutive share price hurdle) equaling A$0.016 for
performance rights;
sales and market cap hurdles as listed above for performance rights;
the continuously compounded risk-free rate is as per table below (calculated based on yield of Australian
government bonds, as at the grant dates for a 2 or 3 year period matching the expected life of performance rights);
the expected option life of 3 years for key management personnel and 2 years for others; and
a volatility measure between 149% to 161%.
c)
d)
e)
f)
Performance hurdles
Key management personnel, being the recipients of the performance rights, must remain engaged by the Company at the
time of satisfaction of the performance hurdle in order for the relevant performance right to vest.
There were no performance rights issued for the year ended June 30, 2023.
Performance rights issued during the year ended June 30, 2022
The performance rights for key management personnel vest and are exercisable upon the Share price reaching A$0.016
while or greater for more than 15-day consecutive ASX trading days.
Performance rights issued during the year ended June 30, 2021
The Class A Performance Rights vest and are exercisable upon the Share price reaching A$0.012 or greater for more
than 10-day consecutive ASX trading days.
The Class B Performance Rights vest and are exercisable upon the Share price reaching A$0.014 or greater for more
than 10-day consecutive ASX trading days and sales commence on the Consumer Initiated Testing (CIT) platform in
either Australia or the United States of America.
The Class C Performance Rights vest and are exercisable upon a minimum of 4,000 tests being processed in any
12-month period or the market cap of the Company reaching A$100 million or above and being sustained for more than
10 consecutive ASX trading days, whichever happens sooner.
The Class D Performance Rights vest and are exercisable upon the Share price reaching A$0.016 or greater for more
than 15-day consecutive ASX trading days.
The Class E Performance Rights vest and are exercisable upon the first commercial sale of the Company’s COVID-19
risk test with IBX (Infinity BioLogix).
Performance rights issued prior to the year ended June 30, 2021
The Class A Performance Rights vest and are exercisable upon the Share price reaching A$0.02 or greater for more than
10-day consecutive ASX trading days.
140
Annual Report 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
26. SHARE BASED PAYMENTS (cont.)
Performance rights issued during prior year
Number of
Performance
Rights issued
20,000,000
20,000,000
40,000,000
Valuation
(cents)
0.52
0.42
Mr. Carl Stubbings
Mr. Kevin Camilleri
Total
Total fair
value of
Performance
Rights
A$
103,104
83,216
186,320
Expense
accounted for
in 2022
A$
Expense
accounted for
during the
year
A$
26,459
16,719
43,178
34,368
27,739
62,107
Performance rights issued during prior year, that lapsed during the financial year ending June 30, 2023
Number of
Performance
Rights issued
40,000,000
40,000,000
Valuation
(cents)
0.73
Mr. Michael Tonroe
Total
Number of
Performance
Rights issued
60,000,000
Valuation
per Class
D
(cents)
0.96
Mr Simon Morriss
Number of
Performance
Rights issued
3,937,500
Valuation
per Class
E
(cents)
0.90
Mr Stanley Sack
Total fair
value of
Performance
Rights
A$
291,428
291,428
Expense
accounted for
in 2022
A$
101,043
101,043
Expense
accounted for
during the
year
A$
(101,043)
(101,043)
Total fair
value of
Class D
Performance
Rights
A$
574,037
Total fair
value of
Class E
Performance
Rights
A$
Expense
accounted for
in 2022
A$
191,346
Expense
accounted for
during the
year
A$
191,346
Expense ac-
counted for in
2022
A$
Expense
accounted for
during the
year
A$
35,438
35,438
-
Performance rights issued during prior years, that lapsed during the financial year ending June 30, 2022
Number of
Performance
Rights issued
3,750,000
6,250,000
5,000,000
15,000,000
Valuation
per Class
A
(cents)
0.77
0.77
0.77
Total fair
value of
Class A
Performance
Rights
A$
28,875
48,125
38,500
115,500
Expense
accounted for
in 2021
A$
Expense
accounted for
during for in
2022
A$
9,625
16,042
12,833
38,500
4,010
6,684
5,347
16,041
Dr. Lindsay Wakefield
Dr. Jerzy Muchnicki
Mr. Peter Rubinstein
Total
No Performance Rights were cancelled/forfeited during the years ended June 30, 2023 and June 30, 2022.
Genetic Technologies Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
26. SHARE BASED PAYMENTS (cont.)
Performance rights issued during prior years, that lapsed during the financial year ending June 30, 2022
Number of
Performance
Rights issued
3,750,000
6,250,000
5,000,000
15,000,000
Valuation
per Class
A
(cents)
0.77
0.77
0.77
Total fair value
of Class A
Performance
Rights
A$
Expense
accounted for in
2021
A$
Expense
accounted for
during for in
2022
A$
28,875
48,125
38,500
115,500
9,625
16,042
12,833
38,500
4,010
6,684
5,347
16,041
Dr. Lindsay Wakefield
Dr. Jerzy Muchnicki
Mr. Peter Rubinstein
Total
No Performance Rights were cancelled/forfeited during the years ended June 30, 2023 and June 30, 2022.
(c) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognized during the period as part of employee benefit
expense and equity raising expenses were as follows:
Kentgrove options issued
Warrants to be issued H.C. Wainwright, subject to shareholder approval
Performance rights issued
Reversal of forfeited Performance Rights
Options issued under employee option plan
Total expenses arising from share-based payments
27. CAPITAL COMMITMENTS
2023
A$
-
134,956
125,500
-
-
260,456
2022
A$
-
-
2021
A$
16,667
-
436,119
622,725
-
1,389
437,508
-
75,186
714,578
There were no significant contracted capital expenditures at the end of the reporting periods ending June 30, 2021, 2022
& 2023.
28. AUDITORS’ REMUNERATION
Audit and assurance services
PricewaterhouseCoopers in respect of:
Audit (1)
Audit related fees (2)
All other fees (3)
Grant Thornton Audit Pty Ltd in respect of:
Audit (1)
Audit related fees (2)
All other fees (3)
Other audit firms in respect of:
Audit of the Financial Reports of subsidiaries
Total remuneration in respect of audit services
2023
A$
2022
A$
2021
A$
-
-
-
320,569
-
-
-
320,569
20,000
-
-
241,882
-
30,000
-
291,882
72,500
-
-
168,333
-
65,000
-
305,833
142
Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
28. AUDITORS’ REMUNERATION (cont.)
(1) Audit fees consist of services that would normally be provided in connection with statutory, half year review,
and regulatory filings or engagements, including services that generally only the independent accountant can
reasonably provide.
(2) Audit related fees consist of fees billed for assurance and related services that generally only the statutory auditor
could reasonably provide to a client.
(3) All other fees consist of fees billed for financial and information technology due diligence services in respect
of the Company’s acquisition of the business and assets associated with the EasyDNA brand that completed on
August 13th, 2021.
29. RELATED PARTY DISCLOSURES
Ultimate parent
Genetic Technologies Limited is the ultimate Australian parent company. As at the date of this Report, no shareholder
controls more than 50% of the issued capital of the Company.
Transactions within the Company and with other related parties
During the financial years ended June 30, 2023, 2022 and 2021, other than compensation paid to directors and other
members of key management personnel, see “Item 6.B Compensation”, the only transactions between entities within
the Company and other related parties are as listed below. Except where noted, all amounts were charged on similar to
market terms and at commercial rates.
Performance Rights Issuance
After receiving shareholder approval on December 10, 2020, the Company issued additional 125,000,000 Performance
Rights to Directors of the Company as follows:
● 5,000,000 Class A Performance Rights to Dr. Lindsay Wakefield
● 7,500,000 Class A Performance Rights, 25,000,000 Class B Performance Rights and 25,000,000 Class C
Performance Rights to Dr. Jerzy Muchnicki
● 7,500,000 Class A Performance Rights, 25,000,000 Class B Performance Rights and 25,000,000 Class C
Performance Rights to Mr. Peter Rubinstein
● 5,000,000 Class A Performance Rights to Mr. Nicholas Burrows
During the financial year ending June 30, 2021, the Board has approved for the following Performance Rights to be
issued to the Chief Executive Officer and Chief Operating Officer:
● 60,000,000 Class D Performance Rights to Mr. Simon Morris
● 3,937,500 Class E Performance Rights to Mr. Stanley Sack
Mr. Stanley Sack exercised his performance rights during the financial year ending June 30, 2022.
During the financial year ending June 30, 2022, the Board has approved for the following Performance Rights to be
issued to the Key Management Personnel below:
● 40,000,000 Performance Rights to Mr. Michael Tonroe
● 20,000,000 Performance Rights to Mr. Carl Stubbings
● 20,000,000 Performance Rights to Mr. Kevin Camilleri
The performance rights issued to Mr. Michael Tonroe were forfeit during the 2023 financial year following his resignation.
The Company has accounted for these Performance Rights in accordance with its accounting policy for share-based
payment transactions and has recorded A$125,500 (2022: A$437,508 & 2021: A$622,725) of associated expense in the
reporting period.
Genetic Technologies Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
29. RELATED PARTY DISCLOSURES (cont.)
Mr. Phillip Hains (Former Chief Financial Officer)
On July 15, 2019, the Company announced that it had appointed Mr. Phillip Hains (MBA, CA) as the Chief Financial
Officer who has over 30 years of extensive experience in roles with a portfolio of ASX and NASDAQ listed companies
and provides CFO services through his firm The CFO Solution. Prior to this point the Company had a similar arrangement
with The CFO Solution, where it would engage and provide services of overall CFO, accounting and other finance
related activities.
During the reporting period, the Company had not transacted with The CFO Solution towards provision of overall CFO,
accounting and other finance related activities (2022: A$91,615 & 2021: A$224,971).
Mr. Stanley Sack (former Chief Operating Officer)
On May 18, 2020, the Company appointed Mr. Stanley Sack who provides consulting in the capacity of Chief Operating
Officer. Mr. Sack has spent 15 years in large listed entities in executive positions managing large business divisions. He
has worked with a high-net-worth family managing all their operating businesses and private equity activities. Mr. Sack
built an Allied Health Business in the aged care and community care space which became the biggest Mobile Allied
Health Business in Australia, and was recently sold to a large medical insurance company.
During the reporting period, the Company had not transacted with Mr. Stanley Sack’s entity Cobben Investments towards
provision of consulting services in relation to provision of duties related to Chief Operating Officer of the Company
(2022: A$107,187 & 2021: A$143,172).
Mr. Peter Rubinstein (Non-Executive Director and Chairman)
During the financial year ended June 30, 2020, the Board approved to obtain consulting services in relation to capital
raises, compliance, NASDAQ hearings and investor relations from its Non-Executive Director and current Chairman,
Mr. Peter Rubinstein. The services procured were through Mr. Peter Rubinstein’s associate entity ValueAdmin.com Pty
Ltd and amounted to A$60,000 (2022: A$60,000 & 2021: A$60,000) that is included as part of the cash salary and fees
in the remuneration report as at June 30, 2023.
Dr. Jerzy Muchnicki (Non-Independent Non-Executive Director)
During the financial year ended June 30, 2022, the Board approved to obtain consulting services in relation to PRS and
Germline Integration; Epigenetics; Somatic Testing; NIPT; Carrier testing and related marketing advice from its Non-
Independent Non-Executive Director, Dr. Jerzy Muchnicki. The services procured were through Dr. Jerzy Muchnicki’s
private consultancy and amounted to A$50,000 (2021: Nil) that is included as part of the cash salary and fees in the
remuneration report.
There were no transactions with parties related to Key Management Personnel during the year other than that disclosed
above.
144
Annual Report 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
29. RELATED PARTY DISCLOSURES (cont.)
Details of Directors and Key Management Personnel as at balance date
Directors
● Mr. Peter Rubinstein (Independent Non-Executive & Chairman)
● Dr. Jerzy Muchnicki (Non-Independent Non-Executive)
● Dr. Lindsay Wakefield (Independent Non-Executive)
● Mr. Nicholas Burrows (Independent Non-Executive)
Key Management Personnel (KMPs)
● Mr. Simon Morriss (Chief Executive Officer) (appointed 1 February 2021)
● Dr. Richard Allman (Chief Scientific Officer) (ceased full-time employment 6 October 2022, then appointed
consulting Scientific Advisor)
● Mr. Tony Di Pietro (Chief Financial Officer) (appointed 28 November 2022)
● Mr. Mike Tonroe (Chief Financial Officer) (appointed 15 June 2021, resigned on 28 November 2022)
● Mr. Phillip Hains (Chief Financial Officer) (July 15, 2019 to 15 June 2021)
● Mr. Stanley Sack (former Chief Operating Officer) (May 18, 2020 to April 30, 2022)
● Mr. Kevin Camilleri (Chief Executive Officer of EasyDNA) (appointed August 16, 2021)
● Mr. Carl Stubbings (Chief Commercial Officer) (appointed September 1, 2021)
Remuneration of Key Management Personnel
Short-term employee benefits
Post-employment benefits
Share-based payments
Other long-term benefits
Termination benefits
Total remuneration of Key Management Personnel
2023
A$
2022
A$
2021
A$
1,529,124
113,511
253,453
10,978
-
1,907,066
1,894,413
125,822
387,046
4,797
-
2,412,078
1,035,302
79,042
650,911
4,589
-
1,769,844
Genetic Technologies Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
30. SUBSIDIARIES
The following diagram is a depiction of the Company structure as at June 30, 2023.
Name of Company
Incorporation details
2023
2022
2023
2022
Company interest (%)
Net carrying value (A$)
Entities held directly by parent
GeneType Pty. Ltd. (Dormant)
September 5, 1990
Victoria, Australia
Genetic Technologies Corporation
Pty. Ltd. (Genetic testing)
October 11, 1996
NSW, Australia
Gene Ventures Pty. Ltd. (1)
(Dormant)
GeneType Corporation (Dormant)
geneType Inc. (2) (formerly
Phenogen Sciences Inc.)
Hainan Aocheng Genetic
Technologies Co Ltd
Genetic Technologies HK Ltd
Helix Genetics Limited
Genetype UK Limited
Total carrying value
March 7, 2001
NSW, Australia
December 18, 1989
California, U.S.A.
June 28, 2010
Delaware, U.S.A.
March 18, 2019
Hong Kong, China
March 18, 2019
Hong Kong, China
July 7, 2021
Malta
April 26, 2022
United Kingdom
100%
100%
100%
100%
100%
100%
100%
100%
-
2
10
-
-
2
10
-
100%
100%
11,006
11,006
100%
100%
100%
100%
100%
100%
100%
100%
-
-
1,910
176
13,104
-
-
-
-
11,018
(1)
On 26 April 2018, the name of RareCellect Pty Ltd (ACN 096 135 9847) was changed to Gene Ventures Pty Ltd
(ACN 096 135 947)
(2) On 3 April 2023, the name of Phenogen Sciences Inc. was changed to geneType Inc.
31. FINANCIAL RISK MANAGEMENT
This note explains the Company’s exposure to financial risks and how these risks could affect the Company’s future
financial performance.
The Company’s risk management is predominantly controlled by the board. The board monitors the Company’s financial
risk management policies and exposures and approves substantial financial transactions. It also reviews the effectiveness
of internal controls relating to market risk, credit risk and liquidity risk.
(a) Market risk
(i) Foreign exchange risk
The Company undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk
through foreign exchange rate fluctuations.
Foreign exchange rate risk arises from financial assets and financial liabilities denominated in a currency that is not the
Company’s functional currency. Exposure to foreign currency risk may result in the fair value of future cash flows of
a financial instrument fluctuating due to the movement in foreign exchange rates of currencies in which the Company
holds financial instruments which are other than the Australian dollar (AUD) functional currency of the Company. This
risk is measured using sensitivity analysis and cash flow forecasting. The cost of hedging at this time outweighs any
benefits that may be obtained.
The consolidated financial statements are presented in Australian Dollar ($), which is Genetic Technologies Limited’s
functional and presentational currency.
146
Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
31. FINANCIAL RISK MANAGEMENT (cont.)
Exposure
The Company’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollar, was
as follows:
June 30, 2023
June 30, 2022
USD
A$
CAD
A$
EUR
A$
GBP
A$
USD
A$
CAD
A$
EUR
A$
Cash at Bank / on hand
Trade and other receivables
1,296,082
611,193
10,766
11,252
100,369
17,690
41,858
26,376
3,299,787
3,318
199,758
606,075
-
16,033
Trade and other payables
(455,167)
(3,795)
(151,327)
(31,441)
(412,511)
(1,652)
(46,790)
Sensitivity
As shown in the table above, the Company is primarily exposed to changes in USD/AUD exchange rates. The sensitivity
of profit or loss to changes in the exchange rates arises mainly from USD denominated financial instruments.
The Company has conducted a sensitivity analysis of its exposure to foreign currency risk. Based on the financial
instruments held as at June 30, 2023, had the Australian dollar weakened/strengthened by 3.65% (2022: 8.3%) against
the USD with all other variables held constant, the Company’s post-tax loss for the year would have been A$52,988
lower/higher (2022: A$289,607 lower/higher).
● USD: 3.65% (2022: 8.3%)
The Company is less sensitive to movements in the AUD/USD exchange rates in 2023 than 2022 because of the reduced
amount of USD denominated cash and cash equivalents. The Company’s exposure to other foreign exchange movements
is not material.
(b) Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract
obligations that could lead to a financial loss to the Company.
(i) Risk management
Credit risk is managed through the maintenance of procedures (such as the utilization of systems for the approval,
granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring the financial
stability of significant customers and counterparties), ensuring to the extent possible that customers and counterparties
to transactions are of sound credit worthiness. Such monitoring is used in assessing receivables for impairment. Credit
terms are normally 30 days from the invoice date.
Risk is also minimized through investing surplus funds in financial institutions that maintain a high credit rating.
(ii) Security
For some trade receivables the Company may obtain security in the form of guarantees, deeds of undertaking or letters
of credit which can be called upon if the counterparty is in default under the terms of the agreement.
(iii) Impairment of financial assets
The Company has one type of financial asset subject to the expected credit loss model:
● trade receivables for sales of inventory
While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment
loss was immaterial.
Genetic Technologies Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
31. FINANCIAL RISK MANAGEMENT (cont.)
(b) Credit risk (Cont.)
(iii) Impairment of financial assets (Cont.)
Trade receivables
The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables.
To measure the expected credit losses, trade receivables assets have been grouped based on shared credit risk
characteristics and the days past due.
(c) Liquidity risk
Liquidity risk arises from the possibility that the Company might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities. The Company manages this risk through the following mechanisms:
●
●
●
●
●
●
preparing forward looking cash flow analyses in relation to its operating, investing and financing activities;
obtaining funding from a variety of sources;
maintaining a reputable credit profile;
managing credit risk related to financial assets;
investing cash and cash equivalents and deposits at call with major financial institutions; and
comparing the maturity profile of financial liabilities with the realization profile of financial assets.
(i) Maturities of financial liabilities
The tables below analyze the Company’s financial liabilities into relevant maturity groupings based on their contractual
maturities. The amounts disclosed in the table are the contractual undiscounted cash flows.
Contractual maturities of
financial liabilities
At June 30, 2023
Trade and other payables
Lease liabilities
Total
Contractual maturities of
financial liabilities
At June 30, 2022
Trade and other payables
Lease liabilities
Total
Less than
6 months
A$
6 – 12
months
A$
Between
1 and 2
years
A$
Between
2 and 5
years
A$
Over 5
years
A$
Total
contractual
cash flows
A$
Carrying
amount
(assets)/
liabilities
A$
1,617,333
158,316
1,775,649
-
161,154
161,154
-
208,957
208,957
-
21,636
21,636
-
1,817
1,817
1,617,333 1,617,333
532,846
2,169,213 2,150,179
551,880
Less than
6 months
A$
6 – 12
months
A$
Between
1 and 2
years
A$
Between
2 and 5
years
A$
Over 5
years
A$
Total
contractual
cash flows
A$
Carrying
amount
(assets)/
liabilities
A$
2,122,379
133,507
2,255,886
-
136,250
136,250
-
255,601
255,601
-
163,896
163,896
-
-
-
2,122,379 2,122,379
652,526
2,811,633 2,774,905
689,254
148
Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
31. FINANCIAL RISK MANAGEMENT (cont.)
(d) Interest rate risk
The Company’s main interest rate risk arises in relation to its short-term deposits with various financial institutions.
If rates were to decrease, the Company may generate less interest revenue from such deposits. However, given the
relatively short duration of such deposits, the associate risk is relatively minimal.
The Company has a Short-Term Investment Policy which was developed to manage the Company’s surplus cash and
cash equivalents. In this context, the Company adopts a prudent approach that is tailored to cash forecasts rather than
seeking high returns that may compromise access to funds as and when they are required. Under the policy, the Company
deposits its surplus cash in a range of deposits / securities over different time frames and with different institutions in
order to diversify its portfolio and minimize risk.
On a monthly basis, Management provides the Board with a detailed list of all cash and cash equivalents, showing the
periods over which the cash has been deposited, the name and credit rating of the institution holding the deposit and the
interest rate at which the funds have been deposited.
At June 30, 2023, if interest rates had changed by +/- 50 basis points from the year-end rates, with all other variables
held constant, the Company’s loss for the year would have been A$31,083 lower / higher (2022: loss A$40,369 lower /
higher), as a result of higher / lower interest income from cash and cash equivalents and deposits in place.
The exposure to interest rate risks and the effective interest rates of financial assets and liabilities, both recognized and
unrealized, for the Company is as follows:
Floating
rate
A$
Fixed rate
A$
Carrying
amount
A$
Year
Weighted
average
effective rate
%
Average
maturity
Period
Days
Financial assets
Cash at bank / on hand
2023
1,516,646
6,334,551
7,851,197
Bonds / deposits
Totals
Financial liabilities
Borrowings
Leases
Totals
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
1,971,827
9,759,498
11,731,325
-
-
17,440
13,257
17,440
13,257
1,516,646
1,971,827
6,351,991
9,772,755
7,868,637
11,744,582
-
-
-
-
-
-
-
-
532,846
652,526
-
-
532,846
652,526
652,526
652,526
4.46
1.31
-
At call
At call
At call
At call
-
-
4.77 %
4.55 %
-
-
-
-
Genetic Technologies Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
32. CAPITAL MANAGEMENT
(a) Risk management
The Company’s objectives when managing capital are to:
● safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders
and benefits for other stakeholders, and
● maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may issue new shares or reduce its capital, subject to the
provisions of the Company’s constitution. The capital structure of the Company consists of equity attributed to equity
holders of the Company, comprising contributed equity, reserves and accumulated losses. By monitoring undiscounted
cash flow forecasts and actual cash flows provided to the board by the Company’s management, the board monitors the
need to raise additional equity from the equity markets.
(b) Dividends
No dividends were declared or paid to members for the year ended June 30, 2023 (2022: nil). The Company’s franking
account balance was nil at June 30, 2023 (2022: nil).
33. PARENT ENTITY FINANCIAL INFORMATION
The individual financial statements for the parent entity show the following aggregate amounts:
Statement of Financial Position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Shareholders’ equity
Share Capital
Other reserves
Share-based payment
Accumulated losses
Total Equity
Loss for the year
2023
A$
2022
A$
2021
A$
10,035,224
4,237,344
14,272,568
2,841,919
314,999
3,156,918
5,022,689
5,815,118
10,837,807
2,270,626
589,745
2,860,371
21,809,918
2,011,338
23,821,256
1,317,378
7,694,668
9,012,046
161,342,707
(117,131)
3,917,101
(154,027,027)
155,138,636
(117,131)
8,937,157
(155,981,226)
153,574,974
(117,131)
8,499,649
(147,148,282)
11,115,650
7,977,436
14,809,210
(3,697,316)
(8,833,064)
(1,601,672)
For the year ended June 30, 2023, A$30,956,037 impairment loss previously recognized on intercompany loan balances
between the parent and its subsidiaries was reversed (2022: Nil, 2021: A$4,482,965 recognized as impairment loss
reversal). The parent entity forgave loan balances with subsidiaries representing A$26,072,596 during the year.
150
Annual Report 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (cont.)
34. CONTINGENT LIABILITIES AND CONTINGENT ASSETS
The Company is not aware of any contingent liabilities as at June 30, 2023 (2022: There were no contingent liabilities
or assets).
35. SUBSEQUENT EVENTS
At the date of this report there have been no matters or circumstances that have arisen since the end of the period which
significantly, or may significantly affect:
– The Company’s operations in future years;
– The results of those operations in future years; or
– The Company’s state of affairs in future years.
Australian Disclosure Requirements
All press releases, financial reports and other information are available using the stock code GTG on the Australian
Securities Exchange website: www2.asx.com.au
Genetic Technologies Limited Exhibit 12.01
SARBANES-OXLEY SECTION 302(a) CERTIFICATION
I, Simon Morriss, certify that:
1. I have reviewed this annual report on Form 20-F of Genetic Technologies Limited;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the Company, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
Disclosed in this report any change in the Company’s internal control over financial reporting that oc-
curred during the period covered by the annual report that has materially affected, or is reasonably likely
to materially affect the Company’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the Company’s auditors and the audit & risk committee of the Company’s board of
directors (or persons performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process,
summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant
role in the Company’s internal control over financial reporting.
Date: August 30, 2023
/s/ Simon Morriss
Simon Morriss
Chief Executive Officer
152
Annual Report 2023
SARBANES-OXLEY SECTION 302(a) CERTIFICATION
Exhibit 12.02
I, Tony Di Pietro, certify that:
1. I have reviewed this annual report on Form 20-F of Genetic Technologies Limited;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred
during the period covered by the annual report that has materially affected, or is reasonably likely to materially
affect the Company’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of
directors (or persons performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize
and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role
in the Company’s internal control over financial reporting.
Date: August 30, 2023
/s/ Tony Di Pietro
Tony Di Pietro
Genetic Technologies Limited
Exhibit 13.01
CERTIFICATION PURSUANT TO 18 U.S.C
SECTION 1350 AS ADOPTED
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Genetic Technologies Limited (the “Company”) on Form 20-F for the period
ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Simon
Morriss, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of
the Sarbanes-Oxley Act of 2002, that:
(1)
(2)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and
result of operations of the Company.
August 30, 2023
By:
/s/ Simon Morriss
Simon Morriss
Chief Executive Officer
* The originally executed copy of this Certification will be maintained at the Company’s offices and will be made
available for inspection upon request.
154
Annual Report 2023
Exhibit 13.02
CERTIFICATION PURSUANT TO 18 U.S.C
SECTION 1350 AS ADOPTED
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Genetic Technologies Limited (the “Company”) on Form 20-F for the period
ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Tony
Di Pietro, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906
of the Sarbanes-Oxley Act of 2002, that:
(1)
(2)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and
result of operations of the Company.
August 30, 2023
By:
/s/ Tony Di Pietro
Tony Di Pietro
Chief Financial Officer
* The originally executed copy of this Certification will be maintained at the Company’s offices and will be made
available for inspection upon request.
Genetic Technologies Limited
Appendix 4E
Preliminary final report for the twelve months to June 30, 2023
Genetic Technologies Limited
ABN 17 009 212 328
1.
Reporting period
Report for the financial year ended
Previous corresponding period is the financial year ended
2.
Results for announcement to the market
Up/down
%
Exhibit 15.1
June 30, 2023
June 30, 2022
Amount reported
for the year ended
June 30, 2023
A$
Revenues from ordinary activities (item 2.1)
Loss from ordinary activities after tax attributable to
members (item 2.2)
Net loss for the period attributable to members (item 2.3)
Up
Up *
Up *
28%
to
8,686,118
65%
64%
to
to
(11,750,923)
(11,650,334)
*increase in loss
There are no dividends being proposed or declared for the period (item 2.4 and 2.5)
Commentary related to the above results
Please refer to ‘Item 5.A Operating results’ within the Form 20-F for the year ended June 30, 2023.
3.
Net tangible assets per security
Net tangible asset backing per ordinary security (1)
0.07 cents
0.12 cents
0.24 cents
June 30, 2023
June 30, 2022
June 30, 2021
(1)
4.
Net tangible assets exclude the right-of-use assets under AASB 16 Leases.
Other documents accompanying this Appendix 4E
This Appendix 4E should be read in conjunction with the Genetic Technologies Limited annual report on the
form 20-F, which includes:
-
-
Item 18 Financial Statements; and
Other sections as tabled below.
156
Annual Report 2023
This preliminary final report and the associated Directors’ Report are found throughout the various sections of
the accompanying Genetic Technologies Limited annual report on the form 20-F.
The following table has been provided to assist readers to locate each section of the Directors’ Report within
the accompanying annual report on the form 20-F.
Sections of Directors’ Report
Principal activities
Form 20-F Reference
Item 5.A Operating Results
Review of operations and activities
Business strategies and prospects for
future years
Business risks
Significant changes in the state of
affairs
Matters subsequent to the end of the
financial year
Likely developments and expected
results of operations
Environmental regulations
Dividends
Information on directors
Remuneration report
Indemnification of officers
Proceedings on behalf of the group
Non-Audit Services
Auditor’s independence declaration
Directors’ Resolution
See subheading – “Overview”
Item 4.B Business Overview Item 5.A Operating Results
Item 4.B Business Overview
Item 3.D Risk Factors
Item 5.A Operating Results
See subheading – “Significant changes in the state of
affairs”
Item 8.B Significant Changes
Item 5.A Operating Results
See subheading – “Likely developments and expected
results of operations”
Item 5.A Operating Results
See subheading – “Likely developments and expected
results of operations”
Item 5.A Operating Results
See subheading – “Environmental regulations”
Item 4.B Business Overview See subheading – “Divi-
dends”
Item 6.A Directors and Senior Management
The Remuneration report starts at Item 6 and ends after
Item 6.B as indicated
Item 6.B Compensation
See subheading – “Indemnification and Insurance with
respect to Directors”
Item 8.A Consolidated Statements and Other Financial
Information
See subheading – “Legal Proceedings”
Item 16.C Principal Accountant Fees and Services
Exhibit 15.4 Auditor’s Independence Declaration
Item 6.B Compensation
See subheading – “Directors’ Resolution”
5.
Audited Financial Statements 2023
This preliminary final report has been based on accounts which have been audited.
A copy of the audited Financial Statements for the year ended June 30, 2023 is included in Item 18 Financial
Statements within the Form 20-F.
- End of Appendix 4E -
Genetic Technologies Limited
Exhibit 15.2
Grant Thornton Audit Pty Ltd
Level 22 Tower 5
Collins Square
727 Collins Street
Melbourne VIC 3008
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
Auditor’s Independence Declaration
To the Directors of Genetic Technologies Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit
of Genetic Technologies Limited for the year ended 30 June 2023, I declare that, to the best of my knowledge
and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
Grant Thornton Audit Pty Ltd
Chartered Accountants
M A Cunningham
Partner – Audit & Assurance
Melbourne, 30 August 2023
www.grantthornton.com.au
ACN-130 913 594
Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389.
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or
refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL).
GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member
firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one
another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127
556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards
Legislation.
w
158
Annual Report 2023
Exhibit 15.3
Grant Thornton Audit Pty Ltd
Level 22 Tower 5
Collins Square
727 Collins Street
Melbourne VIC 3008
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
Independent Auditor’s Report
To the Members of Genetic Technologies Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Genetic Technologies Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2023, the
consolidated statement of profit or loss and other comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies, and the Directors’
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a
b
giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its performance
for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
www.grantthornton.com.au
ACN-130 913 594
Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389.
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or
refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL).
GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member
firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one
another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127
556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards
Legislation.
w
Genetic Technologies Limited
Material uncertainty related to going concern
We draw attention to Note 2(a)(iv) in the financial statements, which indicates that the Group incurred a total
comprehensive loss of A$11,650,334 (2022: A$7,103,134) and net cash outflow from operations of
A$9,723,095 (2022: A$5,659,456). As at 30 June 2023, the Group held total cash and cash equivalents of
A$7,851,197 and total net current assets of A$7,185,750. As stated in Note 2(a)(iv) these events or
conditions, along with other matters as set forth in Note 2(a)(iv), indicate that a material uncertainty exists
that may cast significant doubt on the Group's ability to continue as a going concern. Our conclusion is not
modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
In addition to the matter described in the Material uncertainty related to going concern section, we have
determined the matters described below to be the key audit matters to be communicated in our report.
Key audit matter
How our audit addressed the key audit matter
R&D Tax Incentive – Note 5 and Note 12
Genetic Technologies Limited determines the eligibility of the
research and development activities under the Australian
government tax incentive scheme.
The R&D receivable for the period was A$1,616,064 and the
income recognised in the consolidated statement of profit or
loss and other comprehensive income was A$1,616,064 for
the year then ended.
There is inherent subjectivity involved in the Group's
judgements in relation to the calculation and recognition of the
R&D tax incentive income and receivable, with several
assumptions made in determining the eligibility of claimable
expenses. Due to the above reasons, this was assessed as a
key audit matter.
Our procedures included, amongst others:
•
•
•
•
•
•
•
Obtaining an understanding of the process undertaken
to calculate the research and development tax
incentive;
Utilising an internal research and development tax
specialist to:
o Review the methodology used by the Group for
consistency with the R&D tax offset rules; and
o Consider the nature of the expenses against the
eligibility criteria of the R&D tax incentive
scheme to assess whether the expenses
included in the estimate were likely to meet the
eligibility criteria;
Inspecting supporting documentation for a sample of
expenses claimed to assess validity of the claimed
amount and eligibility against the R&D tax incentive
scheme criteria;
Validating the approval process for a sample of
expenses;
Comparing the nature of R&D expenditure included in
the current year estimate to the prior year claim;
Considering the Group’s history of successful claims;
Inspecting copies of relevant correspondence with Aus
Industry and the Australian Taxation Office related to
the claims; and
Assessing the adequacy of the Group’s disclosures in
relation to the R&D tax incentive.
Grant Thornton Audit Pty Ltd
160
Annual Report 2023
Key audit matter
How our audit addressed the key audit matter
Goodwill and other intangible assets – Note 15
and Note 16
Goodwill amounted to A$3,116,893 as at 30 June 2023 as
a result of the acquisitions of EasyDNA and AffinityDNA
and the impairment loss of A$1,845,000 for EasyDNA that
was recognised in the period. At 30 June 2023 Genetic
Technologies Limited also has other intangibles assets of
A$520,472 consisting of brands, trademarks, trade names,
and domain names acquired via the EasyDNA and
AffinityDNA acquisition.
In accordance with AASB 136 Impairment of Assets,
goodwill and other intangible assets acquired in a business
combination must be allocated to the Group’s cash
generating units (“CGUs”). For each CGU to which
goodwill has been allocated, the Group is required to
assess if the carrying value of the CGU is in excess of the
recoverable value.
The goodwill and other long-lived assets impairment
assessment has been assessed as a key audit matter due
to the judgement required by management in preparing a
value in use model to satisfy the impairment test as
prescribed in AASB 136 Impairment of Assets, including
the significant estimation involved in forecasting of future
cash flows and applying an appropriate discount rate which
inherently involves a high degree of estimation uncertainty
and judgement by management.
Business Combination – Note 17
On 14 July 2022, the Group completed the acquisition of
AffinityDNA’s direct -to-consumer eCommerce business
and distribution rights.
This transaction was accounted for as a business
combination using the acquisition method.
Accounting for these transactions is a complex and
judgmental exercise requiring management to determine
the fair value of acquired assets and liabilities as well as
the goodwill arising on acquisition and as a result has been
assessed as a key audit matter.
Our procedures included, amongst others:
• Assessing management’s determination of the Group having
three CGUs and their allocation of goodwill;
•
•
•
•
Assessing whether management has the requisite expertise to
prepare the impairment model;
Reviewing the impairment model for compliance with AASB
136;
Assessing the reasonableness and appropriateness of inputs
and assumptions to the model, with involvement of our internal
valuation specialist;
Evaluating management’s future cash flow forecasts and
obtaining an understanding of the process by which they were
developed, including:
o
o
o
o
Assessing management’s key assumptions for
reasonableness and obtaining available evidence to
support key assumptions;
Considering the reasonableness of the revenue and cost
forecasts against current period actuals;
Performing a sensitivity analysis on the key assumptions;
Testing the underlying calculations for mathematical
accuracy of the model; and
• Evaluating the disclosures in the financial statements for
appropriateness and consistency with accounting standards.
Our procedures included, amongst others:
• Reading the executed acquisition agreements and evaluated
the Group’s acquisition accounting against the requirements of
Australian Accounting Standards;
•
•
Testing the accuracy of the purchase consideration against the
executed acquisition agreements;
Assessing the fair values of the acquired assets and liabilities
recognised, including:
o Evaluating the competence, capabilities and objectivity of
management’s expert who assisted the Group in
estimating fair values;
o
o
o
o
o
Assessing the valuation of identified intangible assets
recognised as part of the purchase price allocation
calculations;
Assessing the completeness of identified intangible
assets through discussions with management and with
the internal valuation specialist;
Assessing the mathematical accuracy of the Group’s
calculation of the resulting goodwill arising on the
Purchase Price Allocation (PPA) calculations;
Reviewing the work of the independent valuers engaged
by the Group to assist with the PPA calculations;
Utilising internal valuation specialist to review the work
performed by management’s expert; and
• Assessing the adequacy of the business combination
disclosures against the requirements of Australian Accounting
Standards.
Grant Thornton Audit Pty Ltd
Genetic Technologies Limited
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included
in the Group’s annual report for the year ended 30 June 2023, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report, or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The Directors of the Group 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 Group’s ability 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 have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1_2020.pdf.This
description forms part of our auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 57 to 72 of the Directors’ report for the year
ended 30 June 2023.
In our opinion, the Remuneration Report of Genetic Technologies Limited, for the year ended 30 June 2023
complies with section 300A of the Corporations Act 2001.
Grant Thornton Audit Pty Ltd
162
Annual Report 2023
Responsibilities
The Directors of the Group 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.
Grant Thornton Audit Pty Ltd
Chartered Accountants
M A Cunningham
Partner – Audit & Assurance
Melbourne, 30 August 2023
Grant Thornton Audit Pty Ltd
Genetic Technologies Limited
A leader in personalised
predictive genetics
164
Annual Report 2023 Shareholder Information
Genetic Technologies Ltd’s ordinary shares are quoted on the Australian Securities Exchange (ASX) under the ticker code GTG.
The Company also has American Depositary Shares (ADS), representing 600 ordinary shares, listed on the NASDAQ under the
ticker code GENE. GTG’s securities are not quoted on any other stock exchange. The following information was extracted from
the Company’s records as at August 21, 2023 and is required by the ASX Listing Rules. At the close of trading on 21 August 2023,
the Company’s share price was $0.002 while the ADS price closed at US$0.72.
There is currently no on-market buy-back of GTG’s listed ordinary shares.
1. Number of Securities on Issue
The following securities were on issue as at August 21, 2023:
– 11,541,658,143 fully paid ordinary shares.
– 313,016,778 unlisted warrants issued to H.C. Wainwright, connected with U.S. equity raisings.
– 225,000,000 unlisted performance rights issued to directors and employees, held by seven individuals.
Note 26 to the Þnancial statements provides further information regarding performance rights.
– 8,000,000 unlisted options issued under the Company’s Employee Share Option Plan, held by seven individuals.
Note 24 to the Þnancial statements provides further information regarding share options.
2. Distribution of equity securities
The number of shareholders, by size of holding, of quoted fully paid ordinary shares as at August 21, 2023 is as follows:
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Total
Fully paid ordinary shares
Number of holders Number of shares
294
626
326
154,461
1,830,516
2,644,581
1,613
90,271,921
1,987
11,446,756,664
4,846
11,541,658,143
There were 3,562 holders of less than a marketable parcel of ordinary shares.
3. Twenty Largest Shareholders
The names of the 20 largest holders of quoted fully paid ordinary shares and their respective holdings at August 21, 2023 are:
Security holder
Number held
Percentage of
issued shares
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
8,119,123,510
70.35
MR WARWICK WRIGHT
MJGD NOMINEES PTY LTD
DOMA 193 PTY LTD
RIP OPPORTUNITIES PTY LTD
IRWIN BIOTECH NOMINEES PTY LTD
AP 300 PTY LTD
MONUMENT HILL PTY LTD
MISS SUSAN SPITERI
217,500,000
200,849,309
144,551,379
124,999,999
75,849,310
48,040,000
42,000,001
40,142,778
MRS HELEN KAMER + MR BENJAMIN KAMER
40,000,000
MR LEI DA TAO
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
AQUASAFE INVESTMENTS PTY LTD
WHALECORP PTY LTD
MISS BEVERLEY SUSAN MCCAIN
MR JOHN CHRISTOPOLOUS
MR BILL GIANOULAS
MR MICHAEL BATTLEY
CITICORP NOMINEES PTY LIMITED
MR CAN ODABAS
Total remaining holders balance
38,000,000
35,043,531
30,608,028
30,000,000
28,000,000
27,000,000
25,000,000
24,221,459
23,257,576
23,000,000
9,337,186,880
2,204,471,263
1.88
1.74
1.25
1.08
0.66
0.42
0.36
0.35
0.35
0.33
0.30
0.27
0.26
0.24
0.23
0.22
0.21
0.20
0.20
80.90
19.10
1
Genetic Technologies Limited
4. Substantial Shareholders
The following information is current at August 21, 2023 based on information extracted from the substantial
shareholding notices given to the Company by shareholders who hold relevant interests in more than 5 per cent of the
Company’s voting shares:
The Bank of New York Mellon Corporation and Associates
8,111,035,111
Number held
5. Voting Rights
The voting rights attracting to each class of equity securities are set out below:
a) Ordinary shares: On a show of hands every member present at a meeting in person or by proxy
shall have one vote and upon a poll each share shall have one vote.
b) Options, Performance Rights, and Warrants have no voting rights.
6. Restricted Securities
As at the date of this report there are no restricted securities on issue.
Annual Report 2023
166
1
Annual Report 2023 Corporate Directory
Directors
Auditor
Mr Peter Rubinstein
Non-Executive Director and Chairman
Grant Thornton Audit Pty Ltd
Collins Square
727 Collins Street,
Melbourne VIC 3008
Australia
Telephone: +61 (0)3 8603 1000
Facsimile: +61 (0)3 8603 1999
Bankers
National Australia Bank
Level 2, 151 Rathdowne Street
Carlton VIC 3053
Stock exchange listings
Genetic Technologies Limited securities are
listed on the Australian Securities Exchange
(ASX: GTG) and NASDAQ (GENE)
Dr Jerzy Muchnicki
Non-Executive Director
Dr Lindsay Wakefield
Non-Executive Director
Mr Nicholas Burrows
Non-Executive Director
Company Secretary
Mr Tony Di Pietro
Registered office and principal place of business
60-66 Hanover Street
(PO Box 115)
Fitzroy VIC 3065
Australia
Telephone: +61 (0)3 8412 7000
Facsimile: +61 (0)3 8412 7040
Website
genetype.com
Share register
Computershare Investor Services Pty Limited
452 Johnston Street
Abbotsford VIC 3067
Australia
Telephone: +61 0(3) 9415 5000
Facsimile: +61 0(3) 9473 2500
Genetic Technologies Limited Annual Report 2023
168
Annual Report 2023 Genetic Technologies Limited genetype.com