Annual Report 2019
CHAIRMAN & CEO’S LETTER
SHAREROOT LEADERSHIP
DIRECTOR’S REPORT
DECLARATION OF INDEPENDENCE
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8
14
30
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
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DIRECTORS' DECLARATION
SHAREHOLDER INFORMATION
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ShareRoot Ltd | ABN 81 610 858 896
Our mission is to create value
by accessing and aggregating social
and clinical data, with consent,
to improve health and wellness, and
to advance life science technologies
GOALS
1.
2.
3.
4.
Reposition ShareRoot to engage, contribute and generate
value within the emerging global digital health market.
Create a unique point of difference in developing novel AI
technologies and translation methodologies with the
capability to access patient/physician reported outcomes
and perceptions on social media and integrate structured
and unstructured data sets.
Commercialise and scale technologies and services
generating exponential value and advantage for
stakeholders.
Work within and contribute to an informed and ethical
industry framework.
CHAIRMAN &
CEO'S LETTER
Dear stakeholders
To say ShareRoot has implemented a significant and rapid transformation agenda in the past year would be an
understatement. The outcome of a leadership change and strategic review in February/ March 2019 repositioned the
company directly into the burgeoning global digital health sector.
Within four months of the leadership change and the new Chief Executive Officer appointed, ShareRoot’s strategic priorities
were confirmed, operational efficiencies implemented, and the technology pipeline rebuilt. Skills and resources were
realigned and a capital restructure was underway to deliver a more agile, service-ready and strategically focused offering to
stakeholders with an upside potential that is achievable, scalable and within reach.
ShareRoot is now resourced to create and contribute unique value into the emerging real world data-rich intelligent global
health ecosystem that is shaping and rebuilding the way medicine is practiced and drug discovery undertaken. The three
key value generating pillars underpinning the company are: services, technologies and partnerships, defined by a clear
understanding of the emerging dynamics and opportunities within the global health market and the capability to deliver
within each pillar.
Digital transformation in health reveals new unmet needs
In choosing to enter into the digital health sector, ShareRoot recognised it has a number of significant advantages: a first-
class revenue generating client services team (in The Social Science) with strategy skills and deep networks and knowledge
of the health, medical devices, clinical trials and biopharma sectors; , and; direct access to AI technologies, methodologies
and translations skills.
The ShareRoot leadership team also recognises the global healthcare market is undergoing a digital revolution, far more
transformative than the mere introduction of electronic health records and patient oriented wellness apps. The reinvention of
health and wellness within the connected environment is beginning to reveal unmet needs and commercial opportunities in
every aspect of the sector, from drug discovery to patient activation and empowerment. The global artificial intelligence
market in healthcare 2019-2023 is expected to post a CAGR of 28%i to as much as 43.5%ii with the Asia Pac region
expected to grow, according to a various research reports as the fastest CAGR rate of any global region. A strong indication
of potential for ShareRoot.
ShareRoot’s new vision is to make healthcare more personal, empowering patients and physicians in accessing and
implementing future treatments and clinical interventions. Utilizing AI technologies and our novel methodologies and know-
how, we have the ability to capture, integrate and interpret structured and unstructured data, including real world data, from
multiple sources such as social media, clinical records and apps, into actionable insights, recommendations and tools that
will dramatically change the trajectory of healthcare and health technology development.
Value and values in alignment – every data point is a personal story
We are living in a world of a trillion sensors. Health data generated from wearables, apps, clinical records and self-reported
outcomes to social media, represent a wealth of opportunity and challenge. Acknowledging and working within an ethical
framework is a core guiding principle at ShareRoot – it always has been. Working with data in a compliant manner, and with
consent is key. Behind every data point is a person.
Throughout the strategic and operational transformation that occurred from March to June 2019, some things did not
change. Data sovereignty, compliance, consent and respect remain central to our company values. ShareRoot applies a
privacy-by-design approach to technology and methodology development. In achieving ShareRoot’s strategic goal, the
leadership team and employees all agree that as an organisation we want to achieve this by employing a set of personal
values and ethical principles, contributing to a compliant regulatory and commercial environment in which the individual’s
rights and privacy are respected. MediaConsent is a legacy technology concept from ShareRoot’s past that we believe has
ongoing value. It is unlikely that the MediaConsent platform will continue its development in the form originally proposed,
but we agree that as a concept, providing the individual with agency and clear ownership of their health data is both valid
and will become increasingly desirable.
Resourcing the pivot and positioning for scale
Ensuring the company has sufficient financial resources, talent and access to technology to ensure it can achieve the
ambitious milestones it has set, ShareRoot has assembled an appropriate leadership team. Damon Rasheed and Marat
Basyrov were instrumental in introducing new technologies, methodologies and platforms in the AI space, building skills and
capabilities, assisting in the development of the technology/ services pipeline as the company went through the review
period emerging with a new value proposition. It was apparent that financial resources were inadequate to achieve the
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first stage of the new development plan and a recapitalisation strategy was launched and successfully implemented just
after the close of the financial year.
Partnering will be important in supporting ShareRoot’s plan to achieve scale. Local and global partnerships and alliances
are being considered and actively pursued to scale service offerings and access to new AI technologies and methodologies
and commercialisation pathways.
The acquisition of The Social Science (TSS) in April 2018, provided ShareRoot with both a team of highly skilled digital
marketing communication specialists in science, technology and healthcare as well as much needed revenues and a client
group that was health and science-centric. The TSS client services team are deserving of special mention. Not only did they
hold their own, in terms of revenue generation during a period of significant turbulence but continued to grow the client base
and client offerings.
Following the strategic review, ShareRoot’s US operation significantly reduced with further development of MediaConsent
suspended and the US-based team working on the project dissolved along with all corporate roles based in the US.
ShareRoot remains committed to the MediaConsent concept and will focus all efforts on the application in healthcare,
leveraging the relationships and market position that The Social Science team has in health and science. ShareRoot has
taken steps to bring the development of the MediaConsent platform back to Australia with the added advantage of
accessing R&D tax incentives and government grants.
US-based game development company, Ludomade which was acquired by ShareRoot in November 2018 was assessed as
non-core to the new strategic direction in health. Since acquisition, Ludomade has failed to deliver revenue expectations and
ongoing management of the asset created a drain on resources. ShareRoot announced plans to divest Ludomade, of which
are ongoing.
Tapping digital megatrends and creating a point of difference
ShareRoot’s research indicates that patients are very willing to share health data if it will provide better care for them or help
others going through the same distressing experience with illness, injury or living with disorders. As a result patient-to-
patient social networks, health and wellness apps and physician-to-physician education and engagement platforms are
burgeoning. Lakes of new structured and unstructured data are being created combined with traditional clinical records,
offering a complex and accurate view into the real lived experience of patients and carers managing diseases, disorders and
injuries. Unmet clinical needs are being revealed and highlighted in the data, which is invaluable to technology developers
and healthcare providers.
Finally, through the advent of artificial intelligence to aggregate, integrate and interpret these data sets, we have a window
into the real world of patients and physicians as they engage and self-report outcomes, concerns, opinions, perceptions and
build inclusive and diverse networks on social media, enabling better and more precise treatment and care for patients.
Clinical datasets are objective and structured, but the world of patient and physician generated content is personal,
subjective, perceptive unstructured data and though it’s more challenging it’s richer and more real. Ethically tapping into this
more nuanced data set, combined with machine learning and natural language processing to deliver deep audience insights
and predictability is where ShareRoot can develop a unique value proposition and deliver exponential value for
stakeholders.
The business plan and future direction of ShareRoot in the world of digital healthcare, offers a foundation to build a
significant company with a competitive and unique offering to the market. The board and management is excited about the
company’s future and delivering the next chapter in ShareRoot’s story.
___________________________
Michelle Gallaher
CEO
___________________________
Dr Julian Chick
Chairman
1 Technavio. August 23, 2019. Global AI in Healthcare Market Report.
2 Meticulous Research. July 30, 2019. Artificial Intelligence in Healthcare Market by Product, Technology, Application, End-User and
Geography – Global Forecast to 2025.
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SHAREROOT LEADERSHIP
Michelle Gallaher
CEO
Dr Julian Chick
Chairman
Damon Rasheed
NED
Marat Basyrov
NED
Marat is an experienced
technology investor and
serial entrepreneur,
applying creative and
technology-forward data
and digital solutions
across a large cross-
section of industries to
solve complex digital and
data challenges.
As a Chief Executive
Officer of artificial
intelligence software and
app provider, Adevi, Marat
has a track record of
success through building
a number of data-driven
startup companies
including Edway Apps
Studio, Intelligent Profit
Solutions and Tech4Data.
Marat has a broad, high
value professional
network of technology
developers, investors and
collaborators across the
globe.
Marat holds a Bachelor of
Business in Accounting
and Management from
Central Queensland
University and and is a
Certified Practicing
Accountant (Australia).
Damon’s skills and
expertise in data science
and analytics have been
applied to a wide range of
industries, specifically in
financial services and
professional services
where he co-founded one
of Australia's leading data
and artificial intelligence
companies, Advantage
Data.
Damon is also the founder
of Rate Detective, an
Australian financial service
comparison site
specialising in life
insurance, income
protection insurance and
home loans.
Damon holds a Masters in
Economics from the
University of Melbourne
and has been involved in
many start-up internet
businesses, regularly
appears in the media as a
commentator and at
events as a professional
industry speaker on the
value of data and digital in
the growing sharing
economy.
Prior to running his own
businesses, Damon
worked as an economist at
the Australian Competition
and Consumer
Commission (ACCC).
With over 25 years of
experience in the
biopharmaceuticals and
healthcare sector and deep
professional global
networks, Michelle is an
award-winning and
recognised leader in the
Australian health innovation
industries. For the past 15
years Michelle has worked
at an executive level in
biotechnology, most
recently as CEO of the peak
body for biotechnology and
medtech in Victoria.
Establishing The Social
Science in 2014, selling to
ShareRoot in 2018 and
guiding the medical
application of ShareRoot’s
key platform technology
(MediaConsent), Michelle
has a clear view of the
opportunity and challenges
that digital transformation in
healthcre offers.
Michelle holds an allied
health qualification in
applied science from La
Trobe University, a
postgraduate Diploma in
Business from RMIT and is
completing a Global
Executive MBA at Monash
University.
Michelle is a NED on a
number of health and
technology related boards
and co-founder of Women
in STEMM Australia, Telstra
Victorian Business Woman
of the Year and
Entrepreneur of the Year in
2017 and inducted into the
Victorian Honour Roll for
Women in 2018. Michelle is
a GAICD and FAIM.
Julian has over 20 years’
experience in capital
markets and LSHC, on both
the investor and operational
side of businesses, giving
him a unique understanding
of technology companies’
value drivers, value
inflection points and
commercialisation
strategies.
Included in his previous
roles, Julian has worked in
funds management and
venture capital and private
funding. Julian’s funds
under management grew
from $115 million to over
$300 million over a 5-year
period, with an average
annual return of over 20%.
Julian has spent the past 15
years at an Executive level
of life sciences companies
across therapeutics,
diagnostics and medical
devices (including 8 early
stage and start-up
companies and achieved
one trade sale exit of an
Australian contract services
organisation), multiple IPOs
and public offerings in
Australia and Singapore, 3
global product approvals
(including through the US
FDA and the European
Medicines Agency) and
launches.
Julian serves and an
Executive Director and NED
on a number of technology
and health-related boards.
Julian has a BSci and PhD
in Physiology from La Trobe
University and Oxford
University.
BUSINESS STRUCTURE
Services
Solutions
Technology
Digital marketing and social
media management strategies,
specialist content creation,
community moderation and
retained management of digital
platforms for clients,
predominantly in the science,
technology and health sectors.
Identifying and developing
partnership and alliances to
drive value, trial emerging AI
technologies, access health data,
commercialise AI technologies,
drive client acquisition and
service delivery are key to
ShareRoots future success.
Revenue is derived from either;
retainer, projects or training
services.
Unique services include:
• Clinical trial recruitment from
social media and digital platforms
• Specialist content writers –
science, tech and health
• Health market access strategies
using social media and digital tools
• Issues and crisis management
via social media
• Social listening and influence
using deep patient/ HCP insights
Current MOU/ partnerships for
MediaConsent Clinical include:
• St Vincent’s Hospital (Melb)
• Cancer Trials Australia
• Neuroscience Trials Australia
Technology alliances include:
• Adevi
• Advantage Data
Skills development alliances include:
• Swinburne University (intern
program)
The development and
subsequent commercialisation
of technologies, powered by AI
to capture, aggregate and
analyse health and wellness
datasets is the foundation and
the heart of ShareRoots business
plan. It is the successful
commercialisation and scale of
technology opportunities that
will deliver the most significant
value for the company.
Technologies in development
include the following
characteristics:
• Health and wellness focus
• Utilising data in combination with
AI technologies and methodologies
• Capacity for scale
• Within priority areas of potential
acquisition / investment partners
• Global relevance
DEVELOPMENT PIPELINE
MVP
Client trial
Pre-launch Market Launch
Scale
Complete
May 2019
Apr-Oct
5 Clients
Nov
2019
Jan
2020
Widget
Complete
Feb 2019
Jan-Jun
2 Clients
Nov
2019
Jan
2020
June 2019
ongoing
Client trial
Dec 2019
Ongoing
The application of artificial intelligence to the vast lakes of real world health data
being generated minute by minute via digital platforms on and in our bodies, in our
homes and in clinical settings, unlocks an extraordinary opportunity to discover the
real lived experience of illness and how we can maintain and enhance wellness.
ShareRoot’s purpose is to identify unmet clinical need and to carefully select, craft and apply the most appropriate AI
technology solution coupled with select datasets to deliver sensitive and accurate insights that influence health and
wellness. Getting this technology development and roll out right has the potential to deliver life changing value.
This past year has seen the development of three exciting new technologies in a relatively short period of time. On top of
the continuous progression of MediaConsent, albeit slowed down and aligned to an application only in health at this
stage, ShareRoot added Opyl, widget and Rank’d to the pipeline with widget and Opyl progressing rapidly to the MVP and
early revenue stage.
The most significant R&D effort in the second half of the year was applied to Opyl as this technology was deemed to have
the greatest revenue potential in shortest period of time. Opyl was tested free of charge with a TSS client in April to
demonstrate the MVP model and client acceptance, progressing quickly to address a second TSS client challenge in
June. Three more beta clients were signed to Opyl within two weeks, commencing projects in July, September and
October. The five beta clients will serve as a challenging MVP stage in which ShareRoot will received modest ‘test’
revenue and critical feedback. At end October ShareRoot will evaluate the Opyl beta outcomes with clients and plans to
implement a soft market launch, working within the internal resource capacity available at TSS, selecting suitable clients
that are market ready with projects that best match the capabilities of Opyl.
ShareRoot is applying a hybrid agile stage-gate model to its technology development pipeline which ensures a faster and
more adaptive response to the rapidly changing customer needs and landscape in digital health, better integration of
voice-of-customer, better team communication, improved development productivity, and faster to market outcomes. The
philosophy behind the model is to fail inadequate projects fast. Having a rigorous strategic approach to technology
selection and development provides the company with clarity and a convention by which it can move at pace and with
precision.
OPERATIONS REVIEW
2018/19 has been a year for considerable change for ShareRoot. The leadership team has been completely re-cast, the
core strategy sharpened, and the technology pipeline redeveloped. Revenue has significantly lifted by 137% to $927,041.
The overall loss for the consolidated entity after providing for income tax amounted to $3.1m.
Following the strategic review it was imperative that ShareRoot significantly reduce expenditure to ensure the company
could remain operational with a 40% reduction is employee numbers. The majority of the loss during the year was due to
the cost of developing MediaConsent, UGC platform development in the first half of the year and ongoing corporate
activities and compliance.
Client services and revenue generation
Since close to inception, ShareRoot has always had a footprint in delivering digital marketing services to clients, generating
revenues whilst developing technologies to address a growing digital marketing sector. The plan moving into the 2018/19
year was to continue with the acquisition strategy, building up revenue potential and supporting a scaling and leveraging of
services across a number of digital platforms. Following on from the acquisition of Melbourne-based STEM and health
specialist social media marketing and content creation agency, The Social Science, in April 2018, Ludomade, a US-based
game development agency, was acquired in November 2018. At this time ShareRoot had three revenue generating client
service divisions: The Social Science, ShareRoot Inc (US-based social media management and marketing services) and
Ludomade.
ShareRoot’s priority at calendar year-end was to focus on integrating the three service divisions and to improve operational
efficiencies across the group, centralizing services, whilst investigating ways to leverage clients and skills across the group
to drive greater revenue opportunities.
Following the strategic review in March 2019, Ludomade was deemed to be non-core and misaligned. By the end of the
financial year it was clear that Ludomade had failed to realise the revenues expected of the entity and a plan to divest the
business was announced and actioned. The client services delivered by ShareRoot Inc (US) were also evaluated. Two of
the services team were retained and they were generating revenue and involved in Widget development.
Though TSS was the dominant revenue source during the year, this entity was also somewhat compromised as the
Melbourne-based team took on additional, non-revenue generating roles within ShareRoot, specifically taking up the lead
with MediaConsent Clinical and restructuring operational roles and approaches to integrate with ShareRoot and offset some
corporate costs that would otherwise have been charged to ShareRoot.
From May 2019 onward, TSS began moving to a value-based pricing model (from a time and materials model) and worked
to scale the service offering, increasing the price point as automation and AI-assisted platforms come online to commence
offering a bespoke and unique service to clients. A key new service offering was packaged as Opyl – a suite of AI-assisted
technologies and advanced strategic methodologies offering deep audience insights – was piloted after only four weeks in
development. Every client TSS approached about Opyl agreed to sign on to a pilot opportunity, posing complex market
access challenges, testing Opyl methodologies and the licensed-in technologies ShareRoot had access to or was creating.
Opyl presents the greatest revenue generation growth opportunity for ShareRoot in the near-midterm. The Opyl service
model has been developed using similar methodologies and positioning strategies as used by some the world’s largest
digital marketing and management consulting firms.
Technology development pipeline
ShareRoot’s user generated content (UGC) management tool was completed and fully operational in May 2018 and has
been valuable in generating revenues and building the client list. Unfortunately Instagram and Snapchat changed its API
and partnering arrangement late in the year which eliminated the ability of the UGC platform to operate. ShareRoot quickly
acted to rebuild a new UGC tool that could add value for clients piloting ‘widget’ – an e-commerce tool designed to
accelerate consumer sales on Instagram within months.
The technology and strategic review undertaken by the new board in 2019 assessed MediaConsent progress had stalled
and action was taken to stop all development in the US and terminate the arrangement with contractors as well as
retrenching ShareRoot employees. Following the assessment, MediaConsent was retained in the pipeline with plans to re-
establish development in Australia.
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Recognising the opportunity digital health offered and now having access to new skills and knowledge, the re-formed
ShareRoot board and new CEO began rebuilding the technology pipeline. Rank’d, a new digital information tool for
scientists and healthcare providers, was added to the list as was Opyl, alongside further progress on widget and
MediaConsent.
Looking forward, ShareRoot will apply a hybrid agile stage-gate model to evaluate the progress of new technologies and
service offerings with a view that fast failure at MVP stage is preferred with a pipeline of emerging technology opportunities
being constantly nurtured. Relationships and professional networks of the directors and CEO will continue to be key in order
to source technology development opportunities, access skills and identify market needs.
A priority is to identify and progress technologies that can deliver significant revenue at the earliest stage with clients that
are already active with The Social Science. It was clear that Opyl was the primary opportunity that had the potential to
deliver a major uptick in revenue and would be an extension of the client work that The Social Science was already engaged
in delivering. The beta Opyl projects across five clients are generating early stage modest revenue. Opyl clients are working
collaboratively with ShareRoot to build out the offering and prepared to experiment with the technology and methodologies
to unlock value. The five clients all come from the health sector – SME biopharma, NFP community health, medtech and
government.
Human capital and operational efficiencies
Along with the leadership group, the employee landscape at ShareRoot has changed considerably in this period, initially
expanding with the acquisition of TSS and Ludomade and then contracting by 40% from mid March (mostly from ShareRoot
US) following the strategic review.
Operational infrastructure, particularly in the US has been scaled back with considerable reduction in expenditure in the
second half of the year as the company focuses on controlling its operational and research costs and shifts focus to revenue
and value growth in the digital healthcare sector. Relationships with most US-based external technology and business
advisors and the advisory board established by ShareRoot last year has been dissolved as they are no longer aligned to the
trajectory of the company.
The new board and leadership team recognise the value of leveraging valuable government incentives and grant
opportunities in Australia – a path that ShareRoot had not accessed previously. The operational team are working toward
applying for incentives available to ShareRoot stretching financial resources further and accessing scale, support and
growth grant opportunities. Australia’s R&D tax incentive (43.5% refundable tax offset) is a critical offering for a growing
company like ShareRoot, in which a significant portion of our historic and future R&D expenditure is genuinely experimental.
Accessing skills and talent in the digital health services and technology market will become increasingly competitive as more
organisations invest in the growth corridor and resources become more sought after. ShareRoot has implemented an in-
house continuous AI and digital strategy skills development and training program with employees to further develop
competitive edge and service offering. Accessing new graduates from a number of disciplines is seen as an important
strategic priority and the Intern program successfully established by The Social Science some years ago is now a key
aspect of the ShareRoot’s future resources plan and a proven stream in which the company can identify and attract talented
individuals.
ShareRoot’s operational focus moved from the west coast of the US to Melbourne, Australia following the leadership change
early in 2019. ShareRoot HQ is now based out of The Social Science’s office in St Kilda, leveraging the advantages of
working at Engine House, a new generation co-working space, with a gradual move of all advisors and corporate services to
Melbourne or Sydney.
Brand equity: the case for realignment
Well articulated, managed and strategically positioned brands add considerable value to an organisation. Included in the
strategic review of the company’s technology and services performance in March/ April was the company brand, specifically
its alignment in the global digital health market. The outcome of the review concluded that ShareRoot’s present brand
position is incongruent with the digital health message and market it is now targeting. The recommendation from the review
was to rebrand the organization to align with the health focus to ensure ShareRoot can successfully transition its corporate
narrative and service offering into a compelling and competitive position.
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DIRECTOR'S REPORT
ShareRoot Limited
Directors' report
30 June 2019
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'consolidated entity') consisting of ShareRoot Limited (referred to hereafter as the 'company' or 'parent entity') and the
entities it controlled at the end of, or during, the year ended 30 June 2019.
Directors
The following persons were directors of ShareRoot Limited during the whole of the financial year and up to the date of this
report, unless otherwise stated:
Julian Chick - Chairman and Non-Executive Director
Damon Rasheed - Non-Executive Director
Marat Basyrov - Non-Executive Director
Lee Rodne - Non-Executive Chairman
Noah Abelson-Gertler - Managing Director and Chief
Executive Officer
Peter McLennan - Non-Executive Director
Harvey Kaplan - Non-Executive Director
Appointed 6 May 2019
Appointed 1 February 2019
Appointed 1 March 2019
Resigned 1 February 2019
Resigned 1 March 2019
Resigned 1 February 2019
Appointed 1 February 2019, resigned 6 May 2019
Principal activities
During the period, the principal activities of the company were predominantly the development of its MediaConsent
platforms and supporting the consolidation and growth of The Social Science and acquisition of Ludomade.
In the final four months of the year, following a full leadership change late in Q3, 2019 and early Q4, 2019, the company
undertook a major strategic and technology review and recalibrated the business plan to focus on developing digital and
data technologies and services addressing the escalating needs of the global healthcare sector.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
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ShareRoot Limited
Directors' report
30 June 2019
Review of operations
Revenue for the financial year reached $927,041 which represented over a 100% growth from the previous financial year.
The overall loss for the consolidated entity after providing for income tax amounted to $3,105,138 (30 June 2018:
$3,035,627).
Operational Progress
ShareRoot’s results for the financial year ending 30 June 2019 reflect significant growth in revenue and refinement of the
business model, value proposition and R&D technology investment strategy over the previous 12-month period. During the
financial year, the company’s revenue growth was driven predominantly by The Social Science, the STEMM digital
marketing and content services division based in Melbourne, Australia. The Social Science also led the research and
development of MediaConsent Clinical.
The company further invested in its MediaConsent platform, initiating a specialist application of the platform -
MediaConsent Clinical, during the financial year. ShareRoot expanded its technology pipeline with the design and
development to MVP stage of three new technology offerings – Opyl, Widget and Rank’d. Opyl was applied to two beta
client projects in May – June, generating early modest ‘test’ revenue and critical feedback. With more beta clients expected
to be signed early in the new year.
The new ShareRoot strategy is to initially focus on the application of MediaConsent (clinical) into the healthcare industry,
with it aiming to provide patients control of their healthcare data from a wide variety of sources, while allowing companies,
institutes, medical researchers and healthcare providers consented access to real world patient data, significantly
expanding and accessing new research opportunities whilst ensuring compliance with new digital privacy laws and
regulations.
Since the acquisition of The Social Science (TSS) in April 2018, ShareRoot has worked to integrate its UGC and
MediaConsent platform into the TSS client base, as well as using TSS expertise and client networks to identify unmet
needs and develop new digital and data technologies to expand its offering to customers and clients. TSS has delivered
and created long term value opportunities for ShareRoot in being able to identify new market offerings and in accelerating
the deployment of early stage technologies to proof of concept within the client group. The TSS client services team will
continue to scale in 2019, pursuing new business and eventually be responsible for driving revenue and service delivery
with Opyl when it is fully operational. The TSS digital marketing and client services team also have the internal skills and
capabilities to undertake the launch and full scale marketing of Opyl, Widget, Rank’d and MediaConsent (clinical) when
they are operational.
Following the strategy and technology review in February/March, and in response to limited cash resources, ShareRoot
undertook a significant scale back of the US operation, suspending all further development and expenses associated
with MediaConsent in the US. The company’s leadership team have worked to extinguish all non-critical expenditure in the
US electing to only maintain revenue generating activities associated with ongoing client services out of the US.
ShareRoot anticipates that as the group grows it will continue to increase its revenue and decrease its loss, quarter over
quarter, as it drives operational efficiencies, expands revenue generating client services, advances new digital and data
technology offerings in healthcare via TSS and optimise overall company functionality.
Board and leadership changes
The resolution to approve the proposed consolidation of capital did not pass at the Company's General Meeting on 30
January 2019. Following on from this, directors Mr Lee Rodne and Mr Peter McLennan resigned as directors on 1 February
2019, replaced by Mr Damon Rasheed and Mr Harvey Kaplan.
Mr Noah Abelson-Gertler has resigned as the CEO of the Company's wholly-owned subsidiary ShareRoot Inc, and as a
Director of ShareRoot Limited with effect from 1 March 2019. Michelle Gallaher, Managing Director of TSS, was appointed
ShareRoot CEO on 14 March 2019. On 6 May 2019, Harvey Kaplan resigned as Chairman and Dr Julian Chick was
appointed to the Board and role of Chairman.
Significant changes in the state of affairs
As discussed above, significant changes during the year were mainly around the change in leadership in the company with
a renewed focus on the digital healthcare market and developing new technologies and services.
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ShareRoot Limited
Directors' report
30 June 2019
There were no other significant changes in the state of affairs of the consolidated entity during the financial year.
Matters subsequent to the end of the financial year
Although the company finished the year with A$99k in cash, in July 2019 it completed a successful Rights Issue and
placement of $1.2 million before costs, with an oversubscription of shortfall shares leaving the company in a stronger cash
position with funds available to progress its rapidly developing digital health agenda.
In July 2019, the company announced that it plans to divest the Ludomade business as it is considered non-core to
ShareRoot's future strategic direction. ShareRoot is in discussion with a number of potential interested parties.
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect
the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future
financial years.
Likely developments and expected results of operations
Following the strategic and technology review in February/March 2019, ShareRoot recalibrated the effort of the
organisations revenue generating and R&D activities to focus on addressing the rapidly advancing global digital health
market. The outcome of the review determined that Ludomade was no longer a strategic fit with health and operationally a
significant distraction given that it had so far failed to deliver expected revenues and that it should be expediently divested,
thereby also eliminating further expenses supporting a push toward greater operational efficiency. ShareRoot is in
discussion with three interested parties and expects to reach an agreement.
The review also determined that TSS was in a position of strength as a trusted leader in delivering digital services to a high
value health and science-oriented client base to be able to take the lead in developing a new suite of digital tools, powered
by artificial intelligence, to address an emerging data-dependent market. Within six weeks of the review concluding,
ShareRoot/TSS had designed the basis of Opyl – a suite of technologies that offers deep insights into communities or
populations derived from social media and other structured and unstructured data, powered by artificial intelligence. Within
weeks five beta clients were signed to Opyl, generating modest ‘test’ revenue. ShareRoot is exploring a business model
with Opyl, that potentially may provide a white-label service offering to other agencies. Opyl continues to develop with each
client trial project and is expected to be fully operational and entering full product launch and marketing by November
2019. If Opyl can achieve the outcomes predicted by the development team, Opyl has the capability to generate significant
revenue for ShareRoot.
Concurrent to the Opyl development, ShareRoot undertook the foundational design and value proposition of two more
technologies with the potential to earn income and or create long term value for the company. Widget, an influencer
marketing tool for Instagram and Rank’d, an app designed to keep healthcare providers and STEMM academics up to date
with new papers published, new products and clinical research/ trial opportunities are both at MVP stage. Widget is being
trialled with a client and generating early revenue. Rank’d is further behind and only at the basic design and test stage.
MediaConsent, a significant historical investment for ShareRoot, was considered an appropriate and valuable asset to
maintain and grow following the strategic review. To ensure optimal alignment with the renewed healthcare strategic focus,
the platform will continue to be developed and proven initially for the healthcare market before considering expansion into
other markets. In the coming year, ShareRoot will focus on moving the new technologies in the pipeline into proof of
concept and through beta revenue generating status as quickly as possible towards full market launch, adding new
revenue streams to the revenue generated from digital marketing services. ShareRoot will aggressively pursue government
grants and R&D tax incentives it is eligible for and investigate the opportunity of linkages or other industry grant
programs as appropriate to the R&D agenda.
Environmental regulation
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State
law.
16
ShareRoot Limited
Directors' report
30 June 2019
Information on directors
Name:
Title:
Experience and expertise:
Dr Julian Chick (Appointed 6 May 2019)
Chairman and Non-Executive Director
Dr Chick is an executive with more than 25 years of experience in the biotechnology
and medical technology industry as well as five years in investment banking.
Leading public and private companies, Dr Chick's previous roles include investment
adviser, healthcare analyst for private equity investors, portfolio manager, investment
banker and venture capitalist.
Dr Chick has advanced a number of technologies from discovery through to market
as well as
transactions, company
restructuring, business development and licensing transactions.
leading numerous capital raisings, M&A
Dr Chick has a background with ShareRoot, as a shareholder and later worked as an
independent advisor on The Social Science acquisition in April 2018.
Other current directorships:
N/A
Former directorships (last 3 years): N/A
Interests in shares:
Interests in options:
4,033,333 ordinary shares
16,500,000
Name:
Title:
Experience and expertise:
Damon Rasheed (Appointed 1 February 2019)
Non-Executive Director
Mr Rasheed has more than 20 years’ experience in the tech sector, including
founding several successful start-ups. He is the founder of the Rate Detective Group,
one of Australia’s largest financial comparison websites. He is also the co-founder of
Advantage Data, a leading machine learning and AI consultancy business. His most
recent venture is Aurum Data which has built a propriety AI model to value data and
discover commercialisation strategies for data sets. He has sat on the boards of
several private technology companies both in Australia and overseas.
Mr Rasheed's former roles include CEO of iBus Media Limited, one of the world’s
largest online media companies and as an economist assessing mergers at the
Australian Competition and Consumer Commission (ACCC).
Mr Rasheed holds a Masters Degree in Commerce (Hons) and a Degree in
Economics (Hons) majoring in statistics.
Other current directorships:
N/A
Former directorships (last 3 years): N/A
Interests in shares:
Interests in options:
nil
11,000,000
17
ShareRoot Limited
Directors' report
30 June 2019
Name:
Title:
Experience and expertise:
Marat Basyrov (Appointed 1 March 2019)
Non-Executive Director
Mr Basyrov is an experienced investor and serial entrepreneur, applying creative and
technology-forward data and digital solutions across a large cross-section of
industries to solve complex challenges. He sits on the board of advisors to Forbes AIi.
He made his first million dollars at the age of 26 by investing in the stock market.
As a Chief Executive Officer of artificial intelligence software and app solutions
provider, Edway Apps Studio and Intelligent Profit Solutions, Mr Basyrov has a track
record of success through building a number of data-driven startup companies
including Adevi.io.
Mr Basyrov has a broad high-value professional network of developers, investors and
collaborators across the globe. Mr Basyrov holds a Bachelor of Business in
Accounting and Management from Central Queensland University and is a Certified
Practicing Accountant (Australia).
Other current directorships:
N/A
Former directorships (last 3 years): N/A
Interests in shares:
Interests in options:
80,200,000 ordinary shares
11,000,000
Name:
Title:
Experience and expertise:
Lee Rodne (Resigned 1 February 2019)
Non-Executive Chairman
An internationally regarded executive, Mr Rodne brought more than 20 years of
senior executive experience across all aspects of operational management and
governance. He held numerous senior roles in the technology, healthcare, mining and
renewable energy sectors in North America, the UK and Australia.
Mr Rodne has a strong track record building shareholder value by growing small
technology businesses into global companies with significant valuations.
Previously, Mr Rodne led the spin-out of Fortescue Metals Group’s technology
subsidiary Allied Medical Ltd as its CEO and Managing Director, increasing its
valuation from $800,000 to a peak of circa $250 million. Allied Medical Ltd
subsequently further enhanced shareholder value through a merger with bioMD Ltd,
leading to the creation of market-leading diversified healthcare group Admedus Ltd.
Mr Rodne was previously the Senior Executive of Sirius Minerals through a major
acquisition project that saw its market capitalisation grow to over $1 billion, and has
also led IT and technology consulting practices with Fortune 500 businesses in the
US as a Director and Vice-President of a leading US-based consulting firm.
Other current directorships:
N/A
Former directorships (last 3 years): N/A
Interests in shares:
Interests in options:
9,333,335 ordinary shares (at date of resignation)
9,000,000 (at date of resignation)
18
ShareRoot Limited
Directors' report
30 June 2019
Name:
Title:
Experience and expertise:
Noah Abelson-Gertler (Resigned 1 March 2019)
Managing Director and Chief Executive Officer
Mr Abelson-Gertler holds a Bachelor of Arts degree in Psychology from the University
of Maryland.
Mr Abelson-Gertler was the Chief Executive Officer of ShareRoot and was
responsible for executing ShareRoot’s strategic development plan.
Mr Abelson-Gertler has previous management experience in new products and has
launched a vitamin supplement company.
Mr Abelson-Gertler worked in the Facebook advertising space as the person tasked
with launching AdParlor’s (one of Facebook’s largest Ads API partners) US presence
and generating over 3.1 million USD in a single quarter. This experience enabled Mr
Abelson to develop numerous contacts within the social landscape as well as a deep
understanding of what it takes and how to build strong and lasting professional
relationships.
Other current directorships:
N/A
Former directorships (last 3 years): N/A
Interests in shares:
Interests in options:
55,406,075 ordinary shares (at date of resignation)
nil (at date of resignation)
Name:
Title:
Experience and expertise:
Peter McLennan (Resigned 1 February 2019)
Non-Executive Director
Mr McLennan has over 20 years' experience in financial services and technology in
Australia and the UK working for some of world’s leading companies in those sectors.
He is the founder of FitzRoy Capital a corporate financial advisory business. He is
also a cofounder of WG Partners LP, a life sciences sector specialist financial
advisor.
In 2010 Mr McLennan was a founding shareholder in York Potash now Sirius
Minerals which is now a FTSE250 company. Previously he was a Principal at
investment bank Piper Jaffray in London. Mr McLennan commenced his career at
IBM, eventually taking leadership roles in managing some of IBM’s largest clients in
Europe and Australia.
Other current directorships:
N/A
Former directorships (last 3 years): N/A
Interests in shares:
Interests in options:
2,000,000 ordinary shares (at date of resignation)
11,000,000 (at date of resignation)
Name:
Title:
Experience and expertise:
Harvey Kaplan (Appointed 1 February 2019, resigned 6 May 2019)
Non-Executive Director
Mr Kaplan is a qualified lawyer and holds a Bachelor of Laws from the University of
Western Australia. His past experience includes working as a corporate solicitor for
both Phillips Fix and Mallesons Stephen Jacques. Mr Kaplan spent 15 years at
Macquarie Bank as an Associate Director in the Private Wealth Division. In this role
he assisted in numerous corporate transactions involving listed companies.
Other current directorships:
Former directorships (last 3 years): N/A
Interests in shares:
Interests in options:
nil (at date of resignation)
11,000,000 (at date of resignation)
Non-Executive Director of Strategic Energy Resources (ASX: SER)
19
ShareRoot Limited
Directors' report
30 June 2019
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships of all other types of entities, unless otherwise stated.
Company secretaries
David Hwang (Appointed 22 May 2019)
Mr Hwang is an experienced corporate lawyer specialising in listings on ASX (IPOs and reverse listings), equity capital
markets, mergers & acquisitions and providing advice on corporate governance and compliance issues. Mr Hwang leads
the company secretarial practice at Automic Group and is the Chief Compliance Officer at Automic Group.
Andrew Bursill (Resigned 22 May 2019)
Mr Bursill has more than 20 years of experience as CFO of ASX listed, public and private companies in tech, biotech,
medical devices, mining and VC. He has CFO experience at all stages of company development from pre-revenue start-
ups to $100 million plus annual turnover. Mr Bursill is a founding partner of CFO Innovation – a provider of outsourced
CFO and Company Secretarial services, where he has participated in numerous successful IPOs and backdoor listings. Mr
Bursill is a member of the Chartered Accountants Australia and New Zealand.
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') held during the year ended 30 June 2019, and
the number of meetings attended by each director were:
Julian Chick
Damon Rasheed
Marat Basyrov
Lee Rodne
Noah Abelson-Gertler
Peter McLennan
Harvey Kaplan
Full Board
Attended
Held
3
3
3
3
3
3
-
3
3
3
3
3
3
-
Held: represents the number of meetings held during the time the director held office.
There were a total of 6 Board meetings held during the year ended 30 June 2019.
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
●
●
●
●
●
●
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to key management personnel
20
ShareRoot Limited
Directors' report
30 June 2019
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic
objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the
delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for
good reward governance practices:
●
●
●
●
●
Competitiveness and reasonableness
Acceptability to shareholders
Performance linkage / alignment of executive compensation
Transparency
Capital management
The company has structured an executive remuneration framework that is market competitive and complimentary to the
reward strategy of the organisation.
Alignment to shareholders’ and program participants’ interests:
Focuses on sustained growth in shareholder wealth
●
Attracts and retains high calibre executives
●
Rewards capability and experience
●
Provides a clear structure for earning rewards
●
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive
directors' fees and payments are reviewed annually by the board. The board may, from time to time, receive advice from
independent remuneration consultants to ensure non-executive directors' fees and payments are appropriate and in line
with the market.
ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general
meeting. The most recent determination was at the Annual General Meeting held on 30 October 2018, where the
shareholders approved a maximum annual aggregate remuneration of $300,000.
Voting and comments made at the Company's 2018 Annual General Meeting ('AGM')
At the 2018 AGM, more than 75% of the votes received supported the adoption of the remuneration report for the year
ended 30 June 2018. The company did not receive any specific feedback at the AGM regarding its remuneration practices.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.
The key management personnel of the consolidated entity consisted of the following directors and employees of
ShareRoot Limited:
●
●
●
●
●
●
●
●
Julian Chick - Chairman - Appointed 6 May 2019
Michelle Gallaher - Chief Executive Officer - Appointed 14 March 2019
Damon Rasheed - Non-Executive Director - Appointed 1 February 2019
Marat Basyrov - Non-Executive Director - Appointed 1 March 2019
Lee Rodne - Non-Executive Chairman - Resigned 1 February 2019
Noah Abelson-Gertler - Managing Director and Chief Executive Officer - Resigned 1 March 2019
Peter McLennan - Non-Executive Director - Resigned 1 February 2019
Harvey Kaplan - Non-Executive Director - Appointed 1 February, resigned 6 May 2019
The amount of remuneration of the directors and key management personnel is set out below:
21
ShareRoot Limited
Directors' report
30 June 2019
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based payments
Cash salary
and fees
$
Cash bonus
$
Non-
monetary
$
Super-
annuation
$
Long
service
leave
$
Equity-
settled
shares
$
Equity-
settled
option
$
Total
$
16,667
13,333
46,667
23,333
10,580
6,087
272,516
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,583
1,267
4,433
-
1,005
578
-
67,083
456,266
-
-
132,500
132,500
6,373
15,239
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,196
3,713
(12,266)
(2,935)
23,446
18,313
38,834
20,398
-
11,585
882
7,547
-
272,516
-
-
26,626
21,216
232,582
625,221
2019
Non-Executive
Directors:
Damon Rasheed*
Marat Basyrov**
Lee Rodne^
Peter McLennan^
Harvey Kaplan*
^^^
Executive
Directors:
Julian Chick***
Noah Abelson-
Gertler^^
Other Key
Management
Personnel:
Michelle
Gallaher****
* Appointed 1 February 2019
** Appointed 1 March 2019
*** Appointed 6 May 2019
**** Appointed 14 March 2019. Non-monetary benefit relates to payment of $32,500 MBA tuition fees and $100,000
forgiveness and waiver of salary advance.
^ Resigned 1 February 2019
^^ Resigned 1 March 2019. Included in this cash component is US$75,000 (A$104,814), 5 months payment in lieu of
notice termination payment
^^^ Appointed 1 February 2019, resigned 6 May 2019
22
ShareRoot Limited
Directors' report
30 June 2019
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based payments
Cash salary
and fees
$
Cash bonus
$
Non-
monetary
$
Super-
annuation
$
Long
service
leave
$
Equity-
settled
shares
$
Equity-
settled
option
$
Total
$
93,000
40,000
232,138
193,449
558,587
-
-
-
-
-
-
-
-
-
-
8,835
-
-
-
8,835
-
-
-
-
-
-
-
-
-
-
26,775
20,167
128,610
60,167
-
-
46,942
232,138
193,449
614,364
2018
Non-Executive
Directors:
Lee Rodne
Peter McLennan*
Executive
Directors:
Noah Abelson-
Gertler
Marc Angelone**
*
**
Appointed 31 July 2017
Resigned 20 April 2018
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Damon Rasheed*
Marat Basyrov**
Lee Rodne^
Peter McLennan^
Harvey Kaplan* ^^^
Executive Directors:
Julian Chick***
Noah Abelson-Gertler^^
Marc Angelone*****
Other Key Management
Personnel:
Michelle Gallaher****
Fixed remuneration
2018
2019
At risk - STI
At risk - LTI
2019
2018
2019
2018
78%
80%
100%
79%
100%
88%
100%
-
-
-
79%
66%
-
-
100%
100%
89%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22%
20%
-
21%
-
12%
-
-
11%
-
-
21%
34%
-
-
-
-
-
* Appointed 1 February 2019
** Appointed 1 March 2019
*** Appointed 6 May 2019
**** Appointed 14 March 2019
***** Resigned 20 April 2018
^ Resigned 1 February 2019
^^ Resigned 1 March 2019
^^^ Appointed 1 February 2019, resigned 6 May 2019
23
ShareRoot Limited
Directors' report
30 June 2019
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:
Term of agreement:
Name:
Title:
Agreement commenced:
Term of agreement:
Michelle Gallaher (Appointed 14 March 2019)
Chief Executive Officer
14 March 2019
(a) Remuneration: Fixed annual salary $230,000 (inclusive of director's fees) plus
9.5% employer superannuation contribution;
(b) Non-cash benefits: the Board may, at its discretion, determine that Ms Gallaher
may participate in the company’s share plan, subject to shareholder and regulatory
approval; payment of remaining tuition fees in relation to MBA programme provided
appointment is not terminated during the initial term (ie, 12 months from
commencement date); laptop computer; mobile phone and data service; forgive and
waive recovery of salary advance provided agreement not terminated during the initial
term of 12 months.
(c) Termination: the company and Ms Gallaher may terminate the Executive Services
Agreement without cause by giving the other party six months' notice.
Name:
Title:
Agreement commenced:
Term of agreement:
Noah Abelson-Gertler (Resigned 1 March 2019)
Managing Director and Chief Executive Officer
14 March 2016
(a) Remuneration: Fixed annual salary of US$180,000 (A$251,553) (inclusive of
Director’s fees);
(b) Non-cash benefits: the Board may, at its discretion, determine that Mr Abelson-
Gertler will be entitled to performance based bonus payments and participation in the
company’s share plan, subject to shareholder and regulatory approval.
(c) Termination: the company and Mr Abelson-Gertler may terminate the Director
Service Agreement without cause by giving the other party six months' notice.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the year
ended 30 June 2019.
24
ShareRoot Limited
Directors' report
30 June 2019
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key
management personnel in this financial year or future reporting years are as follows:
Name
Number of
options
granted
Grant date
Vesting date and
exercisable date
Damon Rasheed * 11,000,000 8 Feb 2019
Harvey Kaplan ** 11,000,000 8 Feb 2019
Marat Basyrov *
11,000,000 21 Mar 2019
Julian Chick *
11,000,000 13 May 2019
Three equal
tranches being 11
Feb20, 21 & 22
Three equal
tranches being 11
Feb20, 21 & 22
Three equal
tranches being 21
Mar20, 21 & 22
Three equal
tranches being 13
May20, 21 & 22
Fair value
per option
Expiry date
Exercise price at grant date
8 Feb 2024
$0.005
$0.0020
8 Feb 2024
$0.005
$0.0020
21 Mar 2024
$0.005
$0.0020
13 May 2024
$0.005
$0.0010
*
**
Approved in the shareholders meeting on 30 October 2018. The options are exercisable in 12, 24 and 36 months from
date of grant in equal proportion of 3,666,666 each.
Approved in the shareholders meeting on 30 October 2018. The options are exercisable in 12, 24 and 36 months from
date of grant in equal proportion of 3,666,666 each. These options lapsed on Mr Kaplan's resignation on 6 May 2019.
Options granted carry no dividend or voting rights.
Additional information
The earnings of the consolidated entity for the five years to 30 June 2019 are summarised below:
2019
$
2018
$
2017
$
2016
$
2015*
$
Sales revenue
Loss after income tax
927,041
(3,105,138)
390,956
(3,035,627)
169,094
(3,228,403)
56,037
(6,083,488)
-
(4,476,738)
*
Operating as Monto Minerals Limited
2019
2018
2017
2016
2015*
Share price at financial year end ($)
0.001
0.005
0.007
0.034
0.035
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
(0.18)
(0.18)
(0.33)
(0.33)
(0.81)
(0.81)
(2.74)
(2.74)
(0.58)
(0.58)
*
Operating as Monto Minerals Limited
25
ShareRoot Limited
Directors' report
30 June 2019
Additional disclosures relating to key management personnel
Shareholding
The number of ordinary shares in the company held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at Received
as part of
the start of
the year
remuneration Additions
Disposals/
other
Balance at
the end of
the year
Ordinary shares
Julian Chick (appointed 6 May 2019) *
Michelle Gallaher (appointed 14 Mar 2019) *
Damon Rasheed (appointed 1 Feb 2019) *
Marat Basyrov (appointed 1 Mar 2019) *
Lee Rodne (resigned 1 Feb 2019) **
Noah Abelson-Gertler (resigned 1 Mar 2019) **
Peter McLennan (resigned 1 Feb 2019) **
Harvey Kaplan (appointed 1 Feb 2019,
resigned 6 May 2019) **
2,420,000
-
-
80,200,000
9,333,333
55,406,075
2,000,000
-
149,359,408
-
-
-
-
-
-
-
-
-
1,613,333
-
-
-
-
-
-
-
4,033,333
-
-
-
-
- 80,200,000
-
-
-
(9,333,333)
(55,406,075)
(2,000,000)
-
1,613,333
-
(66,739,408) 84,233,333
-
*
**
the amount in "balance at the start of the year" represents balance when became a KMP
the amount in "other" represents the balance at date of resignation
Option holding
The number of options over ordinary shares in the company held during the financial year by each director and other
members of key management personnel of the consolidated entity, including their personally related parties, is set out
below:
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
Options over ordinary shares
Julian Chick (appointed 6 May 2019) *
Michelle Gallaher (appointed 14 Mar 2019) *
Damon Rasheed (appointed 1 Feb 2019) *
Marat Basyrov (appointed 1 Mar 2019) *
Lee Rodne (resigned 1 Feb 2019) ^
Noah Abelson-Gertler (resigned 1 Mar 2019) ^^
Peter McLennan (resigned 1 Feb 2019) ^^^
Harvey Kaplan (appointed 1 Feb 2019,
resigned 6 May 2019) ^^^
5,500,000 11,000,000
-
9,000,000
- 11,000,000
- 11,000,000
-
-
-
11,916,666
2,916,666
11,000,000
11,000,000
40,333,332 44,000,000
-
-
-
-
-
-
-
-
-
-
- 16,500,000
9,000,000
-
- 11,000,000
- 11,000,000
-
-
-
(11,916,666)
(2,916,666)
(11,000,000)
(11,000,000)
-
(36,833,332) 47,500,000
* the amount in "balance at the start of the year" represents balance when became a KMP
^ the amount in "other" is made up of 2,916,666 expired options and 9,000,000 balance at date of resignation
^^ the amount in "other" is made up of 2,916,666 expired options
^^^ the amount in "other" represents the balance at date of resignation
26
ShareRoot Limited
Directors' report
30 June 2019
Options over ordinary shares
Julian Chick
Michelle Gallaher
Damon Rasheed
Marat Basyrov
Harvey Kaplan
Vested
options
Unvested
options
Balance at
the end of the
year
5,500,000 11,000,000 16,500,000
9,000,000
6,000,000
3,000,000
- 11,000,000 11,000,000
- 11,000,000 11,000,000
-
-
-
-
-
-
-
-
-
8,500,000 39,000,000 47,500,000
Performance rights holding
The number of performance rights over ordinary shares in the company held during the financial year by each director and
other members of key management personnel of the consolidated entity, including their personally related parties, is set
out below:
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
Performance rights over ordinary shares
Noah Abelson-Gertler (resigned 1 Mar 2019)
45,000,000
-
-
(45,000,000)
-
* The amount in "other" refers to performance rights lapsed upon termination due to performance hurdles of revenue
milestones and share price milestones not being achieved.
This concludes the remuneration report, which has been audited.
27
ShareRoot Limited
Directors' report
30 June 2019
Shares under option and performance rights
Unissued ordinary shares of ShareRoot Limited under option at the date of this report are as follows:
Grant date
07/01/2016
05/12/2016
27/06/2017
10/11/2017
21/02/2018
21/02/2018
21/02/2018
17/04/2018
06/03/2018
04/05/2018
06/02/2017
20/03/2017
01/04/2017
24/07/2018
15/10/2018
15/10/2018
15/10/2018
15/10/2018
08/02/2019
21/03/2019
13/05/2019
Expiry date
31/12/2020
05/12/2026
27/02/2022
10/11/2022
20/02/2023
05/06/2022
13/04/2022
various
04/05/2023
04/05/2023
06/02/2027
20/03/2027
various
24/07/2023
06/03/2023
06/03/2023
18/09/2023
09/06/2023
08/02/2024
21/03/2024
13/05/2024
Exercise
price
Number
under option
$0.050 21,000,000
4,248,000
$0.012
3,000,000
$0.005
3,666,667
$0.005
3,000,000
$0.006
$0.007
8,000,000
$0.005 11,842,105
4,000,000
$0.005
9,000,000
$0.005
2,500,000
$0.005
600,000
$0.008
1,491,666
$0.025
$0.006
6,000,000
$0.001 25,000,000
2,000,000
$0.004
750,000
$0.004
300,000
$0.004
$0.004
300,000
$0.005 11,000,000
$0.005 11,000,000
$0.005 11,000,000
139,698,438
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of
the company or of any other body corporate.
Shares issued on the exercise of options
There were no ordinary shares of ShareRoot Limited issued on the exercise of options during the year ended 30 June
2019 and up to the date of this report.
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director
or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the
company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
company or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company
or any related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking
responsibility on behalf of the company for all or part of those proceedings.
Non-audit services
There were no non-audit services provided during the financial year by the auditor.
28
ShareRoot Limited
Directors' report
30 June 2019
Officers of the company who are former partners of BDO East Coast Partnership (BDO)
There are no officers of the company who are former partners of BDO East Coast Partnership (BDO).
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors' report.
Auditor
BDO East Coast Partnership (BDO) continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act
2001.
On behalf of the directors
___________________________
Damon Rasheed
Director
30 August 2019
29
[This page has intentionally been left blank for the insertion of the auditor's independence declaration]
30
ShareRoot Limited
Contents
30 June 2019
General information
The financial statements cover ShareRoot Limited as a consolidated entity consisting of ShareRoot Limited and the entities
it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is
ShareRoot Limited's functional and presentation currency.
ShareRoot Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office is:
Level 5
126 Phillip Street
SYDNEY NSW 2000
A description of the nature of the consolidated entity's operations and its principal activities are included in the directors'
report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 30 August 2019. The
directors have the power to amend and reissue the financial statements.
Readers please note:
The presentation of these financial statements reflects the accounting required as a result of ShareRoot Limited acquiring
ShareRoot Inc, which for accounting purposes, was a reverse acquisition. While ShareRoot Limited remains the parent
entity for the consolidated entity, ShareRoot Inc is the parent entity for the purposes of consolidating the financial
statements.
Amount shown in note 27 “Parent entity information” continue to reflect the financial statements of the legal parent,
ShareRoot Limited.
31
ShareRoot Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2019
Revenue from contracts with customers
Other income
Expenses
Employee benefits expense
Depreciation and amortisation expense
Impairment
Finance costs
Occupancy costs
Administration expenses
Consultancy costs
Corporate compliance and management
Share based payments
Loss before income tax expense
Income tax expense
Consolidated
Note
2019
$
2018
$
4
5
927,041
390,956
1,021,615
28,517
(1,467,826)
(26,033)
(1,862,584)
(8,747)
(39,711)
(1,043,110)
(417,008)
(55,227)
(133,548)
(1,607,636)
(34,857)
-
(946)
(42,185)
(1,092,461)
(346,420)
(96,674)
(233,921)
(3,105,138)
(3,035,627)
-
-
6,7
7
7
7
8
Loss after income tax expense for the year attributable to the owners of
ShareRoot Limited
19
(3,105,138)
(3,035,627)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the owners of
ShareRoot Limited
Basic earnings per share
Diluted earnings per share
21,547
29,143
21,547
29,143
(3,083,591)
(3,006,484)
Cents
Cents
32
32
(0.18)
(0.18)
(0.33)
(0.33)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
32
ShareRoot Limited
Statement of financial position
As at 30 June 2019
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Prepayments and other deposits
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Deferred revenue
Total current liabilities
Non-current liabilities
Deferred revenue
Total non-current liabilities
Total liabilities
Net assets/(liabilities)
Equity
Issued capital
Reserves
Accumulated losses
Total equity/(deficiency)
Consolidated
Note
2019
$
2018
$
9
10
11
12
13
14
15
16
99,140
177,999
53,015
330,154
1,546,284
185,959
129,252
1,861,495
-
-
-
-
4,918
161,658
5,653
172,229
330,154
2,033,724
480,408
203,989
48,562
732,959
514,868
-
103,179
618,047
-
-
21,560
21,560
732,959
639,607
(402,805)
1,394,117
17
18
19
14,826,597 13,673,475
921,837
(13,201,195)
1,076,931
(16,306,333)
(402,805)
1,394,117
The above statement of financial position should be read in conjunction with the accompanying notes
33
ShareRoot Limited
Statement of changes in equity
For the year ended 30 June 2019
Consolidated
Balance at 1 July 2017
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total equity
$
9,850,132
546,263
(10,165,568)
230,827
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
-
-
-
-
29,143
(3,035,627)
-
(3,035,627)
29,143
29,143
(3,035,627)
(3,006,484)
Transactions with owners in their capacity as owners:
Shares issued during the year
Costs of issue
Share option reserve on recognition of remuneration options
4,197,127
(373,784)
-
-
-
346,431
-
-
-
4,197,127
(373,784)
346,431
Balance at 30 June 2018
13,673,475
921,837
(13,201,195)
1,394,117
Consolidated
Issued
Reserves
Accumulated
capital
$
$
losses
$
Total
deficiency in
equity
$
Balance at 1 July 2018
13,673,475
921,837
(13,201,195)
1,394,117
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
-
-
-
-
21,547
(3,105,138)
-
(3,105,138)
21,547
21,547
(3,105,138)
(3,083,591)
Transactions with owners in their capacity as owners:
Shares issued during the year
Costs of issue
Share option reserve on recognition of remuneration options
1,221,772
(68,650)
-
-
-
133,547
-
-
-
1,221,772
(68,650)
133,547
Balance at 30 June 2019
14,826,597
1,076,931
(16,306,333)
(402,805)
The above statement of changes in equity should be read in conjunction with the accompanying notes
34
ShareRoot Limited
Statement of cash flows
For the year ended 30 June 2019
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Consolidated
Note
2019
$
2018
$
907,689
(3,016,124)
452,266
(3,318,552)
(2,108,435)
5,578
(2,866,286)
2,193
Net cash used in operating activities
31
(2,102,857)
(2,864,093)
Cash flows from investing activities
Payment for purchase of business, net of cash acquired
Proceeds from disposal of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue transaction costs
Repayment of director loan
Drawings from director loan
Proceeds from borrowings
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
28
17
17
14
9
9
(687,853)
-
(499,649)
3,954
(687,853)
(495,695)
1,221,772
(68,650)
-
-
200,000
4,197,127
(260,416)
461,364
(16,177)
-
1,353,122
4,381,898
(1,437,588)
1,546,284
(9,556)
1,022,110
493,804
30,370
99,140
1,546,284
The above statement of cash flows should be read in conjunction with the accompanying notes
35
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial
performance or position of the consolidated entity.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
AASB 9 Financial Instruments
The consolidated entity has adopted AASB 9 Financial Instruments from 1 July 2018, which replaced AASB 139 Financial
Instruments: Recognition and Measurement. As a result, the consolidated entity has changed its accounting policy for the
recognition and measurement of receivables. The adoption of AASB 9 has not had a material impact on the consolidated
entity’s financial statements.
AASB 15 Revenue from Contracts with Customers
The consolidated entity has adopted AASB 15 Revenue from Contracts with Customers from 1 July 2018, which replaced
AASB 118 Revenue. AASB 15 establishes a principles-based approach for revenue recognition whereby revenue is
recognised when performance obligations are satisfied. The standard applies a five-step approach to the timing of revenue
recognition and is applicable to all contracts with customers, expect those in the scope of other standards. As a result, the
consolidated entity has changed its accounting policy for revenue recognition. The adoption of AASB 15 has not had a
material impact on the consolidated entity’s financial statements.
Accounting Standards issued but not yet adopted
AASB 16 Leases
The consolidated entity will adopt AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for lessees
eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of low-value
assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of financial position. Straight-
line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in
operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the earlier
periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease
expenses under AASB 117. For classification within the statement of cash flows, the interest portion is disclosed in
operating activities and the principal portion of the lease payments are separately disclosed in financing activities. For
lessor accounting, the standard does not substantially change how a lessor accounts for leases. Management has
completed an assessment by reviewing all leases. Based on the work performed to date the findings indicate that the
application of AASB 16 will not have a material impact on the consolidated entity’s financial statements.
Comparative figures
Certain comparative figures have been reclassified to reflect a more meaningful comparison.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as
appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board ('IASB').
The financial statements have been approved and authorised for issue on 30 August 2019 by the Board of Directors.
Historical cost convention
The financial statements have been prepared under the historical cost convention.
36
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 1. Significant accounting policies (continued)
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed in note 2.
Going Concern
The consolidated entity has incurred net losses after tax of $3,083,591 (2018: $3,006,484) and net cash outflows from
operations of $2,102,857 (2018: $2,864,093) for the year ended 30 June 2019, and had working capital deficit of $150,254
at 30 June 2019 (2018: surplus $1,346,627). Cash balance as at 30 June 2019 was $99,140 while borrowings amounted to
$203,989 (as at 30 June 2018: $1,546,284 and nil respectively).
These conditions give rise to a material uncertainty that casts significant doubt upon the consolidated entity’s ability to
continue as a going concern.
The financial report has been prepared on the going concern basis, which assumes continuity of normal business activities
and the realisation of assets and the settlement of liabilities in the ordinary course of business.
ShareRoot completed a rights issue and share placement subsequent to the year-end in July 2019 where $1.2 million was
raised before capital raising costs. The money raised is to be used predominantly to scale the existing revenue-generating
digital client services capabilities and capacity; complete and launch new technology projects and roll out marketing
campaigns and continue the development of MediaConsent Clinical.
Following the strategic and operational review (completed in April 2019), the Board and Management decided to focus on
the digital health market and introduce new data and digital technologies to expand the service offerings. At the same time,
it was also decided to reduce spending in other parts of the business, most notably with the closure of US R&D and
corporate activities and the divestiture of recent acquisition, Ludomade.
The directors have prepared a revised cash flow forecast which takes into account
- commercialisation of its new AI-powered digital insights platform (Opyl) which has already shown potential as well as
other ShareRoot technologies;
- further reduction in expenditure for non-core parts of the business and rationalisation and streamlining of the company
structure;
- the change in operational focus and significant reduction in costs.
This forecast indicates that the consolidated entity can continue as a going concern for at least the next 12 months.
Furthermore, the directors are reviewing the Group’s ability to apply for R&D grants and other subsidies associated with
moving the bulk of R&D and development activity onshore, which have not yet been factored into the cash flow forecast but
will provide cash inflows to reduce the impact of R&D expenditure should they be successfully granted.
Should the commercialisation of new products and platforms take longer than forecast the directors may be required to
raise further capital through either equity or debt. The company has a history of being able to raise capital and debt when
required and the directors are confident that should the need arise they will be able to raise sufficient funds to meet their
liabilities as they fall due.
Should the consolidated entity be unable to implement the above strategies or source alternative funding, it may be
necessary to realise some or all assets and discharge liabilities at amounts different to those stated in the financial
statements No adjustments have been made to the recoverability and classification of asset and the amount and
classification of liabilities that might be necessary should the consolidated entity be unable to continue as a going concern
and meet its debts as and when they fall due.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity
only. Supplementary information about the parent entity is disclosed in note 27.
The parent entity disclosure relates to the legal parent entity, ShareRoot Limited.
37
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 1. Significant accounting policies (continued)
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of ShareRoot Limited
('company' or 'parent entity') as at 30 June 2019 and the results of all subsidiaries for the year then ended. ShareRoot
Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity
when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control
ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity
attributable to the parent.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The
consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained
together with any gain or loss in profit or loss.
ShareRoot Inc
The consolidated entity results are based on reverse acquisition principals which results in the Legal Parent (in this case,
ShareRoot Limited) being accounted for as the subsidiary, while the Legal Acquiree (in this case, ShareRoot Inc), being
accounted for as the parent.
The excess of fair value of the shares owned by the former ShareRoot Limited shareholders and the fair value of the
identifiable net assets of ShareRoot Limited immediately prior to the completion of the merger is to be accounted for under
“AASB 2: Share-based Payment” (AASB 2) as an expense and was expensed to the statement of profit or loss and other
comprehensive income. The net assets of ShareRoot Limited were recorded at fair value at the completion of the
acquisition.
Foreign currency translation
The financial statements are presented in Australian dollars, which is ShareRoot Limited's functional and presentation
currency. For ShareRoot Inc (accounting parent located in United States of America) and Ludomade Inc (a subsidiary
located in United States of America), its functional currency is denominated in US Dollars.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average
exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange
differences are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
38
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 1. Significant accounting policies (continued)
Revenue recognition
Revenue from contracts with customers
Revenue is recognised upon satisfaction of the performance obligation. Performance obligations differ dependent on the
nature of the contracts. For each contract with a customer, the consolidated entity: identifies the contract with a customer;
identifies the performance obligations in the contract; determines the transaction price which takes into account estimates
of variable consideration and the time value of money; allocates the transaction price to the separate performance
obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and
recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the
customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts,
rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates
are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable
consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly
probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement
constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts
received that are subject to the constraining principle are recognised as a refund liability.
Revenue from rendering of services
The consolidated entity primarily generates revenue from sale of its annual subscription services, which enable its
customer to access an online platform that allows them to search and source user generated content. The consolidated
entity also sells advertising and contesting services that are sold in a one-off basis rather than a subscription model.
The consolidated entity recognises subscription revenue over the subscription period (generally 1 year) on a straight-line
basis. For contracts where the consolidated entity is able to provide advertising services for a specific contract period,
advertising revenue is recognised ratably over the advertising term. Contest revenue is recognised when the contest has
concluded.
In relation to the revenue streams of the consolidated entity, the main revenue streams are recognised as follows:
SaaS revenue - This refers to SaaS platform that customers pay for in order to be complaint in how they market to
consumers, gather data and respect consumer privacy. Revenue from the sale of annual subscription services, which
enable its customer to access an online platform that allows then to search and source user generated content, is
recognised over the subscription period (generally 1 year) on a straight line basis. The performance obligation is satisfied
over time.
Retainer revenue - For retainer contracts, revenue from its social media marketing agency arm is recognised when the
performance obligations are satisfied.
Project revenue - Project revenue is from ad-hoc projects. For project contracts, revenue is recognised when the
performance obligations are satisfied.
Web revenue - Relates to Ludomade projects. For these contracts, revenue is recognised when the performance
obligations are satisfied.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset
to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Deferred revenue
Deferred revenue includes billings or payments received in advance of revenue recognition and is recognised as the
revenue recognition criteria are met. Deferred revenue primarily consists of unearned portion of subscription fees.
39
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 1. Significant accounting policies (continued)
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to
temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when
the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted,
except for:
●
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting
nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and
the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the
foreseeable future.
●
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised
within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged
or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating cycle;
it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are recognised when the control of ownership of the underlying sales transactions have passed to the
customer in the ordinary course of business. Trade receivables are recognised initially at the amount of consideration that
is unconditional unless they contain significant financing components, when they are recognised at fair value.
The consolidated entity holds the trade receivables with the objective to collect the contractual cash flows and therefore
measures them subsequently at amortised cost using the effective interest method.
Other receivables arise principally from financial assets where the objective is to hold these assets in order to collect
contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially
recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are
subsequently carried at amortised cost using the effective interest rate method, less allowance for impairment.
The consolidated entity has adopted a simplified approach for trade receivables with an amount equal to the full-expected
credit losses to be recognised.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
40
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 1. Significant accounting policies (continued)
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the
risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively
retains substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower,
the present value of minimum lease payments. Lease payments are allocated between the principal component of the
lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's
useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the end
of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line
basis over the term of the lease.
Goodwill
Goodwill arises on the acquisition of a business. Goodwill is not amortised. Instead, goodwill is tested annually for
impairment, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at
cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not
subsequently reversed.
Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the consolidated entity prior to year end
that are unpaid and arise when the consolidated entity becomes obliged to make future payments in respect of the
purchase of those goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.
They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest
method.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the
loans or borrowings are classified as non-current.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
Employee benefits
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees.
41
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 1. Significant accounting policies (continued)
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for
the rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined
using the Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact
of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield
and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether
the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of any
other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already
recognised in previous periods.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made.
An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is
treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied
during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the
award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and
new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity
instruments or other assets are acquired.
42
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 1. Significant accounting policies (continued)
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments
issued or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest
in the acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value
or at the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to
profit or loss.
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic conditions, the consolidated
entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity
interest in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying
amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within
equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment
in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair
value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a
gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and
measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred
and the acquirer's previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the
provisional amounts recognised and also recognises additional assets or liabilities during the measurement period, based
on new information obtained about the facts and circumstances that existed at the acquisition-date. The measurement
period ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the
information possible to determine fair value.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of ShareRoot Limited, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part
of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
43
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 1. Significant accounting policies (continued)
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates
and assumptions on historical experience and on other various factors, including expectations of future events,
management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will
seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next
financial year are discussed below.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of
the equity instruments at the date at which they are granted. The fair value is determined by using the Black-Scholes
model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates
and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets
and liabilities within the next annual reporting period but may impact profit or loss and equity.
Allowance for expected credit losses
The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the
12-month expected credit loss unless the credit risk on a financial assets has increased significantly since initial recognition
in which case the lifetime ECL method is adopted.
A simplified approach is used for trade receivables. These assumptions include recent sales experience and historical
collection rates.
Impairment of non-financial assets
The consolidated entity assesses impairment of non-financial assets at each reporting date by evaluating conditions
specific to the consolidated entity and to the particular asset that may lead to impairment. If an impairment trigger exists,
the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use
calculations, which incorporate a number of key estimates and assumptions.
Income tax
The consolidated entity is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required
in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary
course of business for which the ultimate tax determination is uncertain. The consolidated entity recognises liabilities for
anticipated tax audit issues based on the consolidated entity's current understanding of the tax law. Where the final tax
outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax
provisions in the period in which such determination is made.
Impairment of intangible assets
At each reporting date, the consolidated entity reviews the carrying amount of its goodwill to determine whether there is
any indication of impairment. If any such indication exists, then the recoverable amount of the goodwill is estimated.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows (CGUs)
from continuing use that are largely independent of the cash inflows of other assets of CGUs.
The recoverable amounts of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in
use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset of CGU.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment
losses are recognised in profit or loss.
Note 3. Operating segments
Identification of reportable operating segments
Performances are monitored per individual entity basis.
44
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 3. Operating segments (continued)
The Chief Operating Decision Maker (CODM) reviews cash flows, revenue, EBITDA and profit/loss before tax of each
business making up the consolidated group. The accounting policies adopted for internal reporting to the CODM are
consistent with those adopted in the financial statements.
The information is reported to the CODM on a monthly basis.
Types of products and services
The principal products and services of each of these operating segments are as follows:
The Social Science
ShareRoot's social media marketing agency providing client services and account
management layer behind the group’s technology properties. The main revenue streams
are retainer revenue and project revenue.
UGC Discovery platform
ShareRoot’s Legal Rights Management protecting against unauthorised use of people's
social and digital content. This platform forms part of SaaS revenue in ShareRoot Inc.
MediaConsent platform
ShareRoot's first platform to give consumers/citizens control of their data and privacy
through a preference and consent management dashboard. This platform forms part of
SaaS revenue in ShareRoot Inc.
Ludomade Inc.
Provides consumer data and privacy compliance. The main revenue stream is web
revenue.
Major customers
The consolidated entity does not have any single customer which contributes more than 10% of the consolidated entity's
revenue.
Operating segment information
2019
Revenue
Sales to external customers
Total revenue
EBITDA
Depreciation and amortisation
Impairment of assets
Interest revenue
Finance costs
Fair value adjustments -
deferred consideration
Share based payments
Profit/(loss) before income
tax expense
Income tax expense
Loss after income tax
expense
The Social
ShareRoot
ShareRoot
ShareRoot
Science
$
Inc
$
Ludomade
$
Limited
$
Ops
$
Total
$
575,898
575,898
239,092
239,092
112,813
112,813
-
-
(196,064)
-
-
4,713
(4,758)
(1,249,365)
(5,695)
(1,700,961)
-
-
58,769
(20,338)
-
-
-
(708,419)
-
(161,623)
865
(3,989)
(762)
(762)
(762)
-
-
-
-
927,041
927,041
(2,095,841)
(26,033)
(1,862,584)
5,578
(8,747)
-
-
1,016,037
-
-
-
-
(133,548)
-
-
1,016,037
(133,548)
(196,109)
(1,939,984)
38,431
(1,006,714)
(762)
(3,105,138)
-
(3,105,138)
45
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 3. Operating segments (continued)
2018
Revenue
Sales to external customers
Total revenue
EBITDA
Depreciation and amortisation
Interest revenue
Finance costs
Share based payments
Loss before income tax expense
Income tax expense
Loss after income tax expense
Geographical information
The Social
ShareRoot
ShareRoot
ShareRoot
Science
$
Inc
$
Limited
$
Ops
$
Total
$
134,372
134,372
256,584
256,584
-
-
-
-
390,956
390,956
(37,397)
-
-
(946)
-
(38,343)
(2,003,268)
(34,857)
-
-
-
(2,038,125)
(718,035)
-
2,193
-
(233,921)
(949,763)
(9,396)
-
-
-
-
(9,396)
(2,768,096)
(34,857)
2,193
(946)
(233,921)
(3,035,627)
-
(3,035,627)
Sales to external
customers
2019
$
2018
$
575,136
351,905
134,372
256,584
927,041
390,956
Consolidated
2019
$
2018
$
927,041
390,956
Consolidated
2019
$
2018
$
235,109
464,607
106,298
112,813
8,214
256,584
61,548
44,129
-
28,695
927,041
390,956
Australia
USA
Note 4. Revenue from contracts with customers
Sales from rendering of services
Details:
SaaS revenue
Retainer revenue
Project revenue
Web
Other
Sales from rendering of services
46
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 5. Other income
Net gain on disposal of property, plant and equipment
Interest income
Miscellaneous other income
Fair value adjustment - deferred consideration relating to Ludomade Inc *
Other income
Consolidated
2019
$
2018
$
-
5,578
-
1,016,037
3,719
2,193
22,605
-
1,021,615
28,517
* On 15 November 2018, the company completed the acquisition of 100% of the ordinary shares of Ludomade, Inc.
(Ludomade) for upfront consideration of US$500,000 (A$687,853) plus future contingent consideration of up to
US$1,000,000 (A$1,375,706) depending on the revenue and gross margin performance milestones (see note 28 Business
combinations).
Based on the revenue and profit in Ludomade since acquisition, management consider there to be a remote likelihood of
future payment of the deferred consideration recognised on the acquisition of Ludomade.
Accordingly, a fair value adjustment has been recognised to adjust the deferred consideration liability down to nil.
Note 6. Impairment
Details
Impairment of TSS goodwill
Impairment of Ludomade goodwill
Total impairment
Impairment testing of goodwill on acquisition
Consolidated
2019
$
2018
$
161,623
1,700,961
1,862,584
-
-
-
The impairment testing of goodwill involves the use of accounting estimates and assumptions. The recoverable amount of
the cash generating unit is determined on the basis of value in use calculations.
The value in use is calculated using a discounted cash flow methodology covering a four-year period with an appropriate
terminal value before the end of year four for the cash generating unit.
The value generated from the cash flow projections to arrive at a recoverable value for goodwill is then compared with the
carrying value of goodwill.
Assumptions used
The following describes the key assumptions on which management has based its cash flow projections to undertake
impairment testing of goodwill.
- Cashflow forecasts: Cash flow forecasts are based on four-year valuation forecasts for growth and profitability.
- Terminal value: Terminal value is calculated using a perpetuity growth formula based on the cash flow forecast for year
four. Terminal growth rate is based on past performance and management's conservative expectations for future
performance. The terminal growth rate assumption is 0%.
- Discount rate: Discount rate used reflects a beta and equity risk premium appropriate to the consolidated entity with risk
adjustments where applicable. The pre-tax discount rate used for cash generating unit is 15%.
47
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 6. Impairment (continued)
The Social Science
On 9 April 2018, the company completed the acquisition of 100% of the ordinary shares of The Social Science Pty Ltd
(TSS).
The goodwill recognised in relation to the acquisition of TSS in the 30 June 2018 full year accounts was attributable to the
skills and technical talent of the employees of the acquisition and the synergies expected to be achieved from integrating
the business into the consolidated entity's existing operations.
Based on impairment testing of goodwill related to TSS as at 30 June 2019, the value generated from the cash flow
projections to arrive at a recoverable value for goodwill indicated that the carrying value of goodwill relating to TSS should
be impaired to nil.
TSS' forecast cashflows do not support the initial goodwill recognised at acquisition.
Ludomade
On 15 November 2018, the company completed the acquisition of 100% of the ordinary shares of Ludomade, Inc.
(Ludomade).
Based on impairment testing of goodwill related to Ludomade as at 30 June 2019, the value generated from the cash flow
projections to arrive at a recoverable value for goodwill indicated that the carrying value of goodwill relating to Ludomade
should be impaired to nil.
Since Ludomade's acquisition, it has failed to generate the revenues forecast at acquisition.
Note 7. Expenses
Consolidated
2019
$
2018
$
1,862,584
-
133,548
233,921
8,747
946
39,711
42,185
8,328
16,911
Loss before income tax includes the following specific expenses:
Impairment
Goodwill
Share based payments
Options issued to employees, directors and other parties
Finance costs
Interest and finance charges paid/payable
Rental expense relating to operating leases
Minimum lease payments
Superannuation expense
Defined contribution superannuation expense
48
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 8. Income tax expense
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense
Tax at the statutory tax rate of 27.5%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Impairment of goodwill
Share-based payments
Fair value adjustment - deferred consideration relating to Ludomade Inc
Current year tax losses not recognised
Income tax expense
Note 9. Current assets - Cash and cash equivalents
Cash at bank
Consolidated
2019
$
2018
$
(3,105,138)
(3,035,627)
(853,913)
(834,797)
512,210
36,725
(279,410)
-
64,328
-
(584,388)
584,388
(770,469)
770,469
-
-
Consolidated
2019
$
2018
$
99,140
1,546,284
49
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 10. Current assets - Trade and other receivables
Trade receivables
Less: Allowance for expected credit losses
Other receivables
Consolidated
2019
$
2018
$
145,866
(12,472)
133,394
144,554
-
144,554
44,605
41,405
177,999
185,959
Allowance for expected credit losses
The consolidated entity has recognised a loss of $12,472 (2018: $nil) in profit or loss in respect of the expected credit
losses for the year ended 30 June 2019.
Management believes that the amounts that are past due by more than 30 days are still collectable in full, based on
historical payment behaviour and extensive analysis of customer credit risk, including underlying customer's credit scores if
they are available. The ageing of the consolidated entity's trade receivables that were not impaired was as follows:
2019
$
2018
$
44,972
6,721
28,178
53,523
117,475
12,351
660
14,068
133,394
144,554
Consolidated
2019
$
2018
$
29,309
23,706
112,394
16,858
53,015
129,252
Trade receivables
Neither past due not impaired
Past due 1 - 30 days
Past due 31 - 90 days
Past due 90+ days
Total
Note 11. Current assets - Prepayments and other deposits
Prepayments
Deposits
50
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 12. Non-current assets - Intangibles
Goodwill - at cost (see note 28 Business combinations)
Intellectual property - at cost
Less: Accumulated amortisation
Consolidated
2019
$
2018
$
-
161,623
97,873
(97,873)
-
92,941
(92,906)
35
-
161,658
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2017
Additions through business combinations (note 28)
Exchange differences
Amortisation expense
Balance at 30 June 2018
Additions through business combinations (note 28)
Impairment of TSS goodwill (note 6)
Impairment of Ludomade goodwill (note 6)
Amortisation expense
Balance at 30 June 2019
Impairment of goodwill is discussed in note 6.
Note 13. Current liabilities - Trade and other payables
Trade payables
Other payables and accruals
Goodwill
Intellectual
$
Property
$
Total
$
-
161,623
-
-
25,200
-
3,366
(28,531)
25,200
161,623
3,366
(28,531)
161,623
1,700,961
(161,623)
(1,700,961)
-
-
35
-
-
-
(35)
-
161,658
1,700,961
(161,623)
(1,700,961)
(35)
-
Consolidated
2019
$
2018
$
185,094
295,314
50,544
464,324
480,408
514,868
51
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 14. Current liabilities - Borrowings
Shareholder loan
Consolidated
2019
$
2018
$
203,989
-
In April 2019, A$200,000 secured loan was advanced by major shareholder Antanas Guoga ("Tony G") to the company.
The loan is fully drawn and the interest on the loan is 8% pa. The amount owing at balance date including interest is
reflected above. Maturity of the loan is 30 March 2020 and it is expected that the amount will be repaid on or before that
date.
Note 15. Current liabilities - Deferred revenue
Deferred revenue
Consolidated
2019
$
2018
$
48,562
103,179
Deferred revenue expected to be realised more than 12 months after the reporting period are presented under non-current
liabilities.
Note 16. Non-current liabilities - Deferred revenue
Deferred revenue
Consolidated
2019
$
2018
$
-
21,560
Deferred revenue expected to be realised in 12 months or less after the reporting period are presented under current
liabilities.
Note 17. Equity - Issued capital
Ordinary shares - fully paid
1,569,454,374 1,231,699,788 14,826,597 13,673,475
Consolidated
2019
Shares
2018
Shares
2019
$
2018
$
52
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 17. Equity - Issued capital (continued)
Movements in ordinary share capital
Details
Date
Shares
$
Balance
Issue of shares - placement
Issue of shares - placement
Shares issued pursuant to Rights Issue
Rights Issue Shortfall
Issue of shares - placement
Share issue costs
Balance
Issue of shares - placement
Issue of shares - placement
Issue of shares - placement
Share issue costs
Balance
Movements in options
Details
Balance
Options lapsed during the year
Issue of options to broker
Issue of options to director
Issue of options to employees
Issue of options - placement
Balance
Options lapsed during the year
Issue of options to director
Issue of options to employees
Issue of options - placement
1 July 2017
11 July 2017
4 September 2017
12 January 2018
22 January 2018
22 January 2018
30 June 2018
24 July 2018
29 November 2018
10 December 2018
445,554,422
178,444,002
43,978,020
143,723,344
257,063,712
162,936,288
-
9,850,132
1,070,664
307,846
718,617
1,285,319
814,681
(373,784)
1,231,699,788 13,673,475
521,272
104,254,587
568,500
189,499,999
132,000
44,000,000
(68,650)
-
30 June 2019
1,569,454,374 14,826,597
Date
1 July 2017
30 June 2018
107,271,150
(73,023,150)
22,000,000
11,000,000
46,433,771
89,222,001
202,903,772
(135,555,334)
44,000,000
3,350,000
25,000,000
Balance
30 June 2019
139,698,438
Movements in performance rights
Details
Balance
Lapse of performance rights
Balance
Lapse of performance rights
Balance
Date
1 July 2017
30 June 2018
120,000,000
(30,000,000)
90,000,000
(90,000,000)
30 June 2019
-
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the
company does not have a limited amount of authorised capital.
53
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 17. Equity - Issued capital (continued)
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so
that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure
to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as
value adding relative to the current company's share price at the time of the investment. The consolidated entity is not
actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in
order to maximise synergies.
Note 18. Equity - Reserves
Foreign currency reserve
Options reserve
Consolidated
2019
$
2018
$
(372,018)
1,448,949
(393,565)
1,315,402
1,076,931
921,837
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign
operations.
Options reserve
The reserve is used to recognise the value of equity benefits provided to employees, directors and other parties as part of
their remuneration and compensation for services.
54
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 18. Equity - Reserves (continued)
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 July 2017
Foreign currency translation
Options issued during the year
Balance at 30 June 2018
Foreign currency translation
Options issued during the year
Balance at 30 June 2019
Note 19. Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax expense for the year
Accumulated losses at the end of the financial year
Note 20. Equity - Dividends
Foreign
exchange
reserve
$
Option
reserve
$
(422,708)
29,143
-
968,971
-
346,431
(393,565)
21,547
-
1,315,402
-
133,547
Total
$
546,263
29,143
346,431
921,837
21,547
133,547
(372,018)
1,448,949
1,076,931
Consolidated
2019
$
2018
$
(13,201,195)
(3,105,138)
(10,165,568)
(3,035,627)
(16,306,333)
(13,201,195)
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 21. Financial instruments
Financial risk management objectives
The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price
risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses
on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of
the consolidated entity. The consolidated entity uses different methods to measure different types of risk to which it is
exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks,
ageing analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors
('the Board'). These policies include identification and analysis of the risk exposure of the consolidated entity and
appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the
consolidated entity's operating units. Finance reports to the Board on a monthly basis.
Market risk
Foreign currency risk
The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign
currency risk through foreign exchange rate fluctuations. Foreign exchange risk arises from future commercial transactions
and recognised financial assets and financial liabilities denominated in a currency that is not the entity's functional
currency. As each of the individual entity within the group primarily transact in their own respective functional currency,
foreign currency risk is deemed to be minimal.
55
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 21. Financial instruments (continued)
Price risk
The consolidated entity is not exposed to any significant price risk.
Interest rate risk
Interest rate risk is deemed to be minimal as the consolidated entity exposure on interest risk mainly on its cash at bank.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
consolidated entity. The consolidated entity has a strict code of credit, including obtaining agency credit information,
confirming references and setting appropriate credit limits. The consolidated entity obtains guarantees where appropriate
to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the
carrying amount, net of any provisions for expected credit losses of those assets, as disclosed in the statement of financial
position and notes to the financial statements. The consolidated entity does not hold any collateral.
The consolidated entity deemed its credit risk to be minimal as its financial assets are mainly cash held at financial
institutions.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than 1 year.
Liquidity risk
The consolidated entity manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual
and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Remaining contractual maturities
The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which
the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as
remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of
financial position.
2019
Non-derivatives
Non-interest bearing
Trade payables
Other payables and accruals
Interest-bearing - fixed rate
Other loans
Total non-derivatives
2018
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
-
185,094
295,314
8.00%
203,989
684,397
-
-
-
-
-
-
-
-
-
-
-
-
185,094
295,314
203,989
684,397
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
-
50,544
464,324
514,868
-
-
-
-
-
-
-
-
-
50,544
464,324
514,868
56
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 21. Financial instruments (continued)
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 22. Key management personnel disclosures
Directors
The following persons were directors of ShareRoot Limited during the financial year:
Julian Chick
Damon Rasheed
Marat Basyrov
Harvey Kaplan
Lee Rodne
Peter McLennan
Noah Abelson-Gertler
Appointed 6 May 2019
Appointed 1 February 2019
Appointed 1 March 2019
Appointed 1 February 2019, resigned 6 May 2019
Resigned 1 February 2019
Resigned 1 February 2019
Resigned 1 March 2019
Other key management personnel
The following person also had the authority and responsibility for planning, directing and controlling the major activities of
the consolidated entity, directly or indirectly, during the financial year:
Michelle Gallaher
Appointed 14 March 2019
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated
entity is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Note 23. Remuneration of auditors
Consolidated
2019
$
2018
$
588,766
15,239
21,216
558,587
8,835
46,942
625,221
614,364
During the financial year the following fees were paid or payable for services provided by BDO East Coast Partnership
(BDO), the auditor of the company:
Audit services - BDO East Coast Partnership (BDO)
Audit or review of the financial statements
Consolidated
2019
$
2018
$
72,000
62,500
57
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 24. Contingent liabilities
The Social Science
On 9 April 2018, the company completed the acquisition of 100% of the ordinary shares of The Social Science Pty Ltd
(TSS) for $500,000 plus future contingent consideration of up to $333,333 depending on revenue performance milestones
as outlined below.
As part of the Purchase Agreement, the vendors of The Social Science are entitled to receive performance shares in the
company (Shares) equal to the Tranche 2 Consideration Securities ($166,667 worth of Shares calculated at 30-day VWAP
as at 30 June 2019) and Tranche 3 Consideration Securities ($166,667 worth of Shares calculated at 30-day VWAP as at
30 June 2020).
The revenue performance milestones for the contingent consideration are:
- Tranche 2 - during the 12 month period from 1 July 2018 to 30 June 2019, minimum of $900,000 revenue
- Tranche 3 - during the 12 month period from 1 July 2019 to 30 June 2020, minimum of $1,200,000 revenue
At acquisition date management consider these to be stretch targets and as such considered remote in the likelihood of
settlement and as such are considered a contingent liability.
Ludomade
On 15 November 2018, the company completed the acquisition of 100% of the issued capital of Ludomade Inc. (a
Delaware corporation) for US$500,000 (A$687,853), refer note 28 Business combinations, plus future consideration of up
to an additional US$1,000,000 (A$1,375,706) to be paid as follows:
- 25% of revenues earned over the 39 whole months immediately following acquisition, up to a total of US$500,000
(A$687,853) ; plus
- 25% of profits earned over the 39 whole months immediately following acquisition, up to a total of US$500,000
(A$687,853)
At balance sheet date management considered these to be achievable targets based on the forecast revenues provided at
that time. These were initially taken up as deferred consideration as a balance sheet liability. As at 30 June 2019, the
forecast revenue and profit are considered to be stretch targets and as such considered remote in the likelihood of
settlement. The deferred consideration has been derecognised as at 30 June 2019.
Given the uncertainty of the timing and amounts of the future purchase consideration, these are now recognised as a
contingent liability.
Shareholder loan
On 1 April 2019, Mr Antanas Guoga ("Tony G") advanced a loan $200,000 loan to the company with maturity 30 March
2020. The loan may be convertible to fully paid ordinary shares in the capital of the company as the discretion of the
company. The conversion to fully paid ordinary shares may be in part or in full, with the balance being paid in cash.
Note 25. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
Consolidated
2019
$
2018
$
49,500
-
58
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 26. Related party transactions
Parent entity
ShareRoot Limited is the legal parent entity.
For the purposes of consolidating the financial statements, ShareRoot Inc is deemed to be the accounting parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 29.
Key management personnel
Disclosures relating to key management personnel are set out in note 22 and the remuneration report included in the
directors' report.
Transactions with related parties
The following transactions occurred with related parties:
Consolidated
2019
$
2018
$
Payment for goods and services:
Payment to Franks & Associates Pty Limited, associated with Andrew Bursill, for accounting
and company secretarial services. Andrew Bursill was a director in ShareRoot Limited,
resigning 31 July 2017
Payment to Aretex Pty Limited, associated with Andrew Bursill, for bookkeeping services.
Andrew Bursill was a director in ShareRoot Limited, resigning 31 July 2017
-
-
93,913
19,327
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
Michelle Gallaher has drawings from the company corporate credit card which are to be repaid to the company. The
balance outstanding as at 30 June 2019 is A$15,823 (2018: A$16,177).
In April 2019, A$200,000 secured loan was advanced by major shareholder Antanas Guoga ("Tony G") to the company.
The loan is fully drawn and the interest on the loan is 8% pa. The amount owing at balance date including interest is
A$203,989. Maturity of the loan is 30 March 2020 and it is expected that the amount will be repaid on or before that date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 27. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
59
Parent
2019
$
2018
$
(803,634)
(1,006,294)
(803,634)
(1,006,294)
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 27. Parent entity information (continued)
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Options reserve
Accumulated losses
Total equity/(deficiency)
Parent
2019
$
2018
$
10,879
877,221
10,879
877,221
413,813
237,389
413,813
237,389
16,653,323 16,991,196
1,514,347
(17,865,711)
1,613,088
(18,669,345)
(402,934)
639,832
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2019 and 30 June 2018.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2019 and 30 June 2018.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2019 and 30 June 2018.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1,
except for the following:
●
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
Note 28. Business combinations
On 15 November 2018, the company completed the acquisition of 100% of the ordinary shares of Ludomade, Inc.
(Ludomade) for upfront consideration of US$500,000 (A$687,853) plus future contingent consideration of up to
US$1,000,000 (A$1,375,706) depending on the revenue and gross margin performance milestones as outlined below.
As part of the Stock Purchase Agreement, the vendors of Ludomade are entitled to receive up to an additional
US$1,000,000 (A$1,375,706) to be paid as follows:
(i) Twenty five percent (25%) of revenues earned over the thirty-nine (39) whole months immediately following acquisition
date. Revenues shall be calculated and paid on a monthly basis, up to a total of US$500,000 (A$687,853); plus
(ii) Twenty five percent (25%) of profits earned over the thirty-nine (39) whole months immediately following acquisition
date. Profits shall be calculated and paid on a quarterly basis, up to a total of US$500,000 (A$687,853).
The acquired business contributed revenue of A$112,813 and income after tax of A$38,431 to the consolidated entity for
the period from 15 November 2018 to 30 June 2019. If the acquisition occurred on 1 July 2018, the full year contributions
would have been revenues of A$180,600 and income after tax of A$61,523.
60
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 28. Business combinations (continued)
The initial accounting for the business combination was provisional due to the uncertainty around the fair value of assets
and liabilities at acquisition date. This was reassessed at year end 30 June 2019.
Assumptions used
The following describes the key assumptions on which management has based its cash flow projections to undertake
impairment testing of goodwill.
- Cashflow forecasts: Cash flow forecasts are based on four-year valuation forecasts for growth and profitability.
- Terminal value: Terminal value is calculated using a perpetuity growth formula based on the cash flow forecast for year
four. Terminal growth rate is based on past performance and management's conservative expectations for future
performance. The terminal growth rate assumption is 0%.
- Discount rate: Discount rate used reflects a beta and equity risk premium appropriate to the consolidated entity with risk
adjustments where applicable. The pre-tax discount rate used for cash generating unit is 15%.
Fair value adjustment of deferred consideration
Based on the revenue and profit in Ludomade since acquisition, management consider there to be a remote likelihood of
future payment of the deferred consideration.
Accordingly, a fair value adjustment has been recognised in other income (see note 5) to adjust the deferred consideration
liability down to nil. The deferred consideration is now considered a contingent liability (see note 24).
61
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 28. Business combinations (continued)
Impairment testing of goodwill on acquisition
The impairment testing of goodwill involves the use of accounting estimates and assumptions. The recoverable amount of
the cash generating unit is determined on the basis of value in use calculations.
The value in use is calculated using a discounted cash flow methodology covering a four-year period with an appropriate
terminal value before the end of year four for the cash generating unit.
The value generated from the cash flow projections to arrive at a recoverable value for goodwill is then compared with the
carrying value of goodwill.
Based on impairment testing of goodwill related to Ludomade as at 30 June 2019, the value generated from the cash flow
projections to arrive at a recoverable value for goodwill indicated that the carrying value of goodwill relating to Ludomade
should be impaired to nil (see note 6).
The fair value of the assets and liabilities acquired as at the date of acquisition and used for provisional accounting were as
follows:
Prepayments
Plant and equipment
Other payables
Net assets acquired
Goodwill
Acquisition-date fair value of the total consideration transferred
Representing:
Cash paid to vendor
Deferred consideration
Note 29. Interests in subsidiaries
Fair value
$
6,722
19,842
(23,635)
2,929
1,700,961
1,703,890
687,853
1,016,037
1,703,890
(a) Ultimate parent
ShareRoot Limited is the ultimate parent entity and the parent entity of the consolidated entity from a legal perspective. For
accounting purposes, ShareRoot Inc is the deemed ultimate parent of the consolidated entity in line with reverse
acquisition accounting.
(b) Corporate structure
The legal corporate structure of the consolidated entity is set out below;
Name
Legal parent
ShareRoot Limited
Legal subsidiaries
ShareRoot Inc
ShareRoot (Australian Ops) Pty Ltd
The Social Science Pty Ltd
Ludomade, Inc
Ownership interest
2018
2019
%
%
-
-
-
-
-
-
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
-
Principal place of business /
Country of incorporation
Australia
United States of America
Australia
Australia
United States of America
62
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 30. Events after the reporting period
Although the company finished the year with A$99k in cash, in July 2019 it completed a successful Rights Issue and
placement of $1.2 million before costs, with an oversubscription of shortfall shares leaving the company in a stronger cash
position with funds available to progress its rapidly developing digital health agenda.
In July 2019, the company announced that it plans to divest the Ludomade business as it is considered non-core to
ShareRoot's future strategic direction. ShareRoot is in discussion with a number of potential interested parties.
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect
the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future
financial years.
Note 31. Reconciliation of loss after income tax to net cash used in operating activities
Consolidated
2019
$
2018
$
Loss after income tax expense for the year
(3,105,138)
(3,035,627)
Adjustments for:
Depreciation and amortisation
Impairment of goodwill
Share-based payments
Other non-cash movement
Fair value adjustment of deferred consideration in relation to Ludomade
Change in operating assets and liabilities:
Decrease in trade and other receivables
Decrease/(increase) in prepayments
Decrease/(increase) in other non-current assets
Decrease in trade and other payables
Increase/(decrease) in deferred revenue
Net cash used in operating activities
26,033
1,862,584
133,548
-
(1,016,037)
34,857
-
233,921
(4,577)
-
7,960
82,959
5,653
(24,242)
(76,177)
3,614
(96,685)
(205)
(61,542)
62,151
(2,102,857)
(2,864,093)
63
Note 32. Earnings per share
Consolidated
2019
$
2018
$
Loss after income tax attributable to the owners of ShareRoot Limited
(3,105,138)
(3,035,627)
Weighted average number of ordinary shares used in calculating basic earnings per share
1,694,417,552 906,305,094
Weighted average number of ordinary shares used in calculating diluted earnings per share 1,694,417,552 906,305,094
Number
Number
Basic earnings per share
Diluted earnings per share
Cents
Cents
(0.18)
(0.18)
(0.33)
(0.33)
64
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 31. Reconciliation of loss after income tax to net cash used in operating activities
(continued)
Note 33. Options
A share option plan has been established by the consolidated entity and approved by shareholders at a general meeting,
whereby the consolidated entity may, at the discretion of the Board of Directors, grant options over ordinary shares in the
company to certain personnel of the consolidated entity. Share options are issued at nil consideration.
In additional, options may also be issued to advisers of the company for example to assist with capital raising activities.
Set out below are summaries of options granted under the plan:
2019
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
07/01/2016
05/12/2016
27/06/2017
11/07/2017
10/11/2017
21/02/2018
21/02/2018
21/02/2018
17/04/2018
19/02/2018
05/04/2018
05/04/2018
18/04/2018
06/03/2018
04/05/2018
06/02/2017
20/03/2017
20/03/2017
20/03/2017
01/04/2017
01/04/2017
01/04/2017
01/04/2017
26/01/2018
24/07/2018
15/10/2018
15/10/2018
15/10/2018
15/10/2018
08/02/2019
21/03/2019
08/02/2019
13/05/2019
31/12/2020
05/12/2026
27/06/2022
31/12/2018
10/11/2022
20/02/2023
05/06/2022
13/04/2022
17/04/2023
19/02/2023
05/04/2023
05/04/2018
18/04/2023
04/05/2023
04/05/2023
06/02/2027
20/03/2027
22/03/2027
20/03/2027
01/04/2027
01/04/2027
01/04/2027
01/04/2027
26/02/2028
24/07/2023
06/03/2018
06/03/2023
18/09/2023
09/06/2023
08/02/2024
21/03/2024
08/02/2024
13/05/2024
$0.000 21,000,000
4,248,000
$0.000
$0.000
9,000,000
$0.000 22,000,000
$0.000 11,000,000
3,000,000
$0.000
$0.000
8,000,000
$0.000 11,842,105
300,000
$0.000
3,000,000
$0.000
200,000
$0.000
200,000
$0.000
300,000
$0.000
9,000,000
$0.000
2,500,000
$0.000
600,000
$0.000
425,000
$0.000
566,666
$0.000
500,000
$0.000
1,500,000
$0.000
750,000
$0.000
1,500,000
$0.000
1,500,000
$0.000
$0.000
750,000
$0.000
$0.000
$0.000
$0.000
$0.000
$0.000
$0.000
$0.000
$0.000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 25,000,000
2,000,000
-
750,000
-
300,000
-
-
300,000
- 11,000,000
- 11,000,000
- 11,000,000
- 11,000,000
113,681,771 72,350,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(6,000,000)
(22,000,000)
(7,333,333)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(11,000,000)
-
21,000,000
4,248,000
3,000,000
-
3,666,667
3,000,000
8,000,000
11,842,105
300,000
3,000,000
200,000
200,000
300,000
9,000,000
2,500,000
600,000
425,000
566,666
500,000
1,500,000
750,000
1,500,000
1,500,000
750,000
25,000,000
2,000,000
750,000
300,000
300,000
11,000,000
11,000,000
-
11,000,000
(46,333,333) 139,698,438
65
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 31. Reconciliation of loss after income tax to net cash used in operating activities
(continued)
2018
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
07/01/2016
05/12/2016
13/12/2016
27/06/2017
21/02/2018
21/02/2018
21/02/2018
11/07/2017
09/11/2017
01/04/2017
01/04/2017
06/02/2017
20/03/2017
20/03/2017
20/03/2017
26/01/2018
05/04/2018
05/04/2018
19/02/2018
01/04/2017
01/04/2017
17/04/2018
18/04/2018
06/03/2018
04/05/2018
31/12/2020
05/12/2026
31/12/2017
27/06/2022
05/06/2022
20/02/2023
13/04/2022
31/12/2018
10/11/2022
01/04/2027
01/04/2027
06/02/2027
20/03/2027
20/03/2027
20/03/2027
26/01/2028
05/04/2023
05/04/2023
20/02/2023
01/04/2027
01/04/2027
17/04/2023
18/04/2023
04/05/2023
04/05/2023
-
$0.050 21,000,000
-
$0.012
7,559,838
-
$0.050 14,272,500
-
9,000,000
$0.006
8,000,000
-
$0.007
-
$0.005
3,000,000
- 11,842,105
$0.005
- 22,000,000
$0.010
- 11,000,000
$0.005
1,500,000
-
$0.006
750,000
-
$0.006
600,000
-
$0.008
425,000
-
$0.025
566,666
-
$0.025
500,000
-
$0.025
750,000
-
$0.006
200,000
-
$0.005
200,000
-
$0.005
3,000,000
-
$0.006
1,500,000
-
$0.006
1,500,000
-
$0.006
300,000
-
$0.005
300,000
-
$0.005
9,000,000
-
$0.005
2,500,000
-
$0.005
51,832,338 79,433,771
The weighted average of the options remaining life is 3.9 years (2018: 3.7 years)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,311,838)
(14,272,500)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,000,000
4,248,000
-
9,000,000
8,000,000
3,000,000
11,842,105
22,000,000
11,000,000
1,500,000
750,000
600,000
425,000
566,666
500,000
750,000
200,000
200,000
3,000,000
1,500,000
1,500,000
300,000
300,000
9,000,000
2,500,000
(17,584,338) 113,681,771
66
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 31. Reconciliation of loss after income tax to net cash used in operating activities
(continued)
Set out below are the options exercisable at the end of the financial year:
Grant date
Expiry date
07/01/2006
05/12/2016
27/06/2017
11/07/2017
10/11/2017
21/02/2018
21/02/2018
21/02/2018
17/04/2018
19/02/2018
05/04/2018
05/04/2018
18/04/2018
06/03/2018
04/05/2018
06/02/2017
20/03/2017
20/03/2017
20/03/2017
01/04/2017
01/04/2017
01/04/2017
01/04/2017
26/01/2018
24/07/2018
15/10/2018
15/10/2018
15/10/2018
15/10/2018
31/12/2020
05/12/2026
27/06/2022
31/12/2018
10/11/2022
20/02/2023
05/06/2022
13/04/2022
17/04/2023
19/02/2023
05/04/2023
05/04/2023
18/04/2023
04/05/2023
04/05/2023
06/02/2027
20/03/2027
20/03/2027
20/03/2027
01/04/2027
01/04/2027
01/04/2027
01/04/2027
26/01/2028
24/07/2023
06/03/2023
06/03/2023
18/09/2023
09/06/2023
2019
Number
2018
Number
2,956,000
3,000,000
21,000,000 21,000,000
4,248,000
-
22,000,000 22,000,000
3,666,667 11,000,000
3,000,000
3,000,000
8,000,000
8,000,000
11,842,105 11,842,105
-
-
-
-
-
-
-
225,000
150,000
200,000
200,000
375,000
187,500
375,000
375,000
-
-
-
-
-
-
100,000
1,000,000
66,667
66,667
100,000
3,000,000
2,500,000
300,000
290,000
380,000
350,000
375,000
375,000
562,500
750,000
187,500
8,333,334
1,333,334
500,000
100,000
100,000
96,234,774 83,177,605
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
Grant date
Expiry date
24/07/2018
15/10/2018
15/10/2018
15/10/2018
15/10/2018
08/02/2019
21/03/2019
08/02/2019
13/05/2019
24/07/2023
06/03/2023
06/03/2023
18/09/2023
09/06/2023
08/02/2024
21/03/2024
08/02/2024
13/05/2024
Share price Exercise
at grant date
price
Expected
volatility
Dividend
Risk-free
Fair value
yield
interest rate at grant date
$0.006
$0.004
$0.004
$0.006
$0.004
$0.002
$0.002
$0.002
$0.001
$0.001
$0.004
$0.004
$0.004
$0.004
$0.005
$0.005
$0.005
$0.005
158.00%
176.00%
176.00%
148.00%
170.00%
299.00%
299.00%
299.00%
299.00%
-
-
-
-
-
-
-
-
-
2.31%
2.40%
2.40%
2.22%
2.43%
1.72%
1.54%
1.72%
1.34%
$0.0060
$0.0038
$0.0038
$0.0036
$0.0038
$0.0020
$0.0020
$0.0020
$0.0010
67
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 31. Reconciliation of loss after income tax to net cash used in operating activities
(continued)
In the directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as
at 30 June 2019 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Damon Rasheed
Director
30 August 2019
68
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 31. Reconciliation of loss after income tax to net cash used in operating activities
(continued)
69
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 31. Reconciliation of loss after income tax to net cash used in operating activities
(continued)
70
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 31. Reconciliation of loss after income tax to net cash used in operating activities
(continued)
71
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 31. Reconciliation of loss after income tax to net cash used in operating activities
(continued)
[This page has intentionally been left blank for the insertion of page two of the independent auditor's report]
72
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 31. Reconciliation of loss after income tax to net cash used in operating activities
(continued)
The shareholder information set out below was applicable as at 26 August 2019.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Number
of holders
of options
Number
of holders
of ordinary ordinary
over
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
shares
shares
2,045
175
74
372
945
3,611
-
-
-
-
-
38
38
-
Ordinary shares
% of total
shares
issued
Number held
MR ANTANAS GUOGA
SCINTILLA STRATEGIC INVESTMENTS LIMITED
REWOP PTY LTD (SCOTT POWER SUPER FUND A/C)
MR MARAT BASYROV
DR DEREK ANTHONY JELLINEK
MR GAVIN JEREMY DUNHILL
NOAH ABELSON
MRS LUYE LI
MR ELIE CHAKKOUR
RCKC NOMINEES PTY LTD
MRS JACINTA MAY WILKIE
DR THOMAS PETER CLARKE & MRS GILDA FRANCES CLARKE (TP&GF CLARKE
SUPER FUND A/C)
MR YEQIAN GENG & MRS YAN HUO
FUTURE LAND LIMITED
MR ANDREW RICHARD JACKSON BALL
MR PETER BI
MARC ANGELONE
LAWCKO PTY LTD (LAWCKO FAMILY A/C)
MR LEGH DAVIS & MRS HELEN DAVIS (SUPER A/C)
SUPERTANK PTY LTD (SUPERTANK SUPERFUND A/C)
267,863,231
120,259,778
84,066,996
73,000,000
68,315,333
50,000,000
49,118,821
45,000,000
40,000,000
33,000,000
29,525,000
27,783,000
26,666,666
25,904,022
25,560,393
25,000,000
24,952,155
21,500,000
20,916,000
20,916,000
9.40
4.22
2.95
2.56
2.40
1.75
1.72
1.58
1.40
1.16
1.04
0.98
0.94
0.91
0.90
0.88
0.88
0.75
0.73
0.73
1,079,347,395
37.88
73
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 31. Reconciliation of loss after income tax to net cash used in operating activities
(continued)
Twenty largest unquoted equity security holders
The names of the twenty largest security holders of unquoted equity securities are listed below:
MR ANTANAS GUOGA
JULIAN CHICK
FOSTER STOCKBROKING PTY LTD
BLARNEY VENTURES
MR MARAT BASYROV
DAMON RASHEED
MICHELLE GALLAHER
JASON WEAVER (WEAVER FAMILY A/C)
PETER MCLENNAN
LEE RODNE
THOMAS RIESTER
OLENA DOPIRO
JULIAN CHICK CONSULTING
EMMA GALLAHER
NWR COMMUNICATIONS PTY LTD
PRECISION CAPITAL MANAGEMENT PTY LTD
SCOTT MISON (THE SCOTT MISON FAMILY A/C)
OLENA DOPIRO
MARA LU HERRERA COHEN
SHANE LEWIS
Options over ordinary
shares
% of total
options
issued
Number held
25,000,000
14,000,000
14,000,000
11,842,105
11,000,000
11,000,000
9,000,000
8,000,000
3,666,667
3,000,000
3,000,000
2,608,800
2,500,000
2,000,000
1,750,000
1,750,000
1,750,000
1,500,000
1,500,000
1,500,000
17.90
10.02
10.02
8.48
7.87
7.87
6.44
5.73
2.62
2.15
2.15
1.87
1.79
1.43
1.25
1.25
1.25
1.07
1.07
1.07
130,367,572
93.30
74
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 31. Reconciliation of loss after income tax to net cash used in operating activities
(continued)
Unquoted equity securities
Unlisted Option expiry and exercise price
UNL OPTIONS EXP 31/12/2020 @ $0.05
UNL OPTIONS EXP 10YRS GRANT DAY @ $0.012
UNL OPTIONS EXP 27/06/2022 @ $0.005
UNL OPTIONS EXP 10/11/2022 @ $0.005
UNL OPTIONS EXP 20/02/2023 @ $0.006
UNL OPTIONS EXP 05/06/2022 @ $0.007
UNL OPTIONS EXP 13/04/2022 @ $0.005
UNL OPTIONS EXP 17/04/23 @ $0.005
UNL OPTIONS EXP 19/02/23 @ $0.005
UNL OPTIONS EXP 05/04/23 @ $0.005
UNL OPTIONS EXP 18/04/23 @ $0.005
UNL OPTIONS EXP 04/05/23 @ $0.005
UNL OPTIONS EXP 06/02/27@ $0.008
UNL OPTIONS EXP 20/03/27@ $0.025
UNL OPTIONS EXP 01/04/27@ $0.006
UNL OPTIONS EXP 26/01/28 @ $0.006
UNL ESS OPT EXP 24/07/2023 @ $0.01
UNL OPT EXP 6/03/2023 @ $0.004
UNL OPT EXP 18/09/2023 @ $0.004
UNL OPT EXP 9/06/2023 @ $0.004
UNL OP EX 8/2/2024 @ $0.005
UNL OP EX 21/3/24 @ $0.005
UNL OP EXP 13/5/24 @ $0.005
Substantial holders
Substantial holders in the company are set out below:
MR ANTANAS GUOGA
MR ANTANAS GUOGA
FOSTER STOCKBROKING PTY LTD
JULIAN CHICK
BLARNEY VENTURES
DAMON RASHEED
MR MARAT BASYROV
MICHELLE GALLAHER
JASON WEAVER (WEAVER FAMILY A/C)
75
Number
on issue
Number
of holders
21,000,000
4,248,000
3,000,000
3,666,667
3,000,000
8,000,000
11,842,105
300,000
3,000,000
400,000
300,000
11,500,000
600,000
1,491,666
5,250,000
7,500,000
25,000,000
2,750,000
300,000
300,000
11,000,000
11,000,000
11,000,000
6
4
1
1
1
1
1
1
1
2
1
2
1
3
4
1
1
2
1
1
1
1
1
Ordinary shares
% of total
shares
issued
Number held
189,333,333
6.65
Options over ordinary
shares
% of total
options
issued
Number held
25,000,000
14,000,000
14,000,000
11,842,105
11,000,000
11,000,000
9,000,000
8,000,000
17.90
10.02
10.02
8.48
7.87
7.87
6.44
5.73
ShareRoot Limited
Notes to the financial statements
30 June 2019
Note 31. Reconciliation of loss after income tax to net cash used in operating activities
(continued)
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Options
All quoted and unquoted options do not carry any voting rights.
76
77
78
CORPORATE DIRECTORY
Directors
Dr Julian Chick - Chairman and Non-Executive Director - Appointed 6 May 2019
Damon Rasheed - Non-Executive Director - Appointed 1 February 2019
Marat Basyrov - Non-Executive Director - Appointed 1 March 2019
Harvey Kaplan - Non-Executive Director - Appointed 1 February 2019, resigned 6 May 2019
Lee Rodne - Non-Executive Chairman - Resigned 1 February 2019
Noah Abelson-Gertler - Managing Director and CEO - Resigned 1 March 2019
Peter McLennan - Non-Executive Director - Resigned 1 February 2019
Company Secretary
David Hwang - Appointed 22 May 2019
Andrew Bursill - Resigned 22 May 2019
Registered Office
Principal place
of business
Share Register
Level 5, 126 Phillip Street
Sydney NSW 2000, Australia
Telephone: +61 2 8072 1440
Engine House
105 Wellington Street
St Kilda VIC 3182, Australia
Automic Pty Ltd
Level 5, 126 Phillip Street
Sydney NSW 2000, Australia
Telephone: +1300 288 664 (within Australia); +61 2 9698 5414 (outside Australia)
Email: hello@automic.com.au
Auditors
BDO East Coast Partnership (BDO)
Level 11, 1 Margaret Street
Sydney NSW 2000, Australia
Solicitors
Automic Legal Pty Ltd
Level 5, 126 Phillip Street
Sydney NSW 2000, Australia
Vault Legal
102 / 15 Corporate Drive
Moorabbin VIC 3189, Australia
Vasquez Benisek & Lindgren LLP
3685 Mt. Diablo Blvd., Ste. 300
Lafayette CA 94549, USA
Bankers
Westpac Banking Corporation
Level 13 109 St Georges Tce
Perth WA 6000, Australia
First Republic Bank
44 Montgomery Street
San Francisco, CA 94104, USA
Stock Exchange
Listing
ShareRoot Limited shares are listed on the Australian Securities Exchange (ASX code: SRO)
Website
www.shareroot.co
Corporate Governance
Statement
www.shareroot.co/investors