K-TIG Limited and Its Controlled Entities
ABN 28 158 307 549
Consolidated Annual Report - 30 June 2020
K-TIG Limited and Its Controlled Entities
Corporate Directory
For the year ended 30 June 2020
Directorships as at the date of this
report
Stuart Carmichael, Chairman
Adrian Smith, Executive Director
Mark Twycross, Non-executive Director
Syed Basar Shueb, Non-executive Director
Anthony McIntosh, Non-executive Director
Company secretaries
Registered office
Principal place of business
Share registry
Auditor
Solicitors
Principal Bankers
Brett Tucker
Deborah Ho
Ground Floor
16 Ord Street
West Perth WA 6005
Building 5
9 William Street
Mile End SA 5031
Phone: (08) 7324 6800
Automic Group
Level 2, 267 St Georges Terrace
Perth WA 6000
BDO Audit (SA) Pty Ltd
BDO Centre
Level 7, 420 King William Street
Adelaide SA 5000
HWL Ebsworth Lawyers
Level 20, 240 St Georges Terrace
Perth WA 6000
Westpac Banking Corporation
275 Kent Street
Sydney NSW 2000
Stock exchange listing
K-TIG Limited shares are listed on the Australian Securities Exchange
(ASX code: KTG)
Website
www.k-tig.com
K-TIG Limited and Its Controlled Entities
Contents
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
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61
K-TIG Limited and Its Controlled Entities
Directors' Report
For the year ended 30 June 2020
The Directors present their report, together with the financial statements, on K-TIG Limited (“K-TIG” or “Company”) and its
controlled entities (“consolidated group”) for the for the year ended 30 June 2020.
Directors
The following persons were directors of K-TIG Limited during the whole of the financial year and up to the date of this report,
unless otherwise stated:
Stuart Carmichael
Syed Basar Shueb (appointed 30 September 2019)
Mark Twycross (appointed 20 February 2020)
Adrian Smith (appointed 20 February 2020)
Anthony McIntosh (appointed 23 June 2020)
Colm O’Brien (resigned 23 June 2020)
Michael Edwards (resigned 30 September 2019)
Kieran Michael Purcell (appointed 30 September 2019, resigned 20 February 2020)
Principal activities
K-TIG is a transformative, industry disrupting welding technology that is changing the economics of fabrication with its
proprietary high-speed precision welding technology.
Dividends
No dividends were declared or paid out during the financial year (2019: nil).
Significant changes in the state of affairs
Acquisition of Keyhole TIG Limited
On 15 August 2019 at the Company’s General Meeting held, the Shareholders approved the consolidation of capital on 57-
for-1 basis (effective 20 September 2019), the appointment of Mr Purcell and Mr Shueb as Non-Executive Directors of the
Company and the issuance of Director options.
On 30 September 2019, the Company acquired 100% of the issued capital of Keyhole TIG Limited and issued the following
securities pursuant to its Replacement Prospectus dated 15 August 2019:
1. 35,000,000 Shares at an issue price of $0.20 each to raise $7,000,000 under the Public Offer;
2. 80,200,501 Shares to the Vendors (or their nominees) pursuant to the Consideration Offer;
3. 11,250,000 Shares to the holders of the Convertible Notes (or their nominees) pursuant to the conversion of all convertible
notes in K-TIG into Shares; and
4. 5,475,000 Shares and 4,331,801 Options exercisable at $0.30 each and expiring 4 years from the date of Completion to
Alto Capital (or its nominees).
The Company’s securities were reinstated for trading on the ASX on 9 October 2019.
There were no other significant changes in the state of affairs of the consolidated group during the financial year.
Review of operations
Results
The net loss for the consolidated group for the year ended 30 June 2020, after providing for income tax, amounted to
$8,411,825 (30 June 2019: $1,690,187). The increase in net loss was mainly attributable to the acquisition of Keyhole, that
incurred $4.85 million of costs. In addition, the consolidated group’s revenue decreased to $333,366 (30 June 2019:
$1,069,198) largely due to the change in business focus from sale of goods to services through the Welding as a Service
(‘WaaS’) licenses. This has impacted the recognition of revenue, with approximately $1.07 million to be recognised in future
financial periods.
The consolidated group had a net asset position at 30 June 2020 of $3,832,615 (30 June 2019: net liabilities of $428,707).
Net operating cash outflows were $3,787,133 during the year (30 June 2019: $1,223,453), and the consolidated group ends
the financial year with a cash balance of $3,493,579 (30 June 2019: $943,820). The Company confirms that during the
financial year ended 30 June 2020, it used its cash and assets in a form readily convertible to cash, in a manner consistent
with its business objectives.
2
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2020
Operational developments
Following relisting on the ASX the Company has continued growth in its customer base with license agreements entered into
with a number of international customers including Precision Fabrication, Primus Pipe & Tube, Steel-Ti, ABEC Kells, Glenfield
Engineering, Aqseptence Group and John Zink Hamworthy Combustion.
During the period, the Company became a formal member of the UK Nuclear Advanced Manufacturing Research Centre
(Nuclear AMRC). The Nuclear AMRC is a collaborative body comprised of Government, industrial and academic partners
and is one of the world’s leading centres of excellence and innovation focused on research and enhancement of technologies
that can be utilised in the building, operating and decommissioning of nuclear facilities. This relationship strengthens the
Company’s relationship and advances discussions with related parties operating in the nuclear decommissioning sector.
In June 2020, the Company announced that it signed a Memorandum of Understanding (MOU) with Axiom Precision
Manufacturing and Bisalloy Steel Group to jointly develop a sovereign capability for the Australian Defence Industry.
Development of an Australian sovereign capability in the welding of specialist defence steels will allow Australian Industry to
maximise its participation in upcoming Defence procurements, such as the four-phase approximately, $10-$15 billion, LAND
400 project, that will see the ADF’s existing Australian Armoured Vehicle and M113 Armoured Personnel Carrier fleets
replaced with new vehicles that deliver improved levels of firepower, protection and mobility.
The COVID-19 pandemic deferred the long lead time capital items, and created restrictions in international travel. These
restrictions have created challenges for the business operating environment. The timing and extent of the impact and
recovery from COVID-19 is unknown and it may have an impact on the consolidated group’s activities in the future, including
the ability to commission equipment and train customer personnel on site.
Corporate
During the financial year, the following changes were made:
On 30 September 2019, Mr Purcell and Mr Shueb were appointed as Non-executive Directors of the Company. Mr
Edwards resigned as a Non-Executive Director of the Company.
On 30 September 2019, a total of 5,472,152 unlisted options exercisable at $0.30 each with an expiry date of 30
September 2023, and a subscription price of $0.0001 each, were issued as advisor and director options.
On 20 February 2020, Mr Purcell resigned as a Non-executive Director and Mr Twycross and Mr Smith were
appointed as Non-executive Directors.
On 21 February 2020, 960,000 unlisted options exercisable at $0.30 each with an expiry date of 30 September 2023
were issued to directors and other key management personnel.
On 16 March 2020, Mr Williams resigned as CEO and Mr Twycross was appointed as Executive Director.
On 23 June 2020, Mr O’Brien resigned as a Non-executive Director and Mr McIntosh was appointed.
On 26 June 2020, 180,000 unlisted options exercisable at $0.30 each with an expiry date of 30 September 2023
were issued to Directors.
Matters subsequent to the end of the financial year
On 28 July 2020, Mr Twycross resigned as Executive Director and was appointed to a position of Non-executive Director.
Mr Smith, a Non-executive Director, was appointed to the position of Executive Director.
On 4 September 2020, the Company raised $5,600,000 (before costs) via a private placement to institutional and
sophisticated investors. 22,400,000 fully paid ordinary shares are to be issued at an exercise price of $0.25 per share. Of
these 22,400,000 shares, the Company issued 21,660,000 fully paid ordinary shares on 16 September 2020, raising
$5,415,000 (before costs). The remaining 740,000 shares are to be issued subject to shareholder approval at the Company’s
Annual General Meeting anticipated to be held in November 2020.
No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect the
consolidated group’s operations, the results of those operations, or the consolidated group's state of affairs in future financial
years.
Likely developments and expected results of operations
The Company continues to build an extensive sales pipeline in key growth markets, including the United States and South
East Asia where it intends to increase its market share in both the small and large stainless-steel vessel industry. The
consolidated group is also pursuing opportunities in the UK nuclear decommissioning market.
3
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2020
Environmental regulation
The consolidated group is not subject to any significant environmental regulation under Australian Commonwealth or State
law.
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Stuart Carmichael
Non-executive Chairman (Appointed 30 June 2017)
B Com, C.A (Aust)
Mr Carmichael has extensive international corporate advisory, mergers and
acquisitions, and operational experience. Mr Carmichael held various senior
executive leadership positions with UGL, DTZ, AJG and KPMG Corporate Finance.
Mr Carmichael has extensive corporate and operational experience across multiple
geographies having lived and worked in the US, UK, Europe, the Middle East and
Australia.
Mr Carmichael’s sector experience includes the construction, transportation and
logistics, facilities management, corporate real estate and professional services
sectors. Mr Carmichael graduated from the University of Western Australia with a
Bachelor of Commerce degree, majoring in Accounting and Finance and is a qualified
Chartered Accountant.
Other current directorships:
Non-Executive Chairman of Schrole Limited (ASX:SCL)
Non-Executive Director of De.mem Limited (ASX:DEM)
Non-Executive Director of ClearVue Technologies Limited (ASX:CPV)
Non-Executive Director of Swick Mining Services Limited (ASX:SWK)
Non-Executive Director of Osteopore Limited (ASX:OSX)
Former directorships (last 3 years): -
Interests in shares:
Interests in options:
175,438 fully paid ordinary shares
70,174 listed options exercisable at $0.23 per option, expiring 30 Apr 2021
370,000 unlisted options exercisable at $0.30 per option, expiring 30 Sep 2023
Name:
Title:
Qualifications:
Experience and expertise:
Syed Basar Shueb
Non-executive Director (Appointed 30 September 2019)
Bachelor of Science in Computer Engineering
Mr Shueb is the General Manager of the Pal Group of Companies, a subsidiary of the
Abu Dhabi-based Royal Group, chaired by His Highness Sheikh Tahnoon Bin Zayed
Al Nahyan, and is the Chairman of Royal Falcon Mining LLC. Mr Shueb has extensive
experience in the process, manufacturing, fabrication, construction and service
industries.
Other current directorships:
-
Former directorships (last 3 years): -
Interests in shares:
Interests in options:
2,528,155 fully paid ordinary shares
180,000 unlisted options exercisable at $0.30 per option, expiring 30 Sep 2023
Name:
Title:
Qualifications:
Experience and expertise:
Mark Twycross
Non-executive Director (Appointed 20 February 2020 – 16 March 2020, from 28 July
2020)
Executive Director (Appointed 16 March 2020 – 28 July 2020)
BSc civil engineering, Grad diploma business, FAICD
Mr Twycross has over 40 years in the energy, oil and gas, water and infrastructure
industries in Australasia (Australia, New Zealand and Papua New Guinea) South East
Asia, Middle East, Africa, Caspian and United Kingdom. Mr Twycross brings a track
record of securing major contracts and contract execution to clients in the oil and gas,
and water infrastructure sectors.
Mr Twycross has previously held senior executive leadership positions with Quanta
Services and McConnell Dowell.
Other current directorships:
-
Former directorships (last 3 years): -
Interests in shares:
Interests in options:
Nil
180,000 unlisted options exercisable at $0.30 per option, expiring 30 Sep 2023
4
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2020
Name:
Title:
Qualifications:
Experience and expertise:
Adrian Smith
Executive Director (Appointed 28 July 2020)
Non-executive Director (Appointed 20 February 2020, resigned 28 July 2020)
B.E. (Hons), B.SC. MBA, FAICD
Mr Smith has both large public company and private SME board experience who has
demonstrated history of growing innovative, business to business companies in both
Managing Director and Chief Executive Officer roles.
Skilled at working with technology and business entrepreneurs to transition
companies from small start-ups into sustainable enterprises, Mr Smith brings a strong
focus on managing people and relationships to deliver exceptional performance.
Mr Smith is currently Non-executive Director of Universal Motion Simulation, UniSA
Ventures, and an Advisory Board Member of Axiom Precision Manufacturing and
elmTEK. Mr Smith has previously had the role of Managing Director of Rheinmetall
Defence Australia Pty Ltd. Previously, Mr Smith was the founder and Chief Executive
Officer of Sydac, a simulation and training business. Sydac was founded in 1988 and
culminated in becoming the world’s #2 supplier of railway training systems with a staff
of 135 and offices in Australia, Europe and India before negotiating an exit with
German multi-national Knorr-Bremse GmbH.
-
Other current directorships:
Former directorships (last 3 years): -
Interests in shares:
Interests in options:
Nil
180,000 unlisted options exercisable at $0.30 per option, expiring 30 Sep 2023
Name:
Title:
Qualifications:
Experience and expertise:
Anthony McIntosh
Non-executive Director (Appointed 23 June 2020)
B Com, GAICD
Mr McIntosh has extensive experience in investment marketing, investor relations and
strategic planning, with a focus on small caps, as well as a strong and well-established
network of stockbroking and investment fund manager.
Mr Mcintosh currently holds board positions with Alice Queen Limited, Symbol Mining
Limited, and until recently with Echo Resources Limited.
Mr McIntosh is a graduate of the Australian Institute Company Director course and
Bond University with a Bachelor of Commerce degree majoring in marketing.
Other current directorships:
Non-executive Director of Alice Queen Limited (ASX:AQX)
Non-executive Director of Symbol Mining Limited (ASX:SL1)
Former directorships (last 3 years): Non-executive Director of Echo Resources Limited (ASX: EAR) – November 2019
Interests in shares:
Interests in options:
375,000 fully paid ordinary shares
180,000 unlisted options exercisable at $0.30 per option, expiring 30 Sep 2023
Name:
Title:
Qualifications:
Experience and expertise:
Colm O’Brien
Non-executive Director (Appointed 18 July 2016, Resigned 23 June 2020)
BCL (Hons), UCC, AICD
Mr O’Brien has over 20 years’ executive level experience in financial services, tier one
management consulting and media industries. He led ASX listed company Aspermont
Limited (ASX: ASP) as chief executive officer and transformed that business from a
local mining publication to a global, digitally led resources media business including
world leading events. Prior to that, Mr O’Brien graduated with a Bachelor of Law, from
University College Cork, Ireland and worked extensively within financial services in
Europe and Australia with Barclays Bank and Andersen Consulting (Accenture).
Mr O’Brien is a founding director of Carrington Partners, a management consultancy
firm focused on providing practical strategic and board/executive support, including
business / technology growth, turnarounds, transformational change, acquisition /
partnership structures and funding introductions.
5
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2020
Other current directorships:
Former directorships (last 3 years): -
Interests in shares:
Interests in options:
Name:
Title:
Qualifications:
Experience and expertise:
Non-executive Director of Pacific Star Network Limited (ASX: PNW)
115,263 fully paid ordinary shares
43,999 listed options exercisable at $0.23 per option, expiring 30 Apr 2021
295,000 unlisted options exercisable at $0.30 per option, expiring 30 Sep 2023
Michael Edwards
Non-executive Director (Appointed 3 November 2017, Resigned 30 September 2019)
Bachelor of Business (Economics and Finance), Curtin University of Technology,
Bachelor of Science (Geology), University of Western Australia, Perth
Mr Edwards is a Geologist and Economist with over 20 years of experience in Senior
Management in both the private and public sector. He has a Bachelor of Business
(Economics and Finance) from Curtin University of Technology and a Bachelor of
Science (Geology) from the University of Western Australia.
Mr Edwards spent three years with Barclays Australia in their corporate finance
department and then eight years as an exploration and mine geologist with companies
such as Gold Mines of Australia Ltd, Eagle Mining Corporation NL and International
Mineral Resources NL.
Mr Edwards has been involved in numerous ASX listing and reverse takeovers across
a range of industries including technology.
Other current directorships:
Non-Executive Director of De.mem Limited (ASX:DEM)
Non-Executive Director of Norwood Systems Limited (ASX:NOR)
Former directorships (last 3 years): Non-Executive Director of Dawine Limited (ASX:DW8) – September 2019
Interests in shares:
Interests in options:
176,549 fully paid ordinary shares
70,385 listed options exercisable at $0.23 per option, expiring 30 Apr 2021
115,351 unlisted options exercisable at $0.30 per option, expiring 30 Sep 2023
Name:
Title:
Qualifications:
Experience and expertise:
Kieran Michael Purcell
Non-executive Director (Appointed 30 September 2019, Resigned 20 February 2020)
B.Com, Graduate Diploma in Applied Financial Investment, Chartered Accountant
Mr Purcell is the General Manager of Morgans Exchange Place and Chairman of the
International Musculoskeletal Research Institute. Mr Purcell was previously State
Manager of Macquarie Private Wealth, Victorian State Manager of Smith Barney
Citigroup, Administration Manager of Merrill Lynch and Executive Officer of ASX.
Mr Purcell has extensive financial management, compliance, structuring and
corporate governance experience, together with exceptional private and public sector
networks.
Other current directorships:
-
Former directorships (last 3 years): -
Interests in shares:
Interests in options:
9,091,774 fully paid ordinary shares
180,000 unlisted options exercisable at $0.30 per option, expiring 30 Sep 2023
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.
6
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2020
Joint company secretary
Brett Tucker (Appointed 5 January 2017)
Mr. Tucker has acted as Company Secretary to a number of ASX listed and private companies and has been involved in
numerous public corporate acquisitions and transactions. Mr. Tucker is a Chartered Accountant with a strong corporate and
compliance background gained from experience in an international accounting practice, working in both audit and taxation
across a wide range of industries.
Deborah Ho (Appointed 31 January 2019)
Ms. Ho has over six years of experience in company secretarial, corporate compliance and financial accounting matters. She
has acted as Company Secretary and financial accountant for a number of Australian publicly listed companies and has also
gained audit experience from her time with international accounting practices. She holds a Bachelor of Commerce from
Curtin University and is an Associate Member of the Governance Institute of Australia.
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 30 June 2020, and the number of meetings attended by each director were:
Stuart Carmichael
Syed Basar Shueb
Mark Twycross
Adrian Smith
Anthony McIntosh
Colm O’Brien
Michael Edwards
Kieran Michael Purcell
Board Meeting
Audit and Risk Committee*
Eligible to
Attend
12
10
5
5
1
12
3
4
Attended
12
1
4
5
-
11
3
4
Eligible to
Attend
-
-
-
-
-
-
-
-
Attended
-
-
-
-
-
-
-
-
* These are conducted by the Board as a whole, as part of board meetings.
The Board also approved twenty (20) circular resolutions during the year ended 30 June 2020 which were signed by all
Directors of the Company.
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated group, 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 Board is responsible for determining and reviewing compensation arrangements for Directors and Senior Executives.
The Board assesses the appropriateness of the nature and amount of emoluments of such officers on a yearly basis by
reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from
the retention of a high quality board and executive team. The expected outcome of this remuneration structure is to retain
and motivate the Directors and Senior Executives.
As part of its Corporate Governance Policies and Procedures, the board has adopted a formal Remuneration Committee
Charter and Remuneration Policy. Currently, the full Board performs the function of the Remuneration Committee. Given that
the consolidated group remains at an early stage of development, the Board’s overall approach to compensation remains
subject to change and will continue to evolve as the consolidated group grows and develops its business.
7
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2020
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
Non-executive directors remuneration
The Constitution provides that the remuneration of non-executive Directors will not be more than the aggregate fixed sum
determined by a general meeting of shareholders. The remuneration of executive Directors will be fixed by the Directors and
may be paid by way of fixed salary or consultancy fee.
Fees and payments to non-executive Directors reflect the demands which are made on, and the responsibilities of, the
Directors. Non-executive Directors’ fees and payments are reviewed annually by the Board. Non-executive Directors do not
receive performance-based pay.
All non-executive Directors are currently paid an annual stipend of A$15,000 to A$50,000. There are currently no separate
attendance fees or fees payable for chairing any committee. The maximum aggregate amount which has been approved to
be paid to non-executive Directors is currently set at A$150,000 per annum.
Executive directors
Executive Directors are not entitled to receive any additional compensation, including employee options, in their capacity as
Directors.
Chairman’s fees
The chairman’s fees are determined independently to the fees of non-executive Directors based on comparative roles in the
external market.
Additional Fees
A Director may also be paid fees or other amounts as the Directors determine if a Director performs special duties or
otherwise performs services outside the scope of the ordinary duties of a Director. A Director may also be reimbursed for
out-of-pocket expenses incurred as a result of their directorship or any special duties.
Retirement Allowances for Directors
Superannuation contributions required under the Australian Superannuation Guarantee Legislation continue to be made and
are deducted from the Directors’ overall fee entitlements where applicable.
Executive remuneration
Compensation Objectives
Pursuant to the Remuneration Policy, the consolidated group’s compensation policies and practices are designed to:
(a) align executive remuneration with shareholder interests;
(b) retain, motive and reward appropriately qualified executive talent for the benefit of the consolidated group;
(c)
(d)
(e)
to achieve a level of remuneration that reflects the competitive market in which the consolidated group operates;
to ensure that individual remuneration is linked to performance criteria if appropriate; and
to ensure that executives are rewarded for both financial and non-financial performance.
The Board aims to satisfy these objectives through the adoption of a compensation program for executive officers that
combines base remuneration, which is market related, with performance-based remuneration which is determined on an
annual basis. All market comparisons reflect an informal assessment and are based on the Board’s knowledge and
experience in executive compensation matters. No remuneration consultant was retained by the Company in determining
the remuneration of any of the KMP.
Overall remuneration decisions are subject to the discretion of the Board and can be changed to reflect competitive and
business conditions where it is in the interests of the consolidated group and shareholders to do so. Executive remuneration
and other terms of employment are reviewed annually by the Board having regard to the performance and relevant
comparative information.
Compensation Components
In accordance with the remuneration policy, the compensation currently consists primarily of three elements: base salary,
cash bonus and long-term equity incentives. Each element of compensation is described in more detail below.
8
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2020
Base Salary
A primary element of the Company’s compensation program is base salary. The Company’s view is that a competitive base
salary is a necessary element for attracting and retaining qualified executive officers. The amount payable to an executive
officer is determined based on the scope of his or her responsibilities and prior experience, while taking into account an
informal evaluation of competitive market compensation for similar positions and overall market demand for such executives
at the time of hire.
Base salaries are reviewed annually and increased for merit reasons, based on the executive officer’s success in meeting
or exceeding Company and individual objectives. Additionally, base salaries can be adjusted as warranted throughout the
year to reflect promotions or other changes in the scope or breadth of the executive officer’s role or responsibilities, as well
as for market competitiveness.
Cash Bonus Plan
Remuneration for certain individuals is directly linked to the performance of the consolidated group. A portion of cash bonus
and incentive payments are dependent on defined milestones being met. Ad hoc cash bonuses may be paid from time to
time if deemed appropriate by the Board, based on the attainment of particular objectives.
Long-Term Equity Incentives
Equity-based awards are a variable element of compensation that allow executive officers to be rewarded for their sustained
contributions to the consolidated group. Equity awards reward continued employment by an executive officer, with an
associated benefit to K-TIG of attraction of employees, continuity and retention. Executives may participate in share,
performance rights and option schemes generally made in accordance with thresholds set in plans approved by shareholders
if deemed appropriate. However, the Board considers it appropriate to retain flexibility to issue shares, performance rights
and options to executives outside of approved schemes in exceptional circumstances.
Voting and comments made at the company's 2019 Annual General Meeting ('AGM')
At the 2019 AGM, 98.9% of the votes received supported the adoption of the remuneration report for the year ended 30 June
2019. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated group are set out in the following tables.
The key management personnel of the consolidated group consisted of the following directors of K-TIG Limited:
●
●
●
●
●
●
●
●
Stuart Carmichael
Syed Shueb (appointed 30 September 2019)
Mark Twycross (appointed 20 February 2020)
Adrian Smith (appointed 20 February 2020)
Anthony McIntosh (appointed 23 June 2020)
Colm O’Brien (resigned 23 June 2020)
Michael Edwards (resigned 30 September 2019)
Kieran Purcell (appointed 30 September 2019, resigned 20 February 2020)
And the following persons:
●
●
Neil Le Quesne, President Market Development (commenced 30 September 2019)
David Williams, Chief Executive Office (commenced 30 September 2019, resigned 16 March 2020)
9
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2020
The value of remuneration received, or receivable by key management personnel for the financial year is as follows:
(a) For the consolidated group (accounting parent), it includes the legal parent K-TIG Limited from 30 September 2019
(acquisition date).
Short-term benefits
Post-
employme
nt benefits
Long-term
benefits
Share-based payments
Salary &
fees
$
Cash
bonus
$
Other
fees
$
Super-
annuation
$
Long
service
leave
$
Equity-
settled
shares
$
Equity-
settled
options
$
2020
Directors
Stuart Carmichael
Syed Shueb1
Mark Twycross2
Adrian Smith2
Anthony
McIntosh3
Colm O’Brien4
Michael Edwards5
Kieran Purcell6
Neil Le Quesne7
William Wilson5
Other Key
Management
Personnel
Neil Le Quesne7
David Williams8
45,000
25,375
37,926
11,797
-
25,375
-
24,063
5,475
-
-
-
-
-
-
-
-
-
-
-
8,500
-
5,000
15,000
-
976
-
-
-
-
4,275
2,411
1,121
1,121
-
2,411
-
1,854
-
-
-
-
-
-
-
-
-
-
-
-
290,009
233,904
171,2759
-
-
-
25,001
17,905
(9,992)
-
698,924
171,275
29,476
56,099
(9,992)
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
103,699
50,127
74,885
58,756
28,163
65,377
-
48,258
34,601
-
45,924
22,341
30,838
30,838
28,163
36,615
-
22,341
29,126
-
-
85,660
476,293
337,469
331,846 1,277,628
1
2
3
4
5
6
7
8
9
Appointed 30 September 2019
Appointed 20 February 2020
Appointed 23 June 2020
Resigned 23 June 2020
Resigned 30 September 2019
Appointed 30 September 2019, resigned 20 February 2020
Resigned as a Director in Keyhole on 30 September 2019, and appointed as President Market Development on 30
September 2019
Appointed as Chief Executive Officer from 30 September 2019 to 16 March 2020
Cash bonus related to specific milestone being met (3 commercial pilot agreement executed), as well as variable
compensation of up to 8% commission on sales achieved by the Executive, or by teams managed by the Executive
10
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2020
(b) K-TIG Limited (legal parent) for the full year ended 30 June 2020, accounting parent from 30 September 2019
(acquisition date).
Short-term benefits
Post-
employment
benefits
Salary &
fees
$
Cash
bonus
$
Other
fees
$
Super-
annuation
$
Long-term
benefits
Long
service
leave
$
Share-based payments
Equity-
settled
shares
$
Equity-
settled
options
$
Total
$
55,500
25,375
37,926
11,797
-
31,375
6,000
12,063
-
-
-
-
-
-
-
-
8,500
-
5,000
15,000
-
976
-
-
5,273
2,411
1,121
1,121
-
2,981
570
1,854
-
-
-
-
-
-
-
-
224,644
199,811
150,661
-
-
-
18,750
15,348
(9,992)
-
604,491
150,661
29,476
49,429
(9,992)
-
-
-
-
-
-
-
-
-
-
-
45,924
22,341
30,838
30,838
28,163
36,615
14,317
22,341
115,197
50,127
74,885
58,756
28,163
71,947
20,887
36,258
-
85,660
384,063
300,819
317,037 1,141,102
2020
Directors
Stuart Carmichael
Syed Shueb1
Mark Twycross2
Adrian Smith2
Anthony
McIntosh3
Colm O’Brien4
Michael Edwards5
Kieran Purcell6
Other Key
Management
Personnel
Neil Le Quesne1
David Williams7
1
2
3
4
5
6
7
Appointed 30 September 2019
Appointed 20 February 2020
Appointed 23 June 2020
Resigned 23 June 2020
Resigned 30 September 2019
Appointed 30 September 2019, resigned 20 February 2020
Appointed 30 September 2019, resigned 16 March 2020
The value of remuneration received, or receivable by key management personnel for the previous financial year is as follows:
(a) Keyhole TIG Limited (accounting parent)
Short-term benefits
Post-
employme
nt benefits
Long-term
benefits
Share-based payments
2019
Directors
Kieran Purcell
Neil Le Quesne
Syed Shueb
William Wilson
Salary &
fees
$
Cash
bonus
$
Other
fees
$
Super-
annuation
$
Long
service
leave
$
Equity-
settled
shares
$
Equity-
settled
options
$
Total
$
-
293,932
-
-
-
67,659
-
-
293,932
67,659
-
-
-
-
-
-
25,000
-
-
25,000
-
-
-
-
-
-
-
-
-
-
32,483
129,137
4,935
4,935
32,483
515,728
4,935
4,935
171,490
558,081
11
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2020
(b)
K-TIG Limited (legal parent)
Short-term benefits
Post-
employme
nt benefits
Long-term
benefits
Share-based payments
Salary &
fees
$
Cash
bonus
$
Other
fees
$
Super-
annuation
$
Long
service
leave
$
Equity-
settled
shares
$
Equity-
settled
options
$
Total
$
42,000
24,000
24,000
90,000
-
-
-
-
-
5,305
63
3,990
2,280
2,280
5,368
8,550
-
-
-
-
-
-
-
-
-
-
-
-
45,990
31,585
26,343
103,918
2019
Directors
Stuart Carmichael
Colm O’Brien
Michael Edwards
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Directors
Stuart Carmichael
Syed Shueb
Mark Twycross
Adrian Smith
Anthony McIntosh
Colm O’Brien
Michael Edwards
Kieran Purcell
Other Key Management
Personnel
Neil Le Quesne
David Williams
Fixed remuneration
2019
2020
At risk - STI
At risk - LTI
2020
2019
2020
2019
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
66%
100%
100%
100%
34%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Cash bonuses are dependent on meeting defined performance measures. Cash bonuses were paid during the financial year
as per remuneration tables above.
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:
Resigned:
Details:
Mark Twycross
Executive Director (resigned 28 July 2020)
16 March 2020
Indefinite term until terminated (1 month written notice)
Resigned as Executive Director and appointed as Non-executive Director on 28 July
2020
Base salary of $7,500 per month plus superannuation
Agreed day rate of $1,000 for any international / interstate attendance
Review of the terms will be conducted by the Board annually
12
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2020
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Adrian Smith
Executive Director
28 July 2020
Indefinite term until terminated (1 month written notice)
Base salary of $7,500 per month plus superannuation
Agreed day rate of $1,000 for any international / interstate attendance
Review of the terms will be conducted by the Board annually
Neil Le Quesne
President Market Development
1 August 2019
Indefinite term until terminated (4 months’ written notice)
Base salary of $297,000 per annum plus superannuation
Maximum bonus of up to $200,000 based on specific milestones (1 August 2019 – 30
June 2020):
$50,000 payable upon each commercial pilot agreement executed (maximum
3 payments)
$30,000 payable upon receipt of minimum $300,000 sale/licence/lease
$20,000 payable upon execution of 3 pilot agreements achieving 100% of its
sale milestone
Variable compensation of up to 8% commission on sales achieved by the Executive,
or by teams managed by the Executive
Review of the terms will be conducted by the Board annually
Name:
Title:
Agreement commenced:
Resigned:
Term of agreement:
Details:
David Williams
Chief Executive Officer
1 August 2019
Resigned 16 March 2020
Indefinite term until terminated (3 months’ written notice)
Base salary of $300,000 per annum (inclusive of superannuation)
Review of the terms will be conducted by the Board annually
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
No shares were issued to directors and other key management personnel as part of compensation during the year ended 30
June 2020.
13
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2020
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:
Number of
options
granted
Name
Stuart Carmichael
Syed Shueb
Mark Twycross
Adrian Smith
Anthony McIntosh
Colm O’Brien
Michael Edwards
Kieran Purcell
David Williams
370,000
180,000
180,000
180,000
180,000
295,000
115,351
180,000
500,000
Grant date
30/09/2019
30/09/2019
21/02/2020
21/02/2020
26/06/2020
30/09/2019
30/09/2019
30/09/2019
21/02/2020
Vesting date and
exercisable date
Expiry date
price
Exercise
Fair value
per option
at grant date
30/09/2019
30/09/2019
21/02/2020
21/02/2020
26/06/2020
30/09/2019
30/09/2019
30/09/2019
21/02/2020
30/09/2023
30/09/2023
30/09/2023
30/09/2023
30/09/2023
30/09/2023
30/09/2023
30/09/2023
30/09/2023
$0.30
$0.30
$0.30
$0.30
$0.30
$0.30
$0.30
$0.30
$0.30
$0.124
$0.124
$0.171
$0.171
$0.156
$0.124
$0.124
$0.124
$0.171
Options granted carry no dividend or voting rights. All options were granted over unissued fully paid ordinary shares in the
company. Options vest based on the vesting period whereby the executive becomes beneficially entitled to the option on
vesting date. Options are exercisable by the holder as from the vesting date. There has not been any alteration to the terms
or conditions of the grant since the grant date. There are no amounts paid or payable by the recipient in relation to the
granting of such options other than on their potential exercise.
Values of options over ordinary shares granted, exercised and lapsed for directors and other key management personnel as
part of compensation during the year ended 30 June 2020 are set out below:
Value of
options
granted
Value of
options
exercised
Value of
options
lapsed
during the during the during the
year
$
year
$
year
$
Remuneration
consisting of
options
for the
year
%
Stuart Carmichael
Syed Shueb
Mark Twycross
Adrian Smith
Anthony McIntosh
Colm O’Brien
Michael Edwards
Kieran Purcell
Neil Le Quesne
David Williams
45,924
22,341
30,838
30,838
28,163
36,615
14,317
22,341
29,126
85,660
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
40%
45%
41%
52%
100%
51%
69%
62%
6%
28%
Additional information
The earnings of the consolidated group for the five years to 30 June 2020 are summarised below.
Sales revenue
EBITDA
EBIT
Loss after income tax
2020
$
2019
$
2018
$
2017
$
2016
$
333,366
(8,245,702)
(8,407,290)
(8,411,825)
1,069,198
(1,641,599)
(1,686,617)
(1,690,187)
2,236,196
(33,018)
(101,189)
(105,787)
1,239,710
(1,166,257)
(1,199,963)
(1,199,963)
1,602,594
(491,402)
(533,842)
(533,842)
14
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2020
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
2020
2019
2018
2017
2016
Share price at financial year end ($) *
Total dividends declared (cents per share) *
Basic loss per share (cents per share) *
0.185
-
(6.97)
-
-
-
-
-
-
-
-
-
-
-
-
* Despite the consolidated group applying the continuation method of accounting for the acquisition of Keyhole, the factors
affecting the TSR have not been presented for financial years before 30 June 2020 due to incomparable operations and
capital structures.
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 group, including their personally related parties, is set out below:
Balance at
the start of
the year
Balance
at
appointment
Received
as part of
remuneration
Additions/
other
Disposals/
other
Balance at
the end of
the year*
Ordinary shares
Stuart Carmichael
Syed Shueb
Mark Twycross
Adrian Smith
Anthony McIntosh
Colm O’Brien
Michael Edwards
Kieran Purcell
Neil Le Quesne
David Williams
10,000,000
-
-
-
-
6,570,000
10,063,333
-
-
-
26,633,333
-
-
-
-
375,000
-
-
-
-
-
375,000
-
-
-
-
-
-
-
-
-
-
-
-
2,528,1553
-
-
-
-
-
9,972,8883
11,962,4073
-
24,463,450
(9,824,562)1
-
-
-
-
(6,454,737)1
(9,886,784)1
(881,114)2
-
-
(27,047,197)
175,438
2,528,155
-
-
375,000
115,263
176,549
9,091,774
11,962,407
-
24,424,586
*
1
2
3
Held at resignation
Share consolidation of 57:1
Disposed on market
Issued as Consideration Shares as per Company’s Replacement Prospectus dated 15 August 2019
Option holding
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 group, including their personally related parties, is set out below:
Balance at
the start of
the year
Granted
upon
appointment
Additions/
other
Exercised consolidation
Share
Balance at
the end of
the year5
Options over ordinary shares
Stuart Carmichael
Syed Shueb
Mark Twycross
Adrian Smith
Anthony McIntosh
Colm O’Brien
Michael Edwards
Kieran Purcell
Neil Le Quesne
David Williams
4,000,000
-
-
-
-
2,508,000
4,012,000
-
-
-
10,520,000
-
180,000
180,000
180,000
180,000
-
-
-
-
500,000
1,220,000
370,0006
-
-
-
-
295,0006
115,3516
180,0006
-
-
960,351
-
-
-
-
-
-
-
-
-
-
-
(3,929,826)7
-
-
-
-
(2,464,001)7
(3,941,615) 7
-
-
-
(10,335,442)
440,174
180,000
180,000
180,000
180,000
338,999
185,736
180,000
-
500,0003
2,364,909
5
6
7
All options are exercisable at 30 June 2020
Issued as Director Options exercisable as per Company’s Replacement Prospectus dated 15 August 2019
Share consolidation of 57:1
15
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2020
Other transactions with key management personnel and their related parties
During the financial year, payments for company secretarial, accounting and corporate advisory fees, totalling $138,797 (30
June 2019: nil) were made to Ventnor Capital Pty Ltd (director-related entity of Mr Carmichael). The current trade and other
payable balance as at 30 June 2020 was $11,132 (30 June 2019: nil). All transactions were made on normal commercial
terms and conditions and at market rates.
During the financial year, related party loans of $359,740 were settled in full through the issue of 5,667,946 ordinary shares
of Keyhole on 1 July 2019. Shares were valued at 6.3 cents per share upon conversion.
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of K-TIG Limited under option at the date of this report are as follows:
Grant date
29/01/2018
30/09/2019
21/02/2020
26/06/2020
Expiry date
30/04/2021
30/09/2023
30/09/2023
30/09/2023
Exercise
price
$0.23
$0.30
$0.30
$0.30
Number
under option
2,101,428
5,472,152
960,000
180,000
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 K-TIG Limited were issued during the year ended 30 June 2020 and up to the date of this
report on the exercise of options granted:
Date options granted
29/01/2018
Exercise
price
$0.23
Number of
shares issued
16,489
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.
Non-audit services
There were a total of $43,136 non-audit services provided during the financial year by the auditor (2019: $65,595).
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
16
K-TIG Limited and Its Controlled Entities
Directors' report
For the year ended 30 June 2020
The directors are of the opinion that the services as disclosed in note 24 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 – Part
4A of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the company,
acting as advocate for the company or jointly sharing economic risks and rewards.
●
Officers of the company who are former partners of BDO Audit (SA) Pty Ltd
There are no officers of the company who are former partners of BDO Audit (SA) Pty Ltd.
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
BDO Audit (SA) Pty Ltd 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
___________________________
Stuart Carmichael
Chairman
30 September 2020
Perth
17
Tel: +61 8 7324 6000
Fax: +61 8 7324 6111
www.bdo.com.au
Level 7, BDO Centre
420 King William Street
Adelaide SA 5000
GPO Box 2018, Adelaide SA 5001
AUSTRALIA
DECLARATION OF INDEPENDENCE
BY G K EDWARDS
TO THE DIRECTORS OF K-TIG LIMITED
As lead auditor of K-TIG Limited for the year ended 30 June 2020, I declare that, to the best of my
knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of K-TIG Ltd and the entities it controlled during the period.
G K Edwards
Director
BDO Audit (SA) Pty Ltd
Adelaide, 30 September 2020
BDO Audit (SA) Pty Ltd ABN 33 161 379 086 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (SA) Pty Ltd and BDO (Australia) Ltd are members of BDO International
Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme
approved under Professional Standards Legislation.
K-TIG Limited and Its Controlled Entities
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2020
Sales revenue
Cost of sales
Gross profit/(loss)
Other income
Expenses
Marketing expenses
Corporate expense
Service expense
Employee benefits expense
Office / workshop expense
Travel expense
R&D expense
Reverse acquisition cost
Excess consideration arising on reverse acquisition
Other expenses
(Loss) before income tax expense
Income tax expense
(Loss) for the year
Other comprehensive income
Total comprehensive loss for the year
Loss per share to the owners of K-TIG Limited
Basic loss per share
Diluted loss per share
Note
Consolidated
2020
$
2019
$
4
5
6
3
7
333,366
(335,073)
(1,707)
1,069,198
(480,752)
588,446
147,933
42,237
(180,669)
(689,618)
(154,598)
(2,228,853)
(239,646)
(114,839)
(59,314)
(1,853,772)
(3,000,777)
(35,965)
(151,489)
(403,778)
(50,957)
(1,358,232)
(141,558)
(117,826)
(76,492)
-
-
(20,538)
(8,411,825)
(1,690,187)
-
-
(8,411,825)
(1,690,187)
-
-
(8,411,825)
(1,690,187)
Cents
Cents
34
34
(6.97)
(6.97)
(3.68)
(3.68)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
19
K-TIG Limited and Its Controlled Entities
Consolidated statement of financial position
As at 30 June 2020
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangibles
Total non-current assets
Liabilities
Current liabilities
Trade and other payables
Amounts received in advance
Borrowings
Lease liabilities
Employee benefits
Total current liabilities
Non-current liabilities
Lease liabilities
Employee benefits
Total non-current liabilities
Total liabilities
Net assets / (liabilities)
Equity
Issued capital
Share based payment reserve
Accumulated losses
Total equity
Notes
Consolidated
2020
$
2019
$
8
9
10
11
12
13
14
15
16
17
18
17
18
3,493,579
111,670
368,008
3,973,257
943,820
72,695
373,117
1,389,632
479,242
168,228
52,989
700,459
4,673,716
129,050
-
64,045
193,095
1,582,727
420,235
114,862
-
87,888
126,665
749,650
202,407
7,300
1,610,780
-
106,231
1,926,718
85,209
6,242
91,451
-
84,716
84,716
841,001
2,011,434
3,832,615
(428,707)
19
20
17,732,901
871,990
(14,772,276)
5,327,819
603,925
(6,360,451)
3,832,615
(428,707)
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
20
K-TIG Limited and Its Controlled Entities
Consolidated statement of changes in equity
For the year ended 30 June 2020
Consolidated
Non-
Redeemable
Series A
Preference
Shares
$
Issued capital
$
Share based
payments
reserve
$
Accumulated
losses
$
Total
$
Balance at 1 July 2018
2,348,884
2,978,935
347,321
(4,670,264)
1,004,876
Loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Share based payments
-
-
-
-
-
-
-
-
-
-
-
(1,690,187)
-
(1,690,187)
-
(1,690,187)
(1,690,187)
256,604
-
256,604
Balance at 30 June 2019
2,348,884
2,978,935
603,925
(6,360,451)
(428,707)
Balance at 1 July 2019
2,348,884
2,978,935
603,925
(6,360,451)
(428,707)
Loss for the year
Other comprehensive income for the year
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Issue of share options
Exercise of share options
Conversion to preference Shares on reverse
acquisition
Issue of shares, net of transaction costs
Issue of shares to advisor
Conversion of borrowings to equity
Issue of options
Options exercised
Reverse acquisition deemed consideration
-
-
-
-
633,051
-
-
-
-
-
2,978,935
(2,978,935)
6,528,788
1,095,000
1,610,780
-
3,792
2,533,671
-
-
-
-
-
-
-
-
-
-
(8,411,825)
-
(8,411,825)
-
(8,411,825)
(8,411,825)
29,126
(633,051)
-
-
-
-
871,990
-
-
-
-
-
-
-
-
-
-
-
29,126
-
-
6,528,788
1,095,000
1,610,780
871,990
3,792
2,533,671
871,990
(14,772,276)
3,832,615
Balance at 30 June 2020
17,732,901
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
21
K-TIG Limited and Its Controlled Entities
Consolidated statement of cash flows
For the year ended 30 June 2020
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Other income
Interest and other finance costs paid
Notes
Consolidated
2020
$
2019
$
442,201
(4,317,879)
1,133,987
(2,415,538)
(3,875,678)
3,638
93,080
(8,173)
(1,281,551)
2,166
59,502
(3,570)
Net cash used in operating activities
31
(3,787,133)
(1,223,453)
Cash flows from investing activities
Payments for intangibles
Payments for property, plant and equipment
Cash acquired on acquisition
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from borrowings
Repayment of lease liabilities
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
3
33
33
-
(143,192)
30,670
(1,744)
(2,519)
-
(112,522)
(4,263)
6,532,315
-
(82,901)
-
1,244,607
-
6,449,414
1,244,607
2,549,759
943,820
16,891
926,929
Cash and cash equivalents at the end of the financial year
8
3,493,579
943,820
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
22
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
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 group 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 are most relevant to the consolidated group:
AASB 16 Leases
AASB 16 replaces AASB 117 Leases and introduces a single lessee accounting model that requires a lessee to recognise
right-of-use assets and lease liabilities for all leases with a term of more than 12 months, unless the underlying asset is of
low value. Right-of-use assets are initially measured at cost and lease liabilities are initially measured on a present value
basis.
As described in Note 17, the consolidated group has applied AASB 16 using the modified retrospective approach #1 whereby
the right of use asset equals the lease liability recognised, therefore comparative information has not been restated. This
means comparative information is still reported under AASB 17.
Subsequent to initial recognition:
(a) Right-of-use assets are accounted for on a similar basis to non-financial assets, whereby the right-of-use asset is
accounted for on a cost basis unless the underlying asset is accounted for on a revaluation basis, in which case if
the underlying asset is:
i.
Investment property, the lessee applies the fair value model in AASB 140 Investment Property to the
right-of-use asset; or
ii. Property, plant or equipment, applies the revaluation model in AASB 116 Property, Plant and Equipment
to all of the right-of-use assets that relate to that class of property, plant and equipment; and
(b) Lease liabilities are accounted for on a similar basis to other financial liabilities, whereby interest expense is
recognised in respect of the lease liability and the carrying amount of the lease liability is reduced to reflect the
principal portion of lease payments made.
AASB 16 substantially carries forward the lessor accounting requirements of the predecessor standard, AASB 117.
Accordingly, under AASB 16 a lessor continues to classify its leases as operating leases or finance leases subject to whether
the lease transfers to the lessee substantially all of the risks and rewards incidental to ownership of the underlying asset,
and accounts for each type of lease in a manner consistent with the current approach under AASB 117.
The consolidated group recognises right-of-use assets totalling $255,998 representing its right to use the underlying asset
and lease liabilities representing its obligations to make lease payments with exemptions for short-term leases and leases of
low-value items. The recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated
useful life and the lease term. Right-of-use assets are subject to impairment.
In calculating the present value of lease payments, the consolidated group uses the incremental borrowing rate of 3.72%.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for
the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a
change in lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the
underlying asset.
23
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 1. Significant accounting policies (continued)
The following is a reconciliation of total operating lease commitments at 30 June 2019 to the lease liabilities recognised at 1
July 2019:
Total operating lease commitments disclosed at 30 June 2019
Recognition exemptions
Leases of low value assets
Leases with remaining lease term of less than 12 months
Variable lease payments not recognized
Lease liabilities before discounting
Reasonably certain extension options
Discounted using incremental borrowing rate
Total lease liabilities recognised under AASB 16 at 1 July 2019
$
90,052
-
-
-
90,052
180,599
(14,653)
255,998
The consolidated group exercised its right to extend the lease for the final two-year period of the agreement with the lease
expiry date being 5 June 2022.
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 financial assets and liabilities at fair value through profit or loss.
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 group'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.
Going concern
The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business
activity and the realisation of assets and the settlement of liabilities in the ordinary course of business. The consolidated
group incurred a loss for the year ended 30 June 2020 of $8,411,825 (2019: $1,690,187) and net cash outflows from operating
activities of $3,787,133 (2019: $1,223,453).
The Directors believe that there are reasonable grounds to believe that the consolidated group will be able to continue as
going concern after consideration of the following factor:
On 4 September 2020, the Company raised $5,600,000 (before costs) via a private placement to institutional and
sophisticated investors. 22,400,000 fully paid ordinary shares is to be issued at an exercise price of $0.25 per share.
Of these 22,400,000 shares, the Company issued 21,660,000 fully paid ordinary shares on 16 September 2020,
raising $5,415,000 (before costs). The remaining 740,000 shares are to be issued subject to shareholder approval
at the Company’s Annual General Meeting anticipated to be held in November.
The Directors believe there are sufficient funds to meet the consolidated group’s working capital requirements as at the date
of this report.
24
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 1. Significant accounting policies (continued)
Reverse Acquisition
On 30 September 2019, K-TIG Limited (previously known as Serpentine Technologies Limited) ('KTG') completed the 100%
acquisition of Keyhole TIG Limited ('Keyhole'). The acquisition of Keyhole resulted in the shareholders of Keyhole obtaining
control of the merged entity. Under Australian Accounting Standard ('AASB') 3 'Business Combinations', the acquisition is to
be accounted for as a reverse acquisition whereby Keyhole is deemed to be the accounting acquirer in this transaction, and
KTG is deemed to be the accounting acquiree. The acquisition has been accounted for as a share-based payment using the
principles set out in AASB 2 'Share-Based Payments', by which Keyhole is deemed to have issued shares in exchange for
the net assets and listing status of KTG. The difference between the fair value of the deemed consideration paid by Keyhole
and the fair value of the identifiable assets of KTG, is required to be recognised as an expense.
Accordingly, the consolidated financial statements of KTG have been prepared as a continuation of the business and
operations of Keyhole, with the exception of the capital structure. Keyhole has accounted for the acquisition of KTG from the
30 September 2019. The comparative information for the year ended 30 June 2020 presented in the consolidated financial
statements is that of Keyhole. The implications of the acquisition by Keyhole on the financial statements are as follows:
Consolidated Statement of Profit or Loss and Other Comprehensive Income
The statement of profit or loss and other comprehensive income comprises the total comprehensive income for the year
ended 30 June 2020 for Keyhole as the accounting parent and KTG from 30 September 2019 as the accounting
subsidiary.
The statement of profit or loss and other comprehensive income for the year ended 30 June 2019 comprises of Keyhole
balances only.
Consolidated Statement of Financial Position
The statement of financial position as at 30 June 2020 represents the K-TIG Limited consolidated group.
The statement of financial position comparative represents Keyhole as at 30 June 2019.
Consolidated Statement of Changes in Equity
The equity balance of Keyhole as at the beginning of the year (1 July 2019).
The total comprehensive income for the year and transactions with equity holders, being 12 months from Keyhole as
the accounting parent and KTG from 30 September 2019 as the accounting subsidiary.
The equity balance of the K-TIG Limited consolidated group as at 30 June 2020.
The Statement of Changes in Equity comparatives are for Keyhole for the year ended 30 June 2019.
Consolidated Statement of Cash Flows
The cash balance of Keyhole at the beginning of the year (1 July 2019).
The cash balance as at 30 June 2020 reflects the K-TIG Limited consolidated group.
The transactions for the year ended 30 June 2019 are from Keyhole and the year ended 30 June 2020 for Keyhole as
the accounting parent and KTG from 30 September 2019 as the accounting subsidiary.
Equity Structure
The equity structure (the number and type of equity instruments issued) in the financial statements reflects the equity
structure of KTG.
Earnings per Share
The weighted average number of shares outstanding for the year ended 30 June 2020 is based on the combined weighted
average number of shares of the K-TIG Limited consolidated group outstanding in the year.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated group only.
Supplementary information about the legal parent entity is disclosed in Note 28.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of K-TIG Limited ('company' or
'parent entity') as at 30 June 2020 and the results of Keyhole for the year then ended as the accounting parent and KTG
from 30 September 2019 as the accounting subsidiaryd. K-TIG Limited and its subsidiaries together are referred to in these
financial statements as the 'consolidated group'.
25
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 1. Significant accounting policies (continued)
Subsidiaries are all those entities over which the consolidated group has control. The consolidated group controls an entity
when the consolidated group 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 group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated group 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 group.
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.
Where the consolidated group 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 group 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 K-TIG 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.
Revenue recognition
The consolidated group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated group is expected to be entitled
in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated group:
identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction
price; 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.
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.
Rendering of services
Revenue from a contract to provide services is recognised over time as the services are rendered.
Revenue from government grants
Grant income is recognised in line with AASB 120, this being when there is reasonable assurance the consolidated group
has complied with the conditions attached to the grant.
26
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 1. Significant accounting policies (continued)
WaaS
Welding as a Service (WaaS) revenue is recognised at an amount which reflects the greater of the monthly minimum charge
or the usage rate stipulated in the contract which the consolidated group is expected to be entitled to under an operating
lease in accordance with AASB 16. The minimum term of the license or lease period is generally three years. The license or
lease equipment is capitalised as an asset and depreciated over the expected useful life being five years. Upon signing of
the license or lease contract the customer is generally required to make a prepayment which is recorded on the statement
of financial position as “Amounts received in advance”. After delivery and commissioning of the WaaS asset, the prepayment
is applied against the monthly fee until it is exhausted.
Interest
Interest income 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.
Prior to the acquisition of Keyhole TIG Limited, K-TIG Limited (the 'legal parent') and its wholly-owned Australian
subsidiaries had formed an income tax consolidated group under the tax consolidation regime. K-TIG Limited is now in the
process of adding Keyhole TIG Limited to that group. The legal parent and each subsidiary in the tax consolidated group
continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the 'separate
taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of the tax
consolidated group.
In addition to its own current and deferred tax amounts, the legal parent also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax
consolidated group.
27
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 1. Significant accounting policies (continued)
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the
intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither a
contribution by the legal parent to the subsidiaries nor a distribution by the subsidiaries to the legal parent.
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 group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within
12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used
to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the consolidated group's normal operating cycle;
it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
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 group 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.
Inventories
Materials and components and finished goods are stated at the lower of cost and net realisable value on a 'first in first out'
basis. Cost comprises of direct materials. Costs of purchased inventory are determined after deducting rebates and discounts
received or receivable.
Stock in transit is stated at the lower of cost and net realisable value. Cost comprises of purchase and costs, net of rebates
and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
Financial assets
Financial assets are measured at amortised cost if they are held within a business model whose objective is to hold the
financial assets and collect its contractual cash flows, and the contractual terms of the financial assets give rise to cash flows
that are solely payments of principal and interest on the principal amount outstanding. After initial recognition, these are
measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is
immaterial. The consolidated group’s cash and cash equivalents, trade and other receivables fall into this category of financial
instruments.
28
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 1. Significant accounting policies (continued)
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the
consolidated group has transferred substantially all the risks and rewards of ownership. When there is no reasonable
expectation of recovering part or all of a financial asset, its carrying value is written off.
Impairment of financial assets
The consolidated group recognises a loss allowance for expected credit losses on financial assets which are measured at
amortised cost. The measurement of the loss allowance depends upon the consolidated group'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.
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 to write off the net cost of each item of property, plant and equipment over
their expected useful lives as follows:
Leasehold improvements
WaaS assets
Plant and equipment
Computer Equipment
2 years
5 years
2.5 -20 years
3 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Leasehold improvements are depreciated over the unexpired period of the lease or the estimated useful life of the assets,
whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
consolidated group. 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.
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 group 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 group 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.
29
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 1. Significant accounting policies (continued)
Intangible assets
Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and
are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less
amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible
assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The
method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption
or useful life are accounted for prospectively by changing the amortisation method or period.
Patents and trademarks
Significant costs associated with patents and trademarks are deferred and amortised on a straight-line basis over the period
of their expected benefit, being their finite life of 10 years. Amortisation expense is recognised as R&D expense in the profit
or Loss.
Impairment of non-financial assets
Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated group 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.
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the statement
of financial position, net of transaction costs.
On the issue of the convertible notes the fair value of the liability component is determined using a market rate for an
equivalent non-convertible bond and this amount is carried as a non-current liability on the amortised cost basis until
extinguished on conversion or redemption. The increase in the liability due to the passage of time is recognised as a finance
cost. The remainder of the proceeds are allocated to the conversion option that is recognised and included in shareholders
equity as a convertible note reserve, net of transaction costs. The carrying amount of the conversion option is not remeasured
in the subsequent years. The corresponding interest on convertible notes is expensed to profit or loss.
30
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 1. Significant accounting policies (continued)
Leases
As a lessee
For any new contracts entered on or after 1 July 2019, the consolidated group considers whether a contract is, or contains
a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset)
for a period of time in exchange for consideration’. To apply this definition the consolidated group assesses whether the
contract meet three key evaluations which are whether:
- The contract contains an identified asset, which is either explicitly identified in the contact or implicitly specified by
being identified at the time the asset is made available to the consolidated group;
- The consolidated group has the right to obtain substantially all of the economic benefits from use of the identified
asset throughout the period of use, considering its rights within the defined scope of the contract;
- The consolidated group has the right to direct the use of the identified asset throughout the period of use. The
consolidated group assesses whether it has the right to direct ‘how and for what purposes’ the asset is used
throughout the period of use.
As a lessor
The consolidated group’s accounting policy under AASB 16 has not changed from the comparative period. As a lessor, the
consolidated group classified its leases as either operating or finance leases. A lease is classified as a finance lease if it
transfers substantially all the risks and rewards incidental to ownership of the underlying asset and classified as an operating
lease if it does not.
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 group'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 group has a present (legal or constructive) obligation as a result of a past
event, it is probable the consolidated group 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, annual leave and long service 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.
31
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 1. Significant accounting policies (continued)
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.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-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.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using
either the 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 group receives the services that entitle the employees to receive payment. No account is taken of any other
vesting conditions.
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.
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 group or employee, the failure to satisfy the condition is
treated as a cancellation. If the condition is not within the control of the consolidated group 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.
32
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 1. Significant accounting policies (continued)
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.
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.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree. All acquisition costs are expensed as incurred
to profit or loss.
On the acquisition of a business, the consolidated group assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic conditions, the consolidated
group’s operating or accounting policies and other pertinent conditions in existence at the acquisition-date.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and the fair value of the
consideration transferred and the fair value of any pre-existing investment in the acquiree is recognised as goodwill. If the
consideration transferred and the pre-existing fair value is less than the fair value of the identifiable net assets acquired,
being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on
the acquisition-date, but only after a reassessment of the identification and measurement of the net assets acquired, the
non-controlling interest in the acquiree, if any, the consideration transferred and the acquirer's previously held equity interest
in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period ends
on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of K-TIG 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.
33
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 1. Significant accounting policies (continued)
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.
New Accounting Standards and Interpretations not yet mandatory or early adopted
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 group for the annual reporting period ended 30 June 2020. The consolidated
group has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
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.
Share-based payment transactions
The consolidated group measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-
Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting
estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts
of assets and liabilities within the next annual reporting period but may impact profit or loss and equity.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit
loss rate for each group. These assumptions include recent sales experience and historical collection rates.
Estimation of useful lives of assets
The consolidated group 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.
34
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 2. Critical accounting judgements, estimates and assumptions (continued)
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The consolidated group assesses impairment of non-financial assets other than goodwill and other indefinite life intangible
assets at each reporting date by evaluating conditions specific to the consolidated group and to the particular asset that may
lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value
less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.
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 group'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 group 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 group 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.
Employee benefits provision
As discussed in note 1, the liability for employee benefits expected to be settled more than 12 months from the reporting
date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all
employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases
through promotion and inflation have been taken into account.
Note 3. Acquisition of Keyhole TIG Limited
On 30 September 2019, K-TIG Limited (previously known as Serpentine Technologies Limited) (‘KTG’) completed the 100%
acquisition of Keyhole TIG Limited (‘Keyhole’). The acquisition of Keyhole resulted in the shareholders of Keyhole obtaining
control of the merged entity. Under Australian Accounting Standard (‘AASB’) 3 “Business Combinations’, the acquisition is
to be accounted for as a reverse acquisition whereby Keyhole is deemed to be the accounting acquirer in the transaction,
and KTG is deemed to be the accounting acquiree. The acquisition has been accounted for as a share-based payment using
the principles set out in AASB 2 ‘Share-Based Payments’, by which Keyhole is deemed to have issued shares in exchange
for the net assets and listing status of KTG. The difference between the fair value of the deemed consideration paid by
Keyhole and the fair value of the identifiable assets of KTG, is required to be recognised as an expense.
Acquisition Consideration
As consideration for the acquisition of 100% of the issued Keyhole securities, KTG issued 80,200,501 consideration shares
and up to 30,075,135 deferred consideration shares. Refer to Note 19 for terms of the deferred consideration shares.
Deemed Purchase Consideration
The deemed acquisition costs for obtaining control over KTG calculated at fair value in accordance to AASB 13 'Fair Value
Measurement' hierarchy. The agreed acquisition price per share of KTG is more reliable. The deemed acquisition cost is
therefore $2,533,671 (26,608,857 of KTG shares at $0.0952 per share).
35
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Fair value of securities transferred
Fair value of net identifiable assets held at acquisition date
- Cash and cash equivalents
- Trade and other receivables
- Trade and other payables
- Pre-paid share issue costs
Total fair value of identifiable net liabilities
Excess consideration arising on reverse acquisition
Note 4. Revenue
Revenue from contracts with customers
Sale of goods
Rendering of services
Other trading revenue
Revenue from WaaS lessor arrangements
Note 4. Revenue (Continued)
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Geographical regions
Australia
United Kingdom
United States
Rest of the World
Timing of revenue recognition
Goods transferred at a point in time
Services transferred at a point in time
36
Fair Value
30 Sep 2019
$
2,533,671
30,670
61,981
(582,459)
22,702
(467,106)
3,000,777
Consolidated
2020
$
283,580
31,202
1,942
316,724
16,642
2019
$
950,307
97,090
21,801
1,069,198
-
333,366
1,069,198
Consolidated
2020
$
2019
$
175,062
65,399
67,125
9,138
910
101,317
888,086
78,885
316,724
1,069,198
285,522
31,202
972,108
97,090
316,724
1,069,198
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 5. Other income
Interest received
Government grants
Other income
Consolidated
2020
$
2019
$
3,638
143,080
1,215
147,933
2,166
40,071
-
42,237
As part of its response to COVID-19, the Australian Government, in March 2020, announced various stimulus measures to
ease the burden experienced by businesses as a result of the economic fallout from the coronavirus lockdown and social
distancing measures. The ‘Boosting Cash Flow for Employers’ provides a tax-free ‘payment’ to eligible SMEs with aggregated
annual turnover of less than $50 million if they employ people between 1 January 2020 and 30 June 2020.
As both the ‘initial cash flow boost’ and ‘additional cash flow boost’ are effectively a waiver of the whole, or part, of the PAYG
liability, the amount of the ‘payment’ is recognised as a reduction in the PAYG liability and grant income under AASB
120 Accounting for Government Grants and Disclosure of Government Assistance because these cash flow boosts are being
provided by the Government in return for compliance with conditions relating to the operating activities of the entity. That is,
the receipt of the cash flow boosts is conditional upon the employer incurring salary expense, and therefore a withholding
tax liability for PAYG.
Note 6. Expenses
Loss before income tax from continuing operations includes the following specific
expenses:
Depreciation Expense
Leasehold improvements
Plant and equipment
Computer equipment
WaaS assets
Right-of-use assets
Amortisation
Amortisation of trademarks
Finance Costs
Interest and finance charges on borrowings
Interest and finance charges on lease liabilities
Reverse Acquisition Costs
Shares issued to advisor
Options issued to advisor
Legal expenses
Other expenses
Consolidated
2020
$
2019
$
33,368
17,887
8,106
3,401
87,770
150,532
12,957
19,869
1,136
-
-
33,962
11,056
11,057
-
8,114
8,114
3,570
-
3,570
1,095,000
537,654
180,380
40,738
1,853,772
-
-
-
-
-
37
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Net foreign exchange loss
Net foreign exchange loss
Rent
Rental expenses relating to operating leases not recognised due to being short-term or low
value
Superannuation Expense
Defined contribution superannuation expense
Professional Services
General legal fees
Share Based Payment Expense
Options issued to executive
Options issued to directors
Options issued to employees
Options issued to advisors
Note 7. Income tax expense
6,472
11,393
9,756
102,713
131,667
88,224
37,315
46,277
85,660
260,503
17,131
537,654
900,948
109,611
-
146,993
-
256,604
The prima facie tax on loss from ordinary activities before income tax is reconciled to the income tax expense as follows:
Loss before income tax expense
Consolidated
2020
$
2019
$
(8,411,825)
(1,690,187)
Prima facie tax payable from ordinary activities at 27.5% (2019: 27.5%)
(2,313,252)
(464,801)
Non-deductible expenses
Non-assessable income
Share based payments
Costs relating to acquisition
Deferred tax asset not recognised
Income tax expense
Deductible temporary differences, unused tax losses and unused tax credits for which no
deferred tax assets have been recognised are attributable to the following:
Unused tax losses – revenue
Unused tax losses – capital
Deductible temporary differences
Potential benefit at 26% (2019: 27.5%)
834,816
(27,500)
99,833
460,183
945,920
2,158
-
70,566
-
392,077
-
-
5,646,017
2,181,919
976,645
1,316,899
2,181,919
396,544
8,804,581
3,895,362
2,289,191
1,071,225
Prior to the acquisition of Keyhole TIG Limited, K-TIG Limited (the 'legal parent') and its wholly-owned Australian subsidiaries
had formed an income tax consolidated group under the tax consolidation regime. K-TIG Limited is now in the process of
adding Keyhole TIG Limited to that group. Unused tax losses for Keyhole TIG Limited for the period prior to 1 July 2019 have
not been included in the amounts disclosed above and will have to be reviewed to determine if the losses are eligible to be
transferred to the income tax consolidated group
38
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 8. Cash and cash equivalents
Cash at bank
Consolidated
2020
$
2019
$
3,493,579
943,820
The carrying amounts of cash and cash equivalents approximate their fair value and are denominated in the following
currencies:
Australian dollar
United states dollar
European dollar
Note 9. Trade and other receivables
Trade receivables
Trade receivables
Provision for expected credit losses
Other receivables
GST receivable
Prepaid insurance
VAT receivable (Ireland)
Other receivables
Consolidated
2020
$
2019
$
3,416,643
54,593
22,343
943,820
-
-
3,493,579
943,820
Consolidated
2020
$
2019
$
13,752
-
13,752
7,922
60,024
29,565
407
97,918
15,025
-
15,025
38,229
-
-
19,441
57,670
Trade and other receivables
111,670
72,695
Allowance for expected credit losses
The consolidated group has recognised $0 in profit or loss in respect of the expected credit losses for the year ended 30
June 2020 due to the upfront nature of equipment sales and the requirement for WaaS license customers to make an advance
payment prior to shipment of the WaaS license system.
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Consolidated
Not overdue
0 to 3 months overdue
3 to 6 months overdue
Over 6 months overdue
Expected credit loss rate
2020
%
2019
%
Carrying amount
2019
$
2020
$
Allowance for expected
credit losses
2020
$
2019
$
0%
0%
0%
0%
0%
0%
0%
0%
8,445
2,218
1,849
1,240
14,130
688
207
-
13,752
15,025
-
-
-
-
-
-
-
-
-
-
39
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 10. Inventories
Materials and components
Finished goods
Note 11. Property, plant and equipment
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
Computer equipment - at cost
Less: Accumulated depreciation
WaaS assets – at cost
Less: Accumulated depreciation
Consolidated
2020
$
2019
$
194,348
173,660
245,051
128,066
368,008
373,117
Consolidated
2020
$
2019
$
178,620
(84,194)
94,426
89,695
(50,826)
38,869
253,669
(144,939)
108,730
213,891
(127,052)
86,839
37,535
(27,810)
9,725
23,046
(19,704)
3,342
269,762
-
(3,401) -
-
266,361
479,242
129,050
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2018
Additions
Depreciation expense
Balance at 30 June 2019
Additions
Transfers from inventory
Depreciation expense
Leasehold
improvements
$
Plant and
equipment
$
Computer
equipment
$
WaaS
assets
$
Total
$
51,826
-
(12,957)
38,869
88,925
-
(33,368)
106,708
-
(19,869)
86,839
39,778
-
(17,887)
1,959
2,519
(1,136)
3,342
14,489
-
(8,106)
-
-
-
-
-
269,762
(3,401)
160,493
2,519
(33,962)
129,050
143,192
269,762
(62,762)
Balance at 30 June 2020
94,426
108,730
9,725
266,361
479,242
40
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 12. Right-of-use assets
Land and buildings
Less: Accumulated depreciation
Consolidated
2020
$
255,998
(87,770)
168,228
2019
$
-
-
-
Adoption of AASB 16 ‘Leases’ resulted in right-of-use assets of $255,988 recognised during the year. This was a non-cash
transaction. The consolidated group leases land and buildings for its office and warehouse under an agreement. Effective 6
June 2020, the final extension on the current lease was exercised for a further two years with the lease expiring on 5 June
2022. The consolidated group leases office and warehouse equipment under agreements that are either short-term or low
value, so have been expensed as incurred and not capitalised as right-of-use assets (Note 6).
Note 13. Intangibles
Trademarks - at cost
Less: Accumulated amortisation
Consolidated
2020
$
2019
$
110,569
(57,580)
110,569
(46,524)
52,989
64,045
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
2020
$
2019
$
64,045
-
(11,056)
73,358
1,744
(11,057)
52,989
64,045
Consolidated
2020
$
2019
$
120,652
149,174
806
149,603
81,003
74,171
13,470
33,763
420,235
202,407
Consolidated
Balance at 1 July
Additions
Amortisation expense
Balance at 30 June
Note 14. Trade and other payables
Trade payables
Other payables
Credit cards
Accrued expenses
Refer to note 22 for further information on financial instruments.
41
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 15. Amounts received in advance
Sales and service
WaaS advance payment
Reconciliation
Reconciliation of the written down values at the beginning and end of the current and
previous financial year are set out below:
Balance at 1 July
Sales and service
WaaS advance payment
Transfer to revenue
Balance at 30 June
Consolidated
2020
$
2019
$
15,800
98,982
114,782
7,300
-
7,300
7,300
15,800
98,982
(7,300)
83,567
7,300
-
(83,567)
114,782
7,300
Unsatisfied performance obligations - Sales and service
The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the end of the
reporting period was $15,800 as at 30 June 2020 ($7,300 as at 30 June 2019) and is expected to be recognised as revenue
in future periods as follows:
Within 6 months
6 to 12 months
Consolidated
2020
$
2019
$
15,800
-
15,800
7,300
-
7,300
WaaS advance payment
The aggregate amount of WaaS amounts received as a prepayment at the end of the reporting period was $98,982 as at 30
June 2020 (30 June 2019: $0) and is expected to be recognised as revenue in future periods as follows:
Within 6 months
6 to 12 months
Consolidated
2020
$
2019
$
53,367
45,615
98,982
-
-
-
42
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 16. Borrowings
Loans with related parties
Convertible notes
Consolidated
2020
$
2019
$
-
-
-
359,740
1,251,040
1,610,780
Loans with related parties (Note 27) were settled in full through the issue of ordinary shares of Keyhole TIG on 1 July 2019.
Shares were fair valued at 6.3 cents per share upon conversion. In total, 5,677,946 ordinary shares were issued to repay
loans to related parties.
The convertible notes were converted upon successful acquisition of Keyhole TIG Limited on 30 September 2019. The
convertible notes converted to 11,250,000 ordinary shares in K-TIG.
Note 17. Lease liabilities
Current
Non-Current
Reconciliation
Balance at 1 July
Adoption of AASB 16
Interest expense
Repayments
Balance at 30 June
Note 18. Employee benefits
Current
Non-Current
Consolidated
2020
$
2019
$
87,888
85,209
173,097
-
255,998
8,114
(91,015)
173,097
-
-
-
-
-
-
-
Consolidated
2020
$
2019
$
126,665
6,242
106,231
84,716
132,907
190,947
Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes all unconditional entitlements where employees have completed the
required period of service and also those where employees are entitled to pro-rata payments in certain circumstances. The
non-current amount represents the unvested long service leave accrual.
43
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 19. Issued capital
Ordinary shares - fully paid
Series A preference shares
Consolidated
2020
Shares
2019
Shares
2020
$
2019
$
144,609,833 96,395,839 17,732,901
-
- 41,322,314
144,609,833 137,718,153 17,732,901
2,348,884
2,978,935
5,327,819
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. On a show of hands every member present at a meeting in person or
by proxy shall have one vote and upon a poll each share shall have one vote.
Series A Preference Shares
The holders of Series A preference shares were entitled to vote at all meetings of the company. Each Series A preference
share entitled the holder upon a poll to that number of votes equal to the number of ordinary shares into which the Series A
preference shares would be converted if the conversion occurred at the time of that vote. Series A Preference Shares were
converted to ordinary shares during the financial year.
Capital risk management
The consolidated group’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 group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Movements in ordinary shares for the financial year
Date
Details
1 Jul 2018
1 Jul 2019
1 Jul 2019
30 Sep 2019
30 Sep 2019
30 Sep 2019
30 Sep 2019
30 Sep 2019
30 Sep 2019
30 Sep 2019
30 Sep 2019
30 Sep 2019
30 Sep 2019
30 Sep 2019
13 Nov 2019
30 Jun 2020
Balance
Balance
Issue of Keyhole shares to repay related party loans
Conversion of share options
Conversion of preference shares
Elimination of Keyhole shares
KTG shares on acquisition
KTG shares on acquisition
Issue of KTG shares on acquisition of Keyhole
Deemed consideration on acquisition of Keyhole
Issue of shares under public offer
Conversion of convertible note
Issue of shares to advisor
Share issue costs
Exercise of options
Balance
Number of
Shares
96,395,839
96,395,839
5,677,946
25,058,608
41,322,314
(168,454,707)
722,096,113
(709,428,270)
80,200,501
-
35,000,000
11,250,000
5,475,000
-
16,489
144,609,833
$
2,348,884
2,348,884
359,740
633,051
2,978,935
-
-
-
-
2,533,671
7,000,000
1,251,040
1,095,000
(471,212)
3,792
17,732,901
44
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 19. Issued capital (continued)
As at 30 June 2020, up to 30,075,135 deferred consideration shares to be issued in 3 tranches based on the cumulative
revenue over 48 months from 1 January 2020.
a) Tranche 1: up to 10,025,045 deferred consideration shares to be issued if K-TIG achieves $30,000,000 of cumulative
revenue within 36 months from 1 January 2020;
b) Tranche 2: up to 10,025,045 deferred consideration shares to be issued if K-TIG achieves $60,000,000 of cumulative
revenue within 48 months from 1 January 2020; and
c) Tranche 3: up to 10,025,045 deferred consideration shares to be issued if K-TIG achieves $15,000,000 of cumulative
EBITDA within 48 months from 1 January 2020.
Movements in series A preference shares for the financial year
Date
Details
1 Jul 2018
1 Jul 2019
30 Sep 2019
30 Jun 2020
Balance
Balance
Conversion of preference shares
Balance
Note 20. Reserves
Share based payment reserve
Number of
Shares
41,322,314
41,322,314
(41,322,314)
-
$
2,978,935
2,978,935
(2,978,935)
-
2020
$
2019
$
871,990
603,925
The reserve is used to recognise share based payment transactions. Amounts will be transferred into share capital upon
share options being exercised.
Movements in share based payment reserve for the year
Date
Details
1 Jul 2018
21 Jun 2019
21 Jun 2019
30 Jun 2019
1 Jul 2019
1 Jul 2019
1 Jul 2019
30 Sep 2019
30 Sep 2019
30 Sep 2019
30 Sep 2019
13 Nov 2019
21 Feb 2020
26 Jun 2020
30 Jun 2020
Balance
Issue of employee share scheme options
Issue of executive options
Vesting of executive options
Balance
Issue of executive options
Cancellation of consultant options
Conversion of share options
KTG shares on acquisition
Expiry of options
Issue of options
Exercise of options
Issue of options
Issue of options
Balance
Number of
Options
11,712,025
7,248,165
4,337,610
-
23,297,800
1,867,058
(106,250)
(25,058,608)
2,119,233
(1,316)
5,472,152
(16,489)
960,000
180,000
8,713,580
$
347,321
146,993
67,667
41,944
603,925
29,126
-
(633,051)
-
-
679,360
-
164,467
28,163
871,990
On 21 June 2019, 7,248,165 options were issued to employees under Keyhole’s employee share scheme. 4,337,610 options
were issued to an executive in lieu of services provided. These options were converted into shares on the 30 September
2019.
On 1 July 2019, 1,867,058 options were issued to an executive in lieu of services provided. These options were converted
into shares on the 30 September 2019.
45
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 20. Reserves (continued)
On 30 September 2019, a total of 5,472,152 unlisted options exercisable at $0.30 each with an expiry date of 30 September
2023, and a subscription price of $0.0001 each, were issued as advisor and director options. 4,331,801 options related to
were issued under the Lead Manager Mandate for advisory services, totalling $537,654. The related expense is recognised
as reverse acquisition costs. 1,140,351 options were issued to Directors for a total consideration of $141,652. The related
expense is recognised as share-based payment in the consolidated statement of profit and loss and other comprehensive
income.
On 21 February 2020, 960,000 unlisted options exercisable at $0.30 each with an expiry date of 30 September 2023 were
issued to directors and other key management personnel. The related expense of $164,467 is recognised as share-based
payment in the consolidated statement of profit and loss and other comprehensive income.
On 26 June 2020, 180,000 unlisted options exercisable at $0.30 each with an expiry date of 30 September 2023 were issued
to Directors. The related expense of $28,163 is recognised as share-based payment in the consolidated statement of profit
and loss and other comprehensive income.
Refer to Note 35 for more details on the calculation of the fair value of the options issued.
Note 21. Dividends
There were no dividends paid during the financial year ended 30 June 2020 (2019: Nil). Franking credits available for
subsequent periods based on a 27.5% tax rate is $0 (2019: $0).
Note 22. Financial instruments
Financial risk management objectives
The consolidated group’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 group’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 group.
Risk management is carried out by senior finance executives (‘finance’) in consultation with the Board of Directors (‘the
Board’). Finance identifies and evaluates financial risks within the consolidated group’s operating units. Finance reports to
the Board on a monthly basis.
Market risk
Foreign currency risk
The consolidated group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency
risk through foreign exchange rate fluctuations. These transactions include customer sales agreements and supplier
agreements.
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.
In order to protect against exchange rate movements, the consolidated group monitors its cash balances in the foreign
currencies and utilises accumulated foreign currencies to purchase supplies to mitigate the exposure to currency changes.
46
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 22. Financial instruments (continued)
The carrying amount of the consolidated group’s foreign currency denominated financial assets and financial liabilities at the
reporting date were as follows:
Consolidated
US dollars
Euros
Assets
Liabilities
2020
$
2019
$
2020
$
2019
$
54,593
22,343
5,560
-
60,961
14,706
4,839
-
76,936
5,560
75,667
4,839
The consolidated group had net assets denominated in foreign currencies of $1,269 as at 30 June 2020 (2019: net asset
$721). Based on this exposure, had the Australian dollar weakened by 10% against these foreign currencies with all other
variables held constant, the consolidated group’s profit before tax for the year would have been $127 higher (2019: $72
higher) and equity would have been $127 higher (2019: $72 higher). The percentage change is the expected overall volatility
of the significant currencies, which is based on management’s assessment of reasonable possible fluctuations taking into
consideration movements over the last 6 months each year and the spot rate at each reporting date. The actual foreign
exchange loss for the year ended 30 June 2020 was $6,472 (2019: $11,393).
Price risk
The consolidated group is not exposed to any significant price risk.
Interest rate risk
The consolidated group has converted all loans as at 30 September 2019 to equity as part of the reverse takeover. There
are no loans or borrowings subject to interest rate risk as at 30 June 2020.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
consolidated group. The consolidated group has a strict process of obtaining advance payment for all equipment sales prior
to shipment. The consolidated group is exposed to customer credit for its WaaS licence customers in relation to the ongoing
monthly payments after the initial Advance Payment has been consumed. This exposure is managed carefully with close
interaction with the customer. The maximum exposure to credit risk at the reporting date to recognised financial assets is the
carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and
notes to the financial statements. The consolidated group does not hold any collateral.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than 1 year.
Liquidity risk
Vigilant liquidity risk management requires the consolidated group to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
The consolidated group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Remaining contractual maturities
The following tables detail the consolidated group’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.
47
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 22. Financial instruments (continued)
Weighted
average
interest rate 1 year or less
Consolidated – 2020
Non-derivatives
Non-interest bearing
Trade payables
Other Payables
Interest bearing
Lease liabilities
Consolidated – 2019
Non-derivatives
Non-interest bearing
Trade payables
Other Payables
%
-
-
3.72
-
-
Between 1
and 2 years
$
Between 2
and 5 years Over 5 years
$
$
Remaining
contractual
maturities
$
$
120,652
149,174
-
-
92,835
362,661
86,801
86,801
81,003
74,171
155,174
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
120,652
149,174
179,636
449,462
81,003
74,171
155,174
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Note 23. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated group
is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Consolidated
2020
$
2019
$
899,675
56,099
(9,992)
331,846
361,591
25,000
-
171,490
1,277,628
558,081
48
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 24. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by BDO Advisory (SA) Pty Ltd, the
auditor of the company, its network firms and unrelated firms:
Audit services – BDO Audit (SA) Pty Ltd
Audit of the financial statements
Review of half year financial statements
Total audit and review of financial statements
Non-audit services – BDO Advisory (SA) Pty Ltd
Preparation of financial statements*
Tax compliance*
Business advice and consulting*
Total non-audit fees
Consolidated
2020
$
2019
$
30,500
24,500
55,000
-
846
42,290
43,136
24,300
-
24,300
5,400
10,645
53,550
69,595
Total services provided by BDO
98,136
93,895
* The material portion of the non-audit fees were earned prior to the consolidated group undertaking the reverse acquisition
and becoming listed.
Note 25. Contingent assets and liabilities
Contingent assets
No contingent assets noted as at 30 June 2020 (30 June 2019: $0).
Contingent liabilities
In the opinion of the Directors, the consolidated group has contingencies of the deferred consideration shares and
consultancy services agreement as at 30 June 2020 (30 June 2019: R&D tax examination and CEO incentive).
Deferred Consideration Shares
During the financial year ended 30 June 2020, K-TIG Limited completed the 100% acquisition of Keyhole TIG Limited. Part
of the acquisition consideration includes up to 30,075,135 deferred consideration shares. Refer to Note 19 for terms of
consideration shares.
CEO incentive for sale over $20M
At 30 June 2019, a 1.25% Success Fee was payable to the Chief Executive Officer, Neil Le Quesne, upon the successful
sale or IPO of the company for $20M or greater. During the financial year ended 30 June 2020, this fee was varied to remove
the $20M condition and was satisfied through an issue of fully paid ordinary shares in Keyhole. In the reverse acquisition
these shares gave rise to a pro rata entitlement to consideration in K-TIG Limited.
R&D Tax Examination
During the financial year ended 30 June 2020, the Department of Industry, Innovation and Science (‘DIIS’) completed an
examination of the company’s 2017-18 financial period R&D Tax Incentive registration in October 2019. K-TIG has received
confirmation from DIIS that K-TIG’s activities have been deemed eligible for the R&D tax rebate and K-TIG is not required to
repay the amount received for the 2017-2018 financial period of $302,807.
Consultancy Services Agreement
On 21 February 2020, K-TIG Limited entered into a Consultancy Services Agreement with a consultant. As part of the
agreement, the consultant is entitled to the following payments contingent on achieving the milestone as at 30 June 2020:
-
-
$25,000 plus GST on K-TIG Limited signing of a contract licence or unit sale or inclusion in a tender (that is ultimately
successful) in the defence sector within 12 months; and
$25,000 plus GST on receipt of the CDIC grant within 24 months.
49
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 26. Commitments
There are $9,756 of lessee commitments as at 30 June 2020 related to equipment operating lease commitments (30 June
2019: $90,052). From 1 July 2019, the consolidated group has recognized the facility lease commitments at its primary place
of business as right-of-use assets. Refer to Note 12 for right-of-use assets.
Lessor commitments receivable
Lessor commitments relate to operating lease payments to be received from WaaS license agreements. Licenses have a
minimum term of 0-3 years (generally 3 year minimum terms). As at 30 June 2020, all operating lease payments to be
received are payable in US dollars or Euros, and for the purposes of the maturity analysis have been translated at the spot
rate at reporting date. Maturity analysis of undiscounted operating lease payments to be received set out below. The lessor
commitments receivable includes one license with a customer with a minimum term of 8 years that will likely be treated as a
finance lease upon commissioning of the system in accordance with AASB 16. A value of $225,000 ($240,000 minimum
contract value less $15,000 advance payment received) associated with this license is included in the table below.
Within 1 year
1-2 years
2-3 years
3-4 years
4-5 years
After 5 years
Note 27. Related party transactions
Parent entity
K-TIG Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 29.
2020
$
139,362
336,437
323,199
135,044
30,000
107,500
1,071,542
2019
$
-
-
-
-
-
-
-
Key management personnel
Disclosures relating to key management personnel are set out in note 23 and the remuneration report included in the
directors’ report.
Transactions with related parties
The following transactions occurred with related parties:
Consolidated
2020
$
2019
$
Ventnor Capital Pty Ltd provided company secretarial, accounting and corporate advisory
services (director-related entity of Mr Carmichael)
138,797
-
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Trade receivables from WB Alloy Welding Products Limited
(director-related entity of former director of Keyhole, William Wilson)
Consolidated
2020
$
2019
$
-
4,895
Trade payable to Ventnor Capital Pty Ltd (director-related entity of Mr Carmichael)
11,132
-
50
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 27. Related party transactions (continued)
Loans to/from related parties
The following balances were outstanding as at 30 June:
Director related loans
- Royal Group
- Kieran Purcell
- WB Alloy
- Neil Le Quesne
Consolidated
2020
$
2019
$
-
-
-
-
-
249,975
49,790
49,975
10,000
359,740
During the current financial year, all related party loans were settled in full through the issue of 5,667,946 ordinary shares of
Keyhole on 1 July 2019 (Note 19). Shares were valued at 6.3 cents per share upon conversion.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 28. Parent entity information
Set out below is the supplementary information about the legal parent entity (K-TIG Limited) for the full year ended 30 June.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive loss
Statement of financial position
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
Net assets / (liabilities)
Equity
Issued capital
Reserves*
Accumulated losses
Total equity
Parent
2020
$
2019
$
(2,731,563)
(2,731,563)
(588,995)
(588,950)
3,110,217
4,834,704
7,944,921
213,957
-
213,957
7,730,964
147,537
-
147,537
336,052
-
336,052
(188,515)
37,104,852 27,326,179
3,143,123
(33,389,380) (30,657,817)
4,015,492
7,730,964
(188,515)
* Relates to share-based payment reserve, performance share reserve and foreign exchange translation reserve
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity has not entered into any guarantees and in relation to the debts of its subsidiaries.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2020 and 30 June 2019.
51
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 28. Parent entity information (Continued)
Capital commitments – Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2020 and 30 June 2019.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated group, as disclosed in note 1.
Note 29. 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. Details of the legal parent’s subsidiary at the end of the reporting
period are as follows:
Name
Kabuni USA, Inc.
Stirling Minerals Pty Limited
Keyhole TIG Limited*
Vessel Tech Pty Ltd**
Principal place of business /
Country of incorporation
USA
Australia
Australia
Australia
Ownership interest
2019
2020
%
%
100%
100%
100%
100%
100%
100%
-
-
*Keyhole TIG Limited was acquired on 30 September 2019. In June 2020 it was changed to a proprietary limited company
(Keyhole TIG Pty Ltd).
**Vessel Tech Pty Ltd was acquired on 30 September 2019.
Note 30. Events after the reporting period
On 28 July 2020, Mr Twycross resigned as Executive Director and was appointed to a position of Non-executive Directive.
Mr Smith, a Non-executive Director, was appointed to the position of Executive Director.
On 4 September 2020, the Company raised $5,600,000 (before costs) via a private placement to institutional and
sophisticated investors. 22,400,000 fully paid ordinary shares is to be issued at an exercise price of $0.25 per share. Of
these 22,400,000 shares, the Company issued 21,660,000 fully paid ordinary shares on 16 September 2020, raising
$5,415,000 (before costs). The remaining 740,000 shares are to be issued subject to shareholder approval at the Company’s
Annual General Meeting anticipated to be held in November 2020.
No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect the
consolidated group’s operations, the results of those operations, or the consolidated group’s state of affairs in future financial
years.
52
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 31. Reconciliation of profit after income tax to net cash from operating activities
Consolidated
2020
$
2019
$
Profit after income tax expense for the year
(8,411,825)
(1,690,187)
Adjustments for:
Depreciation
Amortisation of trademarks
Advisor shares issued
Reverse acquisition deemed consideration
Share-based payments
Change in operating assets and liabilities:
(Increase) / Decrease in trade receivables
(Increase) / Decrease in other receivables and prepayments
(Increase) / Decrease in inventories
Increase / (Decrease) in trade and other payables
Increase / (Decrease) in income in advance
(Decrease) / Increase in employee benefits
150,532
11,056
1,095,000
2,533,671
900,948
1,273
(40,163)
(264,653)
187,326
107,562
(58,040)
33,962
11,057
-
-
256,604
43,856
298,146
(138,575)
(15,324)
(76,267)
53,275
Net cash from operating activities
(3,787,313)
(1,223,453)
Note 32. Non-cash investing and financing activities
Share based payments expense
Note 33. Changes in liabilities arising from financing activities
Consolidated
Balance at 1 January 2018
Cash from financing activities
Balance at 30 June 2019
Cash (used in) financing activities
Acquisition of leases
Other changes (Note 16)
Balance at 30 June 2020
Consolidated
2020
$
2019
$
900,948
256,604
Convertible
notes
$
Lease
liability
$
Total
$
366,173
1,244,607
1,610,780
-
-
(1,610,780)
-
-
366,173
1,244,607
-
(82,901)
255,998
-
1,610,780
(82,901)
255,998
(1,610,780)
-
173,097
173,097
53
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 34. Loss per share
Consolidated
2020
$
2019
$
Loss after income tax attributable to the owners of K-TIG Limited
(8,411,825)
(1,690,187)
Basic loss per share
Diluted loss per share
Weighted average number of ordinary shares
Weighted average number of ordinary shares used in calculating basic loss per share
Cents
Cents
(6.97)
(6.97)
(3.68)
(3.68)
Number
Number
120,670,363 45,893,610
Retrospectively adjustments were made to the weighted average number of ordinary shares due to the share consolidation
(57:1) and reverse acquisition that occurred in September 2019. These capital events are effectively a re-denomination of
shares, that changes the number of the Company’s ordinary shares outstanding without a corresponding change in the
Company’s resources.
Note 35. Share-based payments
On 21 June 2019, 7,248,165 options were issued to employees under Keyhole’s employee share scheme. 4,337,610 options
were issued to an executive in lieu of services provided. These options were valued at an independently assessed current
value per share.
On 1 July 2019, 1,867,058 options were issued to an executive in lieu of services provided. These options were valued at an
independently assessed current value per share.
On 30 September 2019, a total of 5,472,152 unlisted options exercisable at $0.30 each with an expiry date of 30 September
2023, and a subscription price of $0.0001 each, were issued as advisor and director options. 4,331,801 options related to
were issued under the Lead Manager Mandate for advisory services, totalling $537,654. The related expense is recognized
as reverse acquisition costs. 1,140,351 options were issued to Directors for a total consideration of $141,652. The related
expense is recognized as share-based payment in the consolidated statement of profit and loss and other comprehensive
income.
On 21 February 2020, 960,000 unlisted options exercisable at $0.30 each with an expiry date of 30 September 2023 were
issued to directors, other key management personnel and employees. The related expense of $164,467 is recognised as
share-based payment in the consolidated statement of profit and loss and other comprehensive income.
On 26 June 2020, 180,000 unlisted options exercisable at $0.30 each with an expiry date of 30 September 2023 were issued
to Directors. The related expense of $28,163 is recognised as share-based payment in the consolidated statement of profit
and loss and other comprehensive income.
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. Volatility of the options issued on 30 September 2019 used was 100% as best estimate as using
historical movements was not appropriate due to the reverse acquisition (Note 3). For options issued after 30 September
2019, volatility was calculated based on historical movements from acquisition date (30 September 2019).
Grant date
Expiry date
Share price Exercise
at grant date
price
Expected
volatility
Dividend
yield
Risk-free
interest rate at grant date
Fair value
30/09/2019
21/02/2020
26/06/2020
30/09/2023
30/09/2023
30/09/2023
$0.20
$0.185
$0.180
$0.30
$0.30
$0.30
100%
199%
181%
0%
0%
0%
0.78%
0.64%
0.26%
$0.124
$0.171
$0.156
54
K-TIG Limited and Its Controlled Entities
Notes to the financial statements
For the year ended 30 June 2020
Note 35. Share-based payments (Continued)
Set out below are the options exercisable at the end of the financial year:
Grant date
Expiry date
Exercise Price
29/01/2018
30/09/2019
21/02/2020
26/06/2020
01/07/2017
21/06/2019
30/04/2021
30/09/2023
30/09/2023
30/09/2023
30/09/2019
30/09/2019
$0.23
$0.30
$0.30
$0.30
-
-
2020
Number
2019
Number
2,101,428
5,472,152
960,000
180,000
-
-
-
-
-
-
11,712,025
11,585,775
8,713,580
23,297,800
2020
Grant Date Expiry Date
30/09/2019
31/10/2016
30/04/2021
29/01/2018
30/09/2023
30/09/2019
30/09/2023
21/02/2020
30/09/2023
26/06/2020
30/09/2019
01/07/2017
30/09/2019
21/06/2019
30/09/2019
01/07/2019
Exercise
Price
$0.23
$0.23
$0.30
$0.30
$0.30
-
-
-
Balance at
start of the
year
-
-
-
-
-
11,712,025
11,585,775
-
23,297,800
Granted
1,316*
2,117,917*
5,472,152
960,000
180,000
-
-
1,867,058
10,598,443
Exercised
-
(16,489)
-
-
-
(11,605,775)
(11,585,775)
(1,867,058)
(25,075,097)
Expired /
Cancelled
Balance at the
end of the
year
(1,316)
-
-
-
-
(106,250)
-
-
(107,566)
-
2,101,428
5,472,152
960,000
180,000
-
-
-
8,713,580
* Relates to options existing in KTG at date of reverse acquisition, 30 September 2019
2019
Grant Date Expiry Date
30/09/2019
01/07/2017
30/09/2019
21/06/2019
Exercise
Price
Balance at
start of the
year
11,712,025
-
11,712,025
-
-
Granted
-
11,585,775
11,585,775
Exercised
Expired
-
-
-
Balance at the
end of the
year
-
-
-
11,712,025
11,585,775
23,297,800
The weighted average remaining contractual life of options outstanding at the end of the financial year was 2.67 years (2019:
0.25 years).
Note 36. Operating Segment
The consolidate group is considered to be one operating segment based on products delivered. This operating segment is
based on the 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. The information
presented in the financial statements approximates the information of the operating segment.
55
K-TIG Limited and Its Controlled Entities
Directors’ Declaration
For the year ended 30 June 2020
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 group's financial position as
at 30 June 2020 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.
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
___________________________
Stuart Carmichael
Chairman
30 September 2020
Perth
56
Tel: +61 8 7324 6000
Fax: +61 8 7324 6111
www.bdo.com.au
BDO Centre
Level 7, 420 King William Street
Adelaide SA 5000
GPO Box 2018 Adelaide SA 5001
Australia
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF K-TIG LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of K-TIG Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and notes to the
financial report, including a summary of significant accounting policies and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
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.
BDO Audit (SA) Pty Ltd ABN 33 161 379 086 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (SA) Pty Ltd and BDO (Australia) Ltd are members of BDO International
Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme
approved under Professional Standards Legislation.
Accounting for Reverse Acquisition
KEY AUDIT MATTER
HOW THE MATTER WAS ADDRESSED IN OUR AUDIT
As disclosed in note 1 of the financial
report, the company acquired Keyhole
TIG Ltd (unlisted entity incorporated in
Australia). The accounting for the
reverse acquisition is a key audit matter
due to the effect of the arrangement
which is accounted for as Keyhole TIG
Ltd (the accounting parent) issuing a
share based payment in return for the
assets acquired in the company and
listing status. Furthermore, judgment is
involved in the determination of the
value of the purchase consideration
settled by way of a share-based
payment.
Our procedures included, but were not limited to:
•
•
•
•
•
•
•
Obtaining an understanding of the transaction including an
assessment of the accounting acquirer and whether the
transaction constituted a business or asset acquisition;
Assessing management’s proposed accounting treatment in
accordance with applicable accounting standards;
Evaluating the basis of the valuation of the share-based payment
(or fair value of consideration) and challenged the underlying
assumption of the valuation against comparable transactions and
market data.
Checking the calculation of the share based payment, fair value
of identifiable net assets acquired, including any separately
identifiable intangible assets, and listing expense.
Considering whether any fair values or adjustments to fair values
have been dealt with in accordance with generally accepted
accounting principles.
Assessing the appropriateness of the acquisition journals at
acquisition date and checking that the disclosures in the financial
statements are in accordance with the basis of preparation as
disclosed in note 1 for the reverse acquisition.
Assessing the adequacy of the related disclosures in the financial
report.
Share Based Payments
KEY AUDIT MATTER
HOW THE MATTER WAS ADDRESSED IN OUR AUDIT
During the year ended 30 June 2020, the
Company issued options to employees
including key management personnel,
which were accounted for as share
based payments under AASB 2: Share
Based Payments. Share-based payments
are a complex accounting area including
assumptions utilised in the fair value
calculations and judgments regarding
the options issued during the year.
There is a risk in the financial report
that amounts are incorrectly recognised
and/or inappropriately disclosed. Refer
to Note 1 of the financial report for a
description of the accounting policy and
significant estimates and judgements
applied to these transactions.
Our audit procedures included but were not limited to:
•
•
•
•
•
Evaluating management’s assessment of the valuation and
recognition of the options.
Obtaining an understanding of the key terms and conditions of
the options by inspecting relevant agreements.
Holding discussions with management to understand the share
based payment arrangements in place and evaluating
management’s assessment of the likelihood of meeting any
performance condition attached to the performance options.
Recalculating the estimated fair value of the performance
options using the BlackScholes option valuation methodology,
including assessing the reasonableness of the key inputs used in
the Company’s valuation model.
Reviewing the adequacy of the Company’s disclosures in respect
of the accounting treatment of share-based payments in the
financial statements, including the significant judgments
involved, and the accounting policy adopted.
Other information
The directors are responsible for the other information. The other information comprises the
information contained in the Directors’ Report for the year ended 30 June 2020, but does not include
the financial report and our auditor’s report thereon, which we obtained prior to the date of this
auditor’s report, and the Group’s annual report, which is expected to be made available to us after
that date.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed on the other information that we obtained prior to the date
of this auditor’s report, 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.
When we read the Group’s annual report, if we conclude that there is a material misstatement therein,
we are required to communicate the matter to the directors and will request that it is corrected. If it
is not corrected, we will seek to have the matter appropriately brought to the attention of users for
whom our report is prepared.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 7 to 16 of the directors’ report for the
year ended 30 June 2020.
In our opinion, the Remuneration Report of K-TIG Limited, for the year ended 30 June 2020, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (SA) Pty Ltd
G K Edwards
Director
Adelaide, 30 September 2020
K-TIG Limited and Its Controlled Entities
ASX Additional Information
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows.
The information is current at 22 September 2020.
Ordinary Fully Paid Shares
Distribution of Share Holders
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
Number of
Holders
Number of
Shares
170
508
266
624
189
1,757
81,260
1,331,002
2,180,190
23,967,491
138,709,890
166,269,833
There were 363 holders holding a total of 365,599 ordinary shares holding less than a marketable parcel.
Top Twenty Share Holders
The names of the twenty largest holders of quoted shares are listed below:
Name
Number of shares
%
ADVANCED SCIENCE & INNOVATION COMPANY (ASIC) LLC
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
NATIONAL NOMINEES LIMITED
GREAT PLAINS HOLDING COMPANY PTY LTD
GARDEN ENTERPRISES PTY LTD
SWHL INVESTMENTS PTY LTD
MRS LYNETTE ANNE SHARMAN & MR MICHAEL DAVID SHARMAN
CITICORP NOMINEES PTY LIMITED
SOLAR MATE PTY LTD
WIGTOWN PTY LIMITED
SYED BASAR SHUEB
OVERSEAS PENSIONS AND BENEFITS LIMITED
MAINSTAY HOLDINGS PTY LTD
SUSTAINABLE WEALTH PTY LTD
WIGTOWN PTY LTD
RICHARD SMITH
XENDORF PTY LTD
MS BELINDA HELGA STEWART & MR ALEXANDER CHRISTOPHER
STEWART
REAL SMART NUTRITION PTY LTD
Substantial Share Holders
Name
ADVANCED SCIENCE & INNOVATION COMPANY (ASIC) LLC
NEIL GARRY LE QUESNE
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
15,000,000
10,752,185
6,213,764
4,000,000
3,778,648
2,147,189
2,083,333
1,908,613
1,399,259
1,300,000
1,250,000
1,250,000
1,192,883
1,083,334
1,008,595
1,000,000
1,000,000
1,000,000
979,985
11.99%
8.60%
4.97%
3.20%
3.02%
1.72%
1.67%
1.53%
1.12%
1.04%
1.00%
1.00%
0.95%
0.87%
0.81%
0.80%
0.80%
0.80%
0.78%
920,000
59,267,788
0.74%
47.39%
Number of shares
%
19,717,068
11,962,407
10,752,185
42,431,660
11.86%
7.19%
6.47%
25.52%
61
K-TIG Limited and Its Controlled Entities
ASX Additional Information
Listed Options
Distribution of Option Holders
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
Number of
Holders
Number of
Options
77
62
13
32
3
187
30,590
152,299
81,473
1,323,774
513,292
2,101,428
There were 105 holders holding a total of 70,697 options holding less than a marketable parcel.
Top Twenty Listed Option Holders
The names of the twenty largest holders of quoted options are listed below:
Name
Number of options
SOLAR MATE PTY LTD
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD
MR JAMES BEATTIE & MS STACEY CARPENTER
MRS ANNA CARINA HART & MR PAUL HART
MR CARLO GERALDO CHIODO
JAGUAR INVESTMENTS PTY LTD
JALAVER PTY LTD
MR DAVID JASON BOURKE
MR ALEX JULIAN GODINA
SEVENTY THREE PTY LTD
YEOH SUPER PTY LTD
MS MIN HUA XUAN & MR BAO FENG PAN
MR HUGH ANTHONY SHARPE
TWO SEVENTY WINCHESTER PTY LTD
MR COLM JOHN O'BRIEN & MS FIONA ELIZABETH GEORGE
MR ROGER DO
ZESSHAM PTY LTD
SJ & T CARMICHAEL SUPERANNUATION PTY LTD
RED DOG #1 PTY LTD
SBV CAPITAL PTY LTD
200,000
195,175
118,117
100,000
100,000
96,491
90,751
83,768
74,000
61,528
57,894
50,000
48,764
44,321
42,105
41,929
39,789
38,596
33,000
31,578
1,574,806
Substantial Option Holders
Name
SOLAR MATE PTY LTD
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD
MR JAMES BEATTIE & MS STACEY CARPENTER
Number of options
200,000
195,175
118,117
%
9.52%
9.29%
5.62%
4.76%
4.76%
4.59%
4.32%
3.99%
3.52%
2.93%
2.76%
2.38%
2.32%
2.11%
2.00%
2.00%
1.89%
1.84%
1.57%
1.50%
73.65%
%
9.52%
9.29%
5.62%
513,292
24.43%
62
K-TIG Limited and Its Controlled Entities
ASX Additional Information
Unlisted Options
Distribution of Option Holders
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
Substantial Option Holders
Name
DIVERSE CAPITAL PTE LTD
LONHRO (WA) PTY LTD
LDHW PTY LTD
CRB INVESTMENTS (WA) PTY LTD
SOLAR MATE PTY LTD
SRG PARTNERS PTY LTD
SBV CAPITAL PTY LTD
ACNS CAPITAL MARKETS PTY LTD
TR NOMINEES PTY LTD
Restricted Securities
Number of
Holders
Number of
Options
-
-
-
11
19
30
-
-
-
762,904
5,849,248
6,612,152
Number of options
%
649,770
541,510
500,000
433,492
425,000
399,770
370,000
353,213
350,000
4,022,755
9.83%
8.19%
7.56%
6.56%
6.43%
6.05%
5.60%
5.34%
5.29%
60.84%
Restricted Class
Number of Securities
Restriction Period
Fully paid ordinary shares
Unlisted options
41,204,799
5,472,152
24 months from date of quotation
24 months from date of quotation
On-Market Buy Back
There is no current on-market buy back.
Voting Rights
All ordinary shares carry one vote per share without restriction. Options have no voting rights.
Use of Proceeds
In accordance with listing rule 4.10.19, the Company confirms that with the exception of long lead capital items which have
been deferred due to the COVID-19 pandemic (refer to ASX release dated 8 April 2020), it has broadly used cash and
assets in a form readily convertible to cash in a way consistent with its business objectives during the financial year ended
30 June 2020.
Corporate Governance
The Company’s corporate governance statement is found on the Company’s website at www.k-tig.com/corporate-
governance.
63