Table of Contents
Table of Contents ......................................................................................................................................................... 2
Corporate Directory ..................................................................................................................................................... 3
Letter from the Chairman ............................................................................................................................................ 4
2019 Highlights ............................................................................................................................................................ 6
Directors’ Report ......................................................................................................................................................... 8
Remuneration Report (audited) ................................................................................................................................ 15
Auditor’s Independence Declaration ......................................................................................................................... 24
Consolidated Statement of Profit and Loss and Other Comprehensive Income ....................................................... 25
Consolidated Statement of Financial Position ........................................................................................................... 26
Consolidated Statement of Changes in Equity .......................................................................................................... 27
Consolidated Statement of Cash Flows ..................................................................................................................... 28
Notes to the Consolidated Financial Statements…………………………………………………………………………………………………. 29
Directors’ Declaration ................................................................................................................................................ 54
Independent Auditor’s Report ................................................................................................................................... 55
Corporate Governance Statement ............................................................................................................................ 58
Corporate Directory
Imagion Biosystems Annual Report
31 December 2019
Corporate Directory
DIRECTORS
Mr Robert Romeo Proulx
Mr Michael John Harsh
Mr David Gerald Ludvigson
Ms Jovanka Naumoska
Mr Mark Gerald Van Asten
Ms Bronwyn Le Grice
Dr John Hazle
COMPANY SECRETARY
Ms Jovanka Naumoska
Executive Chairman/President
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Resigned 31 March 2020
Resigned 27 June 2019
REGISTERED OFFICE
c/o- K&L Gates,
Level 25, 525 Collins Street
MELBOURNE VIC 3000 AUSTRALIA
PRINCIPAL PLACE OF BUSINESS
10355 Science Center Drive
Suite 210
SAN DIEGO CA 92121 USA
SHARE REGISTER
Boardroom Pty Limited
Level 12, 225 George Street
SYDNEY NSW 2000 AUSTRALIA
AUDITOR
RSM Australia Partners
Level 21, 55 Collins Street
MELBOURNE VIC 3000 AUSTRALIA
AUSTRALIAN LEGAL ADVISOR
Holding Redlich
Level 8, 555 Bourke Street
MELBOURNE VIC 3000 AUSTRALIA
UNITED STATES LEGAL ADVISOR
The Grafe Law Office, PC
PO BOX 2689
Corrales, NM 87048
UNITED STATES OF AMERICA
STOCK EXCHANGE
Imagion Biosystems Limited shares are list on the Australian Securities Exchange (ASX Code: IBX).
The directors present their report, together with the financial statements, on the consolidated entity (referred to
hereafter as the 'consolidated entity') consisting of Imagion Biosystems Limited (referred to hereafter as the
'Company' or 'parent entity' or ‘Imagion’) and the entities it controlled at the end of, or during, the year ended 31
December 2019.
3
Letter from the Chairman
Imagion Biosystems Annual Report
31 December 2019
Letter from the Chairman
Dear Shareholders,
Our focus in 2019 has been on preparing ourselves to enter the clinical phase of development, one of the most
important milestones in our company’s history. This new phase will involve advancing our novel MagSense™
technology into an initial clinical study for our first commercial application - the detection and staging of HER2
metastatic breast cancer.
Over the past year we have made significant progress in key technical areas of the program including successfully
completing a required toxicology study and preparations to commence small scale GMP manufacturing of our
unique MagSense™ nanoparticle technology. This progress along with our ongoing R&D work where we have
generated additional pre-clinical data continues to reinforce our confidence that this technology can transform
medical imaging and lead to earlier detection of cancer and other diseases without the need for invasive
procedures or the use of radiation.
The transformative potential of our technology has been recognized by the US Food and Drug Administration
(FDA) which granted us the Breakthrough Device designation. This designation expedites and improves
communication with the agency, facilitating our dialog as we work towards receiving the necessary approvals to
commence our first human study.
At the prestigious World Molecular Imaging Conference, we presented data that demonstrated how the
MagSense™ nanoparticles could be used as an MR imaging agent. This creates an additional commercial
opportunity for the company’s targeted nanoparticles in diagnostic imaging and the ability to leverage off the large
installed base of MRI machines. So, while HER2 metastatic breast cancer is our first indication, we see an
excellent opportunity to expand into other diseases and modes of imaging using our nanoparticles.
We have established a Scientific Advisory Board, bringing together some of the most highly respected minds in
oncology and medical imaging in the United States and Australia. The experience of this board will be instrumental
in accelerating the path to commercialisation and expanding into additional disease indications. The pedigree of
industry, clinical and academic experts who have leant their support to Imagion, via Board and Advisory roles, is
testament to the potential of our novel technology.
During the year, we received our first rebate of $2 million in R&D tax incentives from the Australian Taxation Office
and I am pleased to report that we have already received an additional $2.2 million for the 2019 financial year. We
continue to endeavor to be fiscally responsible, taking prudent measures to preserve cash, including a staff
reduction part way through the year to better utilize our resources to achieve our clinical path. The company also
4
Letter from the Chairman
Imagion Biosystems Annual Report
31 December 2019
generated $559K in income from the sale of our nanoparticles to third parties researching biomedical applications
of nanoparticle technologies. These factors contributed to a reduction in net operating cash outflow from $6.6
million in 2018 to $4.2 million in 2019.
I’d like to thank our shareholders for their support of our capital raising activities, including the successful raising of
$3.3 million after expenses at the end of 2019, and our recent oversubscribed Rights Issue and Follow-on
Placement in April 2020, which raised $2.5 million. The Board believed it was prudent and in the best interest of
shareholders to act quickly given the uncertainties around widespread effects of COVID-19 and the impact on
global sharemarkets. These additional funds have strengthened our balance sheet ensuring we can continue to
move forward with R&D activities and our plans for our first human clinical study.
It has been a transformative year as we have successfully prepared ourselves to advance our novel imaging
technology to the clinical phase. We are off to a good start in the first quarter of this year and we look forward to
updating the market as we continue our progress.
On behalf of the Board and all Imagion Biosystems employees, we thank you for your support and look forward to
delivering on our vision in 2020.
Robert Proulx
Executive Chairman
Imagion Biosystems Limited
“It has been a transformative year as we have
successfully prepared ourselves to advance to the
clinical phase of development for our novel imaging
technology”
Robert Proulx
Executive Chairman
5
2019 Highlights
Imagion Biosystems Annual Report
31 December 2019
2019 Highlights
March 2019
Imagion receives US patent
The Company was granted a US patent entitled, “Methods and Apparatuses for the localization and
treatment of disease such as cancer”. This patent is a continuation of Imagion’s core patent estate
extending the use of its technology for therapeutic purposes.
April 2019
Imagion receives commercial order of nanoparticles for cancer treatment
The Company received an extended purchase order from NewPhase Ltd., an Israeli biotechnology
company developing cancer treatments, to supply nanoparticles for the remainder of 2019 to be
used in the NewPhase product. NewPhase is developing a proprietary cancer therapy based on
hyperthermia, the principle of killing cancer cells by heating them.
May 2019
Imagion completes toxicology study
The Company successfully completed an industry standard GLP-compliant toxicology study in May
2019, providing evidence of the safety profile of the Company’s lead diagnostic nanoparticle
formulation. These study data are an important part of the regulatory and clinical applications
needed for first-in-human testing. The study was completed on time and no observable adverse
effects were reported.
July 2019
Imagion receives R&D Advanced Overseas Finding and A$2 million in R&D tax incentives
In May the Company successfully applied for an Advance/Overseas Finding in relation to its
research and development activities for a new superparamagnetic based imaging technology for
detection of HER2 breast cancers. In July, Imagion received R&D incentive funds of A$2M (in
respect of the financial year ended 31 December 2018). The cash rebate provided significant non-
dilutive funding to support Imagion.
July 2019
Imagion Biosystems receives FDA Breakthrough Device Designation
Imagion received notification from the US Food and Drug Administration (FDA) that the MagSense
System and Test for staging HER2 breast cancer had been granted Breakthrough Device
designation. The Breakthrough Device Program is designed to expedite and improve
communications between a device manufacturer and the agency during device development,
throughout the review process and provides priority review.
August 2019
Imagion initiates regulatory communications
The Company filed a Pre-Submission with the U.S. Food and Drug Administration (FDA), the first
step is gaining approval to commence human studies.
October 2019
Imagion establishes Scientific Advisory Board
Chaired by Dr John Hazle, Chair of the Department of Imaging Physics at the MD Anderson Cancer
Center, the Company’s Scientific Advisory Board brings together a group of highly qualified experts
in disciplines ranging from oncology, medical imaging, nanotechnology and clinical trial design.
November 2019
Imagion completes a Pro-Rata Renounceable Rights Issue
The Company initiated a renounceable rights issue in October and subsequently closed the offering
in November, raising A$3.6 million. Proceeds from the $0.02 per share offer support key activities
including the scale-up of manufacturing of the nanoparticles to be used in a first human study.
6
2019 Highlights
Imagion Biosystems Annual Report
31 December 2019
Highlights subsequent to year end
January 2020
Imagion appoints Vice President Clinical and Regulatory Affairs
The Company announced the appointment of Dr. Oliver Steinbach as Vice President of Clinical and
Regulatory Affairs, a key appointment as the Company transitions from preclinical to clinical
studies.
April 2020
Imagion receives A$2.2 million in R&D tax incentives
The Company announced the receipt of A$2.2 million in tax incentive from the Australian Tax Office
for the year ended December 31, 2019, bringing the total non-dilutive funding to A$4.2 million in
less than 12 months.
April 2020
Imagion completes a Pro-Rata Renounceable Rights Issue
The Company initiated a renounceable rights issue in March and subsequently closed the offering
in April, raising A$2.5 million. The partially underwritten $0.01 per share offer was over-subscribed.
7
Directors’ Report
Imagion Biosystems Annual Report
31 December 2019
Directors’ Report
Directors
The following persons were directors of Imagion Biosystems Limited during the whole of the financial year and up to
the date of this report, unless otherwise stated:
MR ROBERT ROMEO PROULX
Executive Chairman/President
Bob has been President of Imagion Biosystems since February 2015 and has led the company
through the recent restructuring and recapitalization efforts. Previous employment experience
includes Pres/GM for Silicon Biosystems and a career in marketing and sales management with
more than 25 years’ experience in the computer, life science and medical diagnostics industries,
e.g. Vice President Marketing and Sales for Nanogen, Inc., Senior Vice President of Marketing and
Business Development at Gene Logic, and General Manager, Life Sciences at IGEN International,
Inc. Mr. Proulx holds an M.A. and B.A. from The State University of New York at Albany and an
Executive MBA from the Penn State Smeal College of Business.
MR MICHAEL JOHN HARSH
Non-Executive Director
Mike has over 36 years of experience in healthcare technology, focused on diagnostic imaging
having served as Vice President and Chief Technology Officer for GE Healthcare. As the Global
Technology Leader of Imaging Technologies at GE Global Research, he led the research for X-
Ray, CT, MRI, Ultrasound, Nuclear Medicine, PET and Optical Imaging, and the research
associated with computer visualization/image analysis and superconducting systems. In 2008 Mike
was elected to the American Institute for Medical and Biological Engineering (AIMBE) College of
Fellows, for his significant contributions to the medical and biological engineering field. Mr. Harsh
is a co-founder of Terapede Systems.
MR DAVID GERALD LUDVIGSON
Non-Executive Director
David is currently CEO at Nanomix, a point-of-care diagnostic medical device company. David is a
financial and operating executive with over 35 years of international experience in life sciences and
technology companies including IDEC Pharmaceuticals, Matrix Pharmaceutical, Nanogen, and
MIPS Computer Systems. His experience over 15 years in the diagnostics arena has led
numerous new product efforts from concept to market launch. Mr. Ludvigson has concluded many
successful strategic transactions including multiple acquisitions, corporate partnerships,
technology and intellectual property licensing agreements, and OEM relationships and his
financing experience includes venture capital, corporate, mezzanine, lease, bank credit line, LBO,
IPO and secondary public sources.
MS JOVANKA NAUMOSKA
Non-Executive Director
Jovanka is an Australian legal practitioner with expertise in intellectual property law, corporate law,
and corporate governance. She holds the Officer role of Corporate Secretary for Imagion
Biosystems Ltd, and serves Australian scientific development organizations in an expert capacity
on matters relating to corporate law, business operations, intellectual property development, and
regulatory compliance.
8
Directors’ Report
Imagion Biosystems Annual Report
31 December 2019
MR MARK GERALD VAN ASTEN
Non-Executive Director
Mark has over 30 years of experience in the medical diagnostics and life science industry. Much of
this time has been specific to international business development, strategic planning and
introduction of new technology. Through Diagnostic Technology, a company he founded, he has
been responsible for the development and introduction of a number of innovative technology
platforms and technologies into mainstream healthcare use, including HPV DNA testing for
cervical cancer screening and the molecular monitoring for both viral infections and cancer
treatments. He holds an Adjunct Senior Lectures position at the School of Biotechnology and
Biomolecular Science, University of NSW where he has collaborated on a number of research
projects related to biosynthetic pathways in bacteria.
MS BRONWYN LE GRICE
Non-Executive Director, resigned 31 March 2020
Ms Le Grice has more than 15 years of experience in healthcare and technology markets spanning
venture capital, capital raising and corporate governance for Australian listed companies and non-
profit organisations. She is currently Managing Director of ANDHealth, a unique industry-led non-
profit organisation focused on strengthening the Australian digital health ecosystem and de-risking
innovations in digital health.
Prior to founding ANDHealth, Ms Le Grice was an Investment Director with leading Australian
healthcare venture capital firm BioScience Managers, where she was responsible for managing
significant transactions in the health technology and digital health sectors, resulting in more than
A$65m of private and public equity raisings. This included IPOs on the Australian Securities
Exchange and the UK Alternative Investments Market, in addition to participating in deal
origination, due diligence and negotiation for two funds totaling A$96m under management.
DR JOHN HAZLE
Non-Executive Director, resigned 27 June 2019
John Hazle, Ph.D. is Professor and Chair of the Department of Imaging Physics at one of the
world’s largest cancer research and treatment centers. In his role as the Chairman of the Scientific
Advisory Board, John represents the interests and professional requirements of an
uncompromising customer who buys and uses advanced diagnostic instrumentation on a daily
basis. Dr. Hazle is a medical physicist with over 25 years of experience. He is board-certified and
licensed in Texas for both therapeutic and diagnostic medical physics. His research interests
include image-guided therapy, pre- clinical imaging, and novel early detection technologies. Dr.
Hazle is highly sought-after as an academic and business collaborator, and he services on multiple
institutional committees, engages as a medical imaging expert with industry partners, and is a
reviewer for six peer-reviewed scientific journals. Dr. Hazle holds the Barnard W. Biedenharn Chair
in Cancer Research and has a faculty appointment with the University of Texas Graduate School
of Biomedical Sciences. Following Bachelor’s and Master’s degree studies at the University of
Kentucky, Dr. Hazle earned his PhD degree in Biophysics from the University of Texas Health
Science Center at Houston.
Former Directors
Principal activities
During the financial year the principal continuing activities of the consolidated entity consisted of:
Nanotechnology;
Biotechnology;
Cancer Diagnostics; and
Superparamagnetic Relaxometry.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
9
Directors’ Report
Imagion Biosystems Annual Report
31 December 2019
Review of operations
Revenue and Other Income comprised interest income, and sales of nanoparticles. The Company markets
nanoparticles to customers through its website and expects to continue to do so, though revenue from this activity is
not material and not expected to be material in the future.
Operating loss after tax of $3,432,506 (2018: $8,340,013) was materially in line with projections.
In 2019, the Company successfully raised $3,628,256 (before costs) via rights issue to fund manufacturing of
nanoparticle material and to fund certain other costs related to plans for a first-in-human study.
Significant changes in the state of affairs
On 24 June 2019, 900,000 performance shares were converted into ordinary shares. The performance shares were
issued to current and previous directors.
Dr John Hazle resigned as a non-executive director on 27 June 2019.
Following Dr Hazle’s resignation as a director, on 14 October 2019, the consolidated entity established its Scientific
Advisory Board and which will be chaired by Dr Hazle. The collective experience of this advisory board will be
valuable in helping to further de-risk the MagSense™ program and accelerate the path to commercialisation following
successful completion of the first clinical milestone.
In July 2019, the consolidated entity received $2,057,286 in R&D tax incentives from the Australian Taxation Office.
The consolidated entity completed a rights issue that ultimately raised $3,628,256 (before costs) on 26 November
2019 through a non-renounceable rights issue of 181,412,807 shares at $0.02 to existing shareholders, sophisticated
and professional investors.
As part of the costs of the capital raising, the Company issued 6,000,000 options to the lead manager on 26
November 2019. These options vested immediately at a strike price of $0.05 and expire 24 months from the date of
issue.
10
Directors’ Report
Imagion Biosystems Annual Report
31 December 2019
Matters subsequent to the end of the financial year
On 25 March 2020, the company announced that they will issue up to 204,512,879 fully paid ordinary shares as part
of a rights issue. Shareholders will be offered two new shares for every five shares held at 30 March 2020. With
every new share, shareholders will receive a free attaching new option. New options will have an exercise price of
3.0 cents and term of three years. The oversubscribed offer was successfully completed on 28 April 2020, raising
$2.5 million inclusive of a follow-on placement to accommodate some of the excess demand.
As of the date of this report, Management is monitoring the potential impact of the COVID 19 pandemic and
assessing the potential for delays in the initiation of the study.
Likely developments and expected results of operations
Management expects spending to remain constant in future periods except for contracts and collaborations
agreements to advance our progress toward human trials. These agreements would include manufacturing for our
formulated nanoparticle, design and prototype production of our instrument, and clinical consultants among other
things.
Environmental Regulation
The consolidated entity is not subject to any significant environment regulation under Australian Commonwealth or
State Law.
Information on Directors
Name:
Title:
Qualifications:
Experience & Expertise:
Other Current Directorships:
Former Directorships (last 3 years):
Membership of Committees
Interest in Shares:
Interest in Options:
Interest in Rights:
Contractual rights to Shares:
device
through
products
development
Mr Robert Romeo Proulx
Executive Chairman/President
- Master of Arts and Bachelor of Arts, The State University of
New York at Albany;
- Executive Master of Business Administration, Penn State
Smeal College of Business.
Robert has over 25 years’ experience bringing life science and
and
medical
commercialisation and joined the predecessor company, Senior
Scientific as President and Chief Operating Officer.
Quantapore, Inc.
PGXL Diagnostics Laboratories, Inc.
(2009 – 2017)
None
705,000 Shares
176,250 Options
8,700,000 performance rights
8,700,000 performance rights which are subject to ASX escrow
restrictions
from official quotation. The
Performance rights are issued under the company’s long-term
incentive plan and will vest into one ordinary share each subject
to achievement of prescribed performance conditions.
for 36 months
11
Directors’ Report
Imagion Biosystems Annual Report
31 December 2019
Information on Directors(continued)
Name:
Title:
Qualifications:
Experience & Expertise:
Other Current Directorships:
Former Directorships (last 3 years):
Membership of Committees
Interest in Shares:
Interest in Options:
Interest in Rights:
Contractual rights to Shares:
Name:
Title:
Qualifications:
Experience & Expertise:
Other Current Directorships:
Former Directorships (last 3 years):
Membership of Committees
Interest in Shares:
Interest in Options:
Interest in Rights:
Contractual rights to Shares:
Mr Michael John Harsh
Non-Executive Director
- Bachelor’s degree in Electrical Engineering, Marquette
University
With over 36 years’ service to GE, mostly with GE Healthcare on
his résumé, Michael Harsh is extraordinarily fluent in the complex
processes of transforming high-potential platform technologies
into successful medical diagnostic products.
ENDRA Life Sciences (2016 – present);
NociMed (2019 – present);
EmOpti, Inc. (2015 – present);
FloDesign (2015 – 2019)
Audit and Risk
150,000 Shares
Nil
50,000 performance rights
50,000 Performance Rights each will automatically vest into one
Share on the vesting date of 6 June 2020.
Mr David Gerald Ludvigson
Non-Executive Director
- Bachelor of Science in Accounting, University of Illinois
- Masters in Accounting Science, University of Illinois.
David is President and CEO of Nanomix, Inc, a mobile diagnostics
company. Previously, David held executive leadership positions
with Nanogen, Matrix Pharmaceutical, IDEC Pharmaceuticals,
MIPS Computer Systems, and other high-tech companies. He
began his career at Price Waterhouse.
China Stem Cells Ltd (2010-present);
Nanōmix Inc. (2014-present).
Nil
Audit and Risk Committee
300,000 Shares
75,000 Options
50,000 performance rights
50,000 Performance Rights each will automatically vest into one
Share on the vesting date of 6 June 2020.
12
Directors’ Report
Imagion Biosystems Annual Report
31 December 2019
Information on Directors(continued)
Name:
Title:
Qualifications:
Experience & Expertise:
Other Current Directorships:
Former Directorships (last 3 years):
Membership of Committees
Interest in Shares:
Interest in Options:
Interest in Rights:
Contractual rights to Shares:
Name:
Title:
Qualifications:
Experience & Expertise:
Other Current Directorships:
Former Directorships (last 3 years):
Membership of Committees
Interest in Shares:
Interest in Options:
Interest in Rights:
Contractual rights to Shares:
Ms Jovanka Naumoska
Non-Executive Director
- Bachelor of Science degree, University of Wollongong;
- Bachelor of Law degree and the Graduate Diploma in Legal
Practice, University of Wollongong;
- Graduate Diploma in Applied Corporate Governance,
Governance Institute of Australia.
Jovanka Naumoska is an Australian-qualified corporate lawyer
with board-level experience in legal issues pertaining to medical
imaging technology. Jovanka has served as Senior Corporate
Lawyer and Policy Advisor for Australian Nuclear Science and
Technology Organisation (ANSTO), and currently holds the
position of Manager, Business Excellence.
Security Matters Limited
Nil
Remuneration and Nomination Committee
150,000 Shares
Nil
50,000 performance rights
50,000 Performance Rights each will automatically vest into one
Share on the vesting date of 6 June 2020.
Mark Gerald Van Asten
Non-Executive Director
Bachelor of Science, University of New South Wales
As the Managing Director and founder of Diagnostic Technology
Pty Ltd, Mark has been responsible for the development,
introduction, and mainstream healthcare adoption of technologies
throughout Australia and Asia. Mark has also held several director-
level business development positions with US and Australian
diagnostics corporations.
Nil
Cimtech Ltd
Audit and Risk, Remuneration and Nomination
300,000 Shares
75,000 Options
50,000 performance rights
50,000 Performance Rights each will automatically vest into one
Share on the vesting date of 6 June 2020.
13
Information on Directors(continued)
Name:
Title:
Qualifications:
Experience & Expertise:
Other Current Directorships:
Former Directorships (last 3 years):
Membership of Committees
Interest in Shares:
Interest in Options:
Interest in Rights:
Contractual rights to Shares:
Directors’ Report
Imagion Biosystems Annual Report
31 December 2019
the role of
Ms Bronwyn Le Grice (Resigned 31 March 2020)
Non-Executive Director
- Master’s Degree, Commercial Law University of Melbourne;
- Bachelor’s Degree, Communications, Marketing, General
Management, Business Law and Human Resources The
University of Western Australia.
Bronwyn has over 15 years senior executive experience in health
technology spanning venture capital, transaction management,
capital raising, corporate development, investor relations and
industry advocacy.
She is currently Founder & CEO of ANDHealth, providing
Australia’s only accelerator programs focused specifically on de-
risking and commercialising technologies in digital health.
Previously Bronwyn held
Investment Director
BioScience Managers and has advised both public and private
companies in Australia and New Zealand on deal preparation,
structuring, execution and investor engagement.
Bronwyn is a Member of Women on Boards and the Australian
Institute of Company Directors. In addition, she holds a number
of advisory roles, including the RMIT University Health and
BioMedical Sector Expert Research Advisory Group, Swinburne
University
Innovation Precinct Advisory Board, La Trobe
University Digital Health Advisory Committee, PCH Alliance
Global Innovation Task Force and Australia New Zealand
Leadership Forum Health Technologies Sector Advisory Group.
ANDHealth Limited
None
None
Nil
Nil
150,000 performance rights
150,000 Performance Rights each will automatically vest into
one Share on the vesting date of 26 April 2020.
Other current directorships quoted above are current directorships for listed entities only and excludes directorships
of all other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships of all other types of entities, unless otherwise stated.
Company secretary
Ms Jovanka Naumoska has held the role of Company Secretary since 6 December 2016. She holds a Graduate
Diploma in Applied Corporate Governance from the Governance Institute of Australia as well as Bachelor of Science
degree from the University of Wollongong, Bachelor of Law degree and the Graduate Diploma in Legal Practice, also
from the University of Wollongong.
14
Directors’ Report
Imagion Biosystems Annual Report
31 December 2019
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') and of each Board committee held
during the year ended 31 December 2019, and the number of meetings attended by each director were:
Full Board Audit & Risk Management
Committee
Remuneration &
Nomination Committee
Number of
meetings
eligible to
attend
8
8
8
8
8
4
8
Attended
8
7
5
8
7
4
8
Number of
meetings
eligible to
attend
-
2
2
-
2
-
-
Attended
-
2
2
-
2
-
-
Number of
meetings
eligible to
attend
-
-
-
-
-
-
-
Attended
-
-
-
-
-
-
-
Mr Robert Romeo Proulx
Mr Michael John Harsh
Mr David Gerald Ludvigson
Ms Jovanka Naumoska
Mr Mark Gerald Van Asten
Dr. John Hazle*
Ms Bronwyn Le Grice
*resigned on 27 June 2019
Remuneration Report (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated
entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
●
●
●
●
●
●
principles used to determine the nature and amount of remuneration
details of remuneration
service agreements
share-based compensation
additional information
additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's executive reward framework is to ensure reward for performance is
competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement
of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best
practice for the delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the
following key criteria for good reward governance practices:
●
●
●
●
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
The Board has determined the remuneration arrangements for the directors and executives with the appointment of
the Nomination and Remuneration Committee they will be responsible for determining and reviewing remuneration
arrangements for its directors and executives.
15
Remuneration Report (audited)
Imagion Biosystems Annual Report
31 December 2019
Principles used to determine the nature and amount of remuneration (continued)
The performance of the consolidated entity depends on the quality of its directors and executives. The remuneration
philosophy is to attract, motivate and retain high performance and high-quality personnel.
The reward framework is designed to align executive reward to shareholders' interests. The Board have considered
that it should seek to enhance shareholders' interests by:
●
●
having economic profit as a core component of plan design
focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and
delivering constant or increasing return on assets as well as focusing the executive on key non-financial drivers
of value
attracting and retaining high calibre executives
●
Additionally, the reward framework should seek to enhance executives' interests by:
●
●
●
rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth
providing a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive director and executive
director remuneration is separate.
Non-executive director’s remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive
directors' fees and payments are reviewed annually by the Board. The Board may, from time to time, receive advice
from independent remuneration consultants to ensure non-executive directors' fees and payments are appropriate
and in line with the market.
Shareholders approve the maximum aggregate remuneration for non-executive directors at the Annual General
Meeting on 31 May 2019. The Board recommends the actual payments to directors and shareholders are responsible
for ratifying any recommendations, if appropriate. ASX listing rules require the aggregate non-executive director’s
remuneration be determined periodically by a general meeting. The aggregate approved remuneration for non-
executive directors is $250,000.
Executive remuneration
The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of
remuneration which has both fixed and variable components.
The executive remuneration and reward framework has four components:
●
●
●
●
●
base pay and non-monetary benefits
short-term performance incentives
share-based payments
health care benefits
other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary and non-monetary benefits, are reviewed annually by the Nomination
and Remuneration Committee based on individual and business unit performance, the overall performance of the
consolidated entity and comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the consolidated entity and provides additional value to the
executive.
The short-term incentives ('STI') program is designed to align the targets of the business units with the performance
hurdles of executives. STI payments are granted to executives based on specific annual targets and key performance
indicators ('KPI's') being achieved.
16
Remuneration Report (audited)
Imagion Biosystems Annual Report
31 December 2019
Principles used to determine the nature and amount of remuneration (continued)
The long-term incentives ('LTI') include share-based payments. Shares are awarded to executives over a period of
three years based on long-term incentive measures. These include increase in shareholders’ value relative to the
entire market and the increase compared to the consolidated entity's direct competitors.
Consolidated entity performance and link to remuneration
Remuneration for certain individuals is directly linked to the performance of the consolidated entity. A portion of cash
bonus and incentive payments are dependent on defined earnings per share targets being met. The remaining
portion of the cash bonus and incentive payments are at the discretion of the Nomination and Remuneration
Committee.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following
tables.
The key management personnel of the consolidated entity consisted of the following directors of Imagion Biosystems
Limited:
Executive Directors:
Robert Romeo Proulx – Executive Chairman/President
Other Key Management:
Brian Conn – Chief Financial Officer
Details of Remuneration
Short Term Benefits
2019
Non-Executive Directors
Mr Michael John Harsh
Mr David Gerald Ludvigson
Ms Jovanka Naumoska
Mr Mark Gerald Van Asten
Ms Bronwyn Le Grice
Dr John Hazle *
Executive Directors
Robert Romeo Proulx
Other Key Management
Brian Conn
Total
Cash
Salary &
Fees
$
20,000
20,000
20,000
20,000
25,000
10,000
399,440
209,093
723,533
Cash
Bonus
Non-
Monetary
$
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
Share-Based Payments
Equity-
settled
options
$
Equity-
settled
shares
$
9,208
9,208
9,208
9,208
4,476
7,800
-
-
-
-
-
-
Total
$
29,208
29,208
29,208
29,208
29,476
17,800
(939,600)
-
(540,160)
(183,600)
16,129
41,622
(1,074,092)
16,129
(334,430)
*
Represents remuneration from 1 January 2019 to 27 June 2019.
Due to the reversal of performance rights as a result of reassessment of probabilities of performance milestone
achievement, the share-based payments for Robert Romeo Proulx and Brian Conn is negative for the year ended
31 December 2019.
17
Remuneration Report (audited)
Imagion Biosystems Annual Report
31 December 2019
Details of Remuneration (continued)
Short Term Benefits
2018
Non-Executive Directors
Mr Peter Di Chiara*
Mr Michael John Harsh
Mr David Gerald Ludvigson
Ms Jovanka Naumoska
Mr Mark Gerald Van Asten
Ms Bronwyn Le Grice**
Dr John Hazle***
Executive Directors
Robert Romeo Proulx
Other Key Management
Giulio Paciotti****
Brian Conn
Total
Cash
Salary &
Fees
$
2,576
12,500
12,500
12,500
12,500
8,333
12,500
347,942
272,000
200,480
893,831
Cash
Bonus
Non-
Monetary
$
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
Share-Based Payments
Equity-
settled
options
$
Equity-
settled
shares
$
18,319
11,315
11,315
11,315
11,315
2,531
10,519
610,096
(64,386)
119,214
-
-
-
-
-
-
-
-
-
-
Total
$
20,895
23,815
23,815
23,815
23,815
10,864
23,019
958,038
207,614
319,694
741,553
- 1,635,384
*
**
***
****
Represents remuneration from 1 January 2018 to 26 April 2018.
Represents remuneration from 26 April 2018 to 31 December 2018.
Represents remuneration from 30 July 2018 to 31 December 2018.
Represents remuneration from 1 January 2018 to 1 July 2018.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Fixed Remuneration
2019
2018
At Risk - STI
At Risk - LTI
2019
2018
2019
2018
Non-Executive Directors
Mr Peter Di Chiara*
Mr Michael John Harsh
Mr David Gerald Ludvigson
Ms Jovanka Naumoska
Mr Mark Gerald Van Asten
Ms Bronwyn Le Grice**
Dr John Hazle***
Executive Directors
Robert Romeo Proulx
Other Key Management
Giulio Paciotti****
Brian Conn
-
68%
68%
68%
68%
85%
56%
12%
52%
52%
52%
52%
77%
54%
(74%)
36%
-
502%
131%
63%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32%
32%
32%
32%
15%
44%
88%
48%
48%
48%
48%
23%
46%
174%
64%
-
(402%)
(31%)
37%
*
**
***
****
Represents remuneration from 1 January 2018 to 26 April 2018.
Represents remuneration from 26 April 2018 to 31 December 2018.
Represents remuneration from 30 July 2018 to 31 December 2018 and remuneration from 1 January 2019
to 27 June 2019.
Represents remuneration from 1 January 2018 to 1 July 2018.
18
Remuneration Report (audited)
Imagion Biosystems Annual Report
31 December 2019
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:
Name:
Title:
Agreement Commenced
Term of Agreement
Details
Name:
Title:
Agreement Commenced
Term of Agreement
Details
Mr Robert Romeo Proulx
Executive Chairman/President
1 May 2017
3 years, unless extended by mutual agreement
-
-
-
Base salary of $US240,000 per annum, to be
the Nomination and
reviewed annually by
Remuneration Committee;
Entitled to up to 8,700,000 Shares under the Long-
Term Incentive Plan (subject to certain milestones
being met) as an initial grant upon Listing;
12 months termination notice by either party.
Brian Conn
Chief Financial Officer
1 May 2017
3 years, unless extended by mutual agreement
-
-
-
-
Base salary of $US120,000 per annum, to be
reviewed annually by
the Nomination and
Remuneration Committee;
Entitled to up to 1,700,000 Shares under the Long-
Term Incentive Plan (subject to certain milestones
being met) as an initial grant upon Listing;
Entitled to up to 2,000,000 Options under the Long
Terms Incentive Plan;
6 months termination notice by either party.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of Shares
On 24 June 2019, 900,000 rights were converted into ordinary shares to directors.
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key
management personnel in this financial year or future reporting years are as follows:
Name
Number of
Options
granted
Grant date
Vesting date
and
Exercisable
Date
Expiry date
Exercise
price $
Fair value per
right at grant
date
$
Mr Brian Conn
24-Jun-19
Options granted carry no dividend or voting rights.
2,000,000
24-Jun-19
24-Jun-24
0.028
0.011
19
Remuneration Report (audited)
Imagion Biosystems Annual Report
31 December 2019
Share-based compensation (continued)
Performance Rights
The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of Directors
and other key management personnel in this financial year or future reporting are as follows:
Name
Mr Robert Romeo Proulx
Mr Michael John Harsh
Mr David Gerald Ludvigson
Ms Jovanka Naumoska
Ms Bronwyn Le Grice
Mr Mark Gerald Van Asten
Mr Brian Conn
Number of
rights
granted
8,700,000
50,000
50,000
50,000
150,000
50,000
1,700,000
Grant date
Expiry date
22-Jun-17
6-Jun-18
6-Jun-18
6-Jun-18
6-Jun-18
6-Jun-18
22-Jun-17
22-Jun-20
6-Jun-20
6-Jun-20
6-Jun-20
26-Apr-20
6-Jun-20
22-Jun-20
Exercise
price $
Fair value
per right at
grant date
-
-
-
-
-
-
-
$
0.16
0.06
0.06
0.06
0.06
0.06
0.16
Performance rights granted carry no dividend or voting rights.
Additional information
The earnings of the consolidated entity for the year ended 31 December 2019 is summarised below:
Revenue
Net loss before tax
Net loss after tax
2019
2018
2017
2,490,000
3,432,506
3,432,506
371,489
8,340,013
8,340,013
339,057
7,794,602
7,794,602
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
Share Price at start of financial year ($)
Share price at financial year end ($)
2019
0.030
0.025
2018
0.110
0.030
2017
0.200
0.110
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
(0.0100)
(0.0100)
(0.0378)
(0.0378)
(0.0507)
(0.0507)
20
Remuneration Report (audited)
Imagion Biosystems Annual Report
31 December 2019
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Name
Balance
start of year
Received
Remuneration
Additions
Mr Robert Romeo Proulx
Mr Michael John Harsh
Mr David Gerald Ludvigson
Ms. Jovanka Naumoska
Mr Mark Gerald Van Asten
Ms. Bronwyn Le Grice
Dr John Hazle*
Mr Brian Conn
Total
* Resigned 27 June 2019.
Option holding
352,500
-
-
-
-
-
-
250,000
602,500
-
150,000
150,000
150,000
150,000
-
150,000
-
750,000
352,500
-
150,000
-
150,000
-
-
-
652,500
Disposals Balance at
the end of
the year
705,000
150,000
300,000
150,000
300,000
-
150,000
250,000
2,005,000
-
-
-
-
-
-
-
-
-
The number of options over ordinary shares in the company held during the financial year by each director and other
members of key management personnel of the consolidated entity, including their personally related parties, is set
out below:
Name
Mr Robert Romeo Proulx
Mr David Gerald Ludvigson
Mr Mark Gerald Van Asten
Mr Brian Conn
Total
Performance Rights Holding
Balance
start of year
-
-
-
100,000
100,000
Granted
Exercised
176,250
75,000
75,000
2,000,000
2,326,250
-
-
-
-
-
Expired/
forfeited/
other
-
-
-
-
-
Balance at
the end of
the year
176,250
75,000
75,000
2,100,000
2,426,250
The number of performance shares in the company held during the financial year by each Director and other
members of key management personnel of the consolidated entity, including their personally related parties, is set
out below:
Name
Mr Robert Romeo Proulx
Mr Michael John Harsh
Mr David Gerald Ludvigson
Ms Jovanka Naumoska
Mr Mark Gerald Van Asten
Ms. Bronwyn Le Grice
Dr John Hazle*
Mr Brian Conn
Total
* Resigned 27 June 2019.
Balance start of
year
8,700,000
200,000
200,000
200,000
200,000
150,000
150,000
1,700,000
11,500,000
Granted
-
-
-
-
-
-
-
-
-
Vested Expired/forfeit
ed/other
-
-
-
-
-
-
-
-
-
-
(150,000)
(150,000)
(150,000)
(150,000)
-
(150,000)
-
(750,000)
Balance at
end of year
8,700,000
50,000
50,000
50,000
50,000
150,000
-
1,700,000
10,750,000
This concludes the remuneration report, which has been audited.
21
Remuneration Report (audited)
Imagion Biosystems Annual Report
31 December 2019
Shares under option
Unissued ordinary shares of Imagion Biosystems Limited under option at the date of this report are as follows:
Grant date
Expiry date
6 June 2018
28 November 2018
24 June 2019
30 September 2019
30 September 2019
30 September 2019
30 September 2019
30 September 2019
26 November 2019
26 November 2019
26 November 2019
26 November 2019
30 June 2021
27 November 2020
24 June 2024
27 February 2021
30 March 2021
29 April 2021
30 May 2021
29 June 2021
26 November 2021
22 August 2024
20 September 2024
7 October 2024
Exercise
Number
price under option
$0.2000
$0.0600
$0.0280
$0.0302
$0.0262
$0.0256
$0.0290
$0.0194
$0.0600
$0.0600
$0.0600
$0.0600
3,000,000
34,700,000
4,650,000
198,063
183,950
304,951
377,602
952,987
96,706,395
300,000
100,000
200,000
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share
issue of the company or of any other body corporate.
Shares issued on the exercise of options
The following ordinary shares of Imagion Biosystems Limited were issued during the year ended 31 December 2019
and up to the date of this report on the exercise of options granted:
Date options granted
Exercise price
Number of shares issued
24 June 2019
$0.0280
187,500
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a
director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives
of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance
prohibits disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of
the company or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the
company or any related entity.
Proceedings on behalf of the company
No person has applied to the Court under Section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the company, or to 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 part of those proceedings.
22
Remuneration Report (audited)
Imagion Biosystems Annual Report
31 December 2019
Non-audit services
There were no non-audit services provided during the financial year by the auditor.
Officers of the company who are former partners of RSM Australia Partners
There are no officers of the company who are former partners of RSM Australia Partners.
Rounding of amounts
The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with
that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set
out immediately after this directors' report.
Auditor
RSM Australia Partners continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Robert Proulx
Director
31 March 2020
23
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Imagion Biosystems Limited for the year ended 31 December
2019, I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
(ii)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
R B MIANO
Partner
Dated: 31 March 2020
Melbourne, Victoria
24
Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Consolidated Statement of Profit and Loss and Other Comprehensive Income
For the year ended 31 December 2019
Note
Consolidated
2019
$
2018
$
Revenue
Revenue and other income
Research & development tax incentives
Expenses
Research & development costs
Employee salaries and expenses
Professional fees
General expenses
Share based payments expense
Depreciation
Foreign exchange gain/(loss)
Finance costs
4
432,714
2,057,286
2,490,000
371,489
-
371,489
(2,269,006)
(2,757,564)
(784,023)
(868,684)
940,754
(141,988)
(32,837)
(9,158)
(3,295,676)
(3,128,280)
(525,302)
(1,148,459)
(837,133)
(213,791)
444,892
(7,753)
Loss before income tax expense
(3,432,506)
(8,340,013)
Income tax expense
Loss after income tax expense
Other comprehensive income
-
(3,432,506)
-
(8,340,013)
Items that may be reclassified subsequently to profit or loss
Foreign currency translation reserve
Income tax relating to these items
(70,284)
(411,997)
-
-
Other comprehensive income/(loss) for the year, net of tax
(70,284)
(411,997)
Total comprehensive income/(loss) for the year
(3,502,790)
(8,752,010)
Loss attributable to:
Owners of Imagion Biosystems Limited
Loss per share attributable to the owners of Imagion
Biosystem Limited
Basic loss per share
Diluted loss per share
(3,502,790)
(8,752,010)
Cents
(0.010)
(0.010)
21
21
Cents
(0.038)
(0.038)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction
with the accompanying notes.
25
Consolidated Statement of Financial Position
As at 31 December 2019
Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liability
Employee benefits
Other liability
Total current liabilities
Non-current liabilities
Lease liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
Consolidated
2019
$
2018
$
5
6
7
8
9
10
11
3,401,713
71
171,112
3,572,896
434,150
865,051
1,299,201
4,367,097
140,481
408,021
4,915,599
271,860
-
271,860
4,872,097
5,187,459
885,979
261,760
101,832
33,990
1,283,561
1,187,992
36,082
75,723
-
1,299,797
615,019
615,019
18,434
18,434
1,898,580
1,318,231
2,973,517
3,869,228
12
13
14
36,904,580
714,478
(34,645,541)
33,182,325
1,899,938
(31,213,035)
2,973,517
3,869,228
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
26
Consolidated Statement of Changes in Equity
As at 31 December 2019
Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Consolidated
Issued
Capital
$
Reserves
$
Accumulated
Losses
$
Total Equity
$
Balance at 1 January 2018
28,686,708
1,138,870
(22,873,022)
6,952,556
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity
Cost of contributions of equity
Share-based payments
-
-
-
-
(411,997)
(8,340,013)
-
(8,340,013)
(411,997)
(411,997)
(8,340,013)
(8,752,010)
5,146,705
(651,088)
-
-
-
1,173,065
-
-
-
5,146,705
(651,088)
1,173,065
Balance at 31 December 2018
33,182,325
1,899,938
(31,213,035)
3,869,228
Consolidated
Balance at 1 January 2019
Issued
Capital
$
Reserves
$
Accumulated
Losses
$
Total Equity
$
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
33,182,325
-
-
1,899,938
-
(70,284)
(31,213,035)
(3,432,506)
-
3,869,228
(3,432,506)
(70,284)
Total comprehensive income for the year
-
(70,284)
(3,432,506)
(3,502,790)
Transactions with owners in their capacity as owners:
Contributions of equity
Cost of contributions of equity
Transfer from reserves
Share-based payments
3,848,272
(287,033)
161,016
-
-
-
(161,016)
(954,160)
-
-
-
3,848,272
(287,033)
-
(954,160)
Balance at 31 December 2019
36,904,580
714,478
(34,645,541)
2,973,517
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes.
27
Consolidated Statement of Cash Flows
For the year ended 31 December 2019
Cash flows from operating activities
Receipts from customers (inclusive of sales and other taxes)
Payments to suppliers and employees (inclusive of sales and other taxes)
Interest received
Interest and other finance costs paid
Government grants and tax incentives
Net cash from operating activities
Cash flows from investing activities
Payment for property, plant and equipment
Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Consolidated
Note
2019
$
2018
$
558,844
(6,815,862)
16,556
(3,501)
2,061,918
154,457
(6,786,076)
67,078
(2,669)
-
20 (4,182,045)
(6,567,210)
(12,353)
(83,565)
Net cash used in investing activities
(12,353)
(83,565)
Cash flows from financing activities
Lease repayments
Proceeds from financing arrangements
Proceeds from the issue of shares
Proceeds from exercise of share options
Share issue costs
(120,165)
84,770
3,369,266
5,148
(13,305)
(128,493)
-
4,285,884
-
(54,189)
Net cash used in financing activities
3,325,714
4,103,202
Net increase/(decrease) in cash and cash equivalents
(868,684)
(2,547,573)
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
4,367,097
(96,700)
6,872,829
41,841
Cash and cash equivalents at the end of the financial year
3,401,713
4,367,097
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
28
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by
the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
AASB 16 Leases
The consolidated entity has adopted AASB 16 from 1 January 2019. The standard replaces AASB 117 'Leases' and
for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases and
leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of
financial position. Straight-line operating lease expense recognition is replaced with a depreciation charge for the
right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (included
in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be
higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax,
Depreciation and Amortisation) results improve as the operating expense is now replaced by interest expense and
depreciation in profit or loss. For classification within the statement of cash flows, the interest portion is disclosed in
operating activities and the principal portion of the lease payments are separately disclosed in financing activities.
For lessor accounting, the standard does not substantially change how a lessor accounts for leases.
Impact of adoption
AASB 16 was adopted using the modified retrospective approach and as such the comparatives have not been
restated. The company has used the practical expedient to account for the lease for which the lease term ends within
12 months of the date of initial application as short term leases. The impact of adoption on opening retained profits
as at 1 January 2019 was as follows:
Operating lease commitments as at 1 January 2019 (AASB 117)
Short-term leases not recognised as a right of use asset (AASB 16)
Increase/reduction in opening retained profits as at 1 January 2019
Going Concern
1 January
2019
$
203,207
(203,207)
-
The financial statements have been prepared on the going concern basis, which contemplates continuity of normal
business activities and the realisation of assets and discharge of liabilities in the normal course of business. As disclosed
in the financial statements, the consolidated entity incurred a loss of $3,432,506 (PY: $8,340,013), and had net cash
outflows from operating activities of $4,182,045 (PY: $6,567,210) for the year ended 31 December 2019. The company
is still in the product development phase recording minimal sales revenue, consequently it is dependent on external
funding to cover ongoing product development and has forecast losses for the next financial year. Subsequent to year
end, the impact of COVID 19 may have an impact on its ongoing research, development and other activities as outlined
in the events after the reporting period (refer to note 28).
These factors indicate a material uncertainty which may cast significant doubt as to whether the consolidated entity will
continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal
course of business and at the amounts stated in the financial report.
29
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Despite this financial position, the Directors believe there are reasonable grounds to believe that the consolidated entity
will be able to continue as a going concern after considering the following factors:
•
•
•
The Company successfully raised $3,628,256 (before costs) during November 2019;
The Directors are confident that additional funds can be raised through further capital raisings to support
ongoing research and development activities; and
The Company has historically received some cost relief through the receipt of research & development income
tax incentives and the directors expect this to continue.
Accordingly, the Directors believe that the consolidated entity will be able to continue as a going concern and that it is
appropriate to adopt the going concern basis in the preparation of the financial report. The financial report does not
include any adjustments relating to the amounts or classification of recorded assets or liabilities that might be necessary
if the consolidated entity does not continue as a going concern.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as
appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss,
investment properties, certain classes of property, plant and equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant
to the financial statements, are disclosed in note 2.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity
only. Supplementary information about the parent entity is disclosed in note 18.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Imagion Biosystems
Limited ('company' or 'parent entity') as at 31 December 2019 and the results of all subsidiaries for the year then ended.
Imagion Biosystems Limited and its subsidiaries together are referred to in these financial statements as the
'consolidated entity'.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an
entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the
date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity
are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the
asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with
the policies adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly
in equity attributable to the parent.
30
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Note 1. Significant accounting policies (Continued)
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss
and other comprehensive income, statement of financial position and statement of changes in equity of the consolidated
entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results
in a deficit balance.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities
and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity.
The consolidated entity recognises the fair value of the consideration received, and the fair value of any investment
retained together with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for
the allocation of resources to operating segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Imagion Biosystems Limited's functional and
presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of
the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average
exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign
exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Revenue recognition
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be
entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the
consolidated entity: identifies the contract with a customer; identifies the performance obligations in the contract;
determines the transaction price which takes into account estimates of variable consideration and the time value of
money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone
selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance
obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as
discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events.
Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of
variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it
is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The
measurement constraint continues until the uncertainty associated with the variable consideration is subsequently
resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability.
31
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Note 1. Significant accounting policies (Continued)
Sale of goods
Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which
is generally at the time of delivery.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating
the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective
interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable
to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when
the assets are recovered, or liabilities are settled, based on those tax rates that are enacted or substantively enacted,
except for:
● When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability
in a transaction that is not a business combination and that, at the time of the transaction, affects neither the
accounting nor taxable profits; or
● When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures,
and the timing of the reversal can be controlled, and it is probable that the temporary difference will not reverse
in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred
tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available
for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that
it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised
within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as
non-current.
A liability is classified as current when: it is expected to be settled in the consolidated entity's normal operating cycle; it
is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is
no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other
liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
32
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Note 1. Significant accounting policies (Continued)
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term,
highly liquid investments with original maturities of three months or less that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes in value. For the statement of cash flows presentation
purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowings in current
liabilities on the statement of financial position.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within
30 days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime
expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days
overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the
initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently
measured at either amortised cost or fair value depending on their classification. Classification is determined based on
both the business model within which such assets are held and the contractual cash flow characteristics of the financial
asset, unless an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the
consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable
expectation of recovering part or all a financial asset, its carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as
financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading,
where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative;
or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or
loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the consolidated
entity intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial
recognition.
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance
depends upon the consolidated entity's assessment at the end of each reporting period as to whether the financial
instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable
information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected
credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is
attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit
impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's
lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the
probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original
effective interest rate.
33
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Note 1. Significant accounting policies (Continued)
For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within
other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss.
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis or diminishing value basis to write off the net cost of each item of
property, plant and equipment (excluding land) over their expected useful lives as follows:
Plant and equipment
3-10 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting
date.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to
the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or
loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost,
which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or
before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except
where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing
the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated
useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are
subject to impairment or adjusted for any remeasurement of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-
term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are
expensed to profit or loss as incurred.
Research and development
Research costs for the development of intellectual property are expenses in the period in which they are incurred.
Development costs are capitalised when it is probable that the project will be a success considering its commercial and
technical feasibility; the consolidated entity is able to use or sell the asset; the consolidated entity has sufficient
resources; and intent to complete the development and its costs can be measured reliably. Following the initial
recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any
accumulated amortisation and accumulated impairment losses. Any expenditure is capitalised and is amortised on a
straight-line basis over the period of expected benefits from the related project.
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the
financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not
discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method.
34
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Note 1. Significant accounting policies (Continued)
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the
present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit
in the lease or, if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease
payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on
an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option
when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable
lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate
used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability
is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying
amount of the right-of-use asset is fully written down.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed
in the period in which they are incurred.
Provisions
Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a
past event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be
made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding
the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to
the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.
Employee Benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled wholly within
12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date
are measured at the present value of expected future payments to be made in respect of services provided by employees
up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and
salary levels, experience of employee departures and periods of service. Expected future payments are
discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that match,
as closely as possible, the estimated future cash outflows.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in
exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services,
where the amount of cash is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently
determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise
price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the
underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with
non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the
employees to receive payment. No account is taken of any other vesting conditions.
35
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Note 1. Significant accounting policies (Continued)
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over
the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the
award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period.
The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date
less amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying
either the Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on
which the award was granted.
The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied
by the expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at
the reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash
paid to settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market
conditions are considered to vest irrespective of whether or not that market condition has been met, provided all
other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been
made. An additional expense is recognised, over the remaining vesting period, for any modification that increases
the total fair value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the
condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee
and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining
vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled
and new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date; and assumes that the transaction will take place
either: in the principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests.
For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that
are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used,
maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and
transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the
fair value measurement.
36
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Note 1. Significant accounting policies (Continued)
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either
not available or when the valuation is deemed to be significant. External valuers are selected based on market
knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to
another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and
a comparison, where applicable, with external sources of data.
Issued Capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of
tax, from the proceeds.
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the company.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Imagion Biosystems Limited,
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 financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and
the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares
Goods and Services Tax (‘GST’) and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax
authority.
Rounding of amounts
The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with
that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
New Accounting Standards and Interpretations not yet mandatory or early adopted Australian
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 31 December
2019. The consolidated entity has not yet assessed the impact of these new or amended Accounting Standards and
Interpretations.
37
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates
in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements,
estimates and assumptions on historical experience and on other various factors, including expectations of future
events, management believes to be reasonable under the circumstances. The resulting accounting judgements and
estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective
notes) within the next financial year are discussed below.
Fair value measurement hierarchy
The consolidated entity is required to classify all assets and liabilities, measured at fair value, using a three level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1:
Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly; and Level 3: Unobservable inputs for the asset or liability. Considerable judgement
is required to determine what is significant to fair value and therefore which category the asset or liability is placed in
can be subjective.
Estimation of useful lives of assets
The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for its
property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of
technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives
are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or
sold will be written off or written down.
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability.
Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease or
purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised, when
ascertaining the periods to be included in the lease term. In determining the lease term, all facts and circumstances
that create an economical incentive to exercise an extension option, or not to exercise a termination option, are
considered at the lease commencement date. Factors considered may include the importance of the asset to the
consolidated entity's operations; comparison of terms and conditions to prevailing market rates; incurrence of
significant penalties; existence of significant leasehold improvements; and the costs and disruption to replace the
asset. The consolidated entity reassesses whether it is reasonably certain to exercise an extension option, or not
exercise a termination option, if there is a significant event or significant change in circumstances.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated
to discount future lease payments to measure the present value of the lease liability at the lease commencement
date. Such a rate is based on what the consolidated entity estimates it would have to pay a third party to borrow the
funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar terms, security and
economic environment.
Note 3. Operating Segments
Identification of reporting operating segments
The consolidated entity is organised into one operating segment being Research & Development. This operating
segment is based on internal reports that are reviewed and used by the Board of Directors (who are identified as the
Chief Operating Decision Makers (CODM) in assessing performance and in determining the allocation of resources).
38
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Note 4. Revenue
Sales revenue
Sale of goods
Other revenue
Interest
Other income
Revenue
Note 5. Current assets - cash and cash equivalents
Cash on hand
Cash at bank
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the financial
year as shown in the statement of cash flows as follows:
Balances as above
Balance as per statement of cash flows
Note 6. Current assets - other
Prepayments
Other assets
Consolidated
2019
A$
2018
A$
410,854
410,854
191,477
191,477
21,788
72
21,860
36,955
143,057
180,012
432,714
371,489
Consolidated
2019
A$
2018
A$
16
3,401,697
16
4,367,081
3,401,713
4,367,097
3,401,713
4,367,097
3,401,713
4,367,097
Consolidated
2019
A$
2018
A$
97,977
73,135
52,885
355,136
171,112
408,021
39
Note 7. Non-current assets - property, plant and equipment
Plant and equipment - at cost
Less: accumulated depreciation
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Consolidated
2019
A$
2018
A$
1,032,534
(598,384)
1,328,260
(1,056,400)
434,150
271,860
Reconciliation
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:
Consolidated – Plant & Equipment
Opening Balance
Additions
Disposals
Foreign currency revaluation movements
Depreciation expense
Closing Balance
Note 8. Non-current assets – right-of-use assets
Land and buildings - right-of-use
Less: Accumulated depreciation
Consolidated
2019
A$
2018
A$
271,860
278,233
-
2,243
(118,186)
372,103
87,181
-
26,367
(213,791)
434,150
271,860
Consolidated
2019
A$
2018
A$
889,095
(24,044)
865,051
-
-
-
The consolidated entity leases land and buildings for its offices under agreements of 25 months with options to extend.
The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated.
The consolidated entity leases office equipment under agreements of less than two years. These leases are either short-
term or low-value, so have been expensed as incurred and not capitalised as right-of-use assets.
Note 9. Current liabilities - trade and other payables
Trade payables
Other payables
40
Consolidated
2019
A$
2018
A$
708,905
177,074
983,680
204,312
885,979
1,187,992
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Consolidated
2019
$
2018
$
261,760
36,082
Consolidated
2019
$
2018
$
615,019
18,434
Note 10. Current liabilities - lease liabilities
Lease liability
Note 11. Non-current liabilities - lease liabilities
Lease liability
Note 12. Equity - issued capital
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value
and the company does not have a limited amount of authorised capital.
2018
Shares
Consolidated
2019
Shares
2018
A$
2019
A$
Ordinary shares - fully paid
322,742,824
508,782,191
33,182,325
36,488,486
Movements in ordinary share capital
Details
Issue of shares (share-based payment)
Issue of shares (rights issue)
Issue of shares (rights issue)
Issue of shares (performance shares)
Date
6 June 2018
24 October 2018
28 November 2018
28 November 2018
Shares
10,529,053
10,288,098
96,859,510
1,300,000
Issue Price
0.062
0.040
0.040
0.160
Sub total
31 December 2018
322,742,824
Costs of capital raising
Closing balance
A$
652,801
411,524
3,874,380
208,000
33,833,413
(651,088)
33,182,325
41
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Movements in ordinary share capital
Details
Issue of shares (performance rights)
Issue of shares (performance rights)
Issue of shares (share-based payment)
Issue of shares (exercise of options)
Issue of shares (rights issue)
Issue of shares (share-based payment)
Date
24 June 2019
30 September 2019
30 September 2019
4 October 2019
26 November 2019
10 December 2019
Shares
962,500
31,250
3,445,310
187,500
181,412,807
2,500,000
Issue Price
0.160
0.160
0.050
0.039
0.020
0.017
Sub total
31 December 2019
511,282,191
Costs of capital raising
Closing balance
A$
154,000
5,000
172,266
7,266
3,628,256
42,500
37,191,613
(287,033)
36,904,580
On 24 June 2019, 962,500 vested performance shares were converted into ordinary shares. The performance shares
were issued to current and previous employees.
On 30 September 2019, 31,250 vested performance shares were converted into ordinary shares. The performance
shares were issued to a current employee.
On 30 September 2019, the consolidated entity issued an additional 3,445,310 shares to Family Office Networks, Inc.
and nanoComposix, Inc. as payment for the consolidated entity to contractors under deeds of subscription and
settlement. The shares have been valued at the fair value on the date of issue.
On 4 October 2019, an option holder exercised 187,500 options and converted to ordinary shares.
The consolidated entity completed a rights issue that ultimately raised $3,628,256 (before costs) on 26 November 2019
through a non-renounceable rights issue of 181,412,807 shares at $0.02 to existing shareholders, sophisticated and
professional investors.
On 10 December 2019, the consolidated entity issued an additional 2,500,000 shares as payment for consideration for
professional investor relation services. The shares have been valued at the fair value on the date of issue.
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so
that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital
structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is
calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as
value adding relative to the current consolidated entity's share price at the time of the investment. The consolidated
entity is not actively pursuing additional investments in the short-term as it continues to integrate and grow its existing
businesses in order to maximise synergies.
42
Note 13. Equity - reserves
Foreign currency translation reserve
Share based & option reserve
Total
Foreign currency translation reserve
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Consolidated
2019
A$
2018
A$
32,662
681,816
102,946
1,796,992
714,478
1,899,938
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign
operations. Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 January 2018
Share
based
payment
reserve
A$
Foreign
currency
reserve
A$
Total
A$
623,927
514,943
1,138,870
Movements in revaluation of foreign currency through translation reserve
Share based payments for key management, non-executive directors and
employees
Balance at 31 December 2018
-
1,173,065
(411,997)
-
(411,997)
1,173,065
1,796,992
102,946
1,899,938
Movements in revaluation of foreign currency through translation reserve
Share based payments for key management, non-executive directors and
employees
Conversion to share capital
-
(70,284)
(70,284)
(954,160)
(161,016)
-
(954,160)
(161,016)
Balance at 31 December 2019
681,816
32,662
714,478
Note 14. Accumulated Losses
Accumulated Losses at the beginning of the financial year
Losses after income tax expense for the year
Consolidated
2019
A$
2018
A$
(31,213,035) (22,873,022)
(3,432,506) (8,340,013)
Accumulated Losses at the end of the financial year
(34,645,541) (31,213,035)
43
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Note 15. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the
consolidated entity is set out below:
Short-term employee benefits
Share-based payments
Consolidated
2019
A$
2018
A$
723,533
(1,057,963)
893,831
741,553
(334,430)
1,635,384
Share based payments for the year ended 31 December 2019 is a negative amount, reflecting the reversal of
performance rights following a reassessment of the probabilities related to milestone achievement.
Note 16. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by RSM Australia Partners, the
auditor of the company, its network firms and unrelated firms:
Audit services – RSM Australia Partners
Audit or review of the financial statements
Consolidated
2019
A$
2018
A$
60,000
60,000
60,000
60,000
Note 17. Commitments
The consolidated entity had no capital commitments for property, plant and equipment as at 31 December 2019 and
31 December 2018.
44
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Note 18. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
(Loss) after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Reserves
Retained earnings
Total equity
Contingent liabilities
Parent
2019
A$
2018
A$
(3,868,212) (28,436,906)
(3,868,212) (28,436,906)
Parent
2019
A$
2018
A$
3,185,926
4,705,440
3,370,893
4,705,453
614,362
687,789
614,362
687,789
36,488,486
1,385,037
(35,116,992)
33,182,325
2,084,119
(31,248,780)
2,756,531
4,017,664
The parent entity had no contingent liabilities as at 31 December 2019 and 31 December 2018.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 31 December 2019 and 31
December 2018.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in
note 1, except for the following:
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
45
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Note 19. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly owned
subsidiaries in accordance with the accounting policy described in note 1:
Name
Principal place of business /
Country of incorporation
Ownership interest
2018
2019
%
%
Imagion Biosystems Inc
United States of America
100
100
Note 20. Reconciliation of loss after income tax to net cash flows from operating activities
Loss after income tax expense for the year
(3,432,506)
(8,340,013)
Consolidated
2019
$
2018
$
Adjustments for:
Depreciation expense
Refundable Deposit
Fair value adjustment
Foreign exchange loss
Share based payments expense
Direct Equity Raising Costs
Collaboration Expenses
Interest
Bad Debts
Equity Settled Payments
Changes in operating assets and liabilities:
Trade and other receivables
Prepayments
Trade and other payables
Monies in trust
Net cash used in operating activities
142,230
123,112
-
32,837
(940,754)
7,882
-
5,657
4,945
180,852
(3,875,745)
213,791
(123,112)
(140,036)
(444,892)
837,133
(57,894)
869,811
-
-
-
(7,185,212)
24,192
(45,092)
(298,909)
13,509
(44,583)
287,670
371,450
3,465
(4,182,045)
(6,567,210)
46
Note 21. Earnings per share
Loss after income tax
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Consolidated
2019
A$
2018
A$
(3,432,506) (8,340,013)
Loss after income tax attributable to the owners of Imagion Biosystems Limited
(3,432,506) (8,340,013)
Weighted average number of ordinary shares used in calculating basic earnings per
share
Weighted average number of ordinary shares used in calculating diluted earnings per
share
342,221,471 220,883,627
342,221,471 220,883,627
Number
Basic earnings per share
Diluted earnings per share
Note 22. Share based payments
Performance Shares
Cents
Cents
(0.0100)
(0.0100)
(0.0378)
(0.0378)
Upon listing on the Australian Stock Exchange, the consolidated entity established various incentive arrangements to
assist in the attraction, retention and motivation of its employees and management group.
Employees
A total of 2,550,000 rights over shares were issued to employees of the consolidated entity under the LTI plan, which
vested quarterly over the two years following the listing on 22 June 2017 to 22 June 2019 and were not subject to
performance milestones. Each right was converted into one ordinary share upon vesting. Performance rights are
unquoted.
During the current financial year and the previous financial year, rights vested on a quarterly basis in accordance with
the rules of the LTI Plan and, upon cessation of employment, unvested rights either lapsed or fully vested.
On 24 June 2019, 62,500 rights were converted into ordinary shares to an employee.
On 30 September 2019, 31,250 rights were converted into ordinary shares to an employee.
Key Management and Directors
A total of 13,350,000 rights over shares have been issued to Key management personnel and directors. These shares
vest two years after the date of issue. A total of 10,400,000 rights are subject to two performance milestones. The
remaining rights and are not subject to performance milestones, apart from continuation of employment. Each right is
convertible into one ordinary share upon vesting. Performance rights are unquoted.
During the current financial year, no performance rights were issued to directors (2018: 350,000) and nil rights (2018:
1,700,000) lapsed due to cessation of employment
During the current financial year no rights were issued to employees (2018: nil), and nil rights (2018: nil) lapsed.
47
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
On 24 June 2019, 900,000 rights were converted into ordinary shares to Key management personnel and directors.
Other rights to employees vested in 2019 were 62,500 (2018: 787,500)
The number of performance shares at the end of the financial year and movements are shown below:
Employees
Directors & Key
Management
2018
1 January 2018
Issued
Vested based on employment
Vested – due to resignation
Lapsed – due to resignation
Converted to shares
Unvested Vested Unvested Vested
-
-
-
-
-
-
543,750 13,000,000
350,000
-
-
(1,700,000)
-
1,537,500
-
(381,250)
(406,250)
(687,500)
-
-
381,250
406,250
-
(1,300,000)
Total
Total
Unvested
14,537,500
350,000
(381,250)
(406,250)
(2,387,500)
-
Vested/not
exercised
543,750
-
381,250
406,250
-
(1,300,000)
Balance 31 December 2018
62,500
31,250 11,650,000
-
11,712,500
31,250
2019
Issued
Vested based on employment
Vested – due to resignation
Lapsed – due to resignation
Converted to shares
-
(62,500)
-
-
-
-
62,500
-
-
(93,750)
-
(900,000)
-
-
-
-
900,000
-
-
(900,000)
-
(962,500)
-
-
-
-
962,500
-
-
(993,750)
Balance 31 December 2019
-
- 10,750,000
-
10,750,000
-
A share option plan has been established by the consolidated entity and approved by directors at a board meeting,
whereby the consolidated entity may, at the discretion of the Board, grant options over ordinary shares in the company
to certain key management personnel of the consolidated entity. The options are issued for nil consideration and are
granted in accordance with performance guidelines established by the Board.
Set out below are summaries of options granted under the plan:
2019
Grant date
Expiry date Exercise
price
24/06/2019
24/06/2024 $0.028
Balance
at the
start of
the year
-
-
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
5,300,000
5,300,000
(187,500)
(187,500)
(462,500)
(462,500)
4,650,000
4,650,000
Weighted average exercise price
-
$0.028
$0.028
$0.028
$0.028
2018: Nil
48
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Set out below are the options exercisable at the end of the financial year:
Grant date
Expiry date
24/06/2019
24/06/2024
2019
Number
2018
Number
3,475,000
3,475,000
-
-
The weighted average share price during the financial year was $0.033 (2018: $0.056).
The weighted average remaining contractual life of options outstanding at the end of the financial year was 0.48
years (2018: Nil).
For the options granted during the current financial year, the valuation model inputs used to determine the fair value
at the grant date, are as follows:
Grant date
Expiry date
Share price
at grant
date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest rate
Fair value
at grant
date
24/06/2019
24/06/2024
$0.017
$0.028
87.00%
0.00%
0.92%
$0.011
Note 23. Financial Instruments
The consolidated entity’s activities expose it to a variety of financial risks: market risk (including foreign currency risk,
price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity’s overall risk management program
focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial
performance of the consolidated entity. The consolidated entity uses different methods to measure different types of
risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and
other price risks, ageing analysis for credit risk and beta analysis in respect of investment portfolios to determine market
risk.
Derivatives are not currently used by the consolidated entity for hedging purposes. The consolidated entity does not
speculate in the trading of derivative instruments.
Market Risk
Foreign currency risk
The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign
currency risk through foreign exchange rate fluctuations, in particular United States dollars.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis
and cash flow forecasting.
The consolidated entity had net assets denominated in foreign currencies of $216,998 (assets of $1,501,217 less
liabilities of $1,284,219) as at 31 December 2019 (2018: Net Liabilities $148,423 (assets of $482,019 less liabilities of
$630,442)). Based on this exposure, had the Australian dollar weakened by 5%/strengthened by 5% (2018: weakened
by 5%/strengthened by 5%) against these foreign currencies with all other variables held constant, the consolidated
entity's loss before tax for the year would have been $10,850 lower/$10,850 higher (2018: $7,421 lower/$7,421 higher)
.
49
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
The carrying amount of the consolidated entity’s foreign currency denominated financial assets and financial liabilities
at the reporting date were as follows (holdings are shown in AUD equivalent):
Consolidated
US dollars
Assets
2019
2018
Liabilities
2019
2018
1,501,217
482,019
1,284,218
630,442
1,501,217
482,019
1,284,218
630,442
Price risk
The consolidated entity is not exposed to any significant price risk.
Credit risk
Credit risk refers to the risk that the counter party will default on its contractual obligations resulting in financial loss to
the consolidated entity. Credit risk is the risk of financial loss to the consolidated entity if a customer or counterparty to
a financial instrument fails to meet its contractual obligations and arises principally from the consolidated entity’s
receivables from customers and investment securities. The consolidated entity has only minimal sales revenue and
consequently does not have credit exposure to outstanding receivables.
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument or cash flows associated with the instrument will
fluctuate due to changes in market interest rates. Interest rate risk arises from fluctuations in interest bearing financial
assets and liabilities that the consolidated entity uses. Interest bearing assets comprise cash and cash equivalents
which are considered to be short-term liquid assets and investment decisions are governed by the monetary policy.
During the year, the consolidated entity had no variable rate interest bearing liability. It is the consolidated entity's policy
to settle trade payables within the credit terms allowed and therefore not incur interest on overdue balances.
Liquidity risk
Liquidity risk is the risk that the consolidated entity will not be able to meet its financial obligations as they fall due. The
consolidated entity’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 consolidated entity’s reputation. The consolidated entity’s objective is to maintain a
balance between continuity of funding and flexibility. The consolidated entity’s exposure to financial obligations relating
to corporate administration and projects expenditure, are subject to budgeting and reporting controls, to ensure that
such obligations do not exceed cash held and known cash inflows for a period of at least 1 year.
Remaining contractual maturities
The following tables detail the consolidated entity’s remaining contractual maturity for its financial instrument liabilities.
The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date
on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows
disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the
statement of financial position.
50
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Weighted
average
interest
rate
%
1 year or
less
Between 1
and 2 years
Between 2
and 5 years Over 5 years
Total
-
-
-
5.014%
708,905
177,074
-
262,257
1,148,236
-
-
-
296,476
296,476
-
-
-
318,587
318,587
-
-
-
-
-
-
-
708,905
177,074
-
877,320
1,763,299
-
-
-
-
-
-
-
-
1 year or
less
Between 1
and 2 years
Between 2
and 5 years Over 5 years
Total
983,680
204,312
-
38,507
1,226,499
-
-
-
18,971
18,971
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
983,680
204,312
-
57,478
1,245,470
-
-
Consolidated - 2019
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - fixed rate
Lease liability
Total non-derivatives
Derivatives
Promissory and Convertible
Notes
Total derivatives
Consolidated - 2018
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - fixed rate
Lease liability
Total non-derivatives
Derivatives
Promissory and Convertible
Notes
Total derivatives
-
Weighted
average
interest
rate
%
-
-
6.317%
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above
51
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Note 24. Fair value measurement
Fair value hierarchy
The following tables detail the consolidated entity’s assets and liabilities, measured or disclosed at fair value, using a
three-level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly
Level 3: Unobservable inputs for the asset or liability.
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their
fair values due to their short-term nature. The fair value of financial liabilities is estimated by discounting the remaining
contractual maturities at the current market interest rate that is available for similar financial liabilities.
Valuation techniques for fair value measurements categorised within level 2.
Unquoted investments have been valued using a discounted cash flow model.
Derivative financial instruments have been valued using quoted market rates. This valuation technique maximises the
use of observable market data where it is available and relies as little as possible on entity specific estimates.
Note 25. Income tax benefit
Tax losses not recognised
Consolidated
2019
$
2018
$
Unused tax losses for which no deferred tax asset has been recognised (Australia)
9,384,665
6,332,140
Potential tax benefit @ 27.5% for 2019 and 27.5% for 2018
9,384,665
1,741,338
Unused tax losses for which no deferred tax asset has been recognised (United
States of America)
8,794,261
8,854,777
The above potential tax benefit for tax losses has not been recognised in the statement of financial position. These tax
losses can only be utilised in the future if the company satisfies the relevant tax loss rules in the relevant jurisdictions
and the Company earns sufficient taxable profit to absorb the losses.
Note 26. Contingent liabilities
As of 31 December 2019, the Company was not party to any material litigation, claims or suit whose outcome could
have a material effect on the financial statements (31 December 2018: Nil).
52
Notes to the Consolidated Financial Statements
Imagion Biosystems Annual Report
31 December 2019
Note 27. Related party transactions
Parent Entity
Imagion Biosystems Limited is the parent entity.
Subsidiaries
Interest in subsidiaries are set out in Note 19.
Key management personnel
Disclosures relating to key management personnel are set out in note 15 and the remuneration report included in the
directors' report.
Transactions with related parties
The following transactions occurred with related parties:
Payment for goods and services:
Payment for contracting services – Bronwyn Le Grice
Consolidated
2019
$
2018
$
25,000
18,012
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Trade payables to David Ludvigson
Trade payables to Michael Harsh
Trade payables to Jovanka Naumoska
Trade payables to Mark Van Asten
Note 28. Events after the reporting period
Consolidated
2019
$
20,554
24,122
27,080
27,080
2018
$
-
-
-
-
On 25 March 2020, the company announced that they will issue up to 204,512,879 fully paid ordinary shares as part of
a rights issue. Shareholders will be offered two new shares for every five shares held at 30 March 2020. With every new
share, shareholders will receive a free attaching new option. New options will have exercise price of 3.0 cents and term
of three years. This offer closed oversubscribed on 28 April 2020, raising $2.5 million inclusive of a follow-on placement
to accommodate some of the excess demand.
Recent developments in the 2020 year with the COVID-19 pandemic virus has led to various lock downs being put in
place which may adversely impact the consolidated entity’s ongoing research, development and ongoing activities.
Management is monitoring the potential impact of the COVID 19 pandemic and assessing its impact on the consolidated
entity. In the coming months, the adverse impact of COVID-19 is likely to be significant to the consolidated entity, but at
the date of this report, it is too early to estimate the impact.
On 8 April 2020, the Company announced it received its 2019 R&D tax incentive claim of $2.2 million from the Australian
Taxation Office (ATO).
No other matters or circumstances have arisen since the end of the financial period that has significantly affected or
may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs
of the consolidated entity in future financial years.
53
Directors Declaration
Imagion Biosystems Annual Report
31 December 2019
Directors’ Declaration
In the directors' opinion:
•
•
•
•
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards,
the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial position
as at 31 December 2019 and of its performance for the financial year ended on that date;
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable; and
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Robert Proulx
Director
31 March 2020
54
INDEPENDENT AUDITOR’S REPORT
To the Members of Imagion Biosystem Limited
Opinion
We have audited the financial report of Imagion Biosystems Limited (the Company) and its subsidiaries (the Consolidated
Entity), which comprises the consolidated statement of financial position as at 31 December 2019, the consolidated statement
of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for
the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the
directors' declaration.
In our opinion the accompanying financial report of the Consolidated Entity is in accordance with the Corporations Act 2001,
including:
(I)
giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2019 and of its financial
performance for the year then ended; 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 Consolidated Entity in accordance with the auditor independence requirements of the Corporations Act 2001 and the
ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical
responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors
of the Company, would be in the same terms if given to the directors as at the time of this auditor's report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report, which indicates that the Consolidated Entity incurred a net loss of
$3,432,506 and reported negative operating cash flows of $4,182,045 during the year ended 31 December 2019. As stated in
Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists
that may cast significant doubt on the Consolidated Entity’s ability to continue as a going concern. Our opinion is not modified
in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
55
Key Audit Matters (Continued)
In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the
matters described below to be the key audit matters to be communicated in our report
Key Audit Matter
How our audit addressed this matter
Fair Value of the share-based payments
Refer to Note 22 in the financial statements
During
issued,
the year, performance rights were
cancelled and modified to key management personnel and
options were issued to consultants of the Consolidated
Entity.
Management have accounted for these arrangements in
accordance with AASB 2 Share-based payments and
used the relevant option pricing model to value the options
issued in the year.
We considered the valuation of these instruments to be a
key audit matter, as it involves management estimates
and judgments in determining the relevant inputs to the
valuation model.
Our audit procedures included, among others:
-
-
-
-
-
-
Reviewing the minutes of directors' meetings and
ASX announcements for the approvals in relation to
the granting of the instruments;
Reviewing the key terms and conditions of the
share-based payment arrangements;
Reviewing managements estimates of achieving
vesting conditions for the performance rights issued
based on the performance in the current period;
the
Challenging
key
assumptions used by management relative to the
valuation at the grant date;
reasonableness
of
Verifying
computation; and
the mathematical accuracy of
the
Reviewing the adequacy and accuracy of the
relevant disclosures in the financial statements.
Other Information
The directors are responsible for the other information. The other information comprises the information included in the
Consolidated Entity’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 accordingly we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information 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 Consolidated Entity 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 Consolidated Entity or to cease operations, or have no realistic alternative
but to do so.
56
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/ar2.pdf.
This description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors' report for the year ended 31 December 2019.
In our opinion, the Remuneration Report of Imagion Biosystems 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.
RSM AUSTRALIA PARTNERS
R B MIANO
Partner
Dated: 31 March 2020
Melbourne, Victoria
57
Shareholder Information
Imagion Biosystems Annual Report
31 December 2019
Corporate Governance Statement
The Company’s Directors and management are committed to conducting the business of the Group’s business in an
ethical manner and in accordance with the highest standards of corporate governance. The Company has adopted and
substantially complies with the ASX Corporate Governance Principles and Recommendations (Third Edition)
(Recommendations) to the extent appropriate to the size and nature of the Group’s operations.
The Company has prepared a statement which sets out the corporate governance practices that were in operation
throughout the financial year for the Company, identifies any Recommendations that have not been followed, and
provides reasons for not following such Recommendations (Corporate Governance Statement).
In accordance with ASX Listing Rules 4.10.3 and 4.7.4, the Corporate Governance Statement will be available for review
on the Company’s website (www.imagionbiosystems.com), and will be lodged together with an Appendix 4G with ASX
at the same time that this Annual Report is lodged with ASX.
The Appendix 4G will particularise each Recommendation that needs to be reported against by the Company and will
provide shareholders with information as to where relevant governance disclosures can be found.
The Company’s
www.imagionbiosystems.com.
corporate governance policies and
charters are all available on
its website
ADDITIONAL SECURITIES INFORMATION
In accordance with ASX Listing Rule 4.10, the Company provides the following information to shareholders not
elsewhere disclosed in this Annual Report. The information provided is current as at 23 April 2020 (Reporting Date).
QUOTED EQUITY SECURITIES – ORDINARY SHARES
As at the Reporting Date, the Company had a total of 511,282,191 fully paid ordinary shares on issue. The Company’s
shares are quoted on the ASX, and form the only class of securities on issue in the Company that is quoted on the
ASX, and that carries voting rights.
At a general meeting of the Company, every holder of ordinary shares is entitled to vote in person or by proxy or
attorney; and on a show of hands every person present who is a member has one vote, and on a poll every
person present in person or by proxy or attorney has one vote for each ordinary share he holds.
Range of holdings
An analysis of number of shareholders in the Company by size of holding is as follows:
Share Range
1-1,000
1001-5001
5001-10,000
10,000-100,001
100,001 and over
Total
Unmarketable Parcels
Number of
Holders
23
19
46
569
562
1,219
Units
5,343
60,638
406,231
28,816,156
481,993,823
511,282,191
%
0.000
0.010
0.080
5.640
94.270
100.000
The number of shareholders holding less than a marketable parcel of shares as at the Reporting Date (based on a
closing price of $0.013 per share) was 313.
58
Shareholder Information
Imagion Biosystems Annual Report
31 December 2019
Top 20 Shareholders
The names of the twenty largest holders of ordinary shares as at the Reporting Date are listed below:
Rank Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
DRAKE SPECIAL SITUTIONS LLC
MR KEMPER SHAW
THE BOARD OF REGENTS OF THE UNIVERSITY OF TEXAS SYSTEM
CITICORP NOMINEES PTY LIMITED
MR ANTHONY FAILLACE
SUNSET CAPITAL MANAGEMENT PTY LTD
MR HAOJIE LI
MRS LEANNE VIDOVICH
EXCALIBUR TRADING PTY LTD
MR ROBERT REVELEY
GUINA NOMINEES PTY LTD
DR HUY TRAN
G & D FINN PTY LTD
MR YOANTO WAKIMIN
ARISION PTY LTD
DR RUSSELL KAY HANCOCK
MR BRIAN PETER BYASS
MR G J & MRS M W HOWLETT
WH & PR PTY LTD
Total
No. of
shares
68,663,879
25,000,000
14,798,818
10,529,053
10,379,432
10,361,838
8,800,000
8,171,370
7,000,000
6,521,884
6,100,000
5,084,862
5,000,000
5,000,000
4,612,328
4,042,011
4,000,000
3,500,000
3,500,000
3,500,000
214,565,475
%
13.430
4.890
2.894
2.059
2.030
2.027
1.721
1.598
1.369
1.276
1.193
0.995
0.978
0.978
0.902
0.791
0.782
0.685
0.685
0.685
41.966
Balance of register
Grand total
296,716,716
511,282,191
58.034
100.000
Substantial shareholders
The substantial holders of shares in the Company as at the Reporting Date were:
Substantial holders
HSBC Custody Nominees (Australia) Ltd
Number of shares held
68,663,879
% of total issued share capital
13.430%
Escrowed Securities
Description
Number of securities
Expiry date of escrow period
Fully Paid Ordinary Shares
2,500,000
9 August 2020
59
Shareholder Information
Imagion Biosystems Annual Report
31 December 2019
UNQUOTED EQUITY SECURITIES
The Company has two classes of unquoted equity securities on issue, being Performance Rights and Options.
Performance Rights
The Performance Rights will vest into ordinary shares (on a 1-for-1 basis), subject to satisfaction of prescribed vesting
conditions.
None of the Performance Rights carry any voting rights. However, any underlying shares issued upon the vesting or
conversion of the Performance Rights will carry equal voting rights with the other shares on issue in the Company.
As at the Reporting Date, there were a total of 10,750,000 Performance Rights on issue, held by 7 holders.
An analysis of number of Performance Rights holders by size of holding is as follows:
Range
1-1,000
1001-5001
5001-10,000
10,000-100,001
100,001 and over
Total
Options
Number of
Holders
0
0
0
4
3
7
Units
0
0
0
200,000
10,550,000
10,750,000
%
0.000
0.000
0.000
1.860
98.140
100.000
The Options upon exercise will convert into ordinary shares (on a 1-for-1 basis), subject to various exercise prices and
expiry dates.
None of the Options carry any voting rights. However, any underlying shares issued upon conversion of the Options
will carry equal voting rights with the other shares on issue in the Company.
As at the Reporting Date, there were a total of 136,518,895 Options on issue, held by 312
holders. An analysis of number of Options holders by size of holding is as follows:
Range
1-1,000
1001-5001
5001-10,000
10,000-100,001
100,001 and over
Total
Units
1,810
32,000
133,777
5,824,619
130,526,689
136,518,895
%
0.000
0.020
0.100
4.270
95.610
100.000
Number of
Holders
5
7
16
116
168
312
60
Shareholder Information
Imagion Biosystems Annual Report
31 December 2019
LISTING RULE 4.10.19 DISCLOSURE
For the purposes of Listing Rule 4.10.19, the Company confirms that it has used the cash and assets in a form readily
convertible to cash in a way consistent with its business objectives at the time of admission.
STOCK EXCHANGE LISTING
The Company’s ordinary shares are quoted on the Australian Securities Exchange (ASX: IBX).
ON-MARKET BUYBACK
The Company is not currently conducting an on-market buy-back.
No securities were purchased on-market during the reporting period under or for the purposes of an employee
incentive scheme or to satisfy the entitlements of the holders of options or other rights to acquire securities granted
under an employee incentive scheme.
ITEM 7 ISSUES OF SECURITIES
There are no issues of securities approved for the purposes of item 7 of section 611 of the Corporations Act which have
not yet been completed
61
62