HERAMED LIMITED
ABN 65 626 295 314
ANNUAL REPORT FOR THE YEAR ENDED
31 DECEMBER 2019
For personal use only CONTENTS
Corporate Directory(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)..(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133).(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)
Chairman and CEO Review(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133).(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)..(cid:133)
Directors(cid:146) Report(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)..(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133).(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133).(cid:133)(cid:133)(cid:133)(cid:133)(cid:133).
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Auditor(cid:146)s Independence Declaration(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133).(cid:133)(cid:133)(cid:133)(cid:133)(cid:133).
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Consolidated Statement of Profit or Loss and Other Comprehensive Income...(cid:133).
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Consolidated Statement of Financial Position(cid:133)(cid:133)..(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)..
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Consolidated Statement of Changes in Equity(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)..(cid:133)(cid:133)(cid:133)(cid:133)..(cid:133)..(cid:133)
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Consolidated Statement of Cash Flows(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133).(cid:133)(cid:133).(cid:133)(cid:133)..(cid:133).(cid:133).
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Notes to the consolidated financial statements.(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133).(cid:133)(cid:133)..
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Directors(cid:146) Declaration(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133).(cid:133)..(cid:133)
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Independent Auditor(cid:146)s Report(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133).(cid:133)(cid:133)
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Additional ASX Information(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133)(cid:133).(cid:133)(cid:133).(cid:133)
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For personal use only CORPORATE DIRECTORY
Directors
Dr Ronald Weinberger
Non-Executive Chairman
Mr David Groberman
Executive Director/Chief Executive Officer
Executive Director/Chief Operating Officer
Non-Executive Director
Non-Executive Director
Mr Tal Slonim
Mr David Hinton
Mr Doron Birger
Company Secretary
Mr Jonathan Hart
Registered Office
Suite 3, Level 10
23-25 Hunter Street
Sydney NSW 2000
Telephone: +61 (2) 8379 2961
Auditors (Australia)
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
Legal Advisers (Australia)
David Selig
Level 11, 52 Phillip Street
Sydney NSW 2000
Share Registry
Automic Share Registry
Level 2, 267 St Georges Terrace
Perth WA 6000
Legal Advisers (Israel)
Pearl Cohen Zedek Latzer Baratz
Azrieli Sarona Tower, 121 Menachem Begin Rd.
Tel Aviv, Israel 6701203
Phone: 1300 288 664 (within Australia) +61 2 9698 5414 (outside Australia)
Fax: +61 8 9321 2337
Email: hello@automic.com.au
Web: www.automic.com.au
ASX Code
HMD
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For personal use only
CHAIRMAN AND CEO REVIEW
To our fellow Shareholders,
We would firstly like to thank you for your ongoing support. 2019 has been a transformational year for HeraMED and we reached
a number of significant milestones propelling us towards fulfilling our mission of providing expectant mothers around the world
with the medically approved and fully integrated Hybrid Maternity Care platform to better manage and monitor their pregnancy
at home and decrease pre- and post-natal complications.
Product Progression
During FY2019, our primary focus was product development and enhancement to not only increase our competitive advantage
but to ensure our HeraCARE and HeraBEAT offerings are seamlessly integrated and professionally validated providing the best
care to patients.
While no lack of challenges, our fundamental strategy was successful, and we received 510(K) clearance from the US Food and
Drug Administration (FDA) for our HeraBEAT foetal ultrasonic heart rate monitor for professional use, which subsequently enables
us to initiate discussions with potential US partners, expand our projects globally with the signing of an agreement with Berlin
based midwife service provider, Kinderheldin GmbH.
This development was also driven by our ever-strengthening relationship with Mayo Clinic. During the year, we joined forces to
co-develop our new HeraCARE platform based on their successful OB Nest Project. As part of this cooperation, we are working to
build our OrionAI solution which is a revolutionary Artificial Intelligence (AI) SaaS that will leverage machine learning-based
algorithms to empower medical professionals offering a much wider perspective, automated and efficient analysis of a diverse
range of pregnancy complications.
Additionally, we strengthened and expanded our relationship with a leading Brazilian healthcare group, Hapvida following an
initial order of 100 HeraBEAT devices. We have fully integrated HeraCARE PRO cloud-based solution into Hapvida(cid:146)s IT systems
and the platform is now fully operational across multiple locations and is being utilised by medical professionals and patients.
These achievements are significant for us and demonstrate the sector(cid:146)s willingness to adopt technology in order to provide a
healthcare service of the highest quality.
Commercial Highlights
As highlighted earlier, FY2019 was a transformational year for us and we reached a number of landmarks in our commercial
development. We continue to optimise our offering based on feedback and cooperation with our professional network of
partners and supporters, moving primarily from a hardware to a combined service-based model.
In addition to product specific developments, we executed a global distribution strategy to drive commercialisation and adoption
in order to deliver material progress across all initiatives. We completed all final translation and integration requirements in
Germany, Turkey, and Spain while we continue to implement our region-specific growth strategy.
Completing these steps provides an excellent platform from which to grow. Our product offering is rapidly scalable as
opportunities arise.
2
For personal use only Highly focused corporate team
As part of our global growth strategy, in December 2019 we completed a successful placement of A$1.42 million. This funding
allows HeraMED to initiate its US market penetration strategy and progress relationships with key medical organisations and
insurance companies. Importantly, the capital raised will also assist HeraMED to progress pilots and clinical trials for the HeraBEAT
Plus and potentially HeraCARE solutions with our current medical partners, as well as assist uptake in key markets such as
Germany, UK, Australia and others.
We also strengthened our Advisory Board with the appointment of Dr Paul A. Friedman, current Chair of the Department of
Cardiovascular Medicine at the Mayo Clinic in Rochester, Minnesota. Dr Friedman was previously named Minnesota′s top
inventor and will focus on the development on the collaborative platform with Mayo Clinic.
We also appointed Dr Arturo Weschler MD as VP Innovation to lead our HeraCARE and OrionAI operations. Dr Weschler is a highly
experienced physician and digital health entrepreneur who has held multiple senior positions and was CIO (Chief Information
Officer) of one of Israel(cid:146)s largest healthcare organisations for 11 years. His aim is to leverage his existing connections to expand
our network of healthcare providers.
2020 Outlook
Our world is facing an unprecedented health, social and economic crisis at a scale not seen in recent times. The high levels of
global uncertainty create significant challenges, however also opens new, substantial opportunities for HeraMED. It is
unfortunate that the present crisis has had to drive the message home that remote monitoring is a critical part of our healthcare
future. The most qualified medical and professional organisations such as The American College of Obstetricians and
Gynaecologists (ACOG) and the Royal Australian and New Zealand College of Obstetricians and Gynaecologists (RANZCOG) have
just recently recognised and emphasized the need for extensive telehealth service, digital tools and a comprehensive homecare-
based approach. Their acknowledgement and support go beyond general statements and quickly becomes a functional reality.
While writing these lines, the operational arms such as the Australian Ministry of Health, the FDA and the US Medicaid insurance
schemes are rapidly adopting the recommendation, updating their programs and proactively increasing their offerings, support
and reimbursement models.
While in some parts of the world, the COVID-19 is just starting to show its effect, it seems that Asia is showing some signs of
economic recovery which is an encouraging sign. We believe that the importance and crucial need for patient home and remote
monitoring and specifically pregnancy remote management will receive more acknowledgement, attention and support by the
different stakeholders in the industry including government, insurers, payers and providers.
We expect to see ongoing momentum of support and acknowledgment from the professional community, advancing clinical trials
and pilots to establish our unique medical positioning and advantage, and leverage the above to a commercial success.
While offering unique opportunities for HeraMED, COVID-19 also presents significant challenges for all companies globally and
HeraMED is not different. The Company had to carefully and responsibly adjust its operational costs keeping a dynamic and
flexible approach optimising our ability to go through the crisis. We further had to implement strict health and safety procedures
internally and take all possible measures to mitigate the challenges of working from home. As with manufacturing companies
globally, supply chain management remains a challenge. The Company is in the process of solving supply chain difficulties by
utilising alternate suppliers and manufacturers in Israel and globally.
Again, we would like to thank you for your ongoing support.
Sincerely,
Dr Ron Weinberger
Chairman
Mr David Groberman
Chief Executive Officer
3
For personal use only DIRECTORS(cid:146) REPORT
The Directors present their report, together with the financial statements of HeraMED Limited ((cid:147)the Company(cid:148) or (cid:147)HeraMED(cid:148))
and its controlled entity ((cid:147)the Group(cid:148)) for the financial year ended 31 December 2019.
Directors
The names and particulars of the Directors of the Company during or since the end of the financial year are:
Name
Dr Ronald Weinberger
Mr David Groberman
Mr Tal Slonim
Mr David Hinton
Mr Doron Birger
Principal Activities
Status
Non-Executive Chairman
Executive Director/CEO
Executive Director/COO
Non-Executive Director
Non-Executive Director
Appointed
21 Aug 2018
25 Sept 2018
27 Sept 2018
21 Aug 2018
5 Oct 2018
The principal continuing activities of the Group during the year was the development and manufacture of foetal heart beat
monitors and other pregnancy monitoring solutions designed for both home and professional use.
Dividends
There were no dividends paid or recommended during the financial year ended 31 December 2019 (2018: nil).
Operating and Financial Review
Unless otherwise stated all figures in this report are in the Company(cid:146)s presentation currency US$.
HeraMED Limited incurred a loss for the year of $3,128,885 (2018: $3,766,480). The net assets of the Group have decreased by
$1,952,151, from $4,340,037 at 31 December 2018 to net assets of $2,387,886 at 31 December 2019. Revenues from sale of
goods and services increased to $145,389 for the year ended 31 December 2019 from $77,169 for the year ended 31 December
2018.
As at 31 December 2019, the Group(cid:146)s cash and cash equivalents were $2,045,612 compared to $4,033,829 at 31 December 2018.
Key highlights during the year
During the year ended 31 December 2019, the Company had the following highlights:
● Major Brazilian health care group placed initial pilot order for HeraMED(cid:146)s cloud-based SaaS pregnancy monitoring
service.
● Manufacturing agreement signed with leading medical device manufacture (cid:150) Quasar, to increase production and
improve cost effectiveness of HeraBEAT(cid:153).
Leading digital healthcare executive, Dr Arturo Weschler MD appointed to lead Orion Artificial Intelligence operation.
●
● Head of Cardiology at the Mayo Clinic, Dr Paul Freidman appointed to HeraMED Advisory Board.
● HeraCARE PRO successfully integrated into Hapvida(cid:146)s hospital systems.
● HeraMED entered the German market after securing an initial order with major electronics distributor Duttenhofer
Group.
● HeraMED and Mayo Clinic teamed up to co-develop a new platform based on Mayo Clinic successful OB Nest project.
● HeraMED received 510(k) clearance from the US Food and Drug Administration (FDA) for HeraBEAT US (United States)
foetal ultrasonic heart rate monitor.
Cooperation Agreement secured with Kinderheldin GmbH to add online midwifery service in Germany.
A$1.42m placement to investors to pursue growth opportunities.
●
●
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Business strategies and prospects for future financial years
The Company continues to progress its business development initiatives and strategic planning for its US market entry. HeraMED
Limited will increase its focus on expanding partnerships with top-tier medical organisations and progress agreements with
insurance companies with the aim to drive solution uptake.
HeraMED Limited will aim at expediting the development and initiate discussions for piloting and clinical trials of HeraCARE, as
well as ongoing development of its product suite and new technologies.
Significant changes in the state of affairs
There were no significant changes to the Company or the state of its affairs during the year except for the issue of 9,184,076
ordinary shares raising $916,071 net of issuance expenses.
Subsequent Events
HeraMED accessed unique pregnancy database to strengthen OrionAI (cid:150) HeraMED(cid:146)s cloud based, machine learning software-as-
a-service (SaaS) platform.
HeraMED appointed US General Manager of Operations to lead the development of a commercial strategy and expedite the
Company(cid:146)s entry into the US market.
Mayo Clinic to initiate a clinical study to evaluate HMD(cid:146)s HeraBEAT Plus solution.
The World Health Organisation announced that the coronavirus (COVID-19) had become a pandemic on 11 March 2020. The
Group has developed policies and procedures to address the health and wellbeing of employees. The timing, extent of the impact
and recovery from COVID-19 on our employees, customers and suppliers is unknown at this stage. The full impact of COVID-19
outbreak continues to evolve as at the date of this report. As such, the Group is unable to estimate the effects of the COVID-19
outbreak on the Group(cid:146)s financial position, liquidity and operations in the 2020 financial year.
There were no other material events after the reporting period other than the above.
5
For personal use only Information on Directors
Ron Weinberger
Non-Executive Chairman
Qualifications
PhD (Medical Biochemistry), BSc (Hons) Molecular Pharmacology
Experience
Interest in Shares
and Options at the
date of this report
Directorships held in
other listed entities
(last 3 years)
Dr Weinberger is an experienced technology and business development executive, with a
demonstrated history of building significant value at multiple levels in the medical device
industry. Dr Weinberger is the former Executive Director and CEO of Nanosonics (ASX: NAN).
During his time at Nanosonics, he co-developed their platform technology, launched their
breakthrough product Trophon globally and created North American sales team to work
alongside GE Healthcare. He also developed the distribution strategy for Europe having
partnered with Toshiba Medical Systems (now Canon Medical Systems) and Miele Professional.
125,000 Ordinary Shares, 75,000 Ordinary Shares escrowed until 12 Dec 2020 and 100,000
Unlisted Options expiring 5 Dec 2021 exercisable at $0.25 escrowed until 12 Dec 2020
Nil
David Groberman
Executive Director/Chief Executive Officer
Qualifications
Experience
Interest in Shares
and Options at the
date of this report
BSc cum laude
Mr Groberman is a mechanical and bio-medical engineer with over 16 years of experience in
developing multi-disciplinary medical technologies across a wide spectrum of the industry. He
spent over 8 years as co-founder and Chief Technology Officer at Meytar R&D (cid:150) one of the
leading service provide firms in Israel. During his time with Meytar R&D, he gained extensive,
hands-on knowledge and capabilities, leading some of the most challenging projects in the field
of multi-disciplinary medical and high-tech devices, ranging from implants to invasive
mechanical, electro-mechanical and opto-mechanical instruments, surgical apparatuses and
applicators, monitoring, diagnosis and scanning equipment.
9,245,418 Ordinary Shares escrowed until 12 Dec 2020
3,187,500 Unlisted Options expiring 5 Dec 2021 exercisable at A$0.25 escrowed until 12 Dec
2020
463,752 Unlisted Options expiring 5 Dec 2021 exercisable at A$0.00002 escrowed until 12 Dec
2020
Directorships held in
other listed entities
(last 3 years)
Nil
Tal Slonim
Executive Director/Chief Operations Officer
Qualifications
BSc cum laude, MBA
Experience
Interest in Shares and
Options at the date
of this report
Mr Slonim is a qualified engineer and operations manager with over 21 years of experience. He
is the co-founder and part-time CEO of Meytar R&D, one of Israel(cid:146)s top R&D services firm. Mr
Slonim brings vast knowledge, hands-on capabilities and profound experience in system design
of multi-disciplinary, integrated solutions as well as transition to mass manufacturing and
production line erection and validation.
9,245,418 Ordinary Shares escrowed until 12 Dec 2020
3,187,500 Unlisted Options expiring 5 Dec 2021 exercisable at A$0.25 escrowed until 12 Dec
2020
463,752 Unlisted Options expiring 5 Dec 2021 exercisable at A$0.00002 escrowed until 12 Dec
2020
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For personal use only
Directorships held in
other listed entities
(last 3 years)
Nil
David Hinton
Non-Executive Director
Qualifications
B.Bus, FCA, GAICD, AGIA, ICSA
Mr Hinton has an extensive career in the information and technology sectors and is currently
Chief Financial Officer and Company Secretary of Empired Limited, an ASX listed IT and software
services provider and prior to that Amcom Telecommunications Ltd. He holds a Bachelor of
Business Degree and is a Fellow of the Institute of Chartered Accountants, Graduate of the
Australian Institute of Company Directors and an Associate of the Governance Institute of
Australia. Mr Hinton is also a Director of Auspire - The Australia Day Council of Western
Australia.
25,000 Ordinary Shares
Nil
Experience
Interest in Shares
and Options
Directorships held
in other listed
entities (last 3
years)
Doron Birger
Non-Executive Director
Qualifications
BA(Econ), MA(Econ)
Experience
Mr Birger is the former Chairman of Given Imaging (NASDAQ/TASE: GIVN), CEO of Elron
electronic industries (Nasdaq / TASE: ELRN) and was a board member, during different periods,
in a variety of publicly traded companies (including Elbit Systems, Elbit Ltd, NetVision, Icecure,
Medigus, HBL Hadasit, Insuline, MCS and Starling). During such period, he was involved in
investments, merger and acquisitions, exits, public offerings on NASDAQ and TASE and private
equity rounds totalling billions of dollars. Mr Birger currently serves as chairman and board
member and consultant to a variety of technology companies, mainly in the medical device
field, and conducts many voluntary and public activities.
Interest in Shares
and Options
Directorships held
in other listed
entities (last 3
years)
Nil
Chairman of Medigus LTD (cid:150) traded on NASDAQ and TASE
Chairman of Insuline (cid:150) traded on TASE
Director in MCS MEDICAL COMPRESSION (cid:150) traded on TASE
Director in HBL Hadasit (cid:150) traded on TASE
Director in Icecure (cid:150) traded on the TASE
Information on Company Secretary
Jonathan Hart
Company Secretary (appointed 2 March 2020)
Qualifications
LLB, BCom
Experience
Jonathan holds a Bachelor of Laws and Commerce and has provided corporate advisory services
and held several board positions on various ASX listed companies over the years. His experience
includes initial public offerings on ASX (AIM and JSE), reverse takeovers, due diligence
investigations, general corporate and commercial drafting, public and private mergers and
acquisitions, general corporate advice in relation to capital raisings, Corporations Act 2001 and
ASX compliance.
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Information on Other Key Management Personnel
Sivan Sadan
Qualifications
Experience
Chief Financial Officer
BA (Economics and Management), MBA (Finance) from Tel Aviv University.
Mrs Sadan has over 22 years of experience in financial management, investment banking and
venture capital. In January of 2006, Mrs Sadan founded Or Capital Ltd, a boutique financial
advisory firm specialising in capital raising, M&A and general financial guidance.
Mrs Sadan has previously held key positions as part of the management team at Tamir Fishman &
Co., acting as Managing Director, Head of Corporate Finance, CO-CEO of Tamir Fishman
Underwriting and partner at Tamir Fishman Ventures.
Mrs Sadan served as an external director on the board of Poalim IBI, a leading underwriting
company in Israel, held partially by Bank Hapoalim (one of the largest commercial banks in Israel).
Interest in Shares
and options
179,732 Ordinary Shares escrowed until 12 December 2020 (including shares held by Or Capital
Ltd)
●
●
●
307,196 Unlisted Options fully vested expiring 5 Dec 2021 exercisable at A$0.00002
escrowed until 12 Dec 2019
200,000 unlisted options vested over 3 years starting 15 August 2019 expiring 15 August
2024 exercisable at A$0.165
574,000 unlisted options vested over 3 years starting 1 July 2018 expiring 15 August
2024 exercisable at US$0.01.
Nil
Directorships held
in other listed
entities (last 3
years)
Meetings of Directors
The following table sets out the number of directors(cid:146) meetings held during the financial year and the number of meetings
attended by each director. During the financial year, 12 board meetings were held.
Ron Weinberger
David Groberman
Tal Slonim
David Hinton
Doron Birger
DIRECTORS(cid:146) MEETINGS
Held
Attended
12
12
12
12
12
11
12
11
12
12
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Options
At the date of this report, the number of Options on issue are as follows:
Expiry Date
5 December 2021
5 December 2021
15 August 2024 (i)
15 August 2024 (ii)
15 August 2024 (iii)
Grant Date
5 December 2018
5 December 2018
15 August 2019
15 August 2019
15 August 2019
31 December 2021 (iv)
22 August 2019
19 February 2022 (v)
19 February 2020
Exercise Price
A$0.00002
A$0.25
A$0.165
A$0.165
US$0.01
A$0.25
A$0.25
Number of Options
3,671,159
23,600,000
1,200,000
25,000
574,000
2,000,000
2,250,000
(i) Unlisted Class 1 Options: Unlisted Options Expiring 15 August 2024 @ AU$0.165 subject to the terms of the Company(cid:146)s 2019
Employee Incentive Plan (Israeli Appendix) and vesting over three years on a quarterly basis (i.e. 8.33% a quarter) starting from
15 August 2019.
(ii) Unlisted Class 2 Options: Unlisted Options Expiring 15 August 2024 @ AU$0.165 subject to the terms of the Company(cid:146)s 2019
Employee Incentive Plan (Israeli Appendix) and vesting subject to FDA approval being granted before 30 November 2019.
(iii) Unlisted Class 3 Options granted to the CFO : Unlisted Options Expiring 15 August 2024 @ US$0.01 subject to the terms of
the Company(cid:146)s 2019 Employee Incentive Plan (Israeli Appendix) and issued pursuant to the CFO Agreement dated 1 July 2018 as
disclosed in section 7.8 of the supplementary prospectus dated 23 November 2018 and vesting over three years on a quarterly
basis (i.e. 8.33% a quarter) starting from 1 July 2018.
(iv) Unlisted Class 4 Options granted to third-party services providers on 28 August 2019 for services rendered to the Company.
(v) Unlisted Options granted to lead manager and book runner and Corporate Advisors on 19 February 2020 pursuant to a
Placement in December 2019.
No option holder has any right under the options to participate in any other share issue of the Company or of any other entity.
No options were exercised during the year (2018: nil).
Shares
The number of Shares issued during 2019 is as follows:
Issue Date
Price
Number of Shares
28 November 2019
Deferred consideration shares - 1st Milestone
28 November 2019 (i)
Deferred consideration shares - 1st Milestone
17 December 2019
19 February 2020 (ii)
A$0.155
A$0.15
5,525,000
975,000
9,184,076
500,000
(i) 975,000 Deferred consideration shares granted to advisors as part of the IPO - 487,500 granted to Zaza Investments Pty Ltd
ACN 613 660 067 and/or its nominee(s), and 487,500 to Twenty 1 Corporate Pty Ltd ACN 614 272 230 and/or its nominee(s).
(ii) After the date of this report and as approved by shareholders of the Company at a General Meeting held on 19 February 2020,
500,000 ordinary shares were issued to S3 Consortium Pty Limited or its nominee(s) at a deemed issue price of A$0.15 per share
for services provided to the Company.
Proceedings on Behalf of Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which
the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
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Indemnification and insurance of directors and officers
During the year, HeraMED Limited paid a premium to insure directors and officers of the Group.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against
the officers in their capacity as officers of the Group, and any other payments arising from liabilities incurred by the officers in
connection with such proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the
officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else
to cause detriment to the Group.
Details of the amount of the premium paid in respect of the insurance policies is not disclosed as such disclosure is prohibited
under the terms of the contract.
The Company has agreed, to the extent permitted by law, to indemnify each Director and Company Secretary of the Company
against any and all reasonable liabilities incurred in respect of or arising out of any act in the course of their role as an officer of
the Company.
Environmental Regulations
HeraMED products are in compliant with ROHS and WEEE EU directives:
• Directive 2011/65/EU of the European Parliament and of the Council of 8 June 2011 on the restriction of the use
of certain hazardous substances in electrical and electronic equipment (ROHS)
• Directive 2012/19/EU of the European Parliament and of the Council of 4 July 2012 on waste electrical and
electronic equipment (WEEE).
HeraMED’s products and packaging are marked with the WEEE symbol. HeraMED’s local distributors in Europe must register with
a scheme company to ensure a take back process.
HeraMED’s critical supplier agreements cover the above requirements.
Likely Developments and Expected Results of Operations
The Company(cid:146)s principal continuing activity is the development and manufacture of HeraBEAT, providing foetal heart beat
monitoring, as well as the development of HeraCARE a software pregnancy platform for the creation and implementation of
digital health solutions for maternity care management. The Company(cid:146)s future developments, prospects and business strategies
are to continue to develop and commercialise these technologies and new technologies such as OrionAI.
Any likely developments are disclosed in the Chairman and CEO review as well as within the financial statements at Note 27.
Indemnification of Auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, BDO Audit (WA) Pty Ltd, as part of the terms
of its audit engagement agreement against claims by third parties arising from their report on the financial report. No payment
has been made to indemnify BDO Audit during or since the financial year.
Non-audit services
During the year, BDO Audit (WA) Pty Ltd, the Company(cid:146)s auditor provided non-audit services of US$12,167 in relation to income
tax and Goods and Services Tax (GST) compliance.
Full details of their remuneration can be found within the financial statements at Note 8.
10
For personal use only
In the event that non-audit services are provided by BDO Audit (WA) Pty Ltd, the Board has established certain procedures to
ensure that the provision of non-audit services are compatible with, and do not compromise the auditor independence
requirements of the Corporations Act 2001. These procedures include:
●
non-audit services will be subject to the corporate governance procedures adopted by the Company and will be reviewed
by the Board to ensure they do not impact the integrity and objectivity of the auditor; and
ensuring non-audit services do not involve reviewing or auditing the auditor(cid:146)s own work, acting in a management or
decision-making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.
●
Corporate Governance
The directors support and adhere to the principles of corporate governance, recognising the need for the highest standard of
corporate behaviour and accountability. The Company(cid:146)s Corporate Governance Statement and its compliance with ASX
guidelines can be found on the Company(cid:146)s website at www.hera-med.com. The policies and compliance as stated were in place
for the whole year and are current as at the date of this report.
Auditor(cid:146)s Independence Declaration
The auditor(cid:146)s independence declaration for the year ended 31 December 2019 has been received and can be found on page 20
of the financial report.
11
For personal use only
Remuneration Report (Audited)
This remuneration report, which forms part of the directors(cid:146) report, for the year ended 31 December 2019 outlines the
remuneration arrangements of the Group in accordance with the requirements of the Corporations Act 2001 (Cth), as amended
(Act) and its regulations. This information has been audited as required by section 308(3C) of the Act.
The remuneration report is presented under the following sections:
Introduction
1.
2. Remuneration governance
3. Executive remuneration arrangements
4. Non-executive director fee arrangements
5. Details of remuneration
6. Additional disclosures relating to equity instruments
7.
Loans to key management personnel (KMP) and their related parties
8. Other transactions and balances with KMP and their related parties
9. Voting of Shareholders at last year(cid:146)s annual general meeting
1. Introduction
Key Management Personnel (KMP) have authority and responsibility for planning, directing and controlling the major activities
of the Group. KMP comprise the directors of the Company and identified key management personnel. Compensation levels for
KMP are competitively set to attract and retain appropriately qualified and experienced directors and executives. The Board may
seek independent advice on the appropriateness of compensation packages, given trends in comparable companies both locally
and internationally and the objectives of the Group(cid:146)s compensation strategy.
Key management personnel covered in this report are as follows:
Name
Directors
Ron Weinberger
David Groberman
Tal Slonim
David Hinton
Doron Birger
Status
Appointed
Non-Executive Chairman
21 August 2018
Executive Director/CEO
25 September 2018
Executive Director/COO
27 September 2018
Non-Executive Director
21 August 2018
Non-Executive Director
5 October 2018
Other key management personnel
Sivan Sadan
Chief Financial Officer
1 July 2018
2. Remuneration governance
The Directors believe the Company is not currently of a size nor are its affairs of such complexity as to warrant the establishment
of a separate remuneration committee. Accordingly, all matters are considered by the full Board of Directors, in accordance with
a Remuneration Committee Charter.
During the financial year, the Company did not engage any remuneration consultants.
12
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3. Executive remuneration arrangements
The compensation structures are designed to attract suitably qualified candidates, reward the achievement of strategic
objectives, and achieve the broader outcome of creation of value for shareholders. Compensation packages may include a mix
of fixed compensation, equity-based compensation, as well as employer contributions to social benefits/superannuation funds.
Mr David Groberman and Mr Tal Slonim
Mr David Groberman is Executive Director/CEO and Mr Tal Slonim is Executive Director/COO. The summary of the terms of their
Executive Employment Agreements with HeraMED Limited is as follows:
On 1 January 2016 (as amended on 1 August 2018), HeraMed Israel entered into executive employment agreements with:
Mr David Groberman pursuant to which Mr Groberman was appointed as the Chief Executive Officer (CEO); and
Mr Tal Slonim pursuant to which Mr Slonim was appointed as Chief Operating Officer (COO),
(together, the Executive Directors) of HeraMed Israel (Executive Services Agreements).
Pursuant to the Acquisition, the Executive Directors have also entered into engagement letters with the Company (Executive
Engagement Letters), which outlined their arrangements as Executive Directors of the Company.
A summary of the key terms of the Executive Services Agreements and the Executive Engagement Letters effective from
completion of the Public Offer are set out below.
(a) (Salary):
(i) the CEO is entitled to a monthly salary of US$15,000; and
(ii) the COO is entitled to a monthly salary of US$10,500.
(b) (Social Benefits) each Executive Director is entitled to 29.83% of its salary and include severance payments (8.33%), pension
payments (7.5%), advanced study fund (7.5%) and social security (6.5%).
(c) (Term): Each Executive(cid:146)s engagement commenced on 1 January 2016, and continues until the Executive(cid:146)s engagement is
validly terminated in accordance with its terms.
(d) (Termination by either Party): Each Executive Services Agreement may be terminated by either party by providing ninety (90)
days(cid:146) written notice to the other party (Notice Period), during which period the Executive must continue to perform his duties
until the conclusion of the Notice Period.
(e) (Termination by the Company): HeraMed Israel may terminate an Executive Services Agreement immediately, without notice
or payment for the Notice Period, in the event the Executive Director commits a serious breach.
(f) (Termination Benefits): In the event the Executive Director(cid:146)s employment is terminated by the Company (other than in the
event of a material breach) or is terminated by the Executive Director for good reason, the Executive Director shall be entitled to
receive 12-months(cid:146) gross salary to be paid over a twelve (12) month period, and any unvested incentive securities will
automatically vest. However, the termination benefits are limited by and subject to Listing Rule 10.19, and the Company may
seek Shareholder approval for the purposes of Listing Rule 10.19 at a future time.
(g) (Compliance with Australian Laws): Pursuant to the Executive Engagement Letters, any provision contained in the Executive
Services Agreements that is not consistent with, or is in breach of the Corporations Act, the ASX Listing Rules, or any Australian
law, has no force or effect.
The Executive Services Agreements and the Executive Engagement Letters otherwise contain terms and conditions which are
considered standard for agreements of their respective nature, including those relating to confidentiality and intellectual
property.
In support of the Company and its financial situation, Tal Slonim voluntarily accepted a 50% salary reduction effective 1
September 2019, all according to Mr Slonim(cid:146)s explicit agreement.
13
For personal use only
Ms Sivan Sadan - CFO
On 1 July 2018, HeraMed Israel entered into a service agreement with Or Capital Ltd (Or Capital) (an entity associated with Ms
Sivan Sadan) for the provision of CFO services in connection with the development of the ongoing and future business of
HeraMED (CFO Agreement).
A summary of the key terms of the CFO Agreement is set out below:
(Salary): A monthly fee of 29,000 NIS (plus value added tax (VAT) is payable to Or Capital for provision of CFO services. As of
January 2019, the monthly fee was changed to 37,700 NIS (approximately US$10,908 using an exchange rate of 3.456 NIS/US$)
(plus VAT).
(Options): Subject to the implementation of an employee share option plan and the Company obtaining any necessary approvals,
the Company has agreed to issue Sivan Sadan options, with a nominal exercise price, to acquire such number of Shares that
equates to 0.5% of the Company (on a fully diluted basis) upon completion of the Public Offer (Option Issue). In the event the
Option Issue has not been completed by 31 December 2019, and subject to the continuous employment of Or Capital until 1
January 2020, Or Capital shall be entitled to a one-off cash payment of US$50,000 in lieu of the Option Issue.
(Term): The CFO Agreement commenced on 1 July 2018 and shall continue until terminated in accordance with its terms.
(Termination): Either party may terminate the CFO Agreement by providing the other party with ninety (90) days written notice.
(Termination for cause): The Company may terminate the CFO Agreement immediately for cause (as defined in the CFO
Agreement).
The CFO Agreement otherwise contains terms and conditions which are considered standard for an agreement of its nature,
including those relating to confidentiality, and intellectual property.
Employee Options
On 15 August 2019, HeraMED approved the issue of options to employees and service providers of the Israeli company. According
to an inter-company agreement between HeraMED Australia and HeraMED Israel, the cost of such options shall be borne solely
by the Israeli company.
3 Classes of options were issued:
1. Class 1 - 1,200,000 Unlisted Options Expiring 15 August 2024 exercisable at A$0.165 subject to the terms of the
Company(cid:146)s 2019 Employee Incentive Plan (Israeli Appendix) and vesting over three years on a quarterly basis (i.e. 8.33%
a quarter) starting from 15 August 2019.
2. Class 2 - 25,000 Unlisted Options Expiring 15 August 2024 exercisable at A$0.165 subject to the terms of the Company(cid:146)s
2019 Employee Incentive Plan (Israeli Appendix) and vesting subject to FDA approval being granted before 30
November 2019.
3. Class 3 - 574,000 Unlisted Options Expiring 15 August 2024 exercisable at US$0.01 subject to the terms of the Company(cid:146)s
2019 Employee Incentive Plan (Israeli Appendix) and issued pursuant to the CFO Agreement dated 1 July 2018 as
disclosed in section 7.8 of the supplementary prospectus dated 23 November 2018 and vesting over three years on a
quarterly basis (i.e. 8.33% a quarter) starting from 1 July 2018.
The purpose of granting employee options is to provide an incentive, in the employment or service or directorship of HeraMED
Israel, and ability to attract new employees, directors or consultants whose services are considered valuable, to encourage the
sense of proprietorship of such persons and to stimulate the active interest of such persons in the development and financial
success of the Company by providing them with opportunities to purchase shares in the Company.
4. Non-executive director fee arrangements
The Board policy is to remunerate non-executive directors at a level to comparable companies for time, commitment, and
responsibilities. Non-executive directors may receive performance related compensation. Directors(cid:146) fees cover all main Board
activities and membership of any committee. The Board has no established retirement or redundancy schemes in relation to non-
executive directors.
14
For personal use only
The maximum aggregate amount of fees that can be paid to non-executive directors is presently limited to an aggregate of
A$300,000 (approximately US$210,887) per annum and any increase is subject to approval by shareholders. Fees for non-
executive directors are not linked to the performance of the Company. However, to align directors(cid:146) interests with shareholder
interests, directors are encouraged to hold shares in the Company.
Total fees for non-executive directors for the financial year were $133,287 (2018: $28,908) and cover main Board activities only.
Non-executive directors may receive additional remuneration for other services provided to the Group. All non-executive
directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the
board policies and terms, including remuneration, relevant to the office of director.
5. Details of Remuneration
The Key Management Personnel of HeraMED Limited includes the current and former directors of the Company and Key
Management Personnel of HeraMED Limited during the year ended 31 December 2019.
31 Dec 2019
Directors:
R. Weinberger
D. Groberman
T. Slonim
D. Hinton
D. Birger
Other KMP:
S. Sadan (2)
Total
Short term
salary, fees &
commissions
US$
Superannuation &
social benefits
(1)
US$
Non-monetary
benefits
US$
Share-based
payments (2)
US$
Total
US$
Performance
based
remuneration
63,266
179,766
105,847
32,099
34,873
124,911
540,762
-
30,089
5,844
3,049
-
-
38,982
-
-
-
-
-
-
-
-
-
-
-
-
63,266
209,855
111,691
35,148
34,873
-
-
-
-
-
67,832
67,832
192,743
647,576
35.2%
(1) Mr Groberman and Mr Tal Slonim are entitled to benefits which equate to 29.83% of the salary and include severance
payments (8.33%), pension payments (7.5%), advanced study fund (7.5%) and social security (6.5%) and vacation accrued
in 2019. In the case of Mr Hinton, statutory superannuation of 9.5%.
(2) Including US$9,405 for Class 1 options and US$58,427 for Class 3 options. Refer to Section 6 Additional disclosures relating
to equity instruments for further information on share-based payments granted to directors and key management during
the year.
15
For personal use only 31 Dec 2018
Directors:
R. Weinberger
D. Groberman
T. Slonim
D. Hinton
D. Birger
Other KMP:
S. Sadan (4)
Total
Short term
salary, fees &
commissions
Superannuation &
social benefits
(1)
Non-monetary
benefits
Bonus
(2)
Share-based
payments
(3)
Total
US$
US$
US$
US$
US$
US$
Performance
based
remuneration
21,142
96,790
54,830
5,363
1,894
47,143
227,162
-
26,971
17,843
509
-
-
45,323
-
-
-
-
-
-
-
-
25,000
25,000
-
-
6,670
56,670
-
21,142
198,717
347,478
198,717
296,390
-
-
5,872
1,894
-
7.19%
8.43%
-
-
28,358
82,171
8.12%
425,792
754,947
(1) Mr Groberman and Mr Tal Slonim are entitled to benefits which equate to 29.83% of the salary and include severance
payments (8.33%), pension payments (7.5%), advanced study fund (7.5%) and social security (6.5%). In the case of Mr
Hinton, statutory superannuation of 9.5%.
(2) A one-time bonus of US$25,000 to Mr Groberman and Mr Tal Slonim and US$6,670 to Ms Sivan Sadan (as part of the
agreement with Or Capital).
(3) Refer to Section 6 Additional disclosures relating to equity instruments for further information on share-based payments
granted to directors and key management during the year.
(4) Refers to remuneration starting 1 July 2018 from which Ms Sivan Sadan acted as CFO. Prior to her role as CFO Mr Sivan
Sadan acted as an advisory board member of HeraMED Israel.
6.
Additional disclosures relating to equity instruments
KMP Shareholdings
2,562,064 shares were issued to KMP during the 2019 financial year (2018: nil). The shares were issued to key management
personnel in their capacity as Vendors, as consideration for achieving the first milestone, being receipt of FDA clearance for
HeraBEAT device to be used as a clinical medical device for professional use in the USA.
The number of ordinary shares in HeraMED Limited held by each KMP of the Group during the financial year is as follows:
31 Dec 2019
Directors:
R. Weinberger
D. Groberman
T. Slonim
D. Hinton
D. Birger
S. Sadan(ii)
Total
Balance at start
of the year
Shares issued
during the year(i)
Other changes
during the year
Balance at end
of the year
200,000
7,995,723
7,995,723
25,000
-
117,058
16,333,504
-
1,249,695
1,249,695
-
-
62,674
2,562,064
-
-
-
-
-
-
-
200,000
9,245,418
9,245,418
25,000
-
179,732
18,895,568
(i) Shares issued to key management personnel in their capacity as Vendors as consideration for achieving the first milestone.
(ii) Including shares held by Or Capital (an entity associated with Ms Sivan Sadan).
16
For personal use only KMP Options Holdings
The number of options over ordinary shares held by each KMP of the Group during the financial year is as follows:
31 Dec 2019
Directors:
R. Weinberger
D. Groberman(ii)
T. Slonim (ii)
D. Hinton
D. Birger
Other KMP:
S. Sadan
Total
Balance at
the start of
the year
Granted
as
remuner-
ationi
Exercised
during
the year
Options
issued
during the
year(i)
Other
changes
during the
year
Balance
at the end
of the
year
Vested and
exercisable
Unvested
and
unexerci-
sable
100,000
3,651,252
3,651,252
-
-
307,196
7,709,700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
774,000
774,000
-
-
-
-
-
-
-
100,000
3,651,252
3,651,252
-
-
100,000
3,651,252
3,651,252
-
-
-
-
-
-
-
1,081,196
8,483,700
563,028
7,965,532
518,168
518,168
(i) Refer terms and conditions of the share-based payment arrangements section below for details of remuneration options
issued during the year.
(ii) Note: In the Company(cid:146)s 2018 audited financial statements, these options appear as 7,500,000 options to purchase Company(cid:146)s
ordinary shares, issued to Company(cid:146)s CEO and COO in December 2018 prior to the ASX listing. This is due to a clerical error (cid:150) the
correct allocation of these options is (and has been since their issuance in December 2018) as specified here, i.e. 3,187,500
options issued to Company(cid:146)s CEO, 3,187,500 options issued to Company(cid:146)s COO, 562,500 options issued to Mr Wallace and
562,500 options issued to Mr Ntoumenopoulos in their capacity as brokers who facilitated the Company(cid:146)s ASX listing and IPO.
Options do not carry any voting or dividend rights, and can only be exercised once the vesting conditions have been met, until
their expiry date.
Terms and conditions of share-based payment arrangements
The terms and conditions of each grant of options affecting remuneration of key management personnel in the current or a
future reporting are as follows:
Option class
Number
granted
Grant date
Vesting start
date
Expiry date
Exercise
price
Value per
option at grant
date(i)
Vested
%
Employee Options Class 1
1,200,000
15-Aug-19
15-Aug-19
15-Aug-24
A$0.165
US$0.0694
8.33%
Employee Options Class 3
574,000
15-Aug-19
1-July-18
15-Aug-24
US$0.01
US$0.1502
41.66%
(i)The value per option at grant date has been determined using a Black Scholes option pricing model. Details of Black Scholes
inputs and valuations can be found at Note 20.
The vesting conditions of the Employee Options are as follows:
● Class 1 (cid:150) 1,200,000 options: Unlisted Options expiring 15 August 2024 at A$0.165 subject to the terms of the Company(cid:146)s 2019
Employee Incentive Plan and vesting over three years on a quarterly basis (i.e. 8.33% a quarter) starting from 15 August 2019.
● Class 2 (cid:150) 25,000 options: Unlisted Options expiring 15 August 2024 at A$0.165 subject to the terms of the Company(cid:146)s 2019
Employee Incentive Plan and vesting subject to FDA approval being granted before 30 November 2019 (already vested).
● Class 3 (cid:150) 574,000 options: Unlisted Options expiring 15 August 2024 at US$0.01 subject to the terms of the Company(cid:146)s 2019
Employee Incentive Plan and issued pursuant to the CFO Agreement dated 1 July 2018 as disclosed in section 7.8 of the
Supplementary Prospectus dated 23 November 2018 and vesting over three years on a quarterly basis (i.e. 8.33% a quarter)
starting from 1 July 2018.
17
For personal use only Details of share-based payments granted as compensation to key management personnel during the current financial year:
Name
S. Sadan
S. Sadan
Option class
No. granted
No. vested
Class 1
Class 3
200,000
574,000
16,667
239,167
% of grant
vested
8.33%
41.66%
% of grant
forfeited
-
-
During the financial year
31 Dec 2019
Other KMP:
Sivan Sadan
31 Dec 2018
Directors:
David Groberman
Tal Slonim
Fair value of
options
granted
during the
year
Value of
options
vested
during the
year
Value of
options
lapsed during
the year
US$
US$
US$
Value of
options
included in
remuneration
report for the
year
US$
Remuneration
consisting of
options for the
year
%
67,832
25,124
-
67,832
35.19%
Fair value of
options
granted
during the
year
Value of
options
vested
during the
year
Value of
options
lapsed during
the year
US$
US$
US$
Value of
options
included in
remuneration
report for the
year
US$
198,717
198,717
198,717
198,717
-
-
198,717
198,717
Remuneration
consisting of
options for the
year
%
57.19%
67.05%
7. Loans from key management personnel (KMP) and their related parties
Credit Line Agreement (cid:150) Meytar (Digital) Engineering Ltd ((cid:147)Meytar(cid:148))
HeraMED Israel and Meytar, a company controlled by Messrs David Groberman and Tal Slonim (i.e. the Executive Directors),
entered into a Credit Line Agreement dated 21 December 2017 (Credit Line Agreement). The key terms and conditions of the
Credit Line Agreement are set out below.
(a) (Interest): The Principle shall bear interest from the date of payment of the Principle at a rate equivalent to the minimal
interest amount recognised and attributed by the Israel Tax Authority.
(b) (Repayment): Repayment of the Principle shall take place as follows:
(i) half of the Principle shall be repaid upon the consummation by Hera Med Ltd (Israel) of an equity investment/aggregate
sales transaction or series of transactions which are in aggregate amount of at least US$3,000,000; and
(ii) the second half of the Principle is to be repaid at the earlier of the date Hera Med Ltd (Israel) pays dividends or 21
December 2022.
(c) (Accelerated Repayment): Amongst other events, upon the consummation of an IPO the Principle must be repaid in full.
(d) (Waiver of accelerated repayment): the parties have agreed that despite the requirement to repay the Principal in full in
accordance with clause (c) above, half the Principal will be repaid upon completion of the Public Offer with the second half to
be repaid at the earlier of the date Hera Med Ltd (Israel) pays dividends or 21 December 2022.
The Credit Line Agreement otherwise contains terms and conditions that are considered standard for an agreement of its nature.
The interest is at the rate equivalent to the minimal interest amount recognized and attributed by the Israel Tax Authorities, as
such may be adjusted from time to time. During 2019, the interest rate was 2.6%. According to the above terms, half of the loan
amount was repaid upon the consummation of the IPO. After the repayment and as of 31 December 2019, the amount of
US$168,464 was owing by Hera Med Ltd (Israel) to Meytar.
18
For personal use only 8. Other transactions and balances with KMP and their related parties
Transactions with related parties are entered into on terms equivalent to those that prevail in arm(cid:146)s length transactions. The
Group had no transactions with members of the Group(cid:146)s key management personnel and/or their related parties during the year.
9. Voting of shareholders at last year(cid:146)s annual general meeting
The Company received 99.7% (cid:147)Yes(cid:148) votes cast on its Remuneration Report for the 2018 financial year. The Company did not
receive any specific feedback at the Annual General Meeting regarding its remuneration practices.
This is the end of the audited remuneration report
This directors(cid:146) report is signed in accordance with a resolution of directors made pursuant to s.298(2) of the Corporations Act
2001.
On behalf of the Directors
Mr David Groberman
Chief Executive Officer
Tel Aviv, 27 March 2020
19
For personal use only Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY DEAN JUST TO THE DIRECTORS OF HERAMED LIMITED
As lead auditor of HeraMED Limited for the year ended 31 December 2019, I declare that, to the best
of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of HeraMED Limited and the entities it controlled during the period.
Dean Just
Director
BDO Audit (WA) Pty Ltd
Perth, 27 March 2020
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
For personal use only Consolidated Statement of Profit or Loss and Other
Comprehensive Income for the year ended
31 December 2019
Revenues
Cost of sales
Gross profit/(loss)
Research and development expenses
General and administrative expenses
Selling and marketing expenses
Depreciation and amortisation expenses
Share-based payments
Other gains
Loss before finance expenses
Finance income
Finance expenses
Loss before income tax
Income tax expense
Loss for the year
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Foreign currency translation differences
Total comprehensive loss for the year attributable to owners of the
Company
Note
4
5
5
5
20
5
5
6
2019
US$
145,389
(111,577)
33,812
(922,706)
(936,033)
(980,136)
(242,894)
(181,350)
69,271
(3,160,036)
38,601
(7,450)
(3,128,885)
-
(3,128,885)
2018
US$
77,169
(134,070)
(56,901)
(473,117)
(806,011)
(322,133)
(208,325)
(1,008,415)
80,403
(2,794,499)
-
(971,981)
(3,766,480)
-
(3,766,480)
79,313
(198,250)
(3,049,572)
(3,964,730)
Loss per share attributable to owners of the Company
Basic/diluted loss per share (cents per share)
9
(0.035)
(0.102)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
21
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Consolidated Statement of Financial Position as at
31 December 2019
CURRENT ASSETS
Cash and cash equivalents
Other receivables
Inventory
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
Right-of-use asset
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Lease liability
Other financial liability
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Lease liability
Other financial liability
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
SHAREHOLDERS(cid:146) EQUITY
Issued capital
Shares to be issued
Share-based payment reserve
Predecessor Accounting reserve
Foreign exchange reserve
Accumulated losses
SHAREHOLDERS(cid:146) EQUITY
Note
10a
11
12
13
2
14
15
2
17
16
2
17
18
25
19
19
19
2019
US$
2018
US$
2,045,612
254,613
58,091
2,358,316
16,823
72,616
1,156,190
1,245,629
3,603,945
456,345
66,805
16,165
539,315
168,464
5,811
502,469
676,744
1,216,059
4,033,829
177,190
105,311
4,316,330
15,529
-
1,193,153
1,208,682
5,525,012
470,520
-
29,870
500,390
157,220
-
527,365
684,585
1,184,975
2,387,886
4,340,037
10,738,713
52,722
2,140,045
(133,879)
(118,937)
(10,290,778)
2,387,886
9,822,642
-
2,011,417
(133,879)
(198,250)
(7,161,893)
4,340,037
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
22
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Consolidated Statement of Changes in Equity for the
year ended 31 December 2019
Issued
capital
US$
Shares to
be issued
US$
Share-based
payment
reserve
US$
Predecessor
Accounting
reserve
US$
Balance at 1 January 2018
Loss for the year
Other comprehensive loss
Total comprehensive loss for the
year
Transactions with owners in their
capacity as owners:
Issue of shares - pre IPO
Issue of shares
Capital raising costs
Share based payments
Transactions under common
control
Balance at 31 December 2018
Balance at 1 January 2019
Loss for the year
Other comprehensive income
Total comprehensive loss for the
year
Transactions with owners in their
capacity as owners:
Issue of shares
Shares to be issued to service
providers
Capital raising costs
Share based payments
Balance at 31 December 2019
2,998,771
-
-
-
589,746
6,866,552
(632,427)
-
-
9,822,642
9,822,642
-
-
-
974,545
-
(58,474)
-
10,738,713
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
52,722
-
-
52,722
Foreign
exchange
reserve
US$
-
-
(198,250)
Accumulated
losses
US$
Total
US$
(3,395,413)
(3,766,480)
-
205,045
(3,766,480)
(198,250)
(198,250)
(3,766,480)
(3,964,730)
-
-
-
-
-
-
-
-
-
-
589,746
6,866,552
(632,427)
1,409,730
(133,879)
601,687
-
-
-
-
-
-
1,409,730
-
-
-
-
-
-
-
-
-
(133,879)
2,011,417
(133,879)
(198,250)
(7,161,893)
4,340,037
2,011,417
-
-
(133,879)
-
-
(198,250)
-
79,313
(7,161,893)
(3,128,885)
-
4,340,037
(3,128,885)
79,313
79,313
(3,128,885)
(3,049,572)
-
-
-
-
-
-
-
128,628
2,140,045
-
-
(133,879)
-
-
(118,937)
-
-
(10,290,778)
-
-
-
-
974,545
52,722
(58,474)
128,628
2,387,886
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
23
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Consolidated Statement of Cash Flows for the year
ended 31 December 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Net cash (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for plant and equipment
Payments for capitalised development expenses
Cash held by the Company at acquisition date
Net cash (used in) investing activities
Note
2019
US$
2018
US$
207,147
39,193
(2,945,120)
(1,806,217)
11,108
878
10b
(2,726,865)
(1,766,146)
13
14
(6,476)
(5,051)
(200,749)
(172,887)
-
4,267
(207,225)
(173,671)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from equity instruments of the Company
Other transaction costs
Proceeds from convertible loans
Repayment of loans
Net cash provided by financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Impact of movement in foreign exchange rates
Cash and cash equivalents at the end of the financial year
10a
916,071
4,487,060
(92,215)
-
-
-
1,629,174
(151,786)
823,856
5,964,448
(2,110,234)
4,024,631
4,033,829
45,604
122,017
(36,406)
2,045,612
4,033,829
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes
24
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Notes to the Consolidated Financial Statements for
the year ended 31 December 2019
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements cover HeraMED Limited (Company) and its controlled entities as a consolidated entity
(also referred to as Group). HeraMED Limited is a company limited by shares, incorporated and domiciled in Australia. The Group
is a for-profit entity.
The financial statements were authorised for issue by the board of directors on 27 March 2020.
The following is a summary of the material accounting policies adopted by the Group in the preparation and presentation of the
financial report. The accounting policies have been consistently applied, unless otherwise stated.
Basis of preparation of the financial report
a) Statement of Compliance
These financial statements are general purpose financial statements which have been prepared in accordance with the
Corporations Act 2001, Accounting Standards and other authoritative pronouncements issued by the Australian Accounting
Standards Board (AASB), and comply with other requirements of the law.
Australian Accounting Standards set out accounting policies that the Australian Accounting Standards Board has concluded would
result in financial statements containing relevant and reliable information about transactions, events and conditions. Compliance
with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial
Reporting Standards.
b) Basis of Measurement and Reporting Conventions
The financial statements, except for cash flow information, have been prepared on an accruals basis and are based on historical
costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial
liabilities. The amounts presented in the financial statements have been rounded off to the nearest dollar unless stated
otherwise.
c)
Going Concern
The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business activity
and the realisation of assets and settlement of liabilities in the ordinary course of business. The Group incurred a loss for the
year ended 31 December 2019 of $3,128,885 (2018: $3,766,480) and net cash outflows from operating activities of $2,726,865
(2018: $1,766,146).
The World Health Organisation announced that the coronavirus (COVID-19) had become a pandemic on 11 March 2020. The
Group has developed policies and procedures to address the health and wellbeing of employees. The timing, extent of the impact
and recovery from COVID-19 on our employees, customers and suppliers is unknown at this stage. The full impact of COVID-19
outbreak continues to evolve as at the date of this report. As such, the Group is unable to estimate the effects of the COVID-19
outbreak on the Group(cid:146)s financial position, liquidity ad operations in the 2020 financial year.
Whilst the Group is expected to be cash-flow negative in the foreseeable future as a result of continued expenditures, the ability
of the Group to continue as a going concern is dependent on securing additional funding through equity to continue to fund its
operational and technology development activities. These conditions indicate a material uncertainty that may cast a significant
doubt about the Group(cid:146)s ability to continue as a going concern and, therefore, that it may be unable to realise its assets and
discharge its liabilities in the normal course of business.
The Directors believe the Group will continue as a going concern, after consideration of the following factors:
●
●
●
the Group has recently been successful in raising equity and is planning to raise further funds;
the level of expenditure can be managed; and
the directors of HeraMED have reason to believe that in addition to the cash flow currently available, additional funds
from receipts are expected through the sale of the Group(cid:146)s products and services.
25
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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont(cid:146)d)
Should the Group not be able to continue as a going concern, it may be required to realise its assets and discharge its liabilities
other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements or raise
additional capital through equity raisings and that the financial report does not include any adjustments relating to the
recoverability and classification of recorded asset amounts or liabilities that might be necessary should the Group not continue
as a going concern and meet its debts as and when they become due and payable.
The directors plan to continue the Group(cid:146)s operations on the basis as outlined above and believe there will be sufficient funds
for the Group to meet its obligations and liabilities for at least twelve months from the date of this report.
d) Principles of Consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December
2019. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee
and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and
only if the Group has:
●
●
●
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the
investee);
Exposure, or rights, to variable returns from its involvement with the investee, and
The ability to use its power over the investee to affect its returns.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or
more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary
and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or
disposed of during the year are included in the statement of profit or loss and other comprehensive income from the date the
Group gains control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the
Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When
necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the
Group(cid:146)s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.
A change in ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group
loses control over a subsidiary, it:
● De-recognises the assets (including goodwill) and liabilities of the subsidiary
● De-recognises the carrying amount of any non-controlling interests
● De-recognises the cumulative translation differences recorded in equity
●
●
●
●
Recognises the fair value of the consideration received
Recognises the fair value of any investments retained
Recognises any surplus or deficit in profit and loss
Reclassifies the parent(cid:146)s share of components previously recognised in OCI to profit or loss or retained earnings, as
appropriate, as would be required if the Group had directly disposed of the related assets or liabilities.
e) Income Tax
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income
tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the
amounts expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in the deferred tax asset and deferred tax liability balances during the year as
well unused tax losses.
Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when the
tax relates to items that are credited or charged directly to equity.
26
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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont(cid:146)d)
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully
expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an
asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised
or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects
the manner in which management expects to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable
that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred
tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it
is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement
or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are
offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the
same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement
or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant
amounts of deferred tax assets or liabilities are expected to be recovered or settled.
f) Leases
The Group as a lessee
At inception of a contract, the Group assesses if the contract contains characteristics of a lease. If there is a lease present, a right-
of-use asset and a corresponding liability are recognised by the Group where the Group is a lessee. However, all contracts that
are classified as short-term leases (i.e. leases with a remaining lease term of 12 months or less) and leases of low-value assets are
recognised as an operating expense on a straight-line basis over the term of the lease.
Initially, the lease liability is measured at the present value of the lease payments still to be paid at the commencement date.
The lease payments are discounted at the interest rate implicit in the lease. If this rate cannot be readily determined, the Group
uses incremental borrowing rate.
Lease payments included in the measurement of the lease liability are as follows:
-
-
-
-
-
-
fixed lease payments less any lease incentives;
variable lease payments that depend on the index of the rate, initially measured using the index or rate at the
commencement date;
the amount expected to be payable by the lessee under residual value guarantees;
the exercise price of purchase options if the lessee is reasonably certain to exercise its options;
lease payments under extension profits, if the lessee is reasonably certain to exercise the options; and
payments of penalties for terminating the lease, if the lease term reflects the exercise of options to terminate the lease.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, any lease payments made at or
before the commencement date and initial direct costs. The subsequent measurement of the right-of-use asset is at cost less
accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the lease term or useful life of the underlying asset, whichever is the shortest.
Where a lease transfers ownership of the underlying asset or the costs of the right-of-use asset reflects that the Group anticipates
exercising a purchase option, the specific asset is depreciated over the useful life of the underlying asset.
27
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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont(cid:146)d)
g) Financial Instruments
Initial recognition and measurement
Financial instruments, incorporating financial assets and financial liabilities are recognised when the entity becomes a party to
the contractual provisions of the instrument.
Financial instruments are initially measured at fair value plus transaction costs where the instrument is not classified as at fair
value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are
expensed to profit or loss immediately. Financial instruments are classified and measured as set out below.
Classification and subsequent measurement
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine
the fair value for all unlisted securities, including recent arm(cid:146)s length transactions, reference to similar instruments and option
pricing models.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market and are subsequently measured at amortised cost.
Loans and receivables are included in current assets, except for those which are not expected to mature within 12 months after
the end of the reporting period. (All other loans and receivables are classified as non-current assets.)
Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. Gains or losses
are recognised in profit or loss through the amortisation process and when the financial liability is derecognised.
Derivative instruments
The Group does not trade or hold derivatives.
Financial guarantees
The Group has no material financial guarantees other than a bank guarantee of 66,000 NIS (approximately US$19,097 at an
exchange rate of 3.456 NIS/$US) issued in regard to the office lease in Israel. The Company has provided a cash deposit with a
lien in favour of the bank for the issuance of the bank guarantee (see Note 11). In addition, the Group provided a cash deposit
of 60,000 NIS (approximately US$17,361 at an exchange rate of 3.456 NIS/$US) to secure credit card payments.
Impairment
At the end of each reporting period, the Group assesses whether there is objective evidence that a financial asset has been
impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred
(cid:145)loss event(cid:146)) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be
reliably estimated. Evidence of impairment may include indications that the debtor or a group of debtors is experiencing
significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter
bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the
estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flow expires or the asset is transferred to
another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with
the asset.
Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The difference
between the carrying value of the financial liability extinguished or transferred to another party and the fair value of
consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.
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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont(cid:146)d)
h) Impairment of non-financial assets
At the end of each reporting period, the Directors assesses whether there is any indication that an asset may be impaired. The
assessment will include the consideration of external and internal sources of information, including dividends received from
subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits.
If any such indication exists, an impairment test is carried out on the asset by comparing the asset(cid:146)s recoverable amount, being
the higher of its fair value less costs to sell and its value in use, to the asset(cid:146)s carrying amount. Any excess of the asset(cid:146)s carrying
amount over its recoverable amount is recognised immediately in profit or loss. Where it is not possible to estimate the
recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash generating unit to which
the asset belongs.
Impairment testing is performed annually for intangible assets.
i) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits available on demand with banks with original maturity of three months
or less.
j) Trade receivables
Trade receivables, which generally have 0-60 day terms, are recognised and carried at original invoice amount. Collectability of
trade receivables is reviewed on an ongoing basis using an expected credit loss for assessing impairment. An impairment provision
will be recognised when there is objective evidence that HeraMED will not be able to collect the receivable. Bad debts will be
written off when identified.
k) Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the average principle
and includes expenditure incurred in acquiring the inventories and the costs incurred in bringing them to their existing location
and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses.
l) Revenue Recognition
Revenue is recognised based on the five-step model outlined in AASB 15 Revenue from Contracts with Customers.
The Company derives its revenue from:
the sale of goods; and
software licenses and services SaaS.
-
-
Revenue from sale of goods
Revenue from sale of goods in the ordinary course of business is measured at the fair value of the consideration received or
receivable. When the credit period is short and constitutes the accepted credit in the industry, the future consideration is not
discounted.
Revenue is recognised when performance obligation is satisfied, i.e. when control of the goods has transferred, being when the
goods are delivered to the customer. Delivery occurs when the product has been trucked to the specific location, the risks of
obsolescence and loss have been transferred to the customer and either the customer has accepted the product in accordance
with the sales contract, the acceptance provisions have lapsed or the Group has objective evidence that all criteria for acceptance
have been satisfied.
A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because
only the passage of time is required before the payment is due.
29
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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont(cid:146)d)
Revenue from software licenses and service SaaS
Revenue derived from software license agreements and service SaaS are recognised, upon delivery of the software, when the
Company provides the customer a right to use the Company(cid:146)s intellectual property, when collection is probable, the license fee
is otherwise fixed or determinable and persuasive evidence of an arrangement exists.
For contracts that consist of more than one performance obligation, at contract inception the Company allocates the contract
transaction price to each performance obligation identified in the contract (the license and the service) on a relative stand-alone
selling price basis. The stand-alone selling price is the price at which the Company would sell the promised goods or services
separately to a customer.
m) Operating expenses
Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin.
n) Depreciation
Depreciation is a systematic allocation of the depreciable amount of an asset over its useful life. The depreciable amount is the
cost of the asset, less its residual value.
An asset is depreciated from the date it is ready for use, meaning the date it reaches the location and condition required for it
to operate in the manner intended by management.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of the fixed asset
item, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the
assets.
The estimated useful lives for the current and comparative periods are as follows:
●
●
Computers and equipment (cid:150) 3 years
Furniture and office equipment (cid:150) 7-15 years
Depreciation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted if
appropriate.
o) Goods and Services Tax (GST)/ Value Added Tax (VAT)
Revenues, expenses, and assets are recognised net of the amount of GST/VAT, except where the amount of GST/VAT incurred
is not recoverable.
Receivable and payables are stated inclusive of the amount of GST/VAT receivable or payable. The net amount of the GST/VAT
recoverable from, or payable to, the tax authorities is included with other receivables and payables in the statement of financial
position.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST/VAT component of investing and
financing activities, which are disclosed as operating cash flows.
30
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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont(cid:146)d)
p) Employee Benefits
Post-employment benefits
The liability for severance pay is in accordance with its obligations under Israeli employment law (Section 14 of the Severance
Compensation Act, 1963). All Israel based employees are included under Section 14, and are entitled only to monthly deposits,
at a rate of 8.33% of their monthly salary, made in the employee’s name with insurance companies or pension funds. Under
Israeli employment law, payments in accordance with Section 14 release the employer from any future severance payments.
The funds are made available to the employee at the time the employer-employee relationship is terminated, regardless of the
cause of termination. The severance pay liabilities and deposits under Section 14 are not reflected in the statements of financial
position as the severance pay risks have been irrevocably transferred to the insurance companies or pension funds.
Short term employee benefits
Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is
provided or upon the actual absence of the employee when the benefit is not accumulated.
The employee benefits are classified, for measurement purposes, as short-term benefits or as other long-term benefits
depending on when the Group expects the benefits to be wholly settled.
q) Equity-settled compensation
The Group measures the share-based expense and the cost of equity-settled transaction with employees by reference to the
fair value of the equity instruments at the date at which they are granted. The fair value is determined by using the Black-
Scholes option valuation model which takes into account the terms and conditions upon which the instruments are granted.
r) Trade and other payables
Liabilities for trade creditors and other amounts carried at cost which is the fair value of the consideration to be paid in the
future for goods and services received, whether or not billed to the Group. Interest, when charged by the lender, is recognised
as an expense on an accrual basis.
s) Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will result and that outflow can be reliably measured. Provisions are measured
using the best estimate of the amounts required to settle the obligation at the end of the reporting period.
t) Equity and reserves
Share capital represents the fair value of shares that have been issued. Any transaction costs associated with the issuing of
shares are deducted from share capital, net of any related income tax benefits. The Share-based payment reserve records the
cost of share-based payments.
u) Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each entity within the Group is measured using the currency of the primary economic environment
in which that entity operates. The consolidated financial statements are presented in US dollars which is the subsidiary(cid:146)s
functional currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at
historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair
value are reported at the exchange rate at the date when fair values were determined.
31
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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont(cid:146)d)
Exchange differences arising on the translation of monetary items are recognised in the profit or loss.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income
to the extent that the underlying gain or loss is recognised other comprehensive income; otherwise the exchange difference is
recognised in profit or loss.
Group companies
The financial results and position of foreign operations whose functional currency is different from the Group(cid:146)s presentation
currency are translated as follows:
● assets and liabilities are translated at year-end exchange rates prevailing at that reporting period;
● income and expenses are translated at average exchange rates for the period; and
● retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars are
recognised in other comprehensive income and included in the foreign currency translation reserve in the statement of financial
position. These differences are recognised in the profit or loss in the period in which the operation is disposed of.
v) Segment Information
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of
Directors (the chief operating decision makers) in assessing performance and in determining the allocation of resources. The
Group(cid:146)s sole operating segment is consistent with the presentation of these consolidated financial statements.
w) Share Based Payments
Share-based payments are measured at the fair value of goods or services received or the fair value of the equity instruments
issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the
goods or services are received. The fair value of options is determined using the Black-Scholes pricing model. The number of
shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount
recognised for services received as consideration for the equity instruments granted is based on the number of equity
instruments that eventually vest.
x) Earnings per share
Basic earnings per share is calculated by dividing:
●
●
the profit attributable to member of the parent entity, excluding any costs of servicing equity other than ordinary
shares
by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year (if any).
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
●
●
the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares;
and
the weighted average number of additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
32
For personal use only NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont(cid:146)d)
y) Intangible assets
Development costs that are directly attributable to the design and testing of identifiable and unique products controlled by the
Group are recognised as intangible assets when the following criteria are met:
it is technically feasible to complete the product so that it will be available for use;
●
● management intends to complete the product and use or sell it;
●
●
●
there is an ability to use or sell the product;
it can be demonstrated how the product will generate probable future economic benefits;
adequate technical, financial and other resources to complete the development and to use or sell the product are
available, and
the expenditure attributable to the product during its development can be reliably measured.
●
Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for
use.
Research expenditure and development expenditure that do not meet the criteria as set out above are recognised as an expense
as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
z) Predecessor Accounting
Business combinations involving entities under common control are accounted for using the predecessor accounting method.
Under this method;
●
●
carrying values are not restated in the accounts of the acquiring entity, rather prior book values are maintained. As a
result, no fair value adjustments are recorded on the acquisition; and
the carrying value of net assets or liabilities acquired is recorded as a separate element of equity.
Critical Accounting Estimates and Judgements
The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and
best available current information. Estimates assume a reasonable expectation of future events and are based on current trends
and economic data, obtained both externally and within the Group.
Key Estimates and judgements
Share based payments
The Group initially measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires
determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant.
This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of
the share option, volatility and dividend yield and making assumptions about them, as well as an assessment of the probability
of achieving non-market-based vesting conditions.
The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 20.
Deferred Consideration Shares
Deferred consideration shares were issued during the year, which will convert into ordinary shares subject to the satisfaction
of certain performance milestones within 36 months of quotation. The probability of achieving non-market-based performance
milestones is assessed at each reporting date. The milestones are disclosed in Note 18(d) including management(cid:146)s assessment
of the probability of achievement of these milestones.
33
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NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont(cid:146)d)
Impairment
In assessing impairment, management estimates the recoverable amount of each asset or cash-generating unit based on the
fair value less cost of disposal. The Company reviews intangible assets for impairment once a year or more frequently if events
or changes in circumstances indicate that there is impairment. An impairment loss is recognised if the recoverable amount of
the cash-generating unit to which goodwill has been allocated is lower than the carrying value of the cash-generating unit.
The Directors make estimates and judgements in preparing the financial report based on historical knowledge and best available
current information. Estimates assume a reasonable expectation of future events based and are based on current trends and
economic data, obtained both externally and within the Group.
Fair value of long-term liabilities
The Company measured its liability on governmental grants received, each period, based on discounted cash flows derived from
the Group’s future anticipated revenues. The grant is repayable upon the Group commencing product commercialisation and
generating revenue from the sale of the product, with repayments being based on 3%-4.5% of each dollar of revenue. As required
by AASB 9 Financial Instruments, the liability has been recognised at fair value on initial recognition and subject to management(cid:146)s
estimate of the discount rate and the timing and quantity of future revenues.
At the end of each reporting period, the Company evaluates, based on its best estimate of future sales, whether there is
reasonable assurance that the liability recognised, in whole or in part, will not be repaid (since the Company will not be required
to pay royalties). If there is such reasonable assurance, the appropriate amount of the liability is derecognised and recorded in
profit or loss as a revaluation of research and development expenses. If the estimate of future sales indicates that there is no
such reasonable assurance, the appropriate amount of the liability that reflects expected future royalty payments is recognised
with a corresponding adjustment to financial expenses or income.
Development costs
Costs relating to the development of HeraBEAT are capitalised in accordance with AASB 138 Intangible Assets. Capitalised costs
include all direct costs associated with the development of the asset. The development asset is amortised over a 6-year period
from the capitalisation date which is determined by the useful life of the asset, ability to use or sell the asset, generation of future
benefits and the ability to measure the costs reliably and whether the costs, including payroll costs are directly attributable to
relevant projects.
NOTE 2: APPLICATION OF NEW AND REVISED AUSTRALIAN ACCOUNTING STANDARDS
New, revised or amending Accounting Standards and Interpretations issued and adopted
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ((cid:145)AASB(cid:146)) that are relevant to its operations and effective for an accounting period that begins on or
after 1 January 2019.
New and revised Standards and amendments thereof and Interpretations effective for the current year that are relevant to the
Group include:
● AASB 16 Leases
● AASB 2018-3 Amendments to Australian Accounting Standards (cid:150) Reduced Disclosure Requirements
●
Interpretation 23 Uncertainty over Income Tax Treatments and AASB 2017-4 Amendments to Australian Accounting
Standards (cid:150) Uncertainty over Income Tax Treatments
AASB 16 Leases
In the current year, the Group has applied AASB 16 Leases, which is effective for annual periods that begin on or after 1 January
2019.
AASB 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes to lessee
accounting by removing the distinction between operating and finance lease and requiring the recognition of a right-of-use asset
and a lease liability at commencement for all leases, except for short-term leases and leases of low-value assets. In contrast to
lessee accounting, the requirements for lessor accounting have remained largely unchanged.
34
For personal use only
NOTE 2: APPLICATION OF NEW AND REVISED AUSTRALIAN ACCOUNTING STANDARDS (cont(cid:146)d)
The new accounting policy adopted by the Group is disclosed at Note 1(f). In January 2020, the Group entered into an extension
of its office space lease agreement ((cid:147)Agreement(cid:148)). The new term of the Agreement extends the lease term for more than one
(1) year. As a result, the Group recognised a (cid:147)right-of-use asset(cid:148) in the consolidated statement of financial position as at 31
December 2019. The Group(cid:146)s obligation to make lease payments under the Agreement are recognised under current and non-
current liabilities in the consolidated statement of financial position. Based on the present value of future lease payments, the
Group has recognised a right-of-use asset and lease liability of $72,616 as at 31 December 2019. The interest rate used to discount
future lease payment was 8%.
Reconciliation of total leases commitments at 31 December 2018 to the lease liability recognised at 1 January 2019
Lease Commitments as at 31 December 2018
Less: Lease with remaining term less than 12 months
Lease liabilities as at 1 January 2019
$5,446
($5,446)
nil
New, revised or amending Accounting Standards and Interpretations issued and adopted (cont(cid:146)d)
AASB 2018-3 Amendments to Australian Accounting Standards (cid:150) Reduced Disclosure Requirements
AASB 2018-3 establishes the disclosure requirements of AASB 16 Leases in financial statements prepared in accordance with
Australian Accounting Standards (cid:150) Reduced Disclosure Requirements (RDR). These disclosure requirements have been applied
by the Group in presenting and disclosing information in these financial statements.
Interpretation 23 Uncertainty over Income Tax Treatments
Interpretation 23 sets out how to determine the accounting tax position when there is uncertainty over income tax treatments.
The Interpretation requires the Group to:
● Determine whether uncertain tax positions are assessed separately or as a group.
●
Assess whether it is probable that a tax authority will accept an uncertain tax treatment used, or proposed to be used, by
an entity in its income tax filings:
-
-
If yes, the Group should determine its accounting tax position consistently with the tax treatment used or planned
to be used in its income tax filings;
If no, the Group should reflect the effect of uncertainty in determining its accounting tax position using either the
most likely amount or the expected value method.
The adoption of this Interpretation has had no significant impact on the disclosures or the amounts recognised in the Group(cid:146)s
consolidated financial statements.
New and revised Australian Accounting Standards and Interpretations issued but not yet effective
At the date of authorisation of the financial statements, the Group has not applied the following new and revised Australian
Accounting Standards, Interpretations and amendments that have been issued but are not yet effective:
Standard/amendment
AASB 17 Insurance Contracts
Effective for annual
reporting periods
beginning on or after
1 January 2021
AASB 2018-7 Amendments to Australian Accounting Standards (cid:150) Definition of Material
1 January 2020
35
For personal use only
NOTE 3: COMMON CONTROL ENTITY
Summary of Acquisition (cid:150) Prior period
On 21 May 2018, HeraMED Limited (the acquirer) was incorporated in Australia primarily for the purpose of investing in
Hera Med Ltd (Israel).
On 10 December 2018, the Company completed a transaction with the shareholders of Hera Med Ltd (Israel) to acquire
100% of the share capital in Hera Med Ltd, in exchange for 33,728,841 ordinary shares in the Company.
Refer to Notes 1(b) Basis of measurement and reporting conventions, including capital reorganisation and 1(z)
Predecessor accounting for further information.
As at the date of acquisition (10 December 2018), the assets and liabilities of the Company were as follows:
a)
Assets and Liabilities at Acquisition Date
Cash and cash equivalents
Other current assets
Intercompany loan receivable (due from Hera Med Ltd Israel)
Trade and other payables
Convertible loans
Net liabilities of HeraMED Limited at acquisition date
b)
Predecessor Accounting Reserve
Net liabilities of HeraMED Limited at acquisition date
Predecessor Accounting Reserve
NOTE 4: REVENUE
Major products/service lines
Revenue from sale of goods
Software licences and services SaaS
Total
Revenue recognition
At a point in time
Over time (SaaS)
Total
2018
US$
4,267
160,373
1,372,159
(124,805)
(1,545,873)
(133,879)
(133,879)
(133,879)
2019
US$
122,549
22,840
145,389
2018
US$
77,169
-
77,169
142,449
77,169
2,940
-
145,389
77,169
36
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NOTE 5: EXPENSES
Loss before income tax from continuing operations includes the following
specific expenses:
General and administrative expenses:
-
Payroll and related expenses
-
Professional services
-
Others
Total general and administrative expenses
Selling and marketing expenses
-
-
-
Payroll and related expenses
Professional services
Others
Total selling and marketing expenses
Depreciation and amortisation expenses:
-
-
Total depreciation and amortisation expenses
Depreciation of plant and equipment (Note 13)
Amortisation of intangibles assets (Note 14)
Interest expenses and banks fees
Finance expenses/(income)
-
- Revaluation of IIA Loan
-
Non-cash expense
Total finance (income)/expense
2019
US$
2018
US$
367,376
269,472
299,185
936,033
416,411
546,502
17,223
980,136
171,560
241,393
393,058
806,011
230,565
84,053
7,515
322,133
5,182
237,712
242,894
6,768
201,557
208,325
7,450
(38,601)
-
(31,151)
41,661
2,796
927,524
971,981
NOTE 6: INCOME TAX
The financial accounts for the year ended 31 December 2019 comprise the results of HeraMED Australia and HeraMed
Israel. The legal parent is incorporated and domiciled in Australia where the applicable tax rate is 27.5% (2018: 27.5%).
The applicable tax rate in Israel is 23% (2018: 23%).
(a) Income tax expense
Current tax
Deferred tax
(b) The income tax expense for the year can be reconciled to the accounting loss as follows:
Loss for the year before tax
Prima facie income tax expense/(benefit) at domestic tax rate
Effect of different tax rate of group entities operating in a different jurisdiction
Effect of expenses that are not deductible in determining taxable income
Effect of unused tax losses not recognised as deferred tax assets
2019
US$
-
-
-
2019
US$
2018
US$
-
-
-
2018
US$
(3,128,885)
(3,766,480)
(860,443)
(103,673)
90,309
873,807
-
(937,930)
(500,130)
544,359
893,701
-
37
For personal use only
Tax losses
Unused tax losses for which no deferred tax asset has been recognised will be subject to the Company or its subsidiary as the
case maybe satisfying the requirements imposed by regulatory taxation authorities. The benefits of deferred tax assets will only
be recognised if:
-
-
-
Future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised;
The conditions for deductibility imposed by tax legislation continue to be complied with; and
No changes in tax legislation adversely affect the Company in realising the benefit.
NOTE 7: RELATED PARTY TRANSACTIONS
a) Key Management Personnel Compensation
The remuneration of directors and other members of key management personnel during the year was as follows:
Short-term salary and fees
Social benefits
Other
Share based payments
2019
US$
540,762
38,982
-
67,832
647,576
2018
US$
227,162
45,323
56,670
425,792
754,947
Loans from key management personnel (KMP) and their related parties
b)
Details of loans made to the Group by directors and key management are set out below.
2019
D. Groberman and T. Slonim
2018
D. Groberman and T. Slonim
Balance at the
start of the
year
US$
157,220
Balance at the
start of the
year
US$
303,573
Interest
payable for
the year
US$
11,244
Interest
payable for
the year
US$
13,719
Repayments
made during
the year
US$
-
Converted to
equity during the
year
US$
-
Repayments
made during
the year(i)
US$
(160,072)
Converted to
equity during the
year
US$
-
Balance at
the end of
the year
US$
168,464
Balance at
the end of
the year
US$
157,220
(i) According to the terms of the Credit Line Agreement between Hera Med Ltd Israel and Meytar, half of the loan amount was
repaid upon the consummation of the IPO. As of 31 December 2019, an amount of US$168,464 was owed by the Group to
Meytar.
38
For personal use only
NOTE 8: AUDITOR(cid:146)S REMUNERATION
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its
related practices and non-related audit firms:
Auditor remuneration
-
-
Auditing and reviewing the financial reports (BDO) (cid:150) Australia
Auditing and reviewing the financial reports (BDO) (cid:150) Israel
Non-audit remuneration
-
-
-
Taxation services (BDO) (cid:150) Australia
Investigating Accountant(cid:146)s Report (BDO) - Australia
Taxation services (BDO) (cid:150) Israel
2019
US$
26,389
49,000
75,389
12,167
-
-
12,167
2018
US$
21,116
25,000
46,116
-
11,536
23,500
35,036
NOTE 9: LOSS PER SHARE
Loss per share (EPS)
a)
Loss used in calculation of basic EPS and diluted EPS
2019
US$
2018
US$
(3,128,885)
(3,766,480)
b) Weighted average number of ordinary shares outstanding during
the year used in calculation of basic and diluted loss per share
88,511,748
36,971,581
NOTE 10a: CASH AND CASH EQUIVALENTS
Cash at bank
Total cash and cash equivalents in the statement of cash flows
2019
US$
2018
US$
2,045,612
2,045,612
4,033,829
4,033,829
The Group(cid:146)s exposure to the risks associated with cash are disclosed in Note 22.
39
For personal use only
NOTE 10b: RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the year
Non-cash flows in loss after income tax
Non-cash interest expenses
Share based payments expense
Issue of shares for services
Depreciation and amortisation
Change in Israel Innovation Authority grants
Revaluation of third-party loan
Changes in assets and liabilities
Increase in other receivables
Decrease/(increase) in inventory
Increase/(decrease) in other payables
Increase in provisions
2019
US$
2018
US$
(3,128,885)
(3,766,480)
-
128,628
52,722
242,894
(38,601)
11,244
(77,423)
47,220
(14,175)
49,511
941,244
1,008,415
-
208,325
2,796
(13,178)
(162,391)
(41,744)
43,953
12,914
Cash flow (used in) operating activities
(2,726,865)
(1,766,146)
Non-Cash investing and financing activities
There were no other non-cash investing and financing activities during the year.
NOTE 11: OTHER RECEIVABLES
CURRENT
Accounts receivables
Advances to suppliers
Prepaid expenses
Deposits
Other receivables
2019
US$
-
28,512
45,065
36,523
144,513
254,613
2018
US$
37,976
-
55,590
6,858
76,766
177,190
All amounts are short-term. The net carrying value of trade and other receivables is considered a reasonable
approximation of fair value. The Group(cid:146)s exposure to the risks associated with trade and other receivables are disclosed
in Note 22.
NOTE 12: INVENTORY
Inventory at cost
2019
US$
2018
US$
58,091
105,311
40
For personal use only
NOTE 13: PLANT AND EQUIPMENT
Cost
Accumulated depreciation
Net carrying amount
Cost or valuation
Balance at 1 January 2018
Additions
Balance at 31 December 2018
Additions
Balance at 31 December 2019
Accumulated depreciation
Balance at 1 January 2018
Depreciation expense
Balance at 31 December 2018
Depreciation expense
Balance at 31 December 2019
2019
US$
51,120
(34,297)
16,823
2018
US$
44,644
(29,115)
15,529
Computer
equipment
and software
US$
26,761
Office furniture
and equipment
US$
12,832
2,057
28,818
6,476
35,294
2,994
15,826
-
15,826
Computer
equipment
and software
US$
(19,339)
Office furniture
and equipment
US$
(3,008)
(5,635)
(24,974)
(3,959)
(28,933)
(1,133)
(4,141)
(1,223)
Total
US$
39,593
5,051
44,644
6,476
51,120
Total
US$
(22,347)
(6,768)
(29,115)
(5,182)
(5,364)
(34,297)
41
For personal use only
NOTE 14: INTANGIBLE ASSETS
Cost (1)
Accumulated amortisation
Net carrying amount
Cost
Balance at 1 January 2018
Additions
Balance at 31 December 2018
Additions
Balance at 31 December 2019
Accumulated amortisation
Balance at 1 January 2018
Amortisation expense
Balance at 31 December 2018
Amortisation expense
Balance at 31 December 2019
2019
US$
2018
US$
1,595,459
(439,269)
1,394,710
(201,557)
1,156,190
1,193,153
Purchase
license (2)
US$
-
96,038
96,038
Development
costs
US$
1,125,785
Total
US$
1,125,785
172,887
268,925
1,298,672
1,394,710
-
200,749
200,749
96,038
1,499,421
1,595,459
Purchase
license
US$
-
Development
costs
US$
-
Total
US$
-
-
-
-
-
(201,557)
(201,557)
(201,557)
(201,557)
(237,712)
(237,712)
(439,269)
(439,269)
(1) The Company capitalised development costs that are attributable to the HeraBEAT product as it meets the criteria as
described in Note 1(y).
(2) Prior to the acquisition of Hera Med Ltd Israel by the Company, Hera Med Ltd Israel issued shares to Mayo Foundation for
Medical Education and Research ((cid:147)Mayo(cid:148)) as consideration for a research and development collaboration license with Mayo.
NOTE 15: TRADE AND OTHER PAYABLES
CURRENT
Trade payables
Employees(cid:146) salaries and related liabilities
Accrued expenses
Others
2019
US$
86,646
237,387
112,122
20,190
456,345
2018
US$
207,710
183,216
79,594
-
470,520
All amounts are short-term. The carrying values of trade payables and other payables are considered to approximate
fair value. The Group(cid:146)s exposure to the risks associated with trade and other payables are disclosed in Note 22.
42
For personal use only NOTE 16: BORROWINGS
Loan from related party (i)
2019
US$
2018
US$
168,464
157,220
(i) This represents loan from Meytar (Digital) Engineering Ltd ((cid:147)Meytar(cid:148)), a company controlled by Messrs David
Groberman and Tal Slonim (executive directors of HeraMED Limited). The loan bears interest at 2.6% per annum, is
unsecured and is at arm(cid:146)s length. The loan will be repaid at the earlier of the date Hera Med Ltd (Israel) pays dividends or
21 December 2022. Refer to Note 7(b) for more information.
NOTE 17: OTHER FINANCIAL LIABILITIES
CURRENT
2019
US$
2018
US$
Liability for Israel Innovation Authority Grants
16,165
29,870
NON-CURRENT
Liability for Israel Innovation Authority Grants
502,469
527,365
Hera Med Ltd Israel received funding from the Israeli Innovation Authority ("IIA", previously known as Officer of Chief Scientist -
OCS) for its participation in research and development costs of Hera Med Ltd Israel, based on budgets approved by the IIA, subject
to the fulfillment of specified milestones. Hera Med Ltd Israel is committed to pay royalties to the IIA on proceeds from sale of
products in the research and development of which the IIA participates by way of grants. According to the funding terms, royalties
between 3% and 4.5% are payable on sales of developed products funded, up to 100% of the grant received by Hera Med Ltd
Israel, linked to the US dollar and bearing libor interest rates. In the case of failure of a financed project, Hera Med Ltd Israel is
not obligated to pay any such royalties to the IIA. Hera Med Ltd Israel received grants amounting to US$1,015,306 related to two
different products. There were no additional grants received in the 2019 financial year.
As at 31 December 2019, the WACC rate used by Hera Med Ltd Israel for the liability was 20.9% (2018: 19%).
The liability balance recognised by Hera Med Ltd Israel is based on its future revenue estimates which are performed at the end
of each reporting period.
43
For personal use only
NOTE 18: ISSUED CAPITAL
(a) Share Capital
103,212,917 (31 December 2018: 87,528,841) fully paid ordinary shares
(b) Movement in Ordinary Capital
Opening balance as at 1 January 2019
Issue of shares (i)
Issue of shares (ii)
Costs of capital raising
2019
US$
2018
US$
10,738,713
9,822,642
No.
87,528,841
6,500,000
9,184,076
-
Total
US$
9,822,642
-
974,545
(58,474)
Closing balance at 31 December 2019
103,212,917
10,738,713
(i) Issue of shares on 28 November 2019 following the receipt of FDA clearance for HeraBEAT device to be used as a clinical
medical device for professional use in the USA. 5,525,000 shares were issued to Vendors and 975,000 shares were issued to
Corporate Advisers.
(ii) Issue of shares on 17 December 2019 pursuant to a placement at A$0.155 per share.
(c) Capital Management
Due to the nature of the Group(cid:146)s activities, the Group does not have ready access to credit facilities, with the primary source
of funding being equity raisings. Therefore, the focus of the Group(cid:146)s capital risk management is the current working capital
position against the requirements of the Group to meet research and development programs and corporate overheads.
The Group(cid:146)s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a
view to initiating appropriate capital raisings as required. Any surplus funds are invested with major financial institutions.
(d) Deferred Consideration Shares
On 28 November 2019 following the receipt of FDA clearance for HeraBEAT device to be used as a clinical medical device
for professional use in the USA, 5,525,000 shares were issued to Vendors and 975,000 shares were issued to Corporate
Advisers.
In addition to the number of shares disclosed above, there are also 16,500,000 deferred consideration shares to be issued
(14,025,000 to Vendors and 2,475,000 to Corporate Advisors) subject to the satisfaction of certain performance milestones
within 36 months of the date of quotation ((cid:147)Deferred Consideration Shares(cid:148)).
The performance milestones are as follows:
●
14,025,000 Deferred Consideration Shares to Vendors to be issued as follows:
-
-
5,525,000 shares subject to the Company reaching cumulative revenue of A$7,500,000, which shall be
verified by an independent auditor(cid:146)s report, within 24 months of listing on the ASX.
8,500,000 shares subject to the Company reaching cumulative revenue of A$15,000,000, which shall
be verified by an independent auditor(cid:146)s report, within 36 months of listing on the ASX.
As at 31 December 2019, no expense has been recognised in respect of the above Deferred Consideration Shares to be
issued to Vendors as a 0% probability has been assigned to meeting the respective milestones.
●
2,475,000 Deferred Consideration Shares to Corporate Advisors to be issued as follows:
-
-
975,000 shares subject to the Company reaching cumulative revenue of A$7,500,000, which shall be
verified by an independent auditor(cid:146)s report, within 24 months of listing on the ASX.
1,500,000 shares subject to the Company reaching cumulative revenue of A$15,000,000, which shall
be verified by an independent auditor(cid:146)s report, within 36 months of listing on the ASX.
As at 31 December 2019, no expense has been recognised in respect of the above Deferred Consideration Shares to be issued
to Vendors as a 0% probability has been assigned to meeting the respective milestones.
44
For personal use only
In relation to the Deferred Consideration Shares issued to Corporate Advisers, an expense of US$69,335 has been recognised
in the statement of profit or loss and other comprehensive income. The underlying fair value per Deferred Consideration
Share was determined to be A$0.20 based on the issue price of ordinary shares on Acquisition date.
In relation to the Deferred Consideration Shares issued to Vendors, no share-based payment expense has been recognised in
the statement of profit or loss and other comprehensive income.
NOTE 19: RESERVES
a)
Share Based Payment Reserve
2019
US$
2018
US$
31,070,159 (31 December 2018: 27,271,159) options on issue
19b
2,140,045
2,011,417
b) Movement in Share Based Payment Reserve
Opening balance at 1 January 2019
Issue of 2,000,000 options to Australian consultants (Note 20)
Issue of 1,799,000 options to Israeli employees and CFO (Note 20)
Issue of 975,000 Deferred Consideration Shares to Corporate Advisors (Note 20)
Closing balance at 31 December 2019
c)
Foreign Exchange Reserve
Closing balance
2019
US$
2,011,417
27,060
32,233
69,335
2,140,045
2019
US$
2018
US$
(118,937)
(198,250)
The foreign currency translation reserve records exchange differences arising on translation from functional currency to
presentation currency.
d)
Predecessor Accounting Reserve
Closing balance
2019
US$
2018
US$
(133,879)
(133,879)
The reserve arises from the capital reorganisation and records the net liabilities of HeraMED Limited as at the acquisition
date of 10 December 2018. Refer to Note 3.
45
For personal use only
NOTE 20: SHARE BASED PAYMENTS
During the year ended 31 December 2019, the Company recorded the following share-based payments:
●
●
The issue of 2,000,000 Options exercisable at A$0.25 on or before 31 December 2021 to third party service providers
((cid:147)Service Providers Options(cid:148)). The fair value of the options has been determined using Black-Scholes model as the
fair value of the service provided could not be reliably determined.
The issue of 1,200,000 Class 1 Options exercisable at A$0.165 on or before 15 August 2024 to Israeli employees
((cid:147)Employee Options Class 1(cid:148)).
● The issue of 25,000 Class 2 Options exercisable at A$0.165 on or before 15 August 2024 to Israeli employees
((cid:147)Employee Options Class 2(cid:148)).
●
●
●
●
The issue of 574,000 Class 3 Options exercisable at US$0.01 (approximately A$0.015) on or before 15 August 2024 to
Ms Sivan Sadan ((cid:147)CFO Options(cid:148)).
The issue of 5,525,000 ordinary shares as consideration to Vendors as a result of the satisfaction of the first
performance milestone achieved within 12 months of listing on the ASX. No share-based payment expense has been
recognised in the statement of profit or loss and other comprehensive income as this formed part of the 2018 financial
year acquisition accounting.
The issue of 975,000 ordinary shares to Corporate Advisors as a result of the satisfaction of the first performance
milestone achieved within 12 months of listing on the ASX. An initial expense of US$69,335 was already recorded in
the 2018 statement of profit or loss and other comprehensive income of 2018 and an additional expense of US$69,335
has been recognised in the 2019 statement of profit or loss and other comprehensive income.
The post year-end issue of 500,000 ordinary shares to third-party service providers for their services during the 2019
financial year. The Group recorded an expense of US$52,722 in the statement of profit or loss and other
comprehensive income (refer to Note 25).
Fair value
For equity settled share-based payments, the Group measures the goods or services received and the corresponding increase
in equity, directly at the fair value of the goods or services received. Where this cannot be reliably measured, the Group
measures the value by reference to the fair value of equity instruments granted.
The Black-Scholes option pricing model was used to determine the fair value of the options issued. The Black-Scholes inputs and
valuations were as follows:
Options
Number of options
Grant date
Exercise price
Expected volatility
Implied option life (years)
Expected dividend yield
Risk free rate
Valuation per option A$
Exchange rate
Valuation per option US$
Total valuation US$ (i)
Service Providers
Options
Employee
Options Class 1
Employee
Options Class 2
CFO Options
2,000,000
22 Aug 2019
A$0.25
1,200,000
15 Aug 2019
A$0.165
25,000
574,000
15 Aug 2019
15 Aug 2019
A$0.165
US$0.01
60%
2.0
nil
0.86%
0.0193
1.4784
0.0131
26,095
60%
3.3
nil
0.70%
0.0694
1.4760
0.0470
56,428
60%
2.5
nil
0.70%
0.0611
1.4760
0.0414
1,036
25,000
60%
2.85
nil
0.70%
0.1502
1.4760
0.1018
58,427
239,167
Total vested FY2019
2,000,000
100,000
(i) Due to rounding, the total might not precisely reflect the absolute figures obtained by multiplying the number of options by the valuation per
option.
46
For personal use only NOTE 20: SHARE BASED PAYMENTS (cont(cid:146)d)
Share Based Payments Expense
Share based payment expense at 31 December 2019 is comprised as follows:
Issue of 7,500,000 Management Options
Issue of 8,600,000 Noteholder Options
Deferred Consideration Shares to be issued to Corporate Advisors
Shares yet to be issued to third-party service providers (Note 25)
Share option plans
Total expense recognised in profit or loss
Issue of 7,500,000 Broker Options
Total expense recognised in equity
Share option plans (cid:150) capitalised under Intangible assets
2019
US$
-
-
69,335
52,722
59,293
2018
US$
311,814
357,546
69,335
-
269,720
181,350
1,008,415
-
-
-
311,814
311,814
89,501
Total share-based payments expense
181,350
1,409,730
NOTE 21: OPERATING SEGMENTS
Segment Information
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of
Directors (the chief operating decision makers) in assessing performance and in determining the allocation of resources. The
Group(cid:146)s sole operating segment is consistent with the presentation of these consolidated financial statements.
NOTE 22: FINANCIAL INSTRUMENTS
(a) Capital management
The Group(cid:146)s objective when managing capital is to safeguard its ability to continue as a going concern so that it can continue to
provide returns for shareholders and benefits to other stakeholders and to maintain an optimal capital structure to reduce the
cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid, return
capital to shareholders, issue new shares or sell assets to reduce debt.
Given the nature of the business, the Group monitors capital on the basis of current business operations and cash flow
requirements. There were no changes in the Group(cid:146)s approach to capital management during the year.
47
For personal use only NOTE 22: FINANCIAL INSTRUMENTS (cont(cid:146)d)
(b) Categories of financial instruments
Financial assets
Cash and cash equivalents
Other receivables
Financial liabilities
Trade and other payables
Lease liabilities
Borrowings
Other financial liabilities
2019
US$
2018
US$
2,045,612
4,033,829
209,549
121,599
2,255,161
4,155,428
456,345
72,616
168,464
518,634
470,520
-
157,220
557,235
1,216,059
1,184,975
The fair value of the above financial instruments approximates their carrying values.
(c) Financial risk management policies
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note
describes the Group(cid:146)s objectives, policies and processes for managing those risks and the methods used to measure them. Further
quantitative information in respect of those risks is presented throughout these financial statements.
The board has overall responsibility for the determination of the Group(cid:146)s risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the Group(cid:146)s finance function. The Group(cid:146)s risk management policies
and objectives are therefore designed to minimise the potential impacts of those risks on the Group where such impacts may be
material. The board receives financial reports through which it reviews the effectiveness of the processes put in place and the
appropriateness of the objectives and policies it sets. The overall objective of the board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Group(cid:146)s competitiveness and flexibility.
(d) Market risk
Market risk for the Group arises from the use of interest-bearing financial instruments. It is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of changes in interest rate (see (e) below).
(e) Interest rate risk management
The following table illustrates sensitivities to the Group(cid:146)s exposures to changes in interest rates. The table indicates the impact
on how profit and equity values reported at reporting date would have been affected by changes in the relevant risk variable that
management considers to be reasonably possible. These sensitivities assume that the movement in a particular variable is
independent of other variables.
Movement in
Profit
US$
Movement in
Equity
US$
Year ended 31 December 2019
+/-1% in interest rates
20,456
20,456
Year ended 31 December 2018
+/-1% in interest rates
40,338
40,338
48
For personal use only NOTE 22: FINANCIAL INSTRUMENTS (cont(cid:146)d)
(f) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.
The Group has adopted a policy of dealing with creditworthy counterparties and obtaining sufficient collateral, where
appropriate, as a means of mitigating the risk of financial loss from defaults. The Group only transacts with entities that are rated
the equivalent of investment grade and above. This information is supplied by independent rating agencies where available and,
if not available, the Group uses other publicly available information and its own trading records to rate its major customers. The
Group(cid:146)s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions
concluded is spread amongst approved counterparties.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international
credit-rating agencies.
(g) Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its
obligations related to financial liabilities. The Group(cid:146)s approach to managing liquidity is to ensure, as far as possible, that it will
always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group(cid:146)s reputation.
The Group manages liquidity risk by maintaining adequate reserves by continuously monitoring forecast and actual cash flows.
The following are the contractual maturities of financial liabilities based on the actual rates at the reporting date excluding
interest payments:
Interest
rate
Less than
6 months
6-12
months
US$
US$
1-5
years
US$
Over 5
years
US$
Total
contractual
cash flows
US$
456,345
-
-
-
456,345
-
-
-
16,165
16,165
-
72,616
168,464
502,469
743,549
-
-
-
-
-
456,345
72,616
168,464
518,634
1,216,059
Carrying
amount
US$
456,345
72,616
168,464
518,634
1,216,059
2019
Trade and other
payables
Lease liabilities
Borrowings
Other financial liabilities
2018
Trade and other
payables
Borrowings
Other financial liabilities
2.56%
Interest
rate
2.56%
Less than 6
months
6-12
months
US$
US$
1-5
years
US$
Over 5
years
US$
Total
contractual
cash flows
US$
Carrying
amount
US$
470,520
-
-
470,520
-
-
29,870
29,870
-
157,220
527,365
684,585
-
-
-
-
470,520
157,220
557,235
1,184,975
470,520
157,220
557,235
1,184,975
49
For personal use only NOTE 22: FINANCIAL INSTRUMENTS (cont(cid:146)d)
(h) Net fair value of financial assets and liabilities
Fair value estimation
Due to the short-term nature of the receivables and payables, the carrying value approximates fair value.
(i) Foreign currency risk
The currency risk is that risk that the value of financial instruments will fluctuate due to change in foreign exchange rates.
Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that
is not the Company(cid:146)s functional currency. The Company is exposed to foreign exchange risk arising from various currency
exposures primarily with respect to the US Dollar (the functional currency of the subsidiary company), the New Israeli Shekel, the
Australian Dollar (functional currency of the parent company).
NOTE 23: PARENT ENTITY FINANCIAL INFORMATION
The following information of the legal parent HeraMED Limited has been prepared in accordance with Australian Accounting
Standards and the accounting policies as outlined in Note 1.
(a)
Financial Position of HeraMED Limited
ASSETS
Current assets
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Non-current liabilities
TOTAL LIABILITIES
NET ASSETS
SHAREHOLDERS(cid:146) EQUITY
Issued capital
Shares to be issued
Reserves
Accumulated losses
SHAREHOLDERS(cid:146) EQUITY
(b) Statement of profit or loss and other comprehensive income
Loss for the year
Other comprehensive income
Total comprehensive loss
2019
US$
1,064,726
-
1,064,726
53,246
-
53,246
1,011,480
5,965,928
52,722
817,898
(5,825,068)
1,011,480
2018
US$
3,762,906
660,713
4,423,619
83,582
-
83,582
4,340,037
6,234,126
-
677,811
(2,571,900)
4,340,037
(3,253,168)
(2,571,900)
-
-
(3,253,168)
(2,571,900)
(c) Guarantees entered into by HeraMED Limited for the debts of its subsidiary
There are no guarantees entered into by HeraMED Limited.
(d) Contingent liabilities of HeraMED Limited
There were no contingent liabilities as at 31 December 2019 (2018: nil).
(e) Commitments by HeraMED Limited
There were no commitments as at 31 December 2019 (2018: nil).
50
For personal use only NOTE 24: CONTROLLED ENTITIES
The ultimate legal parent entity of the Group is HeraMED Limited, incorporated and domiciled in Australia. The consolidated
financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting
policies described in Note 1.
Controlled entity
Hera Med Ltd
Country of
Incorporation
Israel
Percentage Owned
2019
100%
2018
100%
The proportion of ownership interest is equal to the proportion of voting power held.
NOTE 25: SHARES TO BE ISSUED
As at 31 December 2019, the Company was yet to issue 500,000 ordinary shares at a deemed issue price of A$0.15 per share to
a third party for services rendered to the Company. The issue was subject to shareholders approval which was sought and
obtained at a General Meeting of the Company held on 19 February 2020. The shares were issued subsequent to the year end.
NOTE 26: CONTINGENT LIABILITIES
The Group has no known contingent liabilities as at 31 December 2019 other than a bank guarantee of 66,000 NIS (approximately
US$19,097 at an exchange rate of 3.456 NIS/$US) issued in regard to the office lease in Israel. The Company has provided a cash
deposit with a lien in favour of the bank for the issuance of the bank guarantee (see Note 11). In addition, the Group provided a
cash deposit of 60,000 NIS (approximately US$17,361 at an exchange rate of 3.456 NIS/$US) to secure credit card payments.
NOTE 27: EVENTS AFTER THE REPORTING PERIOD
HeraMED accessed unique pregnancy database to strengthen OrionAI (cid:150) HeraMED(cid:146)s cloud based, machine learning software-as-
a-service (SaaS) platform.
HeraMED appointed US General Manager of Operations to lead the development of a commercial strategy and expedite the
Company(cid:146)s entry into the US market.
Mayo Clinic to initiate a clinical study to evaluate HMD(cid:146)s HeraBEAT Plus solution.
The World Health Organisation announced that the coronavirus (COVID-19) had become a pandemic on 11 March 2020. The
Group has developed policies and procedures to address the health and wellbeing of employees. The timing, extent of the impact
and recovery from COVID-19 on our employees, customers and suppliers is unknown at this stage. The full impact of COVID-19
outbreak continues to evolve as at the date of this report. As such, the Group is unable to estimate the effects of the COVID-19
outbreak on the Group(cid:146)s financial position, liquidity and operations in the 2020 financial year.
There were no other material events after the reporting period other than the above.
NOTE 28: APPROVAL OF FINANCIAL STATEMENTS
The financial statements were approved by the board of directors and authorised for issue on 27 March 2020.
The directors are unaware of any other significant event or circumstance that has arisen since 31 December 2019 that has
significantly affected the Group(cid:146)s operations, results or state of affairs, or may do so in future years other than those disclosed
above.
NOTE 29: CHANGES TO UNAUDITED PRELIMINARY FINANCIAL REPORT
On 27 February 2020, the Group released its unaudited preliminary financial report for the year ended 31 December 2019 which
contained a provision in relation to GST receivable by the Company. Upon finalisation of the audit, other receivables were
increased by US$119,500 to reflect a decision by the Australian Taxation Office ((cid:147)ATO(cid:148)) to reinstate the Company(cid:146)s GST
registration and process all GST credits due and payable to the Company. For avoidance of doubt, the Company was entitled to a
GST credit of US$119,500 as at 31 December 2019. The ATO(cid:146)s decision was communicated to the Company subsequent to the
release of the unaudited preliminary financial report. Net assets of the Group increased by $119,500 and the loss attributable to
members of the Group decreased by US$118,159.
51
For personal use only DIRECTORS(cid:146) DECLARATION
In the Director(cid:146)s opinion:
1.
The consolidated financial statements and notes set out on pages 25 to 51 are in accordance with the
Corporations Act 2001, including:
a)
b)
complying with Australian Accounting Standards, Corporations Regulations 2001 and other mandatory
professional reporting requirements, noting the matters documented in Note 1(a);
giving a true and fair view, the Group(cid:146)s financial position as at 31 December 2019 and of its performance
for the year ended on that date; and
2.
3.
There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
This declaration has been made after receiving the declaration required to be made to the directors in
accordance with Section 295A of the Corporations Act 2001 for the financial year ended 31 December 2019.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the
Directors by:
Mr David Groberman
Chief Executive Officer
Tel Aviv, 27 March 2020
52
For personal use only Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of HeraMED Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of HeraMED Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 31 December 2019, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 31 December 2019 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1(c) in the financial report which describes the events and/or conditions
which give rise to the existence of a material uncertainty that may cast significant doubt about the
group’s ability to continue as a going concern and therefore the group may be unable to realise its
assets and discharge its liabilities in the normal course of business. Our opinion is not modified in
respect of this matter.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian
company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international
BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.
For personal use only Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. In addition to the matter described in the Material uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Accounting of share-based payments
Key audit matter
How the matter was addressed in our audit
During the financial year ended 31 December
2019, the Group issued equity instruments, in the
form of shares and options to eligible employees
and other consultants as detailed in Note 1, Note
19 and Note 20.
The Group performed valuations of shares and
options issued and recorded the related share-
based payment expense or capital raising costs in
accordance with the relevant accounting
standard.
Due to the judgemental estimates used in
determining the fair value of the share-based
payments, we consider the accounting for the
share-based payments to be a key audit matter.
Our audit procedures in respect of this area
included but were not limited to the following:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
Reviewing relevant supporting
documentation to obtain an understanding
of the contractual nature and terms and
conditions of the share-based payment
arrangements;
Reviewing board minutes to assess if new
share-based payments granted during the
year have been accounted for;
Holding discussion with management to
understand the share-based payment
transactions in place;
Reviewing management’s determination of
the fair value of the share-based payments
granted, considering the appropriateness of
the valuation models used and assessing
the valuation inputs, involving our
valuation specialists where considered
necessary;
Assessing management’s determination of
achieving non-market vesting conditions of
the deferred consideration shares on issue;
Assessing the allocation of the share-based
payment expense over management's
expected vesting period; and
Assessing the adequacy of the disclosure in
Note 1, Note 19 and Note 20 in the
financial report.
For personal use only Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 31 December 2019, but does not include
the financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
For personal use only Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 12 to 19 of the directors’ report for the
year ended 31 December 2019.
In our opinion, the Remuneration Report of HeraMED Limited, for the year ended 31 December 2019,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Dean Just
Director
Perth, 27 March 2020
For personal use only ADDITIONAL ASX INFORMATION
The shareholder information set out below was applicable as at 10 March 2020.
As at 10 March 2020, there were 803 holders of Ordinary Fully Paid Shares.
VOTING RIGHTS
The voting rights of the ordinary shares are as follows:
Subject to any rights or restrictions for the time being attached to any shares or class of shares of the Company, each member of
the Company is entitled to receive notice of, attend and vote at a general meeting. Resolutions of members will be decided by a
show of hands unless a poll is demanded. On a show of hands, each eligible voter present has one vote. However, where a person
present at a general meeting represents personally or by proxy, attorney or representation more than one member, on a show
of hands the person is entitled to one vote only despite the number of members the person represents.
On a poll each eligible member has one vote for each fully paid share held.
There are no voting rights attached to any of the options and deferred securities that the Company currently has on issue. Upon
exercise of the options, the shares issued will have the same voting rights as existing ordinary shares.
TWENTY (20) LARGEST SHAREHOLDERS
The names of the twenty largest holders of each class of listed securities are listed below:
Ordinary Fully Paid Shares
Holder Name
Altshuler Shaham Trusts Ltd
Altshuler Shaham Trusts Ltd
Altshuler Shaham Trusts Ltd
Freeman Road Pty Ltd
Altshuler Shaham Trusts Ltd
Etchell Capital Ltd
Altshuler Shaham Trusts Ltd
Chris Ntoumenopoulos
Altshuler Shaham Trusts Ltd
Pula Holdings Pty Ltd
Mr Dominic Virgara
S & S Browne Assets Pty Ltd
Alta Holdings Pty Ltd
Dr Matthew Farrugia
Sobol Capital Pty Ltd
Sharp Holdings Pty Ltd
Altshuler Shaham Trusts Ltd
Martin Corporation NQ Pty Ltd (Martin Corporation Discretionary Trust)
Mr Stephen John Browne & Mrs Suzette Marie Browne
Moshe Cohen
Monex Boom Securities (HK) Ltd
Total
Holding
10,857,385
9,245,418
9,245,418
3,579,032
3,550,421
3,512,500
3,040,774
3,025,000
1,628,126
1,529,000
1,000,000
975,000
960,000
955,229
850,000
747,500
734,007
700,000
677,850
550,000
535,600
57,897,990
% IC
10.47
8.91
8.91
3.45
3.42
3.39
2.93
2.92
1.57
1.43
0.96
0.94
0.93
0.92
0.82
0.72
0.71
0.67
0.65
0.53
0.52
55.83
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For personal use only
SUBSTANTIAL HOLDERS
The names of the substantial shareholders disclosed to the Company as substantial shareholders as at 10 March 2020 are:
Name
Altshuler Shaham Trusts Ltd
Altshuler Shaham Trusts Ltd
Altshuler Shaham Trusts Ltd
No of Shares Held
% of Issued Capital
10,857,385
9,245,418
9,245,418
10.47
8.91
8.91
DISTRIBUTION OF EQUITY SECURITIES
Ordinary Fully Paid Shares
Holding Ranges
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Totals
Holders
Total Units
% Issued Share Capital
7
130
140
390
136
803
357
437,071
1,225,771
16,444,663
85,605,055
103,712,917
0.00
0.42
1.18
15.86
82.54
100.00
Unmarketable Parcels (cid:150) 143 Holders with a total of 469,909 shares, based on the last trading price of $0.086 on 10 March 2020.
RESTRICTED SECURITIES
As at 10 March 2020, the following shares are subject to escrow:
8,277,494 Ordinary Fully Paid Shares escrowed until 5 December 2020
41,567,847 Ordinary Fully Paid Shares escrowed until 12 December 2020
4,022,000 Unlisted Options Expiring 5 December 2021 @ $0.25 escrowed until 12 December 2020
7,500,000 Unlisted Broker Options Expiring 5 December 2021 @ $0.25 escrowed until 12 December 2020
7,500,000 Unlisted Director Options Expiring 5 December 2021 @ $0.25 escrowed until 12 December 2020
UNQUOTED SECURITIES
As at 10 March 2020, the following unquoted securities are on issue:
Unlisted Options Expiring 5 December 2021 @ $0.25 escrowed until 12 December 2020 (cid:150) 16 Holders
Holders with more than 20% - Nil
Unlisted Broker Options Expiring 5 December 2021 @ $0.25 escrowed until 12 December 2020 (cid:150) 14 Holders
Holders with more than 20% - Nil
57
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Unlisted Director Options Expiring 5 December 2021 @ $0.25 escrowed until 12 December 2020 (cid:150) 5 Holders
Holders with more than 20%
Holder Name
Altshuler Shaham Trusts Ltd
Altshuler Shaham Trusts Ltd
Holding
3,187,500
3,187,500
% IC
42.5
42.5
Unlisted Options Expiring 5 December 2021 @ $0.00002 escrowed until 12 December 2020 (cid:150) 2 Holders
Holders with more than 20%
Holder Name
Altshuler Shaham Trusts Ltd
Altshuler Shaham Trusts Ltd
Holding
% IC
463,752
463,752
50
50
Unlisted Options Expiring 5 December 2021 @ $0.00002 (cid:150) 9 Holders
Holders with more than 20% - Nil
Unlisted Options Expiring 5 December 2021 @ $0.25 (cid:150) 39 Holders
Holders with more than 20%
Holder Name
Freeman Road Pty Ltd
Unlisted Options Expiring 31 December 2021 @ $0.25 (cid:150) 2 Holders
Holders with more than 20%
Holder Name
Pointciana Pty Ltd
Ratdog Pty Ltd
Unlisted Options Expiring 19 February 2020 @ $0.25 (cid:150) 2 Holders
Holders with more than 20%
Holder Name
Etchell Capital Ltd
Sobol Capital Pty Ltd
Unlisted Options Expiring 15 August 2024 @ $0.165 (cid:150) 4 Holders
Holders with more than 20%
Holder Name
Altshuler Shaham Trusts Ltd
Unlisted Options Expiring 15 August 2024 @ US$0.01 (cid:150) 1 Holder
Holders with more than 20%
Holder Name
Sivan Sadan
Holding
1,200,000
% IC
26.21
Holding
1,500,000
500,000
% IC
75
25
Holding
1,125,000
1,125,000
% IC
50
50
Holding
% IC
825,000
67.35
Holding
574,000
% IC
100
58
For personal use only
ON-MARKET BUY BACK
There is currently no on-market buyback program.
ASX LISTING RULE 4.10.19
The Company has used its cash and assets in a form readily convertible to cash that it had at the time of listing of the
Company(cid:146)s securities to quotation in a way consistent with its business objectives.
59
For personal use only