LI-S ENERGY LIMITED
ANNUAL REPORT 30 JUNE 2021
Contents
CHAIRMAN’S REPORT
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
STATEMENT OF FINANCIAL POSITION
STATEMENT OF CASHFLOWS
STATEMENT OF CHANGES IN EQUITY
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
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CHAIRMAN’S REPORT
Dear Shareholders,
I am excited in having the opportunity to present my first Li-S Energy’s Chairman’s Report. The main focus for the 2021
financial year has been transitioning Li-S Energy from its early stage lithium-sulphur battery research to its Initial Public
Offer as an ASX listed company in September 2021. To achieve this result, I must recognise the support of my Board
members Robin Levison, Tony McDonald and Hedy Cray plus retired Board members Glenn Molloy and Greg Pullen.
The appointment of Dr Lee Finniear as the Chief Executive Officer, along with the ongoing support of Glenn Molloy as
our Chief Strategic Adviser, has been vital in developing the strategy and operating plans underpinning Li-S Energy
going forward.
BUSINESS OVERVIEW
Li-S Energy, in conjunction with Deakin University (Deakin) has developed novel battery technology using boron nitride
nanotubes (BNNTs) as a nano-insulator in lithium-sulphur batteries.
Lithium-sulphur batteries (also known as Li-S batteries) have the potential to provide a much greater energy storage
capacity than current lithium-ion batteries. However, to date their main drawback has been that they tend to fail after
relatively few charging cycles, and this has inhibited their mass adoption. By using BNNTs and other novel components
in its new lithium-sulphur battery technology, Li-S Energy has substantially increased cycle life. Test batteries have now
demonstrated sustained performance over 600 charge/recharge cycles whilst retaining a specific energy capacity almost
three times that of a typical commercial lithium-ion battery. These testing results have been validated in an independent
research report.
SHAREHOLDER SUPPORT
To achieve the results to date, Li-S Energy has relied upon the continued support of its major shareholders, PPK Group
Limited, Deakin University and BNNT Technology Limited. However, the Company has welcomed new shareholders with a
$3,250,000 capital raise in July 2020 and a further $20,000,000 capital raise in April 2021 to Sophisticated and Institutional
investors. The investors in these two capital raises will benefit from the ATO’s Early Stage Innovation Company tax
incentives and it is pleasing to note that Li-S Energy complies with these strict guidelines.
In December 2020, PPK Group Limited issued a special dividend being a distribution of in-specie shares in Li-S Energy
owned by PPK. This resulted in PPK’s shareholders becoming shareholders in Li-S Energy and an enormous opportunity
for these shareholders to benefit from the future success of Li-S Energy directly through the shares that they own. The
Board has provided further opportunity for existing Li-S Energy’s shareholders to participate in the Initial Public Offer with up
to 8,000,000 shares to be allocated to these shareholders.
We thank current and new shareholders for their support of Li-S Energy.
IPO PROGRESS
At this point we are in the final stages of completing the IPO of Li-S Energy and expect to be trading on the ASX in
September 2021. This has been a huge effort by many people and we are looking to raise approximately $34,000,000
to invest in the growth of the Li-S Energy business into an Australian technology powerhouse.
We are very excited that the IPO is significant over-subscribed with support from institutional investors, small investors
and the existing Li-S Energy shareholders. However, with so much support, there are also challenges, and we are
disappointed in the necessity to scale back allocations to so many prospective shareholders.
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OPERATING RESULTS
Li-S Energy had an operating loss before income tax of $2,283,399 (2020: $35,148 loss) for the year ended 30 June 2021,
which consisted of the following:
• $1,193,104 of expenses were directly related to the IPO;
• $200,000 were management fees to PPK for ongoing services and support;
• $198,100 were the consulting costs for the Chief Executive Officer, including a $100,000 sign-on bonus;
• $127,058 was the accounting costs of the Service Rights granted to the directors and Chief Executive Officer; and
• $289,638 was the loss on the fair value movement of the investment in Zeta Energy LLC of which $222,481 of this
loss was the exchange loss of currency movements in the AUD/USD.
The cash cost of $1,844,778 was primarily related to the work and effort undertaken to position Li-S Energy for a successful
Initial Public Offering.
OUTLOOK
Worldwide demand for more powerful and efficient batteries is increasing exponentially with the development of electric
vehicles (EVs), drones and grid storage solutions, plus portable devices such as mobile phones, personal computers,
medical devices, and an extensive range of tools for consumer and industrial markets.
Affordable, high-performance lithium-sulphur batteries have the potential to fundamentally drive adoption in these
markets, creating EVs that drive further, drones that fly longer and mobile devices that last for days instead of hours. Li-
S Energy has an enviable opportunity to contribute to the development and production of lithium-sulphur batteries to
supply a multitude of industries and uses.
The Li-S Energy research and development program is designed to provide a path to deliver Li-S Energy Batteries,
materials and intellectual property to market. It has the following four primary goals:
1. Further optimise Li-S Energy technology
The Company has successfully proven the breakthrough that BNNT and Li-Nanomesh can improve the cycle life
of a lithium-sulphur battery. The Company believes continued optimisation of materials and construction will likely
result in even greater increases in cell performance. Additional testing, including fast charging, higher capacity
electrodes and other more aggressive use scenarios is likely to expand commercial use-cases, increase the total
addressable market and so increase the value of Li-S Energy intellectual property.
2. Produce Li-S Energy Batteries in pouch, cylinder and flexible battery formats
To maximise total addressable market and improve speed of adoption, Li-S Energy Batteries need to be
manufactured in all common battery formats, including pouch, cylinder and coin cells. In addition, enabling
bespoke and flexible form batteries would create a new class of battery to enable applications in flexible devices
such as foldable phones and wearable devices such as headphones or smart watches.
3. Build pilot production line, manufacture batteries and prove their benefits in commercial products with commercial
partners
The clearest demonstration of Li-S Energy Battery benefits is to show its performance in real products in direct
comparison to current lithium-ion batteries. The Company intends to collaborate with product original equipment
manufacturers (OEMs) in key markets, retrofit their products with Li-S Energy Batteries, and have the OEM
complete a comparative field test. If these tests show, for example, an EV with twice the range, or a drone with
twice the flight time, it would be a clear demonstration of the Li-S Energy breakthrough to the public, the product
OEMs and to battery manufacturers. The Company intends to use these early stage results to advance
commercial discussions with product OEMs and battery manufacturers.
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4. Develop intellectual property on how lithium-ion battery manufacturing plants can be adapted to produce Li-S
Energy Batteries
Creating rapid mass adoption would require one or more battery manufacturers to invest in the capability to
produce Li-S Energy Batteries. The Company intends to build and operate a pilot scale battery production facility
to demonstrate the manufacturability of Li-S Energy Batteries, and help battery manufacturers quantify how to
adapt existing lithium-ion battery lines to produce Li-S Energy Batteries with the least amount of downtime and
capital cost.
During these development stages the Company will seek to collaborate with battery manufacturers as well as various
industries involved in the manufacture and supply of battery powered products.
To advance its strategy, Li-S Energy intends to scale up its development and production team, install a pilot battery
production plant and, in collaboration with product manufacturers, retrofit Li-S Energy batteries into a range of products
to demonstrate clearly the performance advantages. The Company’s business model includes a plan to generate
revenue by licensing intellectual property to battery manufacturers, collecting intellectual property royalties, and
distributing pure BNNTs and other novel components to facilitate ongoing Li-S battery production.
Li-S Energy is building a strong management team and, with the ongoing support from Deakin’s talented scientists and
engineers, is well positioned to deliver on its objectives.
Yours sincerely,
BEN SPINCER
Chairman
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DIRECTORS' REPORT
For the year ended 30 June 2021
The directors of Li-S Energy Limited (“Li-S Energy” or the “Company”) present their report together with the financial
statements of the company for the financial year ended 30 June 2021.
DIRECTORS
The following persons were Directors in office at any time during or since the beginning of the financial year:
Ben Spincer
Glenn Molloy
Robin Levison
Anthony McDonald
Hedy Cray
Greg Pullen
Appointed 18 March 2021, appointed Chairman 19 March 2021
Resigned as Executive Chairman on 19 March 2021, resigned as a Director on 11 June 2021
Appointed 21 April 2021
Resigned 18 March 2021
INFORMATION ON DIRECTORS
Details of the current Directors’ and experience are detailed below:
Dr Ben Spincer MA, PhD, GAICD. (Age 49)
Non-Executive Director and Chairman
Appointed as a Non-Executive Independent Director on 18 March 2021.
Ben is currently the Executive Director of Deakin Research Innovations, responsible for Deakin’s commercial research
partnerships, as well as the commercialisation and translation of the University’s research and oversight of the
ManuFutures advanced manufacturing scale-up facility. He was a member of the Victorian Government Innovation
Taskforce in 2020 and represents Deakin on a number of research centre and institutes Boards.
Prior to joining Deakin in 2015, Ben was Director of Technology Strategy and Innovation at Telstra, working with the
Chief Technology Officer to oversee the long-term technology strategy of the company and to instil a culture of innovation
in the company. From 2007 to 2013, Ben was the Director of Investor Relations for Telstra, managing relationships
between the company and its shareholders after its full privatisation.
Previously, Ben was Vice President and financial analyst at Credit Suisse in London covering the European telecom
industry.
Mr Robin Levison CA, MBA, FAICD. (Age 63)
Non-Executive Director
Appointed as a Non-Executive Director on 12 July 2019 and a member of the Audit Committee.
Other listed public company directorships held in the last 3 years:
• Director of PPK Group Limited and Executive Chairman from 22 October 2013 to 29 April 2015, Non-Executive
Chairman from 29 April 2015 to 28 February 2016, and re-appointed Executive Chairman from 28 February 2016.
Member of the PPK Group Limited Audit Committee 14 August 2017 to 25 January 2018.
• Non-Executive Director and Chairman of Mighty Craft Limited (formerly Founders First Limited) since 17 December
2019.
Robin has 20 years of public company management and board experience. During this time, he has served as Managing
Director at Industrea Limited and Spectrum Resources Limited and has held senior roles at KPMG, Barclays Bank and
Merrill Lynch. He is a Non-Executive Director of a number of PPK Group Limited’s related companies including White
Graphene Limited, BNNT Technology Limited (BNNTTL), BNNT Precious Metals Limited, 3D Dental Technology Pty
Ltd, Ballistic Glass Pty Ltd, Craig International Ballistics Pty Ltd, Strategic Alloys Pty Ltd and AMAG Holdings Australia
Pty Ltd.
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Robin holds a Master of Business Administration from the University of Queensland, is a Member of the Institute of
Chartered Accountants Australia and NZ and is a Graduate and Fellow of Australian Institute of Company Directors.
Robin recently retired as Chair of the University of Queensland Business, Economics and Law Alumni Ambassador
Council.
Mr Anthony McDonald LL.B. (Age 63)
Non-Executive Director
Appointed as a Non-Executive Director on 12 July 2019 and a member of the Audit Committee.
Other listed public company directorships held in the last 3 years:
• Non-Executive Independent director of PPK Group Limited since 13 September 2017 and a member of the PPK
Group Limited Audit Committee since 25 January 2018.
• Executive Director of Santana Minerals Limited from 15 January 2013 to December 2019 and Non-Executive
Director (non-continuously) since December 2019.
• Non-Executive Independent Director of Plant Gas Limited since 19 November 2003 to 20 June 2019.
Tony graduated with a Bachelor of Laws from the Queensland University of Technology in 1981 and was admitted as a
solicitor in 1981. He has been involved in the natural resource sector for many years both within Australia and
internationally and for the past 19 years has held senior management roles in this sector. He is a Non-Executive Director
of a number of PPK Group Limited’s related companies including White Graphene Limited and Strategic Alloys Pty Ltd.
Ms Hedy Cray LL.B. (Hons), LL.M. (age 48)
Non-Executive Director
Appointed as a Non-Executive Director on 21 April 2021 and a member of the Audit Committee
Hedy graduated with a Bachelor of Laws with Honours in 1996 and a Master of Laws in 1999 from Queensland University
of Technology. She has been a law firm partner since 2001 and a partner with Clayton Utz since 2005 and is the Senior
Partner of the Workplace Relations Employment and Safety Group for the firm.
She has extensive experience in commercial and corporate strategy, risk management, corporate governance,
acquisitions and company restructuring as well as employment, human capital and safety and has worked with
multinationals across energy, renewable resources, manufacturing, transport and logistics and the government sector.
INFORMATION ON COMPANY SECRETARIES
Mr Ken Hostland CA/CPA (Canada), MBA, BCom (Age 63)
Chief Financial Officer and Joint Company Secretary
Appointed as Company Secretary on 12 July 2019. Mr Hostland is acting as Chief Financial Officer for Li-S Energy in
accordance with an agreement between Li-S Energy and PPK Aust, a subsidiary of PPK Group Limited.
Ken is the Chief Financial Officer of PPK Group Limited and its related mining service companies and the Chief Financial
Officer and Company Secretary for BNNTTL, White Graphene Limited, BNNT Precious Metals Limited, Strategic Alloys
Pty Ltd, 3 D Dental Technology Pty Ltd and Ballistic Glass Pty Ltd.
Ken has more than 30 years’ experience in Australia as a senior finance executive with public and private companies.
Mr Andrew Cooke LL.B. (age 60)
Joint Company Secretary
Appointed as Company Secretary on 8 July 2021. Mr Cooke’s services as Joint Company Secretary are provided under
a consultancy agreement with Mr Cooke’s consultancy company.
Andrew has extensive experience in law, corporate finance and as a Director/Company Secretary of a number of ASX
listed companies. Andrew was the Company Secretary for PPK Group Limited for nine years and is responsible for
corporate administration together with stock exchange and regulatory compliance.
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Pat Rogers (Age 50) BLaws, BBus Accy, FGIA
Appointed as Company Secretary on 4 May 2021, resigned on 26 July 2021.
PRINCIPAL ACTIVITIES
Li-S Energy is the result of a joint venture between Li-S Energy’s founding Shareholders, PPK Group Limited (through
its nominee subsidiary, PPK Aust. Pty Ltd (PPK Aust)), BNNT Technology Limited (BNNTTL) and Deakin. Li-S Energy
was incorporated on 12 July 2019 with the objective of utilising BNNTTL and Deakin’s existing technology and research
to develop a battery technology based on more advanced lithium-sulphur chemistry, where BNNTs and other
nanomaterials are incorporated into battery components to:
•
•
Improve battery energy capacity when compares to current lithium-ion batteries; and
Improve cycle life when compared to conventional lithium-sulphur batteries.
REVIEW OF OPERATIONS
Li-S Energy’s research and development has shown that integrating BNNTs into lithium-sulphur battery components
and architecture is an effective method of stabilising the battery components during charge and discharge, creating a
lithium-sulphur battery cell with a cycle life approaching that of everyday consumer grade lithium-ion batteries. This
offers the potential for a lithium-sulphur battery to finally be commercialised and mass produced.
For decades, scientists have known that using lithium and sulphur electrodes in a battery presented one of the best
opportunities to create a high-performance battery. At 2,567Wh/kg, the theoretical energy density of a lithium-sulphur
battery is in the order of five times that of a standard lithium-ion battery while they are also lighter, safer, faster charging,
and using more environmentally friendly raw materials.
However, lithium-sulphur batteries have yet to be mass produced as they tended to fail after a low number of recharge
cycles, making them of little use for most commercial applications. Li-S Energy’s research and development has shown
that integrating BNNTs into lithium-sulphur battery components and architecture is an effective method of stabilising the
battery components during charge and discharge, creating a lithium-sulphur battery cell with a cycle life approaching
that of everyday consumer grade lithium-ion batteries. This offers the potential for a lithium-sulphur battery to finally be
commercialised and mass produced. Current test results have proven that the Li-S Energy battery cell with BNNTs
performs substantially better in terms of cycling stability and energy density compared to an identical cell without BNNTs.
Development of the Li-S battery has continued at the ManuFutures building in Waurn Ponds, Victoria during this
period, despite the impact of COVID-19. Li-S Energy has leased two production bays in ManuFutures for the
expansion of its business plans and continues to have a lease over its laboratory until such time that is relocated to
one of the two production bays.
FINANCIAL RESULTS
For the financial year ended 30 June 2021 Li-S Energy incurred a loss of $1,684,391 (2020: $35,148 loss).
Li-S Energy is in the early development stage and as such, certain costs are able to be capitalised as intangible assets
where appropriate and those not directly attributable to the intangible asset (i.e. legal set up costs, audit fee accruals,
etc.) are being expensed, hence it is not unusual to report losses initially.
The Company holds an investment in Zeta Energy LLC as at 30 June 2021. The investment is measured at fair value
through profit or loss with $289,638 recorded as a loss on the fair value movement of the investment, of which $222,481 of
this loss was the exchange loss of currency movements in the AUD/USD. The balance represented a movement in Zeta
Energy LLC’s rolling valuation.
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REVIEW OF FINANCIAL CONDITION
Throughout the year Li-S Energy has increased the strength of its balance sheet through:
• The issue of 4,999,614 shares to Sophisticated Investors at $0.65 per share on 15 July 2020 to complete a
$3,250,000 capital raise; and
• a share split on a 10 for 1 basis on 22 October 2020, restating total shares on issue of 560,200,230, thus
valuing the shares issued to Sophisticated Investors on 15 July 2020 at $0.065 per share. On 9 April 2021 the
company completed a $20,000,000 capital raise from Sophisticated Investors and issued 40,000,000 ordinary
shares at $0.50 per share.
At 30 June 2021, the Company had $18,606,698 of cash in the bank, no debt, no interest bearing loans and trade and
other payables of $443,397. The Company also had non-current assets of $3,370,698 (excluding deferred tax assets)
of which $2,258,062 is its investment in Zeta Energy LLC, $991,863 of intangibles for the research and development
work undertaken to 30 June 2021 and $120,773 of fixed assets.
Subsequent to the year end, Li-S Energy lodged an application with ASIC to list on the ASX, issue 40,000,000 ordinary
shares and raise $34,000,000. After the costs of the offer, project expenditure and corporate overheads, the Company
is estimating to have $16,466,058 in surplus working capital over a forward two year period.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Li-S Energy issued 4,999,614 shares to Sophisticated Investors at $0.65 per share on 15 July 2020 to complete a
$3.250M capital raise. Li-S Energy completed a share split on a 10 for 1 basis on 22 October 2020, restating total
shares on issue of 560,200,230, thus valuing the shares issued to Sophisticated Investors on 15 July 2020 at $0.065
per share.
Li-S Energy has announced its intent to proceed to an Initial Public Offering before 31 December 2021 and
preparations for this have commenced. On 9 April 2021 the company completed a $20,000,000 capital raise from
Sophisticated Investors and issued 40,000,000 ordinary shares at $0.50 per share.
On 14 February 2021, Dr Lee Finniear was appointed the Chief Executive Officer of Li-S Energy.
On 18 March 2021, Ben Spincer was appointed a Director and on 19 March 2021 was appointed Chairman. Greg
Pullen resigned as Director on 18 March 2021.
DIVIDENDS
There were no dividends declared or paid during the financial year.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
Operational Agreements
The Company has entered into a number of new operational agreements subsequent to the end of the financial year.
Supply Agreement with BNNTTL
On 9 July 2021, Li-S Energy and BNNTTL entered into a supply agreement for the supply of BNNTs to Li-S Energy for
the purposes of using BNNTs in Li-S Energy’s development, testing and manufacture of the Li-S Energy batteries. The
key material terms of the supply agreement are as follows:
Term:
Termination:
The contract commenced on 9 July 2021 for an initial term of 5 years and automatically
renews for further 2 year terms unless Li-S Energy elects not to renew the agreement by
giving at least 3 months’ notice prior to the expiry of the latest term.
Either party may terminate the agreement immediately if the other party commits a material
breach that is unable to be rectified or where able to be rectified, fails to do so within a cure
period, or the other party is insolvent or similar.
Product supplied:
BNNTs with a purity of at least 95% or any other specifications agreed from time to time.
The minimum Purchase Order quantity is 10gm.
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Permitted Purpose: Li-S Energy may only order BNNTs from BNNTTL to use BNNTs in the Customer’s
development, testing and manufacture of batteries (including to stockpile BNNTs for later
use in accordance with forecasts) and any other purpose agreed between the parties in
writing.
Other terms:
The remainder of the agreement is on the usual commercial terms for a contract of this
nature.
Distribution Agreement with BNNTTL
On 9 July 2021, Li-S Energy and BNNTTL have entered into a distribution agreement pursuant to which Li-S Energy is
appointed as distributor for BNNT products within the battery industry, with certain exclusive distribution rights. The key
material terms of the distribution agreement are as follows:
Term:
Termination:
Product used
distribution:
for
The contract commenced on 9 July 2021 for an initial term of 5 years and automatically
renews for further 2 year terms unless Li-S Energy elects not to renew the agreement by
giving at least 3 months’ notice prior to the expiry of the latest term.
Either party may terminate the agreement immediately if the other party commits a material
breach that is unable to be rectified or where able to be rectified, fails to do so within a cure
period, or the other party is insolvent or similar.
BNNTs with a purity of at least 95% or any other specifications agreed from time to time.
The minimum Purchase Order quantity is 10gm.
Permitted Purpose: Li-S Energy may only buy BNNTs from BNNTTL for the following Permitted Purposes
(including to stockpile BNNTs for later use in accordance with forecasts) and any other
purpose agreed between the parties in writing:
(a) to distribute on an exclusive basis BNNTs to third party customers (Customers),
provided the Customers are only permitted to use BNNTs to develop, test or
manufacture lithium-sulphur batteries; and
(b) to distribute on a non-exclusive basis BNNTs to Customers, provided the Customers
are only permitted to use BNNTs to:
a. develop, test or manufacture batteries that are not lithium-sulphur batteries
(including to stockpile BNNTs for later use in accordance with forecasts); and
(including Li-
b. manufacture nanomesh products
incorporating BNNTs
Nanomesh) for the use in any form or type of battery.
For clarity, Li-S Energy is not restricted from distributing Li-S Energy’s Li-Nanomesh (or
other nanomesh products), or BNNTs to Li-S Energy’s customers who have a licence from
Li-S Energy to manufacture Li-Nanomesh (or other nanomesh products).
Territory:
Nature
Appointment:
of
Worldwide
Distributor in the Territory for the Permitted Purpose during the Term.
Exclusive distributor for the Permitted Purposes relating to the distribution in respect of
lithium-sulphur batteries, for the first seven years of the agreement.
Li-S Energy’s ‘exclusivity’ in respect of distributing Li-Nanomesh and BNNTs for
manufacture of Li-Nanomesh is by virtue of Li-S Energy owning the IP required to
manufacture Li-Nanomesh.
Other terms:
The remainder of the agreement is on the usual commercial terms for a contract of this
nature.
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Management Services Agreement with PPK Aust
On 9 July 2021, Li-S Energy and PPK Aust have entered into a management services agreement pursuant to which
PPK Aust will provide to Li-S Energy administrative support services. The key material terms of the management
services agreement are as follows:
Term:
Termination:
The contract commenced on 1 May 2021 for an initial term of 3 years and can be renewed
by PPK Aust for a further 3 year term upon notice being provided by PPK Aust not later than
3 months prior to the expiry of the initial term.
Either party may terminate the agreement on 30 days’ notice if the other party commits a
material breach that is unable to be rectified or where able to be rectified, fails to do so
within a cure period, or the other party is insolvent or similar.
Appointment:
Fees:
PPK Aust may terminate the agreement on 30 days’ notice if it is not satisfied with the
Annual Plan of Li-S Energy.
Li-S Energy may terminate the agreement at will on 6 months’ notice.
PPK Aust is appointed to provide management services to Li-S Energy which will see PPK
Aust assist Li-S Energy with its administrative functions such as accounting, record keeping,
reporting, assisting with insurance and recruitment. PPK Aust will also provide staff to act
in key officer roles including the public officer, chief financial officer and company secretary.
It is also appointed, to the extent permitted by law, facilitate/oversee the funding and capital
raising requirements of the company (note this does not include acting as an advisor).
PPK Aust will be paid a fee for providing the management services which will be $150,000
for the initial three months from 1 May 2021 to 31 July 2021. This fee, together with the
scope and performance of the management services, will be subject to review between the
parties every 3 months (this allows for resetting of the fee in the event that Li-S Energy
experiences business changes that require PPK Aust to provide additional (or reduce)
resources to effectively provide the services).
Indemnity:
PPK Aust will be paid a funding fee of up to 1% of any debt or capital raised that it facilitates.
PPK Aust will be entitled to recover any disbursements or expenses it incurs on behalf of
Li-S Energy or in providing the services.
Li-S Energy indemnifies PPK Aust for any loss that arises from the performance by PPK
Aust of its obligations under the agreement.
Other terms:
The remainder of the agreement is on the usual commercial terms for a contract of this
nature.
Research Framework Agreement with Deakin
On 8 July 2021, Li-S Energy and Deakin have entered into a research framework agreement which governs all research
projects conducted between Li-S Energy and Deakin as set out in Project Schedules made under the agreement. The
key material terms of the research framework agreement are as follows:
Term:
The contract commenced on 8 July 2021 and continues until terminated.
Termination:
Either party may terminate the agreement and any Project Schedule immediately if the other
party commits a material breach that is unable to be rectified or where able to be rectified,
fails to do so within a cure period, or the other party is insolvent or similar.
Project Schedules:
The parties may from time to time enter into Project Schedules made under the agreement
for research projects proposed and negotiated by the parties. Such Project Schedules
include terms around payment, steering committees, specified personnel of the parties and
insurances required.
Intellectual
Property:
Each party will retain ownership of their respective intellectual property developed prior to
the date a Project commences or is acquired or developed independent of the agreement,
but grants a non-transferrable licence to the other party to use such background intellectual
property for the purposes of the relevant Project.
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Any new intellectual property created, developed or discovered in the conduct of a Project
vests in Li-S Energy (Project IP). Deakin is granted a non-exclusive, perpetual, non-
transferable, royalty free licence to use the Project IP for the purposes of the Project and for
non-commercial research, teaching and scholarly pursuits.
Deakin must also seek Li-S Energy’s prior consent before it publishes any part of the Project
IP as part of any publication.
Termination of Shareholders Agreement
On 20 July 2021, PPK Aust., Deakin and BNNTTL executed a Deed of Termination of the Shareholders Agreement
effective on the date of signing.
Employment Contracts
On 9 July 2021, Li-S Energy has entered into an employment contract with Dr Lee Finniear for his engagement as CEO
which contains standard terms and conditions for agreements of this nature, including confidentiality, restraint on
competition and retention of intellectual property provisions. The key terms of the employment contract are as follows:
Total Remuneration
Package:
$300,000 annual salary (including superannuation).
In addition to his annual salary, Dr Lee Finniear has been granted, and has elected to be
issued, 1,000,000 Service Rights vesting over a four year term in accordance with the
Executive Rights Plan.
Dr Lee Finniear is also eligible to participate in the Company’s short term incentive plan for
the 2022 Financial Year up to $100,000.
Term:
The contract commenced on 1 July 2021 and continues until terminated.
by
Termination
CEO:
Termination by Li-S
Energy:
Non-competition
and non-solicitation:
6 months’ notice.
6 months’ notice or immediately due to serious misconduct or any reason entitling the Li-S
Energy to summarily dismiss Dr Lee Finniear at common law.
To protect the interests of Li-S Energy and its intellectual property, Dr Lee Finniear will not,
directly or indirectly, in any capacity whatsoever, during the term and for 12 months after
the termination of the contract,
(a) be engaged, concerned or interest in any other business or occupation that is or may
be in competition with the business carried on by Li-S Energy in Australia;
(b) induce or encourage a client or customer of Li-S Energy to cease doing business with
or reduce the amount of business it would otherwise do with Li-S Energy;
(c) induce or solicit any officer or employee of Li-S Energy to leave that office or
employment; or
(d) procure or assist someone else to do or attempt to do anything contemplated by way of
non-competition or non-solicitation.
As a result of the Dr Lee Finniear entering into an employment contract, the previous consulting agreement with his
consultancy company was terminated as at 30 June 2021. Consulting fees paid to or owing to his consultancy company
to 30 June 2021 were $198,100.
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On 1 July 2021, Li-S Energy has entered into an employment contract with Dr Steve Rowlands for his engagement as
CTO which contains standard terms and conditions for agreements of this nature, including confidentiality, restraint on
competition and retention of intellectual property provisions. The key terms of the employment contract are as follows:
Total Remuneration
Package:
$176,000 annual salary (including superannuation).
Dr Steve Rowlands is eligible to participate in the Company’s short term incentive plan for
the 2022 Financial Year up to $16,000, and the Company’s Executive Rights Plan on terms
to be confirmed.
The Company will also reimburse Dr Steve Rowlands for all reasonable relocation costs
from the UK, including an annual economy return flight to the UK.
Term:
The contract commenced on 1 July 2021 (with a three month probation period) and
continues until terminated.
Termination
CTO:
by
2 months’ notice during the probation period.
6 months’ notice.
Termination by Li-S
Energy:
2 months’ notice during the probation period.
6 months’ notice or immediately due to serious misconduct or any reason entitling the Li-S
Energy to summarily dismiss Dr Steve Rowlands at common law.
Non-competition
and non-solicitation:
To protect the interests of Li-S Energy and its intellectual property, Dr Steve Rowlands will
not, directly or indirectly, in any capacity whatsoever, during the term and for 12 months
after the termination of the contract,
(a) be engaged, concerned or interest in any other business or occupation that is or may be
in competition with the business carried on by Li-S Energy in Australia;
(b) induce or encourage a client or customer of Li-S Energy to cease doing business with
or reduce the amount of business it would otherwise do with Li-S Energy;
(c) induce or solicit any officer or employee of Li-S Energy to leave that office or
employment; or
(d) procure or assist someone else to do or attempt to do anything contemplated by way of
non-competition or non-solicitation.
Consulting Agreements
On 16 July 2021, a consulting agreement between Li-S Energy and Glenn Molloy’s consultancy company, Corso
Management Services Pty Ltd. The key terms of the consultancy agreement are as follows:
Designated Person: While the contract is between Li-S Energy and Glenn Molloy’s consultancy company, the
agreement requires that the services to be provided by Glenn Molloy unless otherwise
agreed in writing by Li-S Energy and for Glenn Molloy to remain an employee of the
consultancy company.
Entitlements:
A daily rate to be agreed between the parties. Mr Molloy is not paid any fees in respect of
travel time to and from the locations where work is performed.
Term:
The contract commenced on 12 June 2021 and is for a period of 24 months unless
terminated earlier by Li-S Energy as permitted under the agreement.
Termination:
Subject to annual renewal by written agreement, the contract terminates on 12 June 2023
or Li-S Energy can immediately terminate the agreement if Mr Molloy:
(a) commits any act involving fraud, deceit, dishonesty or other serious misconduct
(whether in relation to Li-S Energy or otherwise);
(b) becomes bankrupt or commits any act of bankruptcy;
11
(c) is charged with any serious criminal offence;
(d) refuses or fails to comply with any lawful request made by Li-S Energy or any of its
Directors;
(e) is unable to properly perform the essential elements of the Chief Commercial Actions
(f)
Officer role whether as a result of illness, accident or otherwise; or
is in breach of any obligations under the contract and fails to rectify the breach within 5
business days after being requested to do by Li-S Energy.
Either party may terminate on 3 months’ notice.
Non-competition
and non-solicitation:
To protect the interests of Li-S Energy and its intellectual property, Mr Molloy will not, directly
or indirectly, in any capacity whatsoever, during the term and for 12 months after the
termination of the contract,
(a) be engaged, concerned or interest in any other business or occupation that is or may
be in competition with the business carried on by Li-S Energy;
(b) induce or encourage a client or customer of Li-S Energy to cease doing business with
or reduce the amount of business it would otherwise do with Li-S Energy;
(c) induce or solicit any officer or employee of Li-S Energy to leave that office or
employment; or
(d) procure or assist someone else to do or attempt to do anything contemplated by way of
non-competition or non-solicitation.
This restraint will not prevent Mr Molloy from performing his roles or holding his interest in
PPK Group Limited entities or entities it holds an interest in.
On 7 July 2021, a consulting agreement between Li-S Energy and Andrew Cooke’s consultancy company, AJC
Corporate Services Pty Ltd was entered into. The agreement is made on standard commercial terms for services for
the provision of company secretarial services.
Australian Research Council Industrial Transformation Research Hub
Deakin University has been awarded grant funding by the Australian Research Council (ARC) to establish and operate
the ARC Industrial Transformation Research Hub in new safe reliable energy storage and conversion technologies.
Under the grant agreement Deakin University must enter into a participant’s agreement with each participating
organisation before the research program can start.
On 11 May 2021, Li-S Energy signed the participant’s agreement and the contract commences when all parties have
executed their agreement. As at 30 June 2021, the other participants had not yet signed the agreement.
Commitment:
Cash contributions of $150,000 per year for five years totalling $750,000 and in-kind
contributions of $50,000 per year for five years totalling $250,000.
Term:
The contract is for a period of 5 years unless terminated earlier by ARC as permitted under
the agreement.
Termination:
The contract terminates on the fifth anniversary of the commencement date of the
agreement or the date of which the final report is submitted to the ARC, whichever is later.
Deakin University may terminate this agreement if the grant agreement with ARC is
terminated for any reason or if the ARC suspends or reduces the scope of the research
program or grant funding. Alternatively the agreement may be terminated if the participating
organisations agree there is no longer a valid reason for continuing with the research
program.
12
Lodgement of IPO Prospectus and Proposed Capital Raising
On 29 July 2021, Li-S Energy lodged a prospectus to raise $34,000,000, issue 40,000,000 ordinary shares and list on
the ASX. As a result of this prospectus, the number of ordinary shares potentially outstanding is as follows:
Outstanding and issued at 30 June 2021
Issued as a result of capital raising in the prospectus
Total outstanding and issued at the completion of the prospectus
Potentially issuable ordinary shares under the Service Rights as detailed in
the Remuneration Report disclosed in the Directors’ Report 1
Issued and potentially issuable ordinary shares at the date of the prospectus
Number of Ordinary Shares
600,200,230
40,000,000
640,200,230
3,160,000
643,360,230
1 Assuming all Service Rights vest and are converted to ordinary Shares.
The Prospectus opened on 2 August 2021 and closed on 13 August 2021 as the capital raise was oversubscribed. Li-S
Energy made an application to the ASX, in accordance with the Prospectus, and is progressing the application with the
ASX. There remain a number of steps before the ASX is in a position to confirm conditional listing approval, which are
understood to be procedural for listing, and it is expected the listing will occur in September 2021.
Impact of COVID-19
Events relating to COVID-19 have resulted in significant economic volatility. There is continued uncertainty as to the
ongoing and future response of governments and authorities globally, and a further Australian economic downturn is
possible. As such, the full impact of COVID-19 to consumer behaviour, employees and the Company are not fully
known. Given this, the impact of COVID-19 could potentially be materially adverse to the Company’s financial and/or
operational performance. Further, any government or industry measures may materially adversely affect the Company’s
operations and are likely beyond the Company’s control.
Due to COVID-19, the State and Federal Governments have imposed social-distancing restrictions which have, and
may, disrupt the operations of the Company. The Company’s main operations are at Deakin University’s campus located
at Geelong, Victoria. To slow the spread of COVID-19 in Victoria, the Victorian government has imposed restrictions
from time-to-time. Deakin University, who is contracted to provide the research and development for the Company, has
had its own restrictions with access to campus by staff, students and visitors restricted to help maintain health and safety
protocols, with staff and visitor access reviewed case-by-case. As a result, limits have been placed on the number of
staff and contractors permitted in the workspace at one time. It is unknown whether stricter restrictions will be imposed
and what the impact of these would be on the operations of the Company.
Due to COVID-19, the manufacture of equipment and parts and the supply of raw materials in foreign markets may be
restricted or delayed which could impact on the Company’s operations.
There have been no other matter or circumstance that has arisen since the end of the financial period which is not
otherwise dealt with in this report or in the financial statements that has significantly affected or may significantly affect
the operations of the Company, the results of those operations or the state of affairs of the Company in subsequent
financial years.
FUTURE DEVELOPMENTS
In 2021, Li-S Energy produced a strategic development program to:
1. Further optimise Li-S Energy technology;
2. Produce Li-S Energy Batteries in pouch, cylinder and flexible battery formats;
3. Build pilot production line, manufacture batteries and prove their benefits in commercial products with
commercial partners; and
4. Develop intellectual property on how lithium-ion battery manufacturing plants can be adapted to produce Li-S
Energy Batteries.
From the strategic development program, Li-S Energy produced business plans and budgets for the following
components:
13
Core Technology
1. Li-S Energy Battery Optimisation
2. Li-Nanomesh Anode Protection
3. Pilot, Pouch and Cylinder Battery Production Plant
4. Retrofit Batteries to Products
5. Modelling, Simulation and In-situ Monitoring
Projects to further enhance Li-S Energy Battery Intellectual Property
6. Flexible Form Battery
7. Solid State Battery
8. 3D Printed Battery
With the funds from the $34,000,000 capital raise, the Company will execute the strategic development plans and business
plans as noted above.
OPTIONS AND UNISSUED SHARES
There are 2,160,000 Service Rights granted to Non-Executive Directors under the NED Equity Plan and 1,000,000
Service Rights under the Executive Rights Plan. See the Remuneration Report below for further information.
ENVIRONMENTAL ISSUES
Li-S Energy is committed to:
the effective management of environmental issues having the potential to impact on its business; and
minimising the consumption of resources utilised by its operations.
The Company has otherwise complied with all government legislation and regulations with respect to disposal of waste and
other materials and has not received any notices of breach of environmental laws and/or regulations.
PROCEEDINGS ON BEHALF OF THE COMPANY
No matter or circumstance has arisen which is not otherwise dealt with in this Annual Report that has significantly affected
or may significantly affect the operations of the company, the results of those operations or the state of the company in
subsequent years.
REMUNERATION REPORT
The Directors of Li-S Energy present the Remuneration Report for Directors and executives, prepared in accordance with
the Corporations Act 2001 and the Corporations Regulations 2001. The Directors have determined that they, the Chief
Executive Officer, the Chief Financial Officer and the Chief Technology Officer are the key management personnel.
Remuneration Policy
The remuneration policy of the Company has been designed to align directors’ and executives objectives and
performance with shareholder and business results by providing a fixed remuneration component and offering specific
Short Term Incentives (STIs) based on key performance areas affecting the Company’s financial results and Long Term
Incentives (LTIs) based on increases to Li-S Energy’s share price and retention of key people.
The Li-S Energy Board believes the remuneration policy to be appropriate and effective in its ability to attract, retain and
motivate directors and executives of high quality and standard to manage the affairs of the Company and create goal
congruence between directors, executives and shareholders.
14
The remuneration policy, setting the terms and conditions for directors and executives was developed by the Board after
taking advice from Godfrey Remuneration Group. The policy for determining the nature and amount of remuneration for
board members and executives is detailed in the paragraphs which follow.
Remuneration of non-executive directors is determined by the Board from the maximum amount available for distribution
to the non-executive directors as approved by shareholders. Currently this amount is set at $800,000 per annum in
aggregate and is to be approved by shareholders at the next Annual General Meeting.
In determining the appropriate level of directors’ fees, data from surveys undertaken of other public companies similar
in size or market section to the Company is taken into account, as well as advice from Godfrey Remuneration Group.
Non-Executive Directors (NEDs)
The following table details the total compensation each Non-Executive Director is entitled to receive in relation to their
duties as a Director of Li-S Energy, the Directors do not receive any additional fees for participation on any Committees.
Director
Dr Ben Spincer
Mr Robin Levison
Mr Tony McDonald
Ms Hedy Cray
Directors’ Fees $
(including superannuation)
120,000
80,000
80,000
80,000
Director fees for Ben Spincer include his responsibilities as the Chairman.
Li-S Energy has adopted the NED Equity Plan under which the Board of the Company may invite Non-Executive
Directors to apply for Service Rights to be issued in accordance with, and subject to the terms of the Plan. Each Service
Right is an entitlement, upon vesting and exercise, to an ordinary fully paid Share in the Company.
The following table indicates the amount of fees that a NED can sacrifice in return for a grant of Service Rights.
Financial Year
Fees Sacrifice
($)
Tranche
Number of Service
Rights
Non-Executive Directors (NEDs)
Chairman
2021
2022
2023
2021
2022
2023
80,000
80,000
80,000
120,000
120,000
120,000
1
2
3
1
2
3
160,000
160,000
160,000
240,000
240,000
240,000
NEDs will sacrifice total Director fees of $80,000 for 160,000 Service Rights and the Chairman will sacrifice total Director
fees of $120,000 for 240,000 Service Rights for each Financial Year. There is no amount payable other than the
sacrificed fees for the Service Rights. The Directors believe that accepting Share Rights in lieu of cash remuneration
aligns their risk/reward with that of the Shareholders.
The number of Service Rights are calculated by dividing the amount of sacrificed fees by the Share price of $0.50 per
Share being the price at which Shares were issued in the April 2021 capital raise. The fair value of these Service Rights
at the time that they were granted have been independently valued at $0.50 each.
The Service Rights were issued as at 1 May 2021 and will vest in three equal tranches on 30 April 2022, 2023 and 2024,
providing the NED holds the office of NED on those dates. Each consecutive tranche commences annually on the vesting
date of the prior tranche.
15
Service Rights may not be disposed of at any time except by force of law such as on death and Service Rights may not
be exercised prior to vesting but may be exercised at any time once they have vested but must be exercised within 90
days of cessation of holding the office of NED and any role as an employee of the Company.
Each Service Right has a term ending 15 years after the grant date. If not exercised before the end of their term the
Service Rights will lapse. The term will be reduced if vested Service Rights are not exercised as required following
cessation of being a NED.
If a NED ceased to hold the office of a NED during a tranche then Service Rights for that tranche will vest in proportion
to the time elapsed as served in the tranche. All subsequent tranches will lapse.
Any unvested Service Rights that do not vest will lapse.
A NED must not enter into an arrangement with anyone if it would have the effect of limiting their exposure to risk in
relation to Service Rights (vested or unvested).
If the Board forms the view that a NED has committed an act of fraud, defalcation or gross misconduct in relation to the
Company then all unexercised Service Rights will be forfeited.
Executives
The Board is responsible for approving remuneration policies and packages applicable to executives of the Company.
The broad remuneration policy is to ensure that the remuneration package properly reflects the person’s duties and
responsibilities and that the remuneration is competitive in attracting, retaining and motivating people of high quality and
standard.
A review of the compensation arrangements for executives is conducted by the full Board at a duly constituted Directors’
meeting.
The Board conducts its review annually based on established criteria which includes:
the individual’s performance;
reference to market data for broadly comparable positions or skill sets in similar organisations or industry;
the performance of the Company during the relevant period; and
the broad remuneration policy of the Company.
Executives may receive bonuses and/or fees based on the achievement of specific goals of the consolidated entity.
Company Performance and Shareholder Wealth for Executive Remuneration
The two methods employed in achieving this aim are:
Short Term Incentives
Li-S Energy has an STI in place which is paid as salary and superannuation above their normal contracts and aligned
with key performance indicators (KPIs) as determined by the board. The KPIs are developed from the strategic and
operating plans and are chosen to reflect the core drivers of short-term performance and deliver sustainable value to
the Company, its shareholders and its customers. Participation in the STI is considered on an annual basis.
Long Term Incentives
Li-S Energy has adopted a plan called the Li-S Energy Limited Executive Rights Plan (Executive Rights Plan) under
which the Board of the Company may invite certain eligible persons, to apply for Service Rights or Performance Rights
to be issued in accordance with, and subject to the terms of, the Executive Rights Plan.
Each Service Right or Performance Right is an entitlement, upon vesting and exercise, to an ordinary fully paid Share
in the Company.
16
The Board may at any time by written instrument, or by resolution of the Board, amend or repeal all or any of the
provisions of the Plan. Non-Executive Directors are excluded from Participation in the Plan.
As at the date of this Prospectus, the following Service Rights have been granted under the Executive Rights Plan:
Executive
Dr Lee Finniear
Number of Service Rights
(unvested)
1,000,000
On 12 November 2020 Dr Lee Finniear was granted 1,000,000 Service Rights which vest in four equal tranches on 30
April 2022, 2023, 2024 and 2025, subject to continuity of his engagement during the Measurement Periods. The Service
Rights have a nil exercise price. Each consecutive tranche commences annually on the vesting date of the prior tranche
The Service Rights may not be disposed of at any time except by force of law such as on death and Service Rights may
not be exercised prior to vesting but may be exercised at any time once they have vested but must be exercised within
90 days of cessation of being an employee of the Company.
Each Service Right has a term ending 15 years after the grant date. If not exercised before the end of their term the
Service Rights will lapse. The term will be reduced if vested Service Rights are not exercised as required following
cessation of being an employee of the Company.
If Dr Lee Finniear ceases his employment during a tranche then Service Rights for that tranche will vest in proportion to
the time elapsed as served in the tranche. All subsequent tranches will lapse.
Any unvested Service Rights that do not vest will lapse.
Dr Lee Finniear must not enter into an arrangement with anyone if it would have the effect of limiting his exposure to risk
in relation to Service Rights (vested or unvested).
If the Board forms the view that Dr Lee Finniear has committed an act of fraud, defalcation or gross misconduct in relation
to the Company then all unexercised Service Rights will be forfeited.
The fair value of these Service Rights at the time that they were granted have been independently valued at $0.065
each.
17
Remuneration Details for the year ended 30 June 2021 for Directors’ and Key Management Personnel
Details of the nature and amount of each element of the remuneration of each director and key management
personnel (‘KMP”) of Li-S Energy and consulting fees to other related parties are shown in the table below:
Short Term Benefits
Salary &
Fees
(3)Cash
Bonus
Non-
Monetary
Post
em ploym ent
Super-
annuation
Long
Term
Benefits
Term ination
Paym ents
(1)Share
Based
Paym ents
2021
($)
($)
($)
($)
($)
($)
($)
Perform ance
Related
%
Total
($)
Directors
Non-Executive
B Spincer
A McDonald(2)
R Levison(2)
H Cray
G Pullen
-
-
16,667
200,000
16,667
100,000
-
-
-
-
Total Non-Executive
33,334
300,000
Executive
G Molloy(2)
Total Executive
Total Directors
16,667
400,000
16,667
400,000
50,001
700,000
Other Key Managem ent
Personnel
L Finniear (2)(4)
98,100
100,000
K Hostland
M Winfield
G Walsh
Total Other
Total Key Managem ent
Personnel
-
-
-
100,000
50,000
50,000
98,100
300,000
148,101
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
36,668
36,668
24,444
241,111
24,444
141,111
24,444
24,444
-
-
110,000
443,334
-
-
416,667
416,667
110,000
860,001
17,058
215,158
-
-
-
100,000
50,000
50,000
17,058
415,158
127,058
1,275,159
-
83
71
-
-
96
96
46
100
100
100
(1) Equity settled share based payments. Service rights granted are expensed over the vesting period from the date of granting to the date that the
last tranche vests.
(2) Salary & Fees include directors fees paid from 1 July 2020 to 30 April 2021 and consulting fees paid from 14 February 2021 to 30 June 2021.
(3) Cash bonus w as paid for w ork undertaken in relation to the Li-S Energy IPO and w as above normal w ork responsiblities. Bonuses w ere
invested in shares in Li-S Energy in off-market-transfers at $0.50 per share.
(4) Cash bonus w as in relation to a sign-on fee for leaving his previous place of employment.
18
As at the end of the financial year, the number of ordinary shares held by directors and Key Management Personnel during
the 2021 reporting period is set out below:
Share
Balance at
Start of Year
Shares Issued
via PPK's In-
specie
Dividend
Shares
Acquired
Shares Sold
Shares Held
at the End of
the Reporting
Period
Service
Rights
Granted
During the
Reporting
Period
Total
Securities
Held at the
End of the
Reporting
Period
-
-
-
-
-
-
-
-
-
-
-
-
166,961
200,000
700,000
1,576,917
1,200,000
-
27,201
1,743,878
2,127,201
5,640,784
5,640,784
7,384,662
800,000
800,000
2,927,201
-
-
200,000
200,000
7,384,662
3,127,201
-
-
-
-
-
-
-
-
-
-
-
200,000
866,961
2,776,917
27,201
720,000
480,000
480,000
480,000
920,000
1,346,961
3,256,917
507,201
3,871,079
2,160,000
6,031,079
6,440,784
6,440,784
-
-
6,440,784
6,440,784
10,311,863
2,160,000
12,471,863
200,000
200,000
1,000,000
1,000,000
1,200,000
1,200,000
10,511,863
3,160,000
13,671,863
2021
Directors
Non-Executive
B Spincer
A McDonald
R Levison
H Cray
Total Non-Executive
Executive
G Molloy
Total Executive
Total Directors
Other Key
Management
Personnel
L Finniear
Total Other
Total Key
Management
Personnel
OTHER TRANSACTIONS WITH RELATED PARTIES OF THE COMPANY
There were no other transactions with directors and/or their related parties during the year.
(End of the Remuneration Report)
DIRECTORS’ MEETINGS
The number of meetings of Directors held during the year and the number of meetings attended by each Director is as
follows:
Ben Spincer
Glenn Molloy
Robin Levison
Anthony McDonald
Hedy Cray
Greg Pullen
DIRECTORS’ MEETINGS
Number
Eligible to
Attend
9
12
15
15
5
5
Number
Attended
9
12
15
15
5
5
There were no separate Audit Committee meetings held, all audit related matters were addressed by the full Board.
CORPORATE GOVERNANCE STATEMENT
Li-S Energy’s directors and management are committed to conducting business ethically and in accordance with high
standards of corporate governance. A copy of Li-S Energy’s Corporate Governance Statement can be found in the
corporate governance section of Li-S Energy’s website at www.lis.energy.
19
RISK & CONTROL COMPLIANCE STATEMENT
As Li-S Energy intends to list on the ASX, the Company complies with the ASX Listing Rules and the ASX Corporate
Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations (“ASX
Recommendations 4th edition”) and discloses in this Annual Report the extent of its compliance with the ASX
Recommendations.
Throughout the reporting period, and as at the date of signing of this Directors’ Report, the Company was in
compliance with a majority of the ASX Recommendations in all material respects as more fully detailed in Li-S
Energy’s corporate governance section as set out on its website.
In accordance with the Recommendations, the Board has:
•
•
received and considered reports from management regarding the effectiveness of the Company’s management of
its material business risks; and
received assurance from the people performing each of the Chief Executive Officer and Chief Financial Officer
functions regarding the financial statements and the effective operation of risk management systems and internal
controls in relation to financial reporting risks.
AUDIT COMMITTEE
The details of the composition, role and Terms of Reference of the Li-S Energy’s Audit Committee are available on the
Company’s website at www.lis.energy.
During the reporting period, the Li-S Energy Audit Committee consisted of the following:
Hedy Cray
Robin Levison
Anthony McDonald
Non-Executive Independent Director, Chairperson
Non-Executive Director
Non-Executive Independent Director
The Company’s lead signing and review External Audit Partner, the Chairman, Chief Executive Officer and Chief
Financial Officer and selected consultants attend meetings of the Audit Committee by standing invitation.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of 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 any part of those proceedings.
DIRECTORS’ INDEMNIFICATION
The Company has not, during or since the end of financial year, except to the extent permitted by law, indemnified or
agreed to indemnify any current or former officer of the Company against a liability incurred as such by an officer. The
Company did not have any insurance premiums paid during the reporting period.
AUDITOR’S INDEMNIFICATION
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young Australia, as part of
the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified
amount). No payment has been made to indemnify Ernst & Young during or since the financial year.
NON-AUDIT SERVICES
In 2021, EY were engaged to provide tax advice and compliance services, and were paid $5,000, and an Independent
Limited Assurance Report in relation to the Li-S Energy IPO for which $69,950 of costs were accrued at 30 June 2021.
ROUNDING OF ACCOUNTS
The amounts contained in the financial report have been rounded to the nearest dollar (where rounding is applicable)
under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191. The Company is an entity to which this legislative instrument applies.
AUDITORS INDEPENDENCE DECLARATION
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 (Cth)
for the year ended 30 June 2021 and a copy of this declaration forms part of this Directors’ Report.
20
Signed in accordance with a resolution of the Board of Directors.
BEN SPINCER
Chairman
ROBIN LEVISON
Non-Executive Independent Director
Brisbane, 2 September 2021
21
Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Auditor’s independence declaration to the directors of Li-S Energy Limited
As lead auditor for the audit of the financial report of Li-S Energy Limited for the financial year ended
30 June 2021, I declare to the best of my knowledge and belief, there have been:
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Li-S Energy Limited.
Ernst & Young
Brad Tozer
Partner
2 September 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
22
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the year ended 30 June 2021
Revenue from contracts with customers
Cost of sales
GROSS PROFIT
Administration expenses
IPO Expenses
Professional costs
Audit Fees
Management fees
Directors’ fees
Share based payments expense
Depreciation and amortisation expense
Finance costs
Unrealised gain (loss) on investment at FVTPL
PROFIT (LOSS) BEFORE INCOME TAX EXPENSE
Income tax (expense) benefit
PROFIT (LOSS) AFTER INCOME TAX EXPENSE
Notes
6
22.4
4
4
14
5
2021
$
-
-
-
(108,793)
(1,193,104)
(218,042)
(41,000)
(200,000)
(50,000)
(127,058)
(54,604)
(1,160)
(289,638)
(2,283,399)
599,008
(1,684,391)
2020
$
-
-
-
(62,330)
-
-
-
-
-
-
-
(9,038)
36,220
(35,148)
-
(35,148)
OTHER COMPREHENSIVE INCOME (LOSS) NET OF INCOME TAX
TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR
-
(1,684,391)
-
(35,148)
Earnings per share (in cents)
Basic
Diluted
The accompanying notes form part of these financial statements
21
21
(0.29)
(0.29)
-
-
23
STATEMENT OF FINANCIAL POSITION
as at 30 June 2021
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Intangible assets
Investments
Property, Plant & Equipment
Deferred Tax assets (net)
Other non-current assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Interest bearing loans
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Retained earnings (accumulated losses)
Capital and reserves attributable to owners of Li-S Energy Limited
TOTAL EQUITY
The accompanying notes form part of these financial statements
Notes
2021
$
2020
$
9
10
11
12
14
13
5
11
15
16
17.1
18
18,606,698
226,143
68,135
18,900,976
991,863
2,258,062
120,773
921,733
-
4,292,431
23,193,407
3,036,100
116,524
37,347
3,189,971
428,080
2,547,136
-
-
37,348
3,012,564
6,202,535
443,397
-
443,397
11,549
1,185,118
1,196,667
443,397
1,196,667
22,750,010
5,005,868
22,994,841
663,366
1,474,708
4,377,650
(1,719,539)
(35,148)
22,750,010
5,005,868
22,750,010
5,005,868
24
STATEMENT OF CASH FLOWS
for the year ended 30 June 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Cash payments to suppliers
Payments for IPO related costs
Management fees paid to parent entity
BAS received
Interest paid
Net cash provided by (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for purchases of intangibles
Payments for purchases of property, plant & equipment
Payment for acquisition of investment
Net cash provided by (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings – related parties
Repayment of borrowings – related parties
Proceeds from capital raisings
Transaction costs on issue of shares
Net cash provided by (used in) financing activities
Net increase (decrease) in cash held
Cash at the beginning of the financial year
Cash at the end of the financial year
The accompanying notes form part of these financial statements
Notes
2021
$
2020
$
(462,309)
(941,820)
(120,000)
-
(1,216)
(1,525,345)
(251,538)
-
-
500
-
(251,038)
(563,783)
(133,906)
-
(697,689)
(419,042)
-
(500,000)
(919,042)
-
(1,185,118)
20,000,000
(1,021,250)
17,793,632
15,570,598
3,036,100
18,606,698
1,176,080
-
3,250,100
(220,000)
4,206,180
3,036,100
-
3,036,100
4
17.2
17.2
4.2
9
25
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2021
Contributed
Equity
Share
Premium
Reserve
Share
Options
Reserve
Equity
Reserve
Accumulated
Losses
Total
Attributable to
Owners of Li-S
Energy Ltd
$
Total Equity
$
$
$
Notes
$
$
663,366
1,347,650
ENTITY
At 1 July 2020
Total comprehensive income (loss) for the year
Profit (loss) for the year
Other comprehensive income (loss) for the year
Total comprehensive income (loss) for the year
Issue of share capital on private placement
Issue of service rights for Non-Executive Directors
Issue of service rights for Executives
Transaction costs for issue of share capital
At 30 June 2021
-
-
-
17.2
18.1
18.1
17.2
23,250,000
-
-
(918,525)
22,994,841
$
-
-
-
-
-
110,000
17,058
-
-
-
-
-
-
-
3,030,000
(35,148)
5,005,868
5,005,868
-
-
-
(3,250,000)
-
-
-
220,000
(1,684,391)
-
(1,684,391)
-
-
-
-
(1,684,391)
-
(1,684,391)
-
(1,684,391)
(1,684,391)
20,000,000
20,000,000
110,000
17,058
110,000
17,058
(698,525)
22,750,010
(698,525)
22,750,010
1,347,650
127,058
-
(1,719,539)
26
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2020
ENTITY
At 16 July 2019
Total comprehensive income (loss) for the year
Profit (loss) for the year
Other comprehensive income (loss) for the year
Total comprehensive income (loss) for the year
Issue of share capital on private placement
Issue of share capital on purchase of investment
Transaction costs for issue of share capital
At 30 June 2020
Notes
17.1
17.1
The accompanying notes form part of these financial statements
Equity
Reserve
Accumulated
Losses
Contributed
Equity
$
-
-
-
-
100
Share
Premium
Reserve
$
-
-
-
-
-
$
-
-
-
-
3,250,000
663,266
1,347,650
-
-
-
(220,000)
663,366
1,347,650
3,030,000
(35,148)
$
-
(35,148)
-
(35,148)
-
-
-
Total Attributable
to Owners of Li-S
Energy Ltd
$
-
Total Equity
$
-
(35,148)
(35,148)
-
(35,148)
3,250,100
2,010,916
(220,000)
5,005,868
-
(35,148)
3,250,100
2,010,916
(220,000)
5,005,868
27
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2021
NOTE 1 CORPORATE INFORMATION
The financial statements of Li-S Energy Limited (“Li-S Energy” or “the Company”) for the year ended 30 June 2021 were
authorised for issue in accordance with a resolution of the Directors on 2 September 2021 as required by the Corporation
Act 2001.
Li-S Energy is a for-profit public company limited by shares, incorporated and domiciled in Australia. Li-S Energy is
registered in Queensland and has its head office at Level 27, 10 Eagle Street, Brisbane, Queensland 4000.
Li-S Energy Limited (Li-S Energy) was incorporated on 12 July 2019 as one of the initial application projects identified
in the Joint Venture Research Agreement with Deakin University and announced by PPK Group Limited on 16 October
2019. The principal activity of Li-S Energy is to develop and commercialise a new type of battery based on Lithium
Sulphur (Li-S) and using boron nitride nanotubes (BNNT) as both an integrated protective insulation layer and a
component in composite anodes which will allow faster charging rates and increased battery cycle life.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of Preparation and Statement of Compliance
These general purpose financial statements of the Company have been prepared in accordance with the requirements
of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian
Accounting Standards Board. Compliance with Australian Accounting Standards results in full compliance with the
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
The Financial Information has been prepared on an accruals basis and are based on historical costs, except for
investments measured at fair value.
The accounting policies have been consistently applied unless otherwise stated.
2.2 New and revised standards that are effective for these financial statements
The Company applied for the first time certain standards and amendments, which are effective for the financial
period ended 30 June 2021. The Company has not early adopted any other standard, interpretation or
amendment that has been issued but is not yet effective.
AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a Business
AASB 2018-6 amends AASB 3 to clarify that to be considered a business, an integrated set of activities and assets
included, at a minimum, an input and a substantive process that, together, significantly contribute to the ability to
create output. Furthermore, it clarifies that a business can exist without including all the inputs and processes needed
to create outputs. These amendments had no impact on the financial statements of the Company, but may impact
future periods should the Company enter into any business combinations.
AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material
AASB 2018-7 principally amends AASB 101 Presentation of Financial Statements and AASB 108 Accounting
Policies, Changes in Accounting Estimates and Errors. The amendments provide a new definition of material that
states “information is material if omitting, misstating or obscuring it could reasonably be expected to influence
decisions that the primary users of general purpose financial statements make on the basis of those financial
statements, which provide financial information about a specific reporting entity”. The amendments clarify that
materiality will depend on the nature or magnitude of information, either individually or in combination with other
information, in the context of the financial statements. A misstatement of information is material if it could reasonably
be expected to influence decisions made by primary users. These amendments had no impact on the financial
statements of, nor is there expected to be any future impact to the Company.
AASB 2019-1 Amendments to Australian Accounting Standards – References to the Conceptual Framework
AASB 2019-1 amends Australian Accounting Standards, Interpretations and other pronouncements to reflect the
issuance of the revised Conceptual Framework for Financial Reporting (Conceptual Framework). The Conceptual
Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in
any standard. The purpose of the conceptual framework is to assist the AASB in developing standards, to help
preparers develop consistent accounting policies where there is no applicable standard in place and to assist all
parties to understand and interpret the standards. This will affect those entities which develop their accounting
policies based on the Conceptual Framework. The revised Conceptual Framework includes some new concepts,
updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts. These
amendments had no impact on the financial statements of the Company.
28
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.3 Foreign currency translation
Functional and presentation currency
The functional and presentation currency of the Company is in Australian Dollars ($AUD).
Foreign currency transactions and balances
Foreign currency transactions during the period are converted to Australian currency at rates of exchange applicable at
the dates of the transactions (spot exchange rate). Foreign exchange gains and losses, whether realised or unrealised,
resulting from the settlement of such transactions, amounts receivable and payable in foreign currency at the reporting
date, and from the re-measurement of monetary items at year end exchange rates are recognised in profit and loss.
Non-monetary items are not retranslated at year end and are measured at historical cost (translated using the exchange
rate at the date of the transaction), except for non-monetary items measured at fair value which are translated using the
exchange rates at the date when fair value was determined.
2.4 Operating expenses
Operating expenses are recognised in the profit or loss upon utilisation of the services or at the date incurred.
2.5 Finance costs
All borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised
during the period that is necessary to complete and prepare the asset for its intended use or sale. Other finance and
borrowing costs are expensed in the period in which they are incurred and reported in finance costs.
2.6 Cash and cash equivalents
For the purposes of the statement of cash flows, cash includes cash on hand, and at call deposits with banks or financial
institutions, net of bank overdrafts as they are considered an integral part of the Company’s cash management.
2.7 Trade receivables
The Company makes use of a simplified approach in accounting for trade receivables and records the loss allowance at
the amount equal to the expected lifetime credit losses. The Company uses its historical experience, external indicators
and forward-looking information to calculate the expected credit losses using a provision matrix which is based on the
historical credit loss experience for the customer segments. At every reporting date, the historical credit loss experience
is reviewed and updated, if appropriate, and changes in the forward-looking estimates are analysed. For this financial
year, the Company did not have any expected lifetime credit losses.
All financial assets, except for those at fair value through profit or loss (FVPL), are subject to review for impairment at
least at each reporting date to identify whether there is any objective evidence that a financial asset or a group of financial
assets is impaired.
2.8 Property, plant and equipment
Plant and equipment are brought to account at cost less, where applicable, any accumulated depreciation or amortisation
and impairment. The cost of fixed assets constructed includes the cost of materials used in construction, direct labour
and an appropriate proportion of fixed and variable overheads.
The depreciable amount of all fixed assets, including buildings and capitalised leased assets but excluding freehold land,
is depreciated over their useful lives commencing from the time the asset is held ready for use. Leasehold improvements
are amortised over the shorter of either the unexpired period of the lease or the estimated useful lives of the
improvements.
The gain or loss on disposal of all fixed assets is determined as the difference between the carrying amount of the asset
at the time of disposal and the proceeds of disposal, and is included in the profit and loss of the entity in the year of
disposal.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Leasehold Improvements
Plant & Equipment
Depreciation Rate
Straight Line
Over the term of the lease
33% – 50%
29
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.9
Intangible assets
Research and Development
Research is recognised as an expense as incurred. Costs incurred on development (relating to the design and testing
of new or improved products) are recognised as intangible assets when it is probable that the project will, after
considering its commercial and technical feasibility, be completed and generate future economic benefits and its costs
can be measured reliably. The expenditure capitalised comprises all directly attributable costs, including costs of
materials, services, direct labour and an appropriate proportion of overheads. Other development expenditures that do
not meet these criteria such as a) selling, administrative and other general overhead expenditure, unless this expenditure
can be directly attributed to preparing the asset for use; b) identified inefficiencies and initial operating losses incurred
before the asset achieves planned performance; and c) expenditure on training staff to operate the asset, are recognised
as an expense as incurred.
Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Capitalised development costs are recorded as intangible assets at cost less any accumulated amortisation and
impairment losses and amortised over the period of expected future sales from the related projects. The carrying value
of development costs is reviewed annually when the asset is not yet ready for use, or when events or circumstances
indicate that the carrying value may be impaired.
Intangible assets not yet ready for use require an annual impairment test. Management has used significant judgement
to determine there was no impairment that occurred after the initial recognition of the intangible asset. Management
made this assessment on the basis that the Company has one Cash Generating Unit and the equity raising price implied
a value for the Company in excess of its recorded assets and liabilities.
2.10
Financial instruments
Initial recognition and measurement
Financial assets
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through
other comprehensive income (OCI), and fair value through profit or loss.
Financial assets are classified according to the characteristics of their contractual cash flow and the Company’s
business model for managing them. Except for those trade receivables that do not contain a significant financing
component or for which the Company has applied the practical expedient, the Company initially measures a financial
asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.
Trade receivables that do contain a significant financing component for which the Company has applied the practical
expedient are measured at the transaction price.
Fair value
Estimated discounted cash flows were used to measure fair value, except for fair values of financial assets that were
traded in active markets that are based on quoted market prices.
Hierarchy
The following tables classify financial instruments recognised in the statement of financial position of the Company
according to the hierarchy stipulated in AASB13 as follows:
•
•
•
Level 1 – the instrument has quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – a valuation technique is used using inputs other than quoted prices within Level 1 that are observable for
financial instruments, either directly (i.e. as prices), or indirectly (i.e. derived from prices); or
Level 3 – a valuation technique is used using inputs that are not based on observable market data (unobservable
inputs)
The Company’s investment in Zeta Energy LLC is at fair value through profit and loss and is measured as a Level 3
financial instrument.
30
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial assets are classified according to the characteristics of their contractual cash flow and the Company’s
business model for managing them. Except for those trade receivables that do not contain a significant financing
component or for which the Company has applied the practical expedient, the Company initially measures a financial
asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.
Trade receivables that do contain a significant financing component for which the Company has applied the practical
expedient are measured at the transaction price as disclosed in Note 2.7.
For a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to
cash flows that are “solely payments of principal and interest (SPPI)” on the principal amount outstanding. This
assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows
that are not SPPI are classified and measured at fair value through profit and loss (“FVTPL)”, irrespective of the
business model.
The Company’s business model for managing financial assets refers to how it manages its financial assets in order to
generate cash flows. The business model determines whether cash flows will result from collecting contractual cash
flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a
business model with the objective to hold financial assets in order to collect contractual cash flows while financial
assets classified and measured at fair value through OCI are held within a business model with the objective of holding
to collect contractual cash flows and selling.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or
convention in the marketplace (regular way trades) are recognised on the trade date (ie the date that the Company
commits to purchase or sell the asset).
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
• Financial assets at amortised cost (debt instruments)
• Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
• Financial assets designated at fair value through the OCI with no recycling of cumulative gains or losses upon
derecognition (equity instruments)
• Financial assets at FVTPL
Financial assets at amortised cost (debt instruments)
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are
subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised.
The Company’s financial assets at amortised cost includes trade receivables.
Financial assets fair value through OCI (debt instruments)
For debt instruments at fair value through OCI, interest income, impairment losses or reversals are recognised in the
statement of profit and loss and computed in the same manner as for financial assets measured at amortised cost.
The remaining fair value changes are recognised in OCI. Upon derecognition the cumulative fair value change
recognised in OCI is recycled to profit or loss.
The Company has no debt instruments at fair value through OCI.
Financial assets designated at fair value through OCI (equity instruments)
Upon initial recognition, the Company can elect to classify irrevocably its equity investments as equity instruments
designated at fair value though OCI when they meet the definition of equity under AASB 32 Financial Instruments:
Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other
income in the statement of profit or loss when the right of payment has been established, except when the Company
benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are
recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.
The Company has no equity instruments at fair value through OCI.
31
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial assets at FVTPL
Financial assets at FVTPL are carried in the statement of financial position at fair value with net changes in fair value
recognised in the statement of profit and loss.
This category includes derivative instruments and listed equity investments which the Company had not irrevocably
elected to classify at fair value through OCI. Dividends on listed equity investments are recognised as other income in
the statement of profit or loss when the right of payment has been established.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group similar financial assets) is primarily
derecognised (ie removed from the Company’s statement of financial position) when:
• The rights to receive cash flows from the asset have expired; or
• The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to
pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement,
and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the
Company has neither transferred nor retained substantially all of the risks and rewards of the asset but has
transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a “pass-through”
arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has
neither transferred nor retained substantially all the risks and rewards of the asset, nor transferred control of the asset,
the Company continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the
Company also recognises an associated liability. The transferred asset and the associated liability are measured on a
basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum amount of consideration that the Company could be required
to repay.
ii) Financial liabilities
Initial measurement and recognition
Financial liabilities are classified, at initial recognition, as financial liabilities at FVTPL, loans and borrowings, payables,
or as derivatives as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of
directly attributable financial statements.
The Company’s financial liabilities include trade and other payables.
Subsequent measurement
For the purposes of subsequent measurement, financial liabilities are classified in two categories:
• Financial liabilities at FVTPL
• Financial liabilities at amortised cost (loans and borrowings)
Financial liabilities at FVTPL
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated up initial
recognition as FVTPL.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near
term. This category also includes derivative financial instruments entered into by the Company that are designated as
hedging instruments in hedge relationships as defined by AASB 9. Separated embedded derivatives are also classified
as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit or loss.
Financial liabilities designated upon initial recognition at FVTPL are designated at the initial date of recognition, and
only if the criteria in AASB 9 are satisfied.
32
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial liabilities at amortised cost (loans and borrowings)
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the
EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through
the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are
an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When
an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of
the original liability and the recognition of a new liability. The difference in the respective carrying amounts is
recognised in the statement of profit or loss.
iii) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if
there is a current enforceable legal right to offset the recognised amounts and there is an intention to settle on a net
basis, to realise the assets and settle the liabilities simultaneously.
2.11
Trade and other payables
These amounts represent unpaid liabilities for goods received and services provided to the Company prior to the end of
the financial year. The amounts are unsecured and are normally settled within 30 to 60 days, except for imported items
for which 90 or 120 day payment terms are normally available.
2.12 Borrowings
All loans and borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the
redemption amount is recognised in the profit or loss statement over the period of the loans and borrowings using the
effective interest method. Bank loans are subject to set-off arrangements.
2.13
Income Tax
The income tax expense for the period is the tax payable on the current period’s taxable income based on the notional
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences between the tax base of assets and liabilities and their carrying amounts in the financial statements, and to
unused tax losses.
Deferred tax assets are only recognised for deductible temporary differences, between carrying amounts of assets and
liabilities for financial reporting purposes and their respective tax bases, at the tax rates expected to apply when the
assets are recovered or liabilities settled, based on those tax rates which are enacted or substantially enacted for each
jurisdiction. Exceptions are made for certain temporary differences arising on initial recognition of an asset or liability if
they arose in a transaction other than a business combination that at the time of the transaction did not affect either
accounting profit or taxable profit.
Deferred tax assets are only recognised for deductible temporary differences and unused tax losses if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax
bases of investments in subsidiaries, associates and interests in joint ventures where the parent entity is able to control
the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the
foreseeable future.
Current and deferred tax balances relating to amounts recognised directly in other comprehensive income or equity are
also recognised directly in other comprehensive income or equity.
33
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.14
Share Based Payments
The Company operates equity-settled Share right-based incentive plans for its Directors and executives. All goods and
services received in exchange for the grant of any Share-based payment are measured at their fair value of the
instruments granted. Where Directors and executives are rewarded using Share right-based payments, the cost of
Directors’ and executives’ services is determined by the fair value at the date when the grant is made using an
appropriate valuation model and revalued when modified.
All Share-based remuneration is ultimately recognised in employee benefits expense with a corresponding credit to a
Share rights reserve. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting
period, based on best available estimate of the number of Share rights expected to vest. Non-market vesting conditions
are included in assumptions about the number of Share rights that are expected to become exercisable. Estimates are
subsequently revised if there is any indication that the number of Share rights expected to vest differs from previous
estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any
expense recognised in prior periods if Share rights ultimately exercised are different to that estimated on vesting.
When the terms of an equity-settled award are modified, the minimum expense recognised is the grant date fair value
of the unmodified award, provided the original vesting terms of the award are met. An additional expense, measured as
at the date of modification, is recognised for any modification that increases the total fair value of the Share-based
payment transaction, or is otherwise beneficial to the holder. Where an award is cancelled by the entity or by the
counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss.
2.15 Dividends
Provision is made for dividends declared, and no longer at the discretion of the Company, on or before the end of the
financial year but not distributed at the end of the reporting period.
2.16
Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys
the right to control the use of an identifiable asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and
leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.
Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset
is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of
lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date
less any lease incentives received.
Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful
lives of the assets.
If ownership of the leased asset transfers to the Company at the end of the lease term or the costs reflects the exercise
of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are
also subject to impairment.
Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of
lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance
fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or rate, and
amounts expected to be paid under residual lease guarantees. The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease,
if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend
on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which
the event or condition that triggers the payment occurs.
34
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease
commencement date if the interest rate implicit in the lease is not readily determinable.
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 the lease term, a change in the lease payments (i.e. changes to future payments resulting from a change in
an index or rate to be used to determine such lease payments) or a change in the assessment of an option to purchase
the underlying asset.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption (i.e. those leases that have a lease term of 12
months or less from the commencement date and do not contain a purchase option) and the lease of low-value assets
recognition exemption to leases that are considered to be low value. Lease payments on short-term leases and leases
of low-value assets are recognised as expenses on a straight-line basis over the lease term. There were no short-
term or low-value leases during the financial year.
2.17
Equity
Share capital represents the fair value of shares that have been issued. Any transaction costs associated with the
issuing of shares are deducted from share capital, net of any related income tax benefit.
2.18
Provisions, contingent liabilities and contingent assets
Provisions for product warranties, legal disputes, onerous contracts or other claims are recognised when the Company
has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic
resources will be required from the Company and amounts can be estimated reliably. Timing or amount of the outflow
may still be uncertain.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most
reliable evidence available at the reporting date, including the risks and uncertainties associated with the present
obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement
is determined by considering the class of obligations as a whole. Provisions are discounted to their present values,
where the time value of money is material.
Any reimbursement that the Company can be virtually certain to collect from a third party with respect to the obligation
is recognised as a separate asset. However, this asset may not exceed the amount of the related provision.
No liability is recognised if an outflow of economic resources as a result of present obligation is not probable. Such
situations are disclosed as contingent liabilities unless the outflow of resources is remote in which case no liability is
recognised.
2.19
Significant accounting judgements, estimates and assumptions
The preparation of the Company’s financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying
disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could
result in outcomes that require a material adjustment to the carrying amount of assets or liabilities in future periods.
Significant Management Judgements
In the process of applying the Company’s accounting policies, management has made the following judgements,
which have the most significant effect on the amounts recognised in the consolidated financial statements.
Impairment of intangibles – development costs
The Company capitalises costs for product development projects. Initial capitalisation of costs is based on
Management’s judgement, after making inquiries from engineers, scientists and other qualified professionals that
technological and economic feasibility is confirmed. In determining the amounts to be capitalised, Management makes
assumptions regarding the expected future cash generation of the project, discount rates to be applied and expected
period of benefits.
35
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Intangible assets not yet ready for use require an annual impairment test. Management has used significant judgement
to determine there was no impairment that occurred after the initial recognition of the intangible asset. Management
made this assessment on the basis that the Company has one Cash Generating Unit and the equity raising price
implied a value for the Company in excess of its recorded assets and liabilities.
Deferred tax asset
Deferred tax asset is only recognised to the extent that there is reasonable certainty of realising future taxable
amounts sufficient to recover the carrying value. Given advancements in the Company’s activity, product development
and capital raising which has indicated a significant value for its operations an assessment has been made that it is
probable that future short term taxable income would be realised to allow the deferred tax assets to be utilised and
they have been recognised with no valuation allowance in the period.
2.22
Goods and Services Tax (GST)
Revenues and expenses are recognised net of GST except where GST incurred on a purchase of goods and services
is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of
the asset or as part of the expense item.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or
payable to, the taxation authority is included as part of receivables or payables in the balance sheet. Cash flows are
included in the cash flow statement on a gross basis and the GST component of cash flows arising from investing and
financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash
flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
taxation authority.
2.23
Going Concern
The Directors consider the Company’s going concern and based on:
•
• project plans and budgets provided to complete the projects;
• a planned capital raising of $34,000,000, pre costs, with an Initial Public Offering in the coming months and an
there was $18,606,698 of cash in the bank;
expectation that the capital raising will be fully subscribed; and
the likelihood of ongoing support from PPK Group Limited.
•
The Directors have formed a view that the Company will continue as a going concern.
NOTE 3 SEGMENT INFORMATION
The Company applies AASB 8 Operating Segments whereby segment information is presented using a “management
approach”, segment information is provided on the same basis as information used for internal reporting purposes by
the chief operating decision makers.
Operating segments have been determined based on reports reviewed by the Directors. The Directors and the Senior
Management are the chief operating decision makers of the Company. The only reportable segment for 30 June 2021
is the development and commercialisation of the Li-S Energy Battery.
36
NOTE 4 CASH FLOW INFORMATION
4.1 Reconciliation of cash flows from operating activities
Profit (loss) after income tax attributed to owners of Li-S Energy
Limited
Cash flows in operating activities but not
attributable to operating result:
Non-cash flows in operating profit:
Unrealised gain (loss) on investment at FVTPL
Share based payment expense
Depreciation and amortisation expense
Net changes in working capital:
(Increase) decrease in trade and other
receivables
(Increase) decrease in deferred tax asset
(Increase) decrease in prepaids
Increase (decrease) in trade and other payables
Net cash (used in) provided by operating activities
4.2 Reconciliation of Cash
For the purposes of the cash flow statement, cash
includes:
Cash at bank and on hand
Cash held in trust
4.3 Non-cash financing and investing activities
During the period, the Company had no non-cash adjustments
Notes
2021
$
2020
$
(1,684,391)
(35,148)
14
7.1
289,074
127,058
54,604
(36,220)
-
-
(109,619)
(116,523)
(599,008)
(34,911)
431,848
(1,525,345)
-
(74,695)
11,548
(251,038)
18,606,698
-
18,606,698
600
3,035,500
3,036,100
9
-
-
-
-
37
NOTE 5 INCOME TAX EXPENSE
Notes
2021
$
2020
$
(a) The prima facie tax payable (benefit) on the profit (loss) before
income tax is reconciled to the income tax expense as follows:
Profit (loss) before tax
Prima facie tax payable (benefit) at 26.0% (2020: 27.5%)
(2,283,399)
(35,148)
(593,684)
(9,666)
(Non-assessable income) non-deductible expenses
Current year losses for which no deferred tax asset was recognised
-
9,666
Adjustments in respect of deferred income tax of previous years
Other
Income tax expense (benefit)
(12,661)
7,337
(599,008)
-
-
-
The applicable weighted average effective tax rate is as follows:
26%
0%
(b) The components of tax expense comprise:
Current tax
Deferred tax in profit and loss
Income tax expense (benefit)
© Recognised in the Statement of Financial Position
Tax losses
Property Plant and Equipment
Investments
Accruals
Capital Raising Costs 1
Total
(355,849)
(243,159)
(599,008)
355,849
(26,002)
65,742
19,799
506,345
921,733
-
-
-
-
-
-
-
-
-
Note 1 Of the recognised deferred tax assets an amount of $322,725 relating to capital raising costs was
recognised directly in equity and the balance of $183,620 was recognised in profit or loss.
(d) Not recognised in the Statement of Financial Position
Unrecognised deferred tax assets / deferred tax liabilities
Tax losses
Temporary differences
Total
NOTE 6 AUDITOR’S REMUNERATION
Remuneration of the auditor of the Company for:
- auditing or reviewing the year end financial report
- auditing the 31 December 2020 financial report
- additional charges for auditing or reviewing 30 June 2020
- Other – tax compliance and other corporate compliance matters
- Other - Independent Limited Assurance Report in relation to the IPO
-
-
-
9,666
-
9,666
19,500
13,500
8,000
5,000
69,950
115,950
8,000
-
-
-
-
8,000
38
NOTE 7 KEY MANAGEMENT PERSONNEL REMUNERATION
7.1 Key management personnel remuneration
Short-term benefits
Share-based payments
Post-employment benefits
Notes
2.14
2021
$
1,148,101
127,058
-
1,271,15
2020
$
-
-
-
-
During the reporting period, the Company recognises the Directors and Chief Executive Officer as being the only key
management personnel. For the 30 June 2021 financial year, the Company paid the Chief Financial Officer and two
executives of BNNTTL for their assistance with the IPO but they are not considered to be key management personnel.
See the Directors’ Report for details of their remuneration policy and benefits.
7.2 Equity instruments
The Non-Executive Directors were granted 2,160,000 Service Rights on 1 May 2021 under the Li-S Energy Limited NED
Equity Plan. These Service Rights were granted in lieu of the Directors taking remuneration as directors fees for the
three years ending 30 April 2014. The key features of the issuance are as follows:
• The exercise price payable by the holder is $Nil.
• The Service Rights will vest to the NED over a 3-year period.
• The vesting of Service Rights requires continued tenure as a Director of the Company. There are no other
performance conditions.
• On vesting the Service Right will expire if unexercised 15 years post the initial grant date.
• Should a Director cease being a Director in the vesting period the unvested Service Rights will be forfeited in
proportion based on plan rules.
• Each Service Right converts to one ordinary Share in the Company.
The Service Rights have been independently valued at $0.50 each. A total expected expense should all Service Rights
vest of $1,080,000 will be recorded in the profit and loss over the forward 3-year period post grant, in accordance with
their vesting profile.
The Chief Executive Officer was granted 1,000,000 Service Rights on 12 November 2020 under the Li-S Energy Limited
Executive Rights Plan. The key features of the issuance are as follows:
• The exercise price payable by the holder is $Nil.
• The Service Rights will vest to the Chief Executive Officer in equal tranches of 250,000 Service Rights on 30 April
2022, 2023, 2024 and 2025.
• The vesting of Service Rights requires continued tenure as an executive of the Company. There are no other
performance conditions. Directors do however have the right to vary the number of vested Service Rights.
• On vesting the Service Right will expire if unexercised 15 years post the initial grant date.
• Should an executive cease being an executive in the vesting period the unvested Service Rights will be forfeited in
proportion based on plan rules. The unexpired portion of the tranche relevant to the date of termination will vest in
proportion and all future unvested tranches will expire.
• Each Service Right converts to one ordinary Share in the Company.
The Service Rights have been independently valued at an average value of $0.065 cents each. A total expected expense
should all Service Rights vest of $65,000 will be recorded in the profit and loss over the forward four year period post
grant, in accordance with their vesting profile.
The fair value of the NED Service Rights and the CEO Service Rights was determined using a Black Scholes model. As
the Service Rights are exercisable for $Nil the fair value of each Service Right is the difference between $Nil and the
fair value of a share on the date of grant. All other Black Scholes variables have no impact on the valuation. The share
price of $50 cents and $6.5 cents was determined to be the share price at date of issue based on proximate capital
raisings completed to the grant date.
39
NOTE 8 DIVIDENDS
(a) Dividends paid
2020 No interim dividend was declared or paid
(b) Dividends declared after balance date
The directors have not declared a final ordinary fully dividend for the
2021 financial year
(c) Franked dividends
Franking credits available for subsequent financial years based on
a tax rate of 26.0% (2020: 27.5%)
Notes
2.15
2021
$
2020
$
-
-
-
-
-
-
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
(a) franking credits that will arise from the payment of the current tax liability;
(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date;
(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date; and
(d) franking credits that may be prevented from being distributed in subsequent financial years.
The amounts include franking credits that would be available to the parent entity if distributable profits of subsidiaries
were paid as dividends.
NOTE 9 CASH AND CASH EQUIVALENTS
Current
Cash at bank and on hand
Cash held in trust
NOTE 10 TRADE AND OTHER RECEIVABLES
Current
GST receivable
Other receivables
Receivable from Deakin University
NOTE 11 OTHER ASSETS
Current
Lease
Other
2.6
18,606,698
-
600
3,035,500
18,606,698
3,036,100
2.22
2.7
220,643
5,500
-
226,143
-
22,673
93,851
116,524
41,472
26,663
68,135
37,347
-
37,347
Other amount relates to costs incurred to date in relation to the Li-S Energy’s IPO. On the successful IPO
these costs will transfer to equity.
NON-CURRENT
Lease
-
-
37,348
37,348
Deakin provides the premises at the ManuFutures building at no cost and in return the Company has agreed to sell the
glove box to Deakin for $1 at the completion of the project. The Company intends to relocate its laboratory from this
premise to the new production bay it has leased in the ManuFutures building. The Company has recognised $34,601
of the prepaid lease as an amortised cost in the year (2020: $6,871).
40
NOTE 12 INTANGIBLE ASSETS - NON-CURRENT
Development Costs
Less: Accumulated amortisation and impairment
Total intangibles
Reconciliations
2021
Opening balance
Additions
Disposals
Transfers
Impairment
Depreciation & amortisation expense
Closing balance
2020
Opening balance
Additions
Disposals
Transfers
Impairment
Depreciation & amortisation expense
Closing balance
Notes
2021
$
2020
$
2.9
991,863
428,080
-
-
991,863
428,080
428,080
563,783
-
428,080
-
-
-
-
-
-
-
-
991,863
428,080
-
428,080
-
-
-
-
428,080
The intangible asset is for the development of the Li-S project undertaken by Deakin University under the Research
and Development Agreement.
NOTE 13 PROPERTY PLANT AND EQUIPMENT - NON-CURRENT
Software – at cost
Less: Accumulated amortisation and impairment
Plant and Equipment - at cost
Less: Accumulated depreciation and impairment
Total property, plant and equipment of continuing operations
Reconciliations
2021
Opening balance
Additions
Disposals
Transfers
Impairment
Depreciation & amortisation expense
Closing balance
-
-
-
-
-
-
-
$
2.8
6,870
-
6,870
2.8
127,036
13,133
113,903
120,773
Plant &
Equipment
$
Total
-
127,036
-
-
-
(13,133)
-
133,906
-
-
-
(13,133)
113,903
120,773
Software
$
-
6,870
-
-
-
-
6,870
41
NOTE 14 INVESTMENTS
Investment in Zeta Energy LLC
Notes
2021
$
2020
$
2.10
2,258,062
2,547,136
On 16 June 2020, Li-S Energy acquired a membership interest in Zeta Energy LLC by issuing 2.0% of Li-S Energy’s
share capital to Zeta Energy LLC and receiving 2.0% of the non-voting limited liability interest in Zeta Energy LLC for a
value of AUD2,010,916. Li-S Energy made a further cash investment of $500,000 in Zeta Energy LLC.
Li-S Energy received confirmation from Zeta Energy LLC at 30 June 2021 that it holds a membership interest of 2.069% of
Zeta Energy LLC’s capital raising value which equates to AUD2,258,062 converted to Australian Dollars at the prevailing
exchange rate of $0.7518 at 30 June 2021. The revaluation of the investments results in an unrealised loss of the
investment of $67,157 and a foreign exchange loss of $221,917. On 26 June 2021 Li-S Energy was notified by Zeta
Energy LLC that the requirement for Li-S Energy to complete an Initial Public Offering by 31 December 2021 had been
removed.
NOTE 15 TRADE AND OTHER PAYABLES
Trade payables – unsecured
Sundry payables and accruals - unsecured
Trade and other payables include $100,117 owing to PPK Aust. Pty Ltd.
NOTE 16 INTEREST BEARING LOANS
PPK Aust. Pty Ltd
BNNT Technology Limited
Notes
2.11
Notes
2.12
2.12
2021
$
20,117
423,280
443,397
2020
$
11,549
-
11,549
2021
$
-
-
-
2020
$
1,033,109
152,009
1,185,118
The shareholders have provided financing, as per the Shareholders Agreement, in the form of short term loans to
fund the development costs incurred by Deakin University and the purchase of equipment for the Li-S project. The
loans are interest bearing at 4.5% per annum, unsecured and were repaid on 20 July 2020 from funds received in
the capital raising. The loan facility agreements were terminated on the repayment of the loans.
42
NOTE 17 SHARE CAPITAL
17.1 Issued capital
600,200,230 (2020: 51,020,409) ordinary shares fully paid
22,994,841
663,366
Notes
2021
$
2020
$
Movements in ordinary share capital
Balance at the beginning of the financial period1
New shares issued, net of transaction costs
Shares issued on acquisition, net of costs
2.17
663,366
22,331,475
-
22,994,841
100
-
663,266
663,366
1 The beginning of the financial period for the 2020 comparatives was the date of incorporation, 12 July 2019.
The shares have no par value. Ordinary shares participate in dividends and the proceeds of winding up in proportion
to the number of shares held. Each ordinary share is entitled to one vote at shareholder meetings.
17.2 New shares issued
Movements in number of ordinary shares
Settlement on 15 July 2020 as part of capital raise @ $0.65 per share
Less: transaction costs
Issued for cash on 9 April 2021 as part of capital raise @ $0.50 per share
Less: transaction costs
New shares issued for cash, net of transaction costs
Issued on 16 June 2020 on acquisition of interest in Zeta Energy LLC
3,250,000
(162,800)
3,087,200
20,000,000
(755,725)
19,244,275
22,331,475
Total shares issued on acquisition, net of transaction costs
22,331,475
17.3 Share movements
Movements in number of ordinary shares
Opening balance
Share split on a 500,000 for 1 basis – restated1
New shares issued2
New shares issued3
Share split on a 500,000 for 1 basis – restated4
New shares issued5
Closing balance
51,020,409
4,999,614
56,020,023
504,180,207
560,200,230
40,000,000
600,200,230
663,266
663,266
100
49,999,900
50,000,000
1,020,409
51,020,409
51,020,409
1 On 20 February 2020, the Directors resolved to split the shares on a 500,000 for 1 basis with total paid up capital
remaining at $100.
2 On 16 June 2020, issued 1,020,409 shares for a 2% non-voting limited liability interest in Zeta Energy LLC.
3 On 15 July 2020, issued 4,999,614 shares for cash at $0.65 per share.
4 On 22 October 2020, the Directors resolved to split the shares on a 10 for 1 basis, restating total shares to
560,200,230.
5 On 9 April 2021, issued 40,000,000 shares for cash at $0.50 per share.
43
NOTE 18 RESERVES
Share option reserve
Share premium reserve
Equity reserve
Movement in reserves
18.1 Share options reserve
Notes
2021
$
127,058
1,347,650
-
1,474,708
2020
$
-
1,347,650
3,030,000
4,377,650
Opening balance
Issue of service rights to Non-Executive Directors
Issue of service rights to Chief Executive Officer
Closing balance
-
110,000
17,058
127,058
-
-
-
-
The share options reserve is used to recognise the value of equity settled share-based payments granted as service
rights to Non-Executive Directors under the NED Equity Plan and to the Chief Executive Officer under the Executive
Rights Plan as part of their remuneration (see Note 7.2).
18.2 Share premium reserve
Opening balance
Movement
Closing balance
1,347,650
-
1,347,650
-
1,347,650
1,347,650
The share premium reserve is to recognise the difference between the value of the investment in Zeta Energy LLC
(see Note 14) of $2,010,916 at the date of the investment and the 1,020,409 shares issued to Zeta Energy LLC (see
Note 17.3) at $0.65 per share at the same time.
18.3 Equity reserve
Opening balance
Movement
Closing balance
3,030,000
(3,030,000)
-
-
3,030,000
3,030,000
The equity reserve was to recognise the cash received of $3,250,000 prior to 30 June 2020, net of transaction costs of
$220,000, for the 5,000,000 shares that were subsequently issued in July 2020.
18.4 Capital Risk Management
The Company considers its capital to comprise its ordinary share capital, reserves and retained earnings.
In managing its capital, the Company’s primary objective is to ensure its continued ability to provide a consistent
return for its equity shareholders through capital growth and distributions. In order to achieve this objective, the
Company seeks to maintain a gearing ratio that balances risks and returns at an acceptable level and to maintain a
sufficient funding base to enable the Company to meet its working capital and strategic investment needs. In making
decisions to adjust its capital structure to achieve these aims, either through new share issues or incurring debt, the
Company considers not only its short-term position but also its long-term operational and strategic objectives.
NOTE 19 FINANCIAL RISK MANAGEMENT
Financial Risk Management
The Directors have overall responsibility for the establishment and oversight of the financial risk management
framework. The Company’s activities expose it to a range of financial risks including market risk, credit risk and
liquidity risk. The Company’s risk management policies and objectives are therefore designed to minimise the
potential impacts of these risks on the results of the Company where such impacts may be material.
44
NOTE 19 FINANCIAL RISK MANAGEMENT (continued)
19.1 Market risk
Market risk is the risk that the fair value of future cash flows of the Company’s financial instruments will fluctuate
because of changes in market prices. Market risk comprises three types of risk: interest rate risk, equity price risk
and currency risk. Financial instruments affected by market risk include loans and borrowings, deposits, debt and
equity investments.
(i) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a security will fluctuate due to changes in
interest rates. Exposure to interest risk arises due to holding floating rate interest bearing liabilities, investments in
cash and cash equivalents and loans to related parties and other persons. The Company was not exposed to
significant interest rate risk during the year.
(ii) Equity price risk
Equity securities price risk is the risk that changes in market prices will affect the fair value of future cash flows of the
Company’s investments.
The Company is exposed to equity price risk through the movement in its membership interest in its investment in Zeta
Energy LLC if and when Zeta Energy LLC raises capital or completes its initial public offering and is listed on a stock
exchange. The equity price risk is determined by market forces and are outside the control of the Company. The risk
of loss is limited to the capital invested. A 1% movement in equity value would cause a movement in the investment of
approximately $22,000.
(iii) Currency Risk
Currency risk is the risk that the fair value or future cash flows of a financial item will fluctuate as a result of
movements in foreign exchange rates. The Company’s exposure to foreign exchange relates to its investment in
Zeta Energy LLC, a company domiciled in USA. The Company manages the foreign exchange risk by monitoring
the potential benefits of the strategic and economic benefits of this investment and, the ability to divest the
investment should the need arise.
19.2 Credit Risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Company. At balance date, the Company does not have material exposure to credit risk. All cash is invested with Tier 1
Australian banks.
19.3 Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial
liabilities. The Company’s objective to mitigate liquidity risk is by monitoring forecast cash flows and ensuring that
adequate facilities or financing options are maintained. At balance date, the Company has payables of $443,397
which are primarily for the year end 30 June 2021. These amount share a contractual maturity of 15-45 days.
NOTE 20 FAIR VALUE OF FINANCIAL INVESTMENTS
The carrying values of financial assets and liabilities listed below approximate their fair value.
Estimated discounted cash flows were used to measure fair value, except for fair values of financial assets that
were traded in active markets that are based on quoted market prices.
Hierarchy
The following tables classify financial instruments recognised in the statement of financial position of the
Company according to the hierarchy stipulated in AASB13 as follows:
- Level 1 – the instrument has quoted prices (unadjusted) in active markets for identical assets or liabilities;
- Level 2 – a valuation technique is used using inputs other than quoted prices within Level 1 that are
observable for financial instruments, either directly (i.e. as prices), or indirectly (i.e. derived from
prices); or
- Level 3 – a valuation technique is used using inputs that are not based on observable market data (unobservable
inputs).
45
NOTE 20 FAIR VALUE OF FINANCIAL INVESTMENTS (continued)
31 June 2021
Non-current assets
Unlisted equity securities
30 June 2020
Non-current assets
Unlisted equity securities
Notes
14
14
Level 1
$
Level 2
$
Level 3
$
Total
$
-
-
-
-
-
-
-
-
2,258,062 2,258,062
2,258,062 2,258,062
2,547,136 2,547,136
2,547,136 2,547,136
The level 3 fair value assessment of unlisted equity securities has been based on advice provided by the investee
company as to the most recent capital raise completed by it on or about 30 June 2021. This amount per share in United
States Dollars has been converted to Australian Dollars at the prevailing exchange rate of $0.7518 at 30 June 2021 (see
Note 14).
NOTE 21 EARNINGS (LOSS) PER SHARE
Profit/(loss) after tax from continuing operations
Weighted average number of ordinary shares outstanding used in
calculating basic earnings per share 1
30 June 2021
30 June 2020
$
(1,684,391)
$
(35,148)
No. of Shares
No. of Shares
567,131,895
500,000,000
Weighted average number of ordinary shares outstanding used in
calculating diluted earnings per share 1, 2
567,131,895
500,000,000
Basic earnings (loss) per share (cents)
Diluted earnings (loss) per share (cents)
(0.29)
(0.29)
-
-
Note 1 The weighted average number of ordinary shares outstanding used in calculating basic and diluted earnings
per share have been adjusted for the impact of the share split on the shares issued on 15 July 2020 and the
shares issued on 9 April 2021. The comparative period has been adjusted for the share split that occurred on
20 February 2020 and the shares issued on 16 June 2020.
Note 2 The weighted average number of ordinary shares outstanding used in calculating diluted earnings per share
has not been adjusted for 2,160,000 Service Rights granted under the NED Equity Plan and 1,000,000
Service Rights granted under the Executive Rights Plan (Note 7.2) as they are anti-dilutive.
46
NOTE 22 RELATED PARTY TRANSACTIONS
See Note 16 for related party loans and Notes 10,11 and 12 for related party transactions that occurred during the
reporting period and Note 23 for related party transactions that occurred subsequent to the reporting period.
22.1 Transactions with Directors, Key Management Personnel and Other Related Parties
Details of the nature and amount of each element of the remuneration of each director and key management
personnel (‘KMP”) of Li-S Energy and consulting fees to other related parties are shown in the table below:
Short Term Benefits
Salary &
Fees
(3)Cash
Bonus
Non-
Monetary
Post
employment
Super-
annuation
Long Term
Benefits
Termination
Payments
(1)Share
Based
Payments
2021
($)
($)
($)
($)
($)
($)
($)
Total
($)
Performance
Related
%
Directors
Non-Executive
B Spincer
A McDonald(2)
R Levison(2)
H Cray
G Pullen
-
-
16,667
200,000
16,667
100,000
-
-
-
-
Total Non-Executive
33,334
300,000
Executive
G Molloy(2)
Total Executive
Total Directors
Other Key Management
Personnel
L Finniear(2)(4)
K Hostland
M Winfield
G Walsh
Total Other
Total Key Management
Personnel
16,667
400,000
16,667
400,000
50,001
700,000
98,100
100,000
-
-
-
100,000
50,000
50,000
98,100
300,000
148,101
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
36,667
36,667
24,444
241,111
24,444
141,111
24,444
24,444
-
-
109,999
443,333
-
-
416,667
416,667
109,999
860,000
17,058
215,158
-
-
-
100,000
50,000
50,000
17,058
415,158
127,057
1,275,158
83
71
96
96
46
100
100
100
(1) Equity settled share based payments. Service rights granted are expensed over the vesting period from the date of granting to the date that the
last tranche vests.
(2) Salary & Fees include directors fees paid from 1 July 2020 to 30 April 2021 and consulting fees paid from 14 February 2021 to 30 June 2021.
(3) Cash bonus was paid for work undertaken in relation to the Li-S Energy IPO and was above normal work responsiblities. Bonuses were
invested in shares in Li-S Energy in off-market-transfers at $0.50 per share.
(4) Cash bonus was in relation to a sign-on fee for leaving his previous place of employment.
The following table details the total compensation each Non-Executive Director is entitled to receive in relation to their
duties as a Director of Li-S Energy, the Directors do not receive any additional fees for participation on any Committees.
Director
Dr Ben Spincer
Mr Robin Levison
Mr Tony McDonald
Ms Hedy Cray
Directors’ Fees $
(including superannuation)
120,000
80,000
80,000
80,000
Director fees for Ben Spincer include his responsibilities as the Chairman.
47
NOTE 22 RELATED PARTY TRANSACTIONS (continued)
Li-S Energy has adopted the NED Equity Plan under which the Board of the Company may invite Non-Executive
Directors to apply for Service Rights to be issued in accordance with, and subject to the terms of the Plan. Each Service
Right is an entitlement, upon vesting and exercise, to an ordinary fully paid Share in the Company. The following table
indicates the amount of fees that a NED can sacrifice in return for a grant of Service Rights.
Financial Year
Fees Sacrifice
($)
Tranche
Number of Service
Rights
Non-Executive Directors (NEDs)
Chairman
2021
2022
2023
2021
2022
2023
80,000
80,000
80,000
120,000
120,000
120,000
1
2
3
1
2
3
160,000
160,000
160,000
240,000
240,000
240,000
NEDs will sacrifice total Director fees of $80,000 for 160,000 Service Rights and the Chairman will sacrifice total Director
fees of $120,000 for 240,000 Service Rights for each Financial Year. There is no amount payable other than the
sacrificed fees for the Service Rights.
The number of Service Rights are calculated by dividing the amount of sacrificed fees by the Share price of $0.50 per
Share being the price at which Shares were issued in the April 2021 capital raise. The fair value of these Service Rights
at the time that they were granted have been independently valued at $0.50 each.
The Service Rights were issued as at 1 May 2021 and will vest in three equal tranches on 30 April 2022, 2023 and 2024,
providing the NED holds the office of NED on those dates. Each consecutive tranche commences annually on the vesting
date of the prior tranche.
As at the end of the financial year, the number of ordinary shares held by directors and Key Management Personnel during
the 2021 reporting period is set out below. All Service Rights are unvested at 30 June 2021:
Share
Balance at
Start of Year
Shares Issued
via PPK's In-
specie
Dividend
Shares
Acquired
Shares Sold
Shares Held
at the End of
the Reporting
Period
Service
Rights
Granted
During the
Reporting
Period
Total
Securities
Held at the
End of the
Reporting
Period
-
-
-
-
-
-
-
-
-
-
-
-
166,961
200,000
700,000
1,576,917
1,200,000
-
27,201
1,743,878
2,127,201
5,640,784
5,640,784
7,384,662
800,000
800,000
2,927,201
-
-
200,000
200,000
7,384,662
3,127,201
-
-
-
-
-
-
-
-
-
-
-
200,000
866,961
2,776,917
27,201
720,000
480,000
480,000
480,000
920,000
1,346,961
3,256,917
507,201
3,871,079
2,160,000
6,031,079
6,440,784
6,440,784
-
-
6,440,784
6,440,784
10,311,863
2,160,000
12,471,863
200,000
200,000
1,000,000
1,000,000
1,200,000
1,200,000
10,511,863
3,160,000
13,671,863
2021
Directors
Non-Executive
B Spincer
A McDonald
R Levison
H Cray
Total Non-Executive
Executive
G Molloy
Total Executive
Total Directors
Other Key
Management
Personnel
L Finniear
Total Other
Total Key
Management
Personnel
48
NOTE 22 RELATED PARTY TRANSACTIONS (continued)
At 30 June 2021, Li-S Energy has the following related party agreements in place:
22.2 A Shareholders Deed between PPK Aust. Pty Ltd (PPK), Deakin University (Deakin) and BNNT Technology Limited
(BNNTTL) sets out the respective rights and obligations of those shareholders as members of Li-S Energy Limited and
the arrangements for the management, control and funding of the Company. Key terms of the deed in relation to the
shareholders and directors’ management and control are:
• any shareholder holding at least 10% of the issued share capital of the Company shall be entitled to appoint one
director to the board;
the directors by unanimous resolution, may appoint an independent director and each director has one vote;
the Chairman is appointed by PPK;
• where BNNTTL is entitled to appoint a director to the board, PPK will nominate and appoint that director;
•
•
• a quorum for a board meeting is one director appointed by PPK and one director appointed by BNNTTL;
•
to the extent permitted by law, a director may make a decision in the interest of the shareholder which appoint the
director, without being required to have regard to the interests of the other shareholders to the Deed individually or
collectively;
• management vests in the board;
• a quorum for a meeting of shareholders shall be the shareholders who alone or together have a combined equity
share of greater than 50% and must include one representative from PPK and one representative from BNNTTL;
• each shareholder is entitled to one vote per share held by that shareholder; and
• all decisions of the directors or the shareholders must be made by ordinary resolution except for specific decisions
which require unanimous or special majority resolutions as defined in the deed.
On 20 July 2021, PPK Aust., Deakin and BNNTTL executed a Deed of Termination of this Shareholders Agreement.
22.3 Deakin University
• Research and Development Agreement to conduct the services for the Li-S battery project for a period of 2
years. This agreement was superseded by a research framework agreement which was signed on 8 July
2021.
• Technology License Agreement provides exclusive global rights to commercialise Li-S battery products
using the Patent Pending titled “Flexible Lithium Sulfur Batteries” for a period of 20 years and Deakin
University receives a royalty of 1.5% of the gross sales.
• Leases for two production bays that are beside each other in Deakin’s ManuFutures advanced manufacturing
hub in Waurn Ponds, Victoria. Each lease consists of 157 square metres space, a 58 square metre office and
monthly rent of $4,741 plus GST with a CPI increase at each anniversary date. Both leases commence on 1
July 2021 and lease 1 expires on 31 December 2023 and lease 2 expires on 30 June 2024, there are no options
for further terms.
22.4 PPK Aust. Pty Ltd
• Shareholders Agreement in which PPK Aust. must manage the funding of Li-S Energy and commercialise
the Li-S battery products.
• Loan Agreement to a maximum amount of $772,756 to fund the Li-S battery project, interest bearing at
4.5% and maturing in 36 months from the date the loan is advanced or such other date the parties agree in
writing. The loan facility agreement was terminated on the repayment of the loan on 20 July 2020.
• Loan Agreement to a maximum amount of $500,000 to fund the acquisition of shares in Zeta Energy LLC,
interest bearing at 4.5% and maturing within 5 days of receiving the funds from the capital raising or such
other date the parties agree in writing. The loan facility agreement was terminated on the repayment of the
loan on 20 July 2020.
• An agreement for management services at $10,000 per month from 1 July 2021. This agreement was
superseded by a new management service agreement signed on 9 July 2021 with an effective date of 1
May 2021. Management fees paid to PPK Aust for the financial year were $200,000. An amount of
$80,000 is unpaid at 30 June 2021.
22.5 BNNT Technology Limited
• Shareholders Agreement in which BNNTTL must provide its technical skills and know how.
• Supply Agreement in which BNNTTL has agreed to supply 100 grams of BNNT per annum at $1,000 per
gram for a 2 year period. This agreement has been superseded by a new supply agreement signed on 9
July 2021.
• Loan Agreement to a maximum amount of $500,000 to fund the Li-S battery project, interest bearing at
4.5% and maturing in 36 months from the date the loan is advanced or such other date the parties agree in
writing. The loan facility agreement was terminated on the repayment of the loan on 20 July 2020.
49
NOTE 23 EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD
Operational Agreements
The Company has entered into a number of new operational agreements subsequent to the end of the financial year.
Supply Agreement with BNNTTL
On 9 July 2021, Li-S Energy and BNNTTL entered into a supply agreement for the supply of BNNTs to Li-S Energy for
the purposes of using BNNTs in Li-S Energy’s development, testing and manufacture of the Li-S Energy batteries. The
key material terms of the supply agreement are as follows:
Term:
The contract commenced on 9 July 2021 for an initial term of 5 years and automatically
renews for further 2 year terms unless Li-S Energy elects not to renew the agreement by
giving at least 3 months’ notice prior to the expiry of the latest term.
Termination:
Either party may terminate the agreement immediately if the other party commits a material
breach that is unable to be rectified or where able to be rectified, fails to do so within a cure
period, or the other party is insolvent or similar.
Product supplied:
BNNTs with a purity of at least 95% or any other specifications agreed from time to time.
The minimum Purchase Order quantity is 10gm.
Permitted Purpose:
Li-S Energy may only order BNNTs from BNNTTL to use BNNTs in the Customer’s
development, testing and manufacture of batteries (including to stockpile BNNTs for later
use in accordance with forecasts) and any other purpose agreed between the parties in
writing.
Other terms:
The remainder of the agreement is on the usual commercial terms for a contract of this
nature.
Distribution Agreement with BNNTTL
On 9 July 2021, Li-S Energy and BNNTTL have entered into a distribution agreement pursuant to which Li-S Energy is
appointed as distributor for BNNT products within the battery industry, with certain exclusive distribution rights. The key
material terms of the distribution agreement are as follows:
Term:
The contract commenced on 9 July 2021 for an initial term of 5 years and automatically
renews for further 2 year terms unless Li-S Energy elects not to renew the agreement by
giving at least 3 months’ notice prior to the expiry of the latest term.
Termination:
Either party may terminate the agreement immediately if the other party commits a material
breach that is unable to be rectified or where able to be rectified, fails to do so within a cure
period, or the other party is insolvent or similar.
Product used
distribution:
for
Permitted Purpose:
BNNTs with a purity of at least 95% or any other specifications agreed from time to time.
The minimum Purchase Order quantity is 10gm.
Li-S Energy may only buy BNNTs from BNNTTL for the following Permitted Purposes
(including to stockpile BNNTs for later use in accordance with forecasts) and any other
purpose agreed between the parties in writing:
(c) to distribute on an exclusive basis BNNTs to third party customers (Customers),
provided the Customers are only permitted to use BNNTs to develop, test or
manufacture lithium-sulphur batteries; and
(d) to distribute on a non-exclusive basis BNNTs to Customers, provided the Customers
are only permitted to use BNNTs to:
a. develop, test or manufacture batteries that are not lithium-sulphur batteries
(including to stockpile BNNTs for later use in accordance with forecasts); and
50
b. manufacture nanomesh products
incorporating BNNTs
(including Li-
Nanomesh) for the use in any form or type of battery.
For clarity, Li-S Energy is not restricted from distributing Li-S Energy’s Li-Nanomesh (or
other nanomesh products), or BNNTs to Li-S Energy’s customers who have a licence from
Li-S Energy to manufacture Li-Nanomesh (or other nanomesh products).
Territory:
Worldwide
Nature
Appointment:
of
Distributor in the Territory for the Permitted Purpose during the Term.
Exclusive distributor for the Permitted Purposes relating to the distribution in respect of
lithium-sulphur batteries, for the first seven years of the agreement.
Li-S Energy’s ‘exclusivity’ in respect of distributing Li-Nanomesh and BNNTs for
manufacture of Li-Nanomesh is by virtue of Li-S Energy owning the IP required to
manufacture Li-Nanomesh.
Other terms:
The remainder of the agreement is on the usual commercial terms for a contract of this
nature.
Management Services Agreement with PPK Aust
On 9 July 2021, Li-S Energy and PPK Aust have entered into a management services agreement pursuant to which
PPK Aust will provide to Li-S Energy administrative support services. The key material terms of the management
services agreement are as follows:
Term:
The contract commenced on 1 May 2021 for an initial term of 3 years and can be renewed
by PPK Aust for a further 3 year term upon notice being provided by PPK Aust not later than
3 months prior to the expiry of the initial term.
Termination:
Either party may terminate the agreement on 30 days’ notice if the other party commits a
material breach that is unable to be rectified or where able to be rectified, fails to do so
within a cure period, or the other party is insolvent or similar.
PPK Aust may terminate the agreement on 30 days’ notice if it is not satisfied with the
Annual Plan of Li-S Energy.
Li-S Energy may terminate the agreement at will on 6 months’ notice.
PPK Aust is appointed to provide management services to Li-S Energy which will see PPK
Aust assist Li-S Energy with its administrative functions such as accounting, record keeping,
reporting, assisting with insurance and recruitment. PPK Aust will also provide staff to act
in key officer roles including the public officer, chief financial officer and company secretary.
It is also appointed, to the extent permitted by law, facilitate/oversee the funding and capital
raising requirements of the company (note this does not include acting as an advisor).
PPK Aust will be paid a fee for providing the management services which will be $150,000
for the initial three months from 1 May 2021 to 31 July 2021. This fee, together with the
scope and performance of the management services, will be subject to review between the
parties every 3 months (this allows for resetting of the fee in the event that Li-S Energy
experiences business changes that require PPK Aust to provide additional (or reduce)
resources to effectively provide the services).
PPK Aust will be paid a funding fee of up to 1% of any debt or capital raised that it facilitates.
PPK Aust will be entitled to recover any disbursements or expenses it incurs on behalf of
Li-S Energy or in providing the services.
Li-S Energy indemnifies PPK Aust for any loss that arises from the performance by PPK
Aust of its obligations under the agreement.
The remainder of the agreement is on the usual commercial terms for a contract of this
nature.
Appointment:
Fees:
Indemnity:
Other terms:
51
Research Framework Agreement with Deakin
On 8 July 2021, Li-S Energy and Deakin have entered into a research framework agreement which governs all research
projects conducted between Li-S Energy and Deakin as set out in Project Schedules made under the agreement. The
key material terms of the research framework agreement are as follows:
Term:
The contract commenced on 8 July 2021 and continues until terminated.
Termination:
Either party may terminate the agreement and any Project Schedule immediately if the other
party commits a material breach that is unable to be rectified or where able to be rectified,
fails to do so within a cure period, or the other party is insolvent or similar.
Project Schedules:
Intellectual
Property:
The parties may from time to time enter into Project Schedules made under the agreement
for research projects proposed and negotiated by the parties. Such Project Schedules
include terms around payment, steering committees, specified personnel of the parties and
insurances required.
Each party will retain ownership of their respective intellectual property developed prior to
the date a Project commences or is acquired or developed independent of the agreement,
but grants a non-transferrable licence to the other party to use such background intellectual
property for the purposes of the relevant Project.
Any new intellectual property created, developed or discovered in the conduct of a Project
vests in Li-S Energy (Project IP). Deakin is granted a non-exclusive, perpetual, non-
transferable, royalty free licence to use the Project IP for the purposes of the Project and for
non-commercial research, teaching and scholarly pursuits.
Deakin must also seek Li-S Energy’s prior consent before it publishes any part of the Project
IP as part of any publication.
Termination of Shareholders Agreement
On 20 July 2021, PPK Aust., Deakin and BNNTTL executed a Deed of Termination of the Shareholders Agreement
effective on the date of signing.
Employment Contracts
On 9 July 2021, Li-S Energy has entered into an employment contract with Dr Lee Finniear for his engagement as CEO
which contains standard terms and conditions for agreements of this nature, including confidentiality, restraint on
competition and retention of intellectual property provisions. The key terms of the employment contract are as follows:
Total Remuneration
Package:
$300,000 annual salary (including superannuation).
In addition to his annual salary, Dr Lee Finniear has been granted, and has elected to be
issued, 1,000,000 Service Rights vesting over a four year term in accordance with the
Executive Rights Plan.
Dr Lee Finniear is also eligible to participate in the Company’s short term incentive plan for
the 2022 Financial Year up to $100,000.
Term:
The contract commenced on 1 July 2021 and continues until terminated.
Termination
CEO:
by
6 months’ notice.
Termination by Li-S
Energy:
6 months’ notice or immediately due to serious misconduct or any reason entitling the Li-S
Energy to summarily dismiss Dr Lee Finniear at common law.
52
Non-competition
and non-solicitation:
To protect the interests of Li-S Energy and its intellectual property, Dr Lee Finniear will not,
directly or indirectly, in any capacity whatsoever, during the term and for 12 months after
the termination of the contract,
(e) be engaged, concerned or interest in any other business or occupation that is or may
be in competition with the business carried on by Li-S Energy in Australia;
(f)
induce or encourage a client or customer of Li-S Energy to cease doing business with
or reduce the amount of business it would otherwise do with Li-S Energy;
(g) induce or solicit any officer or employee of Li-S Energy to leave that office or
employment; or
(h) procure or assist someone else to do or attempt to do anything contemplated by way of
non-competition or non-solicitation.
As a result of the Dr Lee Finniear entering into an employment contract, the previous consulting agreement with his
consultancy company was terminated as at 30 June 2021. Consulting fees paid to or owing to his consultancy company
to 30 June 2021 were $198,100.
On 1 July 2021, Li-S Energy has entered into an employment contract with Dr Steve Rowlands for his engagement as
CTO which contains standard terms and conditions for agreements of this nature, including confidentiality, restraint on
competition and retention of intellectual property provisions. The key terms of the employment contract are as follows:
Total Remuneration
Package:
$176,000 annual salary (including superannuation).
Dr Steve Rowlands is eligible to participate in the Company’s short term incentive plan for
the 2022 Financial Year up to $16,000, and the Company’s Executive Rights Plan on terms
to be confirmed.
The Company will also reimburse Dr Steve Rowlands for all reasonable relocation costs
from the UK, including an annual economy return flight to the UK.
Term:
The contract commenced on 1 July 2021 (with a three month probation period) and
continues until terminated.
Termination by
2 months’ notice during the probation period.
CTO:
6 months’ notice.
Termination by Li-S
Energy:
2 months’ notice during the probation period.
6 months’ notice or immediately due to serious misconduct or any reason entitling the Li-S
Energy to summarily dismiss Dr Steve Rowlands at common law.
Non-competition
and non-solicitation:
To protect the interests of Li-S Energy and its intellectual property, Dr Steve Rowlands will
not, directly or indirectly, in any capacity whatsoever, during the term and for 12 months
after the termination of the contract,
(e) be engaged, concerned or interest in any other business or occupation that is or may be
in competition with the business carried on by Li-S Energy in Australia;
(f)
induce or encourage a client or customer of Li-S Energy to cease doing business with
or reduce the amount of business it would otherwise do with Li-S Energy;
(g) induce or solicit any officer or employee of Li-S Energy to leave that office or
employment; or
(h) procure or assist someone else to do or attempt to do anything contemplated by way of
non-competition or non-solicitation.
53
Consulting Agreements
On 16 July 2021, a consulting agreement between Li-S Energy and Glenn Molloy’s consultancy company, Corso
Management Services Pty Ltd. The key terms of the consultancy agreement are as follows:
Designated Person: While the contract is between Li-S Energy and Glenn Molloy’s consultancy company, the
agreement requires that the services to be provided by Glenn Molloy unless otherwise
agreed in writing by Li-S Energy and for Glenn Molloy to remain an employee of the
consultancy company.
Entitlements:
A daily rate to be agreed between the parties. Mr Molloy is not paid any fees in respect of
travel time to and from the locations where work is performed.
Term:
The contract commenced on 12 June 2021 and is for a period of 24 months unless
terminated earlier by Li-S Energy as permitted under the agreement.
Termination:
Subject to annual renewal by written agreement, the contract terminates on 12 June 2023
or Li-S Energy can immediately terminate the agreement if Mr Molloy:
(g) commits any act involving fraud, deceit, dishonesty or other serious misconduct
(whether in relation to Li-S Energy or otherwise);
(h) becomes bankrupt or commits any act of bankruptcy;
(i)
is charged with any serious criminal offence;
(j) refuses or fails to comply with any lawful request made by Li-S Energy or any of its
Directors;
(k) is unable to properly perform the essential elements of the Chief Commercial Actions
Officer role whether as a result of illness, accident or otherwise; or
(l)
is in breach of any obligations under the contract and fails to rectify the breach within 5
business days after being requested to do by Li-S Energy.
Either party may terminate on 3 months’ notice.
Non-competition
and non-solicitation:
To protect the interests of Li-S Energy and its intellectual property, Mr Molloy will not, directly
or indirectly, in any capacity whatsoever, during the term and for 12 months after the
termination of the contract,
(e) be engaged, concerned or interest in any other business or occupation that is or may
be in competition with the business carried on by Li-S Energy;
(f)
induce or encourage a client or customer of Li-S Energy to cease doing business with
or reduce the amount of business it would otherwise do with Li-S Energy;
(g) induce or solicit any officer or employee of Li-S Energy to leave that office or
employment; or
(h) procure or assist someone else to do or attempt to do anything contemplated by way of
non-competition or non-solicitation.
This restraint will not prevent Mr Molloy from performing his roles or holding his interest in
PPK Group Limited entities or entities it holds an interest in.
54
On 7 July 2021, a consulting agreement between Li-S Energy and Andrew Cooke’s consultancy company, AJC
Corporate Services Pty Ltd was entered into. The agreement is made on standard commercial terms for services for
the provision of company secretarial services.
Australian Research Council Industrial Transformation Research Hub
Deakin University has been awarded grant funding by the Australian Research Council (ARC) to establish and operate
the ARC Industrial Transformation Research Hub in new safe reliable energy storage and conversion technologies.
Under the grant agreement Deakin University must enter into a participant’s agreement with each participating
organisation before the research program can start.
On 11 May 2021, Li-S Energy signed the participant’s agreement and the contract commences when all parties have
executed their agreement. As at 30 June 2021, the other participants had not yet signed the agreement.
Commitment:
Cash contributions of $150,000 per year for five years totalling $750,000 and in-kind
contributions of $50,000 per year for five years totalling $250,000.
Term:
The contract is for a period of 5 years unless terminated earlier by ARC as permitted under
the agreement.
Termination:
The contract terminates on the fifth anniversary of the commencement date of the
agreement or the date of which the final report is submitted to the ARC, whichever is later.
Deakin University may terminate this agreement if the grant agreement with ARC is
terminated for any reason or if the ARC suspends or reduces the scope of the research
program or grant funding. Alternatively the agreement may be terminated if the participating
organisations agree there is no longer a valid reason for continuing with the research
program.
Lodgement of IPO Prospectus and Proposed Capital Raising
On 29 July 2021, Li-S Energy lodged a prospectus to raise $34,000,000, issue 40,000,000 ordinary shares and list on
the ASX. As a result of this prospectus, the number of ordinary shares potentially outstanding is as follows:
Outstanding and issued at 30 June 2021
Issued as a result of capital raising in the prospectus
Total outstanding and issued at the completion of the prospectus
Potentially issuable ordinary shares under the Service Rights as detailed in
the Remuneration Report disclosed in the Directors’ Report 1
Issued and potentially issuable ordinary shares at the date of the prospectus
Number of Ordinary Shares
600,200,230
40,000,000
640,200,230
3,160,000
643,360,230
1 Assuming all Service Rights vest and are converted to ordinary Shares.
The Prospectus opened on 2 August 2021 and closed on 13 August 2021 as the capital raise was oversubscribed. Li-S
Energy made an application to the ASX, in accordance with the Prospectus, and is progressing the application with the
ASX. There remain a number of steps before the ASX is in a position to confirm conditional listing approval, which are
understood to be procedural for listing, and it is expected the listing will occur in September 2021.
Impact of COVID-19
Events relating to COVID-19 have resulted in significant economic volatility. There is continued uncertainty as to the
ongoing and future response of governments and authorities globally, and a further Australian economic downturn is
possible. As such, the full impact of COVID-19 to consumer behavior, employees and the Company are not fully known.
Given this, the impact of COVID-19 could potentially be materially adverse to the Company’s financial and/or operational
performance. Further, any government or industry measures may materially adversely affect the Company’s operations
and are likely beyond the Company’s control.
Due to COVID-19, the State and Federal Governments have imposed social-distancing restrictions which have, and
may, disrupt the operations of the Company. The Company’s main operations are at Deakin University’s campus located
at Geelong, Victoria. To slow the spread of COVID-19 in Victoria, the Victorian government has imposed restrictions
from time-to-time. Deakin University, who is contracted to provide the research and development for the Company, has
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had its own restrictions with access to campus by staff, students and visitors restricted to help maintain health and safety
protocols, with staff and visitor access reviewed case-by-case. As a result, limits have been placed on the number of
staff and contractors permitted in the workspace at one time. It is unknown whether stricter restrictions will be imposed
and what the impact of these would be on the operations of the Company.
Due to COVID-19, the manufacture of equipment and parts and the supply of raw materials in foreign markets may be
restricted or delayed which could impact on the Company’s operations.
There have been no other matter or circumstance that has arisen since the end of the financial period which is not
otherwise dealt with in this report or in the financial statements that has significantly affected or may significantly affect
the operations of the Company, the results of those operations or the state of affairs of the Company in subsequent
financial years.
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DIRECTORS' DECLARATION
FOR THE YEAR ENDED 30 JUNE 2021
1.
In the opinion of the Directors of Li-S Energy Limited;
a) The financial statements and notes of Li-S Energy Limited are in accordance with the Corporations Act 2001, including
(i) Giving a true and fair view of is financial position as at 30 June 2021 and of its performance for the financial year
ended on that date; and
(ii) Complying with Australia Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001; and
b) There are reasonable grounds to believe that Li-S Energy Limited will be able to pay its debts as and when they become
due and payable.
2. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief
Executive Officer and Chief Financial Officer for the financial year ended 30 June 2021.
3. Note 2 confirms that the consolidation financial statements also comply with International Financial Reporting Standards.
Signed in accordance with a resolution of the Directors:
BEN SPINCER
Chairman
Brisbane, 2 September 2021
ROBIN LEVISON
Non-Executive Director
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Ernst & Young
111 Eagle Street
Brisbane QLD 4000 Australia
GPO Box 7878 Brisbane QLD 4001
Tel: +61 7 3011 3333
Fax: +61 7 3011 3100
ey.com/au
Independent auditor’s report to the members of Li-S Energy Limited
Opinion
We have audited the financial report of Li-S Energy Limited (the Company), which comprises the
statement of financial position as at 30 June 2021, the statement of profit or loss and other
comprehensive income, statement of changes in equity and statement of cash flows for the year then
ended, notes to the financial statements, including a summary of significant accounting policies, and
the directors’ declaration.
In our opinion, the accompanying financial report of the Company is in accordance with the
Corporations Act 2001, including:
a. Giving a true and fair view of the Company’s financial position as at 30 June 2021 and of its
financial performance for the year ended on that date; and
b. 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 Company in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information is the directors’ report
accompanying the financial report.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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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 Company’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Company or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
►
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
► Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control.
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company to cease to continue as a going concern.
► Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
Ernst & Young
Brad Tozer
Partner
Brisbane
2 September 2021
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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