More annual reports from Oventus Medical Limited:
2020 ReportOventus Medical Limited
Annual Report
2020
Oventus Medical is leading a new
paradigm of sleep apnea care
Annual Report 2020
Oventus Medical Limited
ABN 12 608 393 282
Oventus Medical is leading a new
paradigm of sleep apnea care by:
–
Providing an innovative treatment option
to obstructive sleep apnea (OSA)
Enabling healthcare providers
Empowering patients to participate
in decision making for their care
– Streamlining accessibility to care
–
–
The enormity and impact of OSA
is distressing.
OSA is a non-discriminatory condition
that affects one in five Americans, with
a similar prevalence worldwide.
Contents
About Obstructive Sleep Apnea
The O2Vent Optima® as an alternative to CPAP
A major market opportunity for Oventus
Oventus is driving disruption in the sleep industry
FY20 key achievements
Chairman’s and CEO’s Address
1
3
4
5
6
7
10 Product overview
12 Clinical efficacy, recognition and CRC-P
13 Business strategy and operational update
15 Customer highlights: Helping first responders during the pandemic
16 Board and Management
18 Directors’ Report
31 Auditor’s Independence Declaration
32 Consolidated Statement of Comprehensive Income
33 Consolidated Statement of Financial Position
34 Consolidated Statement of Changes in Equity
35 Consolidated Statement of Cash Flows
36 Notes to the Financial Statements
57 Directors’ Declaration
58
63 Shareholder Information
65 Corporate Directory
Independent Auditor’s Report
About Obstructive Sleep Apnea
Obstructive sleep apnea (OSA) is the most
common type of ‘sleep apnea’1
It compromises daytime functions, leading to
excessive sleepiness, memory impairment
and depression
Co-morbidities include hypertension, heart
disease, atrial fibrillation, stroke and diabetes
Occurs when a person’s airway repeatedly
becomes blocked despite efforts to breathe
How has OSA historically been treated?
Efficacy
Treatment type
How it works
Comment
100%2
56%
Standard of care is
Continuous Positive
Airway Pressure
(CPAP)
Mandibular
Advancement
Devices (MAD)
Patient is connected to
a machine while they
sleep. The machine blows
air through the airway to
‘splint’ it open.
Patient places in their
mouth during sleep. The
MAD opens the airway by
positioning the jaw forward.
Mixed results Surgery (upper
respiratory tract)
Mixed results Weight loss
Mixed results Other/behavioural
modification
May alleviate or reduce
snoring but the apnea
may still be present.
Losing weight can help
with reducing apnea
in some cases.
Sleep position, reduced
alcohol consumption,
medication.
Works 100% of the time but >50%
of patients can’t tolerate the mask
and machine blowing pressure
into their airway.
Works for some patients, but ~50%
require more treatment. On average,
the efficacy/Apnea Hypopnea Index
(AHI) reduction across the range
of OSA severity is around 50%3.
Oventus data shows 56%4 efficacy.
Presents risk to individuals especially
when a co-morbidity exists. There is
no guarantee the patient will be free
from wearing CPAP post surgery.
Not always readily achievable.
Requires patient motivation,
compliance and adherence.
1.
Sullivan, F. (2016). Hidden health crisis costing america billions: Underdiagnosing and undertreating obstructive sleep apnea draining healthcare system.
American Academy of Sleep Medicine.
2. Australasian Sleep Association. (2009). Best Practice Guidelines for Provision of CPAP Therapy. Version, 2, 14.
3.
4.
Sutherland, K., & Cistulli, P. A. (2019). Oral Appliance Therapy for Obstructive Sleep Apnoea: State of the Art. Journal of Clinical Medicine, 8(12), 2121.
Lavery D, Szollosi I, Moldavtsev J, McCloy K, Hart C. Airway open-airway closed: The effect of mandibular advancement therapy for obstructive sleep apnoea
with and without a novel in-built airway. Poster session presented at: Australasian Sleep Society Sleep DownUnder, 2018, October 17-20; Brisbane, Australia.
1
About Obstructive Sleep Apnea
continued
The trouble with CPAP
CPAP, the ‘standard of care’ works, but for many:
– Masks and straps are uncomfortable, leading to facial
abrasion, strap marks, claustrophobia and limited ability
to move in bed.
– Air pressures are hard to tolerate and CPAP can be noisy
– Technology has an image problem
– Cleaning and maintenance are required, masks
and hoses must be regularly resupplied
– 50%-60%5 of patients quit CPAP
within first year.
A large US
study6 showed
only 54%
compliance
long term
The critical role of the nose in CPAP intolerance
“ The importance of the nose to successful
use of CPAP cannot be overstated.”
Dr. Jerrold A. Kram, MD, FCCP, FAASM
An increase in nasal airway resistance can lead to mouth
breathing7. Mouth breathing leads to CPAP intolerance.
What drives nasal congestion?
– Allergies
– Congestion
– Deviated septum
– Anatomical features
– Other issues
5.
Ballard RD, Gay PC, Strollo PJ. Interventions to improve compliance in sleep apnoea patients previously non-compliant with continuous positive airway pressure
(CPAP), JCSM 2007, Vol 3, No7, 706-12
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2679572/
6.
7. McNicholas WT. The nose and OSA: variable nasal obstruction may be more important in pathophysiology than fixed obstruction. Eur Respir J. 2008 Jul;32(1):3-8.
2
Annual Report 2020 Oventus Medical Limited The O2Vent Optima® as an alternative to CPAP
Oventus’s O2Vent Optima could be the biggest innovation in obstructive sleep apnea (OSA) treatment for decades.
O2Vent Optima features a unique built-in airway for uninterrupted therapy (airflow), even for those patients with nasal
obstruction, and also manages mouth breathing. It helps our customers breathe normally at night.
The device is 3D printed in durable medical grade nylon, is lightweight, comfortable, and offers a more discreet and
portable alternative to CPAP.
In a controlled market
release, 91% of patients
noted they would
continue to use their
O2Vent Optima. The
majority also felt confident
in their ability to continue
regular usage to treat
their OSA.
O2Vent® is life changing.
3
A major market opportunity for Oventus
Up to 80%
12%9 of US adults
The O2Vent Optima addresses needs
of up to 80%8 of OSA patients
More than 29 million suffer from OSA
(US 55% of global market)
6 million adult patients
are prescribed CPAP
in the US alone
50-60%
of those patients
quit CPAP
~3 million existing patients
A$800/unit
in need of an effective
alternative treatment
Average Oventus O2Vent Optima
device wholesale price
$2.4b p.a.
$$$
Total estimated available US Market
for device sales alone
Valves and other accessories drive
recurring revenues
“ What is exciting about the O2Vent Optima is that, for the first time, we can offer
patients with OSA an alternative to CPAP that treats symptoms just as well but
is far more comfortable to use and is precisely fitted from the start. Long-term
compliance wearing CPAP machines is a major challenge in OSA treatment, and
many patients discontinue treatment because of mask discomfort, pressure
tolerance and claustrophobia. O2Vent Optima is a game-changer for millions of
Canadians who live with OSA, even those who struggle with nasal obstruction
and mouth breathing.”
Dr. Sat (Satyendra) Sharma, MD, FRCPC, FCCP, FACP, FAASM – the Windsor Sleep Disorders Clinic, Canada
Based on success rates of O2Vent + ExVent. Refer clinical resources on O2Vent.com.
Based on 12% prevalence in adults within US suffering OSA as defined by having five or more sleep events per hour (AHI>5). Source: Sullivan, F. (2016).
Hidden health crisis costing america billions: Underdiagnosing and undertreating obstructive sleep apnea draining healthcare system. American Academy
of Sleep Medicine..
8.
9.
4
Annual Report 2020 Oventus Medical Limited Oventus is driving disruption in the sleep industry
Why do oral appliances only represent 10% of the therapeutic market?
– Variable effectiveness of current oral appliances
– Complex patient journey
– Competing economic imperatives between the sleep and dental channels
Oventus is addressing these issues with new technology
and a novel approach to care
Our O2Vent Optima is the only oral appliance that treats the entire upper airway with success rates comparable to CPAP. We
have simplified the complex patient journey through our Lab in Lab model which enables our unique treatment modality to
be delivered in both the sleep and dental channels. The Lab in Lab model also solves the problem of competing economic
interests between these two groups, as it increases revenue and profit for both the sleep and dental channels.
Lab in Lab brings more patients into care. Under the traditional healthcare model, an OSA patient would need to visit their dentist
several times as part of their treatment journey. With Lab in Lab, a dentist can take oral scans of patients mouths within a sleep
facility (under a low-cost equipment model) and the patient is able to complete their whole care cycle at the one location.
Lab in Lab overview
Oventus’ Lab in Lab model is a collaborative framework in which all stakeholders benefit – it increases
revenue and profit for both the dentist and sleep groups while improving outcomes for patients.
How Lab In Lab works:
Sleep doctor consults/
diagnoses/prescribes
Dentist within sleep centre scans
patient for O2Vent Optima, delivers
device, handles reimbursement
Patient returns to sleep doctor
for follow up consultation
5
FY20 key achievements
Growth of Lab
in Lab
57 sites contracted*
27 sites launched*
11 in implementation*
Business
improvements
Telehealth implemented
in response to COVID-19
Leads to increased sales
conversions from initial
consultation
Product
improvements
O2Vent Optima given
FDA 510(k) clearance in
September 2019
COVID
impact
Q4 FY20 impacted by
COVID-19 ‘sheltering in
place of orders’
Improved outlook
from June 2020
Total revenue:
FY2020
$419,298
up from
$331,837 in FY19
Cash and
funding
Cash of $8.5 million,
providing over five
quarters of funding
without the benefit of
revenue improvement
As at 30 June, 2020
*
6
Annual Report 2020 Oventus Medical Limited Chairman’s and CEO’s Address
Left: Dr Mel Bridges, Chairman
Right: Dr Chris Hart, Managing Director, CEO
We are delighted to
present Oventus Medical’s
(ASX: OVN) Annual Report
for the 2020 financial year.
This year saw our
Company continue
to make significant
progress with
commercialisation of
the Oventus O2Vent®
technology via our
Lab in Lab business
model in our key
market of North
America.
Lab in Lab contract negotiations
and launches gathered
momentum through FY2020
Strong demand for Oventus’
technology and clinical business
model continued to build through the
financial year, even in the face of the
recent operational challenges due to
COVID-19.
This strong demand and robust
pipeline meant that at the time of
writing, Oventus had 57 contracted
sites in North America, capable of
generating $13.2m in annualized
revenue at minimum quotas. 27
sites were in various stages of
launch, capable of generating
$6.2m annualized revenue at
minimum quotas.
Key agreements secured during the
year included two pivotal agreements
signed during the COVID-19 period.
The first, with fast-growing sleep
group, Aeroflow which will see our
technology rolled out across the
South-eastern US states, before a
wider national rollout is conducted
as part of Aeroflow’s ambitious US
growth plan.
In Canada, we also secured an
agreement with Canadian respiratory
services provider, Careica Health,
which will see our technology offered
to CPAP-intolerant individuals via an
extension to Careica’s well-known
SLEEP program.
While Oventus continues to negotiate
and sign Lab in Lab agreements, our
focus for the near term is bringing
existing sites online, increasing patient
flow and supporting those sites to
achieve minimum quota levels.
COVID-19 and the introduction
of telehealth
When the impact of the pandemic
became clear in March, we moved
quickly to protect our customers
and business, reducing operating
costs and adapting our workflows
and processes to enable business
continuation.
In response to the COVID-19 operating
environment, we introduced a
new telehealth model and rapidly
implemented key initiatives to enable
existing Lab in Lab sites to continue to
identify OSA patients for treatment.
The new workflow model enabled us
to conduct remote training, continue
to engage with customers and patients
through the lockdown periods and
conduct virtual launches across
various sites in North America.
7
Chairman and CEO’s Address
continued
The approval means that the O2Vent Optima is
reimbursable for those patients covered by United States
Centres for Medicare & Medicaid (CMS), in that dentists can
now bill and be reimbursed not only by Medicare but other
commercial payers that follow CMS policy.
This US Medicare reimbursement approval provides
Oventus with an opportunity to access and treat an
additional large population of OSA sufferers – in 2019, of
the 330 million-strong US population, 64 million10 people
were enrolled in the US Medicare system. The move further
supports the roll out of the O2Vent Optima across the
US market.
R&D success
Oventus’ participation in the three-year, Federal
Government-funded Cooperative Research Centres
Programme (CRC-P) project: Targeted therapy for sleep
apnoea: A novel personalised approach11, has been an
outstanding success and we would like to thank our former
CEO and Executive Director, Neil Anderson for his significant
contribution to the Company’s R&D efforts.
The CRC-P was a major factor in bringing our products
to market – with the US Food and Drug Administration
granting regulatory clearance for the O2Vent Optima®
device in September 2019 and ExVent® listed with
Australia’s Therapeutic Goods Administration in June 2019.
ExVent is available for sale in Australia and Canada, while
a regulatory process is underway in the US.
These efforts were augmented when Oventus technology
was featured in a number of peer reviewed journals, written
as a result of studies undertaken as part of the CRC-P. An
article on the CRC-P’s expiratory positive airway pressure
(EPAP) valve combination therapy study was published
in the prestigious SLEEP® journal, while papers were also
presented at the Digital Twins Symposium and Sleep Down
Under conference in Australia during 2019.
During the year, Oventus received $828,120 from the
Australian Federal Government in R&D rebates. While
our R&D spend has moderated due to our focus on our
commercialisation efforts, we are grateful for the funding
and continued government support for our product
development.
Team and Advisors
We further strengthened our Board with the appointment
of new Non-Executive Directors during the financial year.
The appointments of US medical device industry expert,
Paul Molloy and specialist US healthcare investor, Jake
Nunn, bring significant North American commercialisation
expertise to our team as we continue with the rollout of the
Lab in Lab business model.
10.
11.
https://www.kff.org/medicare/fact-sheet/medicare-advantage/
https://ovn.irmau.com/site/PDF/42498767-31c6-4d00-b7cd-
8b696ba5a0e7/CRCPSuccessfulGrantApplication
Editorial and advertisement in Firefighting in Canada magazine,
to stimulate interest and sales.
In April and May, while physical delivery of treatment to
patients was restricted, many of the devices we delivered
were to first responders in Canada who required treatment
alternatives to CPAP. In spite of reduced patient flow, our
device sales have now returned to pre-COVID levels and
at the time of writing, device orders were exceeding those
seen in February and March as we were starting to generate
traction with sales under the Lab in Lab model. We expect
revenue levels to continue to build over the months ahead
as sales and orders continue to increase.
The efficiency of new telehealth measures mean they
have become a permanent workflow change for Oventus.
Our telehealth measures have had a positive impact on
the patient journey and have improved patient flow and
conversion rates. As sites reopen and North America
continues to emerge from lockdown, these measures will
also support our revenue growth across the remainder of
CY2020 and into CY2021.
Medicare reimbursement for O2Vent Optima
In February 2020, we received US Medicare reimbursement
approval for the O2Vent Optima – a very significant
development in that patients accessing government-
funded healthcare in the US can now access Oventus’
treatment.
8
Annual Report 2020 Oventus Medical Limited Cost control and equity raisings add to financial
strength
During the financial year, Oventus Board and Management
took a prudent approach to cost control. Alongside driving
revenue growth, this will continue to be our major focus for
the remainder of CY2020 and into CY2021.
Whilst the onset of COVID-19 saw our strong increase in
booked revenues be truncated, our booked revenue levels
have since recovered to beyond the level recorded during
the March quarter as at June 30. This recovery in booked
revenues was driven by our change in business strategy
and the introduction of telehealth measures as a response
to COVID-19.
Going forward, we expect booked revenues and then cash
receipts to build across the next four quarters as more
contracts are signed; existing sites fulfill minimum quotas
and we see increased patient flow as North America
continues to ease existing lockdown conditions.
During the period, two oversubscribed capital raises
provided funding for growth. In July 2019, Oventus raised
A$9.3 million through an oversubscribed Placement to
institutional and sophisticated investors and an underwritten
Entitlement Offer. In May 2020, we conducted a small top-
up raise, taking in A$6.65 million through an institutional
Placement and Share Purchase Plan (SPP) to existing
eligible investors. We thank all those investors, both existing
and new who participated in those raises, and those that
supported the Company in other ways throughout the year.
Outlook
As we enter FY2021, Oventus has a substantial opportunity
in both our contracted and launched sites, which is yet to be
fully realised.
We are very optimistic about Oventus’ growth over the
coming months due to a mix of factors, including: higher
patient booking conversion rates as a result of refined
workflows and introduction of telehealth; strong demand for
the technology and our clinical business model; continued
contract negotiation and execution; a full launch calendar
through to the end of CY2020 and an overall increase in
the number of operational sites. As North America slowly
reopens by region, Oventus is ready to accelerate revenue
growth with a broad, efficient network of Lab in Lab clinics.
This is an exciting time for our Company, and we look
forward to updating you on our progress.
Yours sincerely,
Dr Mel Bridges
Chairman
Dr Chris Hart
Chief Executive Officer
and Managing Director
COVID-19 Case study:
When COVID-19 hit Louisiana, closures
and mandatory sheltering was swiftly
put into place and day to day operations
came to an abrupt stop. About a
month into the pandemic, some of my
physician referrals, cardiologists and
family physicians reached out to me with
a dilemma.
They had heard about the CPAP device
warnings that reported that CPAP
devices generate respiratory droplets
that could spread the COVID-19 virus
and should not be used in environments
where individuals with immune
suppressed conditions could be
placed at risk.
One cardiologist said he had several
patients that he did not want to put on
CPAP and asked if there was anything
I could do to fabricate oral appliances
and he felt it was time-sensitive.
I called Oventus.
Since I knew they have a completely
digital workflow, it was worth a shot to
see if they were operational. I also had a
lot of experience fitting patients with the
O2Vent Optima and knew most times the
device fits without adjustments.
I called Oventus to talk through how
a workflow process might work and
we created one together. We were
successful with all the remote patient
appointments. With Oventus, we are
not limited by today’s unprecedented
barriers that defer patient care.
Dr Pedro Cuartas, DDS, Houma, Louisiana
9
Product overview
O2Vent Optima®
The O2Vent Optima is an oral device for patients diagnosed with obstructive sleep apnea (OSA) and who are seeking
alternatives to CPAP therapy.
Unlike other oral appliances that only advance the jaw forward, the O2Vent Optima manages the entire upper airway via a
proprietary integrated airway channel that promotes and directs airflow to the back of the throat, providing further stability to the
airway, soft palate and lateral walls. The unique design of the airway channel maintains a lip-seal and manages mouth breathing.
O2Vent Optima devices are particularly designed for the many people that suffer from nasal issues, such as obstruction or
congestion. The device allows for nasal breathing when the nose is unobstructed, but when obstruction is present, breathing
is facilitated via the airway in the appliance.
O2Vent Optima offers a discreet, comfortable and effective alternative to CPAP treatment.
O2Vent® Optima: How it works
Air travels
through the
channel and
is delivered to
the back of the
throat.
The device is
adjustable,
bringing the lower
jaw forward and
stabilising the
airway.
Air goes in
through the
duckbill on
inhalation and out
on exhalation.
The duckbill acts
as a “second nose”,
providing a solution
for breathing when
the nose is unable
to draw in air due
to obstruction or
congestion.
Timeline of significant events:
O2Vent Optima:
October 2018
TGA approval
February 2019
Launch in Canada
October 2019
Launch in the US
Oventus first Lab in
Lab sites become
operational
January 2019
Launch in Australia
September 2019
FDA clearance
received in the US
February 2020
US Medicare reimbursement
approval granted: allows dentists to
bill and be reimbursed by Medicare
and other commercial payers that
follow the Centres for Medicare &
Medicaid (CMS) policy.
ExVent®
The ExVent is a valve accessory that fits into the open airway of the O2Vent Optima® device, to augment traditional oral
appliance therapy by stabilising the airway. The ExVent valve contains air vents that open fully on inhalation for unobstructed
airflow. The valve closes on exhalation, directing the air through the vents, creating the mild resistance or airway support
required to keep the airway stable (known as PEEP, positive end expiratory pressure). The product was launched in Australia
and Canada in June 2019. The Company is in discussion with the US FDA regarding the 510(k) registration for ExVent.
10
Annual Report 2020 Oventus Medical Limited Oventus Bite Fork
The Oventus Bite Fork is a single-use disposable bite
registration tool that was developed to assist dentists
with recording the required 5mm vertical bite clearance
for ordering O2Vent devices. This clearance is essential
to allowing for the proprietary airway. The flexible nylon
lattice design is available in two variants, single sided, to
record the protrusive bite using a bite measurement tool, or
double sided to record an “edge to edge” bite. Each variant is
available in two arch sizes. Together with Connector Bands
and ExVent® (in Australia and Canada) – these items form
part of the ongoing revenue stream.
O2Vent Optima Connector Bands
In May and June 2020, Oventus advised its providers
that we had updated the connector band material and
introduced a second strength to provide more treatment
options. Connector bands are used to advance the lower jaw
forward to further open the airway, with a positioning range
from 13-21mm.
These nine connector bands lengths enable 6mm
advancement and 2mm retrusion from the 19mm starting
measurement. O2Vent Optima oral devices are delivered
assembled with the 19mm connector bands, plus one full
set/Starter Pack of connector bands i.e. 2 of each length.
While ‘soft’ connector bands are the default strength, dentists
can order either ‘soft’ (light blue) or ‘firm’ (dark blue) bands.
After initial use, the dentist will identify the optimum treatment
position (protrusion) and band size that provides the best
therapy. Connector bands are re-ordered as annual packs
of 25 (at the prescribed size). It is recommended the patient
changes both bands monthly, as they may lose elasticity.
As Oventus can manufacture its own connector bands, it
provides us with a reduced cost of goods sold and further,
a high margin and ongoing revenue stream.
ExVent®
Breathe in
Breathe out
Oventus Bite Fork
O2Vent Optima Connector Bands
Soft
Firm
“ Your new O2Vent Optima Mandibular Repositioning Device (MRD) is revolutionary
in the treatment of OSA; especially, patients who are mouth breathers due to nasal
obstruction, congestion or allergies. I have been treating OSA patients for over ten years
since being diagnosed with severe OSA myself in February 2010. Your O2Vent Optima
is the eleventh different appliance I have been personally fitted with over thousands of
hours of continuing education on the subject.
The O2Vent Optima is very comfortable, light weight and allows for plenty of tongue
space. With scanning and bite registration the insertion appointment is effortless. The
bands are rigid enough to eliminate use of elastics to keep mouth closure. Also, the
bands are very easy to change for patient compliance in titration. I highly recommend
the O2Vent Optima for use in treating your mouth breathing sleep apnea patients.”
Dr Steven E. Lanham, DDS
11
Bite Fork SingleBite Fork Double Clinical efficacy,
recognition and CRC-P
Oventus’ product development is funded substantially
through Australian federal government grants, specifically
CRC Projects (CRC-P) grants which support short term,
industry-led collaborative research, for up to 3 years.
During the financial year, the Adelaide Institute for Sleep
Health at Flinders University was formally signed up as
a CRC-P participant as an additional clinical trial site.
The site also commenced data collection following the
receipt of ethics approval.
In addition, a number of clinical papers were published/
presented or submitted for publication as part of the
CRC-P program as follows:
– Clinical efficacy and novel physiology findings led by
CRC-P PhD student Benjamin Tong entitled “Efficacy
of a novel oral appliance and the role of posture on
nasal resistance in obstructive sleep apnea” were
published in the Official Journal of the American
Academy of Sleep Medicine in February 2020
– An abstract titled “An algorithm to estimate sleep
apnoea phenotypes from standard sleep study and
clinical data” was selected for an oral presentation
and delivered by Ritaban Dutta from Data 61 at
CSIRO at the Australasian Sleep Association Annual
Scientific Meeting “Sleep DownUnder” in Sydney in
October 2019
– An EPAP valve combination therapy study manuscript:
“Combination therapy with mandibular advancement
and expiratory positive airway pressure valves
reduces obstructive sleep apnea severity” was
published in the leading scientific journal, SLEEP in
August 2019
– A manuscript on combination therapy with CPAP
and the Oventus device has recently been published
in the prestigious Journal of Applied Physiology.
– A manuscript on the novel algorithm has been
submitted for publication in a major respiratory
journal.
Following on from the above-mentioned work presented
at Sleep DownUnder, a PCT patent application based
on a novel algorithm to help deliver targeted therapy for
sleep apnoea was lodged titled: “Methods for estimating
key phenotypic traits for obstructive sleep apnoea and
simplified clinical tools to direct targeted therapy.”
In addition, a new home sleep study protocol to test
the efficacy and comfort of the novel ExVent® over a
one-month period was incorporated into the current
CRC-P and MRI studies on the O2Vent Optima device
commenced at Neuroscience Research Australia
(NeuRA).
As at July 1, 2020, the total number of night studies
performed on CRC-P clinical trial work was nearly 220.
Key findings and outcomes from the major CRC-P clinical
trial project activities are due to be reported in CY21.
Thanks to the CRC-P research leader, Danny Eckert,
Matthew Flinders Professor, Adelaide Institute for
Sleep Health, College of Medicine and Public Health,
Flinders University.
12
COVID-19 Case study:
In March just as the COVID-19 pandemic
took hold in Colorado, I knew I had to do
something different. My practice, Refresh
Snoring and Sleep Apnea Center, is dedicated
to the treatment of Obstructive Sleep Apnea.
I had already embraced telemedicine follow
up and ‘drive up’, appliance adjustments
performed with the patient sitting in their car
and me running in and out of my office making
adjustments for my patients. Additionally,
I realized I needed to start providing the
adjustment tool for the devices I was
dispensing and showing patients how to
‘tweak’ their device.
Shortly after changing my office procedures,
I met Robin Randolph from Oventus, who
came to my office.
As I settled in to learn about the O2Vent Optima
from Robin, I soon realized not only were there
potential clinical advantages to the product,
but also through this discussion the concept
of a high probability of being successful with
a remote consult with impression taking and a
home fit instruction could be successful.
By 1st April I was fully engaged in a feasibility
study, validating an expanded home-dentistry
model from what I was already offering. Fast
forward to today, where now O2Vent Optima
is my go-to oral appliance for patients with
nasal congestion. Not only can patient follow
up appointments and a high percentage of
delivery appointments be accomplished in
the home, but I have realized that patients
require significantly less adjustments with the
O2Vent Optima. Less follow-up appointments
due to the accuracy and strength of a digitally
milled nylon appliance is a huge benefit for my
patients. I’m excited to be a part of Oventus
and work alongside the remarkable team.
Dr. Jason Ehtessabian, DDS, Refresh Snoring and
Sleep Apnea Center in Castle Rock, Colorado
D-ABDSA, D-ASBA, D-ACSDD
Annual Report 2020 Oventus Medical Limited Business strategy and operational update
Launch of O2Vent Optima and Lab in Lab Program
In July 2019, Oventus signed its first Lab in Lab agreements in the US and Canada.
In October 2019, the Company’s initial Lab in Lab sites became operational following the US Food and Drug Administration’s
regulatory clearance of the O2Vent Optima® in September 2019.
Additional Lab in Lab sites were launched during the financial year and revenues from those sites started to build during the
third quarter FY20.
With the onset of COVID-19 in March, patient flow reduced due to site closures, leading Oventus to rapidly introduce
telehealth services and remote training to continue to engage with patients and to enable virtual Lab in Lab site launches.
These telehealth measures helped to increase sales conversion rates, which - along with an increase in direct sales -
supported growth.
300
280
260
240
220
200
180
160
140
120
100
80
60
40
20
0
Devices sold
COVID
Q1FY20 Optima
FDA Cleared
Q2FY20 LIL
Program
Launched
Q3FY20 Revenue
Build Underway
Q4FY20
Telehealth
Launched
Q1FY21
Revenue Post
COVID
Lab in lab contracts signed
ahead of FDA clearance
Lab in lab contracts signed ahead of FDA
clearance
O2Vent Optima FDA clearance
in September 2019
O2 Vent Optima FDA clearance in
First LIL sites launched in
September 2019
October 2019
First LIL sites launched in October 2019
Additional sites launched and
revenue building to mid March
2020
Additional sites launched and revenue
building to mid March 2020
COVID significantly reduced
COVID significantly reduced patient flow in
patient flow in Q4FY20 – OVN
Q4FY20 – OVN launches telehealth
launches telehealth
Device sales growing again Q1FY21.
Exceeding pre-COVID revenue build partway
through the quarter
Device sales growing again
Q1FY21. Exceeding pre-COVID
revenue build
In addition, from Q4 FY20, a homecare extension of the Lab in Lab program was successfully piloted to future proof against
the risk of protracted shutdowns.
As patient flow improves, along with reopening and new site launches, device sales are expected to continue to build, with
more states and site launches expected as North America comes out of COVID-19 lockdown.
Strong demand for the Lab in Lab business model continued to build during the financial year with adoption of the model
by the sleep community being driven by acceptance of O2Vent Optima as a true CPAP alternative and the simple delivery
approach and also for sleep physicians to recover lost revenues due to COVID-19.
Key agreements secured during the period include one with fast growing sleep group Aeroflow in February, with the company
having identified OSA therapeutics as a key growth driver for its business.
Under the agreement, Aeroflow will initially introduce Oventus technology across the Southeastern US states before rolling
it out nationally as it continues on an aggressive growth path across the US.
In May, Oventus also secured an agreement with Canadian respiratory services provider, Careica Health, which will see
Oventus technology offered to CPAP-intolerant individuals via an extension to the company’s well-known SLEEP program.
As at June 30, Oventus had 57 contracted sites in North America, capable of generating $13.2m annualized revenue at
minimum quotas. Once fully launched, 49 sites have a monthly minimum purchase order of 20 units per site and 8 sites have
a minimum monthly purchase order of 10 units per site.
At the time of writing all sites are operating on reduced capacity as a result of COVID-19 and while patient flow is increasing
we do not have visibility on when patient flow will return to normal. Fortunately, the addition of telehealth and homecare,
along with the large and growing number of sites contracted and under negotiation should enable the company to continue
to build revenue.
13
Business strategy and operational update
continued
Medicare approval and opportunity
In February 2020, Oventus received US Medicare reimbursement approval for the O2Vent Optima – a significant milestone
that will further support the roll out of the device across the US market.
The approval means that the O2Vent Optima is reimbursable for those patients covered by United States Centres for
Medicare & Medicaid (CMS), in that dentists can now bill and be reimbursed not only by Medicare but other commercial
payers that follow CMS policy.
CMS is part of the US Department of Health and Human Services and oversees many federal healthcare programs, including
those that involve medical device reimbursement.
The approval removes barriers for the prescribing physicians and enables dentists to deliver O2Vent Optima regardless
of the patient’s payer type.
In 2019, of the 330 million-strong US population, 64 million people12 were enrolled in the US Medicare system.
It is estimated that only six million people have been diagnosed and treated out of 30 million13 OSA sufferers in the US
population.
This US Medicare reimbursement approval provides an opportunity to access and treat an additional large population
of OSA sufferers.
“ Medicare approval is a very significant development for Oventus. It means that
patients accessing government-funded healthcare in the US can now access
our treatment which has been proven to have exceptional efficacy, both in
our clinical trials and when used by patients for the treatment of their OSA.
It opens up a whole market that may not have previously been able to afford
our treatment and we expect further increased demand for our Lab in Lab
model as a result.”
Dr Chris Hart, Managing Director, CEO, Oventus Medical
PANDEMIC STRATEGIC RESPONSE, HOME CARE
While many US state governments require resident lock down or restriction of
services, Oventus is finalising development of a home care model in collaboration
with sleep group partners to enable treatment delivery to patients in their homes.
If a prescription is required,
patient is diagnosed at home via
telehealth/home sleep testing
Once an O2Vent Optima is
prescribed, a mobile clinician can
attend the home of the patient to
scan their mouth or records can be
acquired via a tele-impression
After the device is 3D printed from
oral scan data, O2Vent Optima can
be delivered to patients at home
and instructions for use and follow
up can be delivered via telehealth
https://www.kff.org/medicare/fact-sheet/medicare-advantage/
12.
13. https://aasm.org/resources/pdf/sleep-apnea-economic-crisis.pdf
14
Annual Report 2020 Oventus Medical Limited Customer highlights: Helping first responders during
the pandemic
Patrick Strong, Denturist, Strong Denture and
Snoring Clinics, Windsor and Leamington,
Ontario, Canada
In April, firefighters across Ontario were told not to use
their Continuous Positive Airway Pressure (CPAP) machines
on overnight shifts, due to concerns it may contribute to
the spread of the COVID-19 virus, through the distribution
of respiratory droplets. Toronto Fire Chief Matthew Pegg
explained that the decision to ban CPAP at work was based
on the advice of the fire service’s chief medical officer,
following reports that although CPAP was the current
standard of care for OSA, data had emerged that it may
contribute to COVID-19 spread14 15.
When the news was released to the public, Patrick
Strong felt compelled to do something. As an obstructive
sleep apnea (OSA) sufferer himself, he said he could not
imagine going without therapy and the potential negative
consequences of cognitive functioning without treatment.
Compounding the concern was the fact these were
Ontario’s first responders.
Patrick contacted Oventus with a single thought in mind, to
provide O2Vent Optima to the firemen. Patrick had already
spoken to Dr Sharma, a prominent Sleep Physician in
Ontario who had agreed to tele-consult and prescribe the
treatment. “Within 48 hours we identified infection control
procedures to manage risk, ordered PPE and sanitizers and
sent communication to the fire stations. The local radio station
and a news site picked up on the activity and helped spread
the word around my offering. Within a few weeks 24 first
responders suffering OSA were scanned,” says Patrick.
This COVID initiative is on-going with word spreading
amongst the fire fighters between different fire stations. First
responders immediately began sending letters to Oventus.
One of these letters was from Captain Brian White,
Windsor Fire Rescue Services, Ontario.
He said: “My station was hit with the coronavirus and I have
been in close contact with co-workers that have tested
positive. As a result of safety measures, some of us that are
CPAP wearers have been ordered not to use them, which
meant I was waking with a sore throat from excessive snoring
which caused questionable anxiety as it is a symptom of
COVID-19 and I thought I may have contracted the virus and
could possibly be passing it to my family or other co-workers.
Thanks to Oventus and the O2Vent Optima, I can now sleep
soundly during work shifts knowing that I am treating my
sleep apnea without placing anyone at risk. This device allows
me to achieve quality sleep without snoring and to be more
alert when responding to emergencies. I am also grateful that
Oventus and Dr Strong heard of the situation and generously
donated their time and products fitting and producing these
devices to first responders.”
Social media and editorial/advertising in Firefighting in Canada
helped spread the word on this first responders initiative.
Other First Responders Testimonials
“ My partner and I go to great lengths to stay safe while
responding to emergencies by ensuring we are wearing the
proper gear. After every call, we are very particular about
cleaning our ambulance and also our own PPE. The last
thing I need to worry about is using my CPAP machine safely
in the station when I already have little time to catch up on
sleep. With the O2Vent Optima, I’m able to sleep, and more
importantly, I and the other paramedics who have access to
this device have peace of mind.”
Tim Branch, Advance Care Paramedic at Essex Windsor
Emergency Medical Services.
–––––––––––––––––––––––––––––––––––––––––––––––––
“ I wanted a treatment approach conducive to my lifestyle, as
I travel frequently – CPAP and other oral appliances seemed
too cumbersome to me. The O2Vent Optima is comfortable
and easy to use, which makes it easy to stick with it as a
treatment. After only a few weeks of use, I’ve noticed my
daytime alertness and energy have increased and my
snoring, much to the relief of my wife, has decreased.”
Ervin Magic, Certified Physician Assistant. Ervin knows first-
hand what many of his patients experience with OSA. He
knows first-hand what many of his patients experience with
OSA. He has lived with moderate OSA symptoms for several
years, and recently had an O2Vent Optima fitted.
14.
15.
https://aasm.org/coronavirus-covid-19-faqs-cpap-sleep-apnea-patients/
http://sleepeducation.org/news/2020/04/03/sleep-doctor-answers-questions-about-covid-19-and-sleep
15
Board and
Management
Dr Mel Bridges
Dr Chris Hart
Sue MacLeman
Sharad Joshi
Paul Molloy
Jake Nunn
Stephen Denaro
Dan Parry
Robin Randolph
16
Dr Mel Bridges
Chairman and Non-
Executive Director
Mel has over 35 years’
experience founding and
building international
lifescience, diagnostic and
medical device companies
and commercialising a
wide range of Australian
technology. He is responsible
for numerous commercial
and M&A transactions and
liquidity events, including
listings on the ASX. Mel has
received national and state
business awards including the
2005 AusBiotech Chairman’s
Industry Medal and 2004
Queensland Entrepreneur of
the Year. Mel has founded and
developed medical device
and diagnostic companies,
including Pacific Diagnostics
(acquired by Baxter), PanBio
Ltd (acquired by Inverness
Medical), and ImpediMed Ltd
(ASX: IPD).
Dr Chris Hart
Founder, Managing
Director and Chief
Executive Officer
Chris is the founder of the
Company and inventor of the
O2Vent design concept. Chris
is overseeing the launch of
the O2Vent Optima to patients
and through clinicians and
heads the management team
as they roll out the Oventus
Sleep Treatment Platform
across Australia, the United
States and Canada. Chris is
also heavily involved with
training and presenting to the
dental and sleep sector. Chris
graduated from the University
of Queensland in 1998 with a
Bachelor of Dental Science
with Honours and a Bachelor
of Science in Biochemistry.
He has studied at Cambridge
University where he graduated
with a Master of Philosophy in
Biomedical Science in 1999.
Prior to establishing Oventus,
Chris owned and managed
a multi-site national dental
practice, training institute and
management consultancy
which he sold to private equity
investors. Chris also acts as
an adviser to various bodies
within the dental industry on
the commercial aspects of
health care delivery.
Sue MacLeman
Non-Executive Director
Sue MacLeman has more
than 30 years’ experience
as a pharmaceutical,
biotechnology and medical
technology executive having
held senior roles in corporate,
medical, commercial and
business development.
Sue has also served as
CEO and Board member of
several ASX and NASDAQ
listed companies in the
pharmaceutical sector. Sue
is also appointed to several
academic and government
advisory committees including
CSIRO Health and Biosecurity
Advisory Committee, Prime
Ministers Digital Expert
Advisory Committee, DMTC
Medical Countermeasures and
various COVID19 taskforces.
Sue is currently the
Chair of MTPConnect
(Medical Technology and
Pharmaceuticals Industry
Innovation Growth Centre
Ltd MTPII-GC Ltd), Chair of
Anatara Lifesciences Ltd
(ASX:ANR), Chair of Tali Digital
Ltd (ASX:TD1), Non-Executive
Director of Palla Pharma Ltd
(ASX:PAL), Non-Executive
Director of Oventus Medical
Ltd (ASX:OVN) and Non-
Executive Director of veski.
Her broad commercial
experience is underpinned
by her qualifications including
a Bachelor of Pharmacy
(University of Queensland),
Masters of Marketing at
Melbourne University
(Melbourne Business School)
and a Masters of Law degree
(Deakin University). Sue is
also Fellow and Chair Health
Forum ATSE, Fellow ACPP and
Fellow/Graduate of AICD.
Annual Report 2020 Oventus Medical Limited Sharad Joshi
Non-Executive Director
Based in Boston, Sharad has
been active in the medical
technology industry for more
than 33 years and has held
senior positions for the past
20 years including as a global
entrepreneurial medical
devices CEO with experience
in launching medical devices,
a strong track record of
driving rapid global growth
and laying the strategic
foundations for sustained
success through strategic
and biomedical product
innovation. Sharad brings
deep expertise in the North
American and global markets
in product development,
marketing and sales, currently
as President and CEO of
NanoDx, and most recently
as CEO of US-headquartered
Microline Surgical (a wholly
owned subsidiary of Tokyo
Stock Exchange listed
HOYA Corporation) where
he was responsible for
executing growth strategy
and market building, selling
into 60 countries. He holds
qualifications in mechanical
engineering and subsequently
specialised in the biomedical
space and also holds an
entrepreneurial MBA.
Paul Molloy
Non-Executive Director
Based in Southern California,
Paul Molloy has considerable
global and US medical device
industry expertise, with
twenty-five years’ experience
leading a range of public,
private and venture capital
funded healthcare companies.
He is currently President
and CEO of ClearFlow Inc.,
a US-based medical device
company. Before joining
ClearFlow, Paul was CEO
at VasoNova Inc.- a Silicon
Valley-based, venture funded
vascular navigation company
which was acquired by
Teleflex Inc. (NYSE, TFX), in
January 2011. Following the
acquisition, he was appointed
President of Teleflex’ largest
division – ARROW Vascular –
having full P&L responsibilities
for direct sales, US and
overseas manufacturing
plants, R&D and strategic
planning.
Mr Molloy has also exited a
number of leading US medical
devices firms, including
publicly traded cerebral
oxygenation monitoring
firm, CAS Medical Inc., and
Revolutionary Medical
Devices. He also serves on the
Board at Augustine Medical,
a privately held market leader
in medical arena temperature
management. and Inscope
Inc., a venture capital-
funded critical care firm. Paul
started his career as a CRNA
(Certified Registered Nurse
Anaesthetist). He holds an
MBA (Chicago Booth School
of Business), with a focus on
finance and economics.
Jake Nunn
Non-Executive Director
Based in Menlo Park, CA, Jake
Nunn has more than 25 years’
experience in the life science
industry as an investor,
independent director, research
analyst and investment
banker. Jake is currently
a venture advisor at New
Enterprise Associates (NEA),
where he was a partner from
2006 to 2018. Jake is a Director
of Addex Therapeutics
(SIX, Nasdaq: ADXN), Qool
Therapeutics, Inc., Regulus
Therapeutics (Nasdaq: RGLS)
and Trevena, Inc. (Nasdaq:
TRVN). He was a previous
Director of several companies
in the pharmaceutical
sector including Dermira
Inc. (acquired by Eli Lilly)
and Hyperion Therapeutics
(acquired by Horizon Pharma
plc), and a board observer
at Vertiflex, Inc. (acquired by
Boston Scientific).
Prior to NEA, Jake was a
Partner specializing in life
sciences investing at MPM
Capital. Previously, he was a
healthcare research analyst
and portfolio manager
at Franklin Templeton
Investments and an
investment banker with Alex.
Brown & Sons. Jake received
an MBA from the Stanford
Graduate School of Business
and an AB in Economics from
Dartmouth College. Jake
holds the Chartered Financial
Analyst designation, is a
member of the CFA Society
of San Francisco, and recently
completed the Stanford
GSB Directors’ Consortium
executive education program.
Stephen Denaro
Company Secretary
Steve has extensive
experience in mergers
and acquisitions, business
valuations, accountancy
and income tax compliance
services, as well as board
corporate governance. Steve
provides company secretary
services for a number
of biotech and software
companies. Steve is also a
member of the Institute of
Chartered Accountants in
Australia, and the Australian
Institute of Company Directors.
Dan Parry
Chief Financial Officer
Dan Parry joined Oventus in
December 2017 with over 20
years’ experience as CFO and
Company Secretary in the
life science, technology and
medical service sectors. Dan
has held senior finance roles
with companies in the US, UK
and Australia, ranging from
venture-backed start-ups to
NASDAQ listed companies
including Astellas, Synergen,
Cortech, Heska, Accera and
Implicit Bioscience Ltd. His
experience also includes
corporate finance and internal
audit roles with a Fortune
100 company and six years
in public accounting where
Dan qualified as a CPA in the
US. In these roles, Dan has
managed finance, accounting,
human resources, information
technology, facilities, legal
and compliance functions
and mergers and acquisitions.
Dan is professionally qualified
as a Chartered Accountant in
Australia and as a CPA in the
US, with an MBA from the J.L.
Kellogg Graduate School of
Management in Chicago.
Robin Randolph
Sr Vice President - Sales,
Marketing and Operations,
North America
Starting her career as a nurse,
then sleep technologist and
clinical researcher, Robin
Randolph is an accomplished
marketing and sales executive
with over 30 years’ experience
in the sleep industry,
including past ownership
of US sleep centres. Robin
joined Oventus Medical in
April 2018 as Vice President
of Marketing and Operations,
North America. Robin’s vast
experience spans medical
device commercialisation,
product management, clinical
education, reimbursement
and sleep centre operations
management. Robin has
held senior management
roles in these areas for
both ResMed and Fisher &
Paykel Healthcare. She is
passionate about education
for patient management of
sleep disorders, including
obstructive sleep apnea,
sharing her in-depth industry
knowledge and promoting the
advantages of Oventus Airway
Technology.
17
Directors’ Report
The directors present their report, together with the
financial statements, on the consolidated entity consisting
of Oventus Medical Limited (‘the Company’) and the entities
it controlled (‘the Consolidated Entity’; ‘the Group’) at the
end of, or during, the year ended 30 June 2020.
Directors and company secretary
The names of the Directors of the Company during the year
and up to the date of this report are noted below. Directors
were in office for the entire period unless otherwise stated:
Dr Mel Bridges
Chairman
Dr Christopher Hart Executive Director
Mr Jake Nunn
Mr Paul Molloy
Non-Executive Director
(appointed 25 February 2020)
Non-Executive Director
(appointed 16 December 2019)
Ms Sue MacLeman Non-Executive Director
Mr Sharad Joshi
Non-Executive Director
Mr Neil Anderson
Executive Director
(until 16 December 2019)
Mr Stephen Denaro Company Secretary
Principal activities
Oventus (ASX: OVN) is a Brisbane, Australia-based medical
device company that is commercialising a unique treatment
platform for obstructive sleep apnea (OSA) and snoring.
Oventus’ O2Vent devices are designed for any patient
that is deemed appropriate for oral appliance therapy, but
especially beneficial for the many people that suffer with
nasal congestion, obstruction and mouth breathing. They
allow for airflow to the back of the mouth while maintaining
an oral seal and stable jaw position, avoiding multiple
obstructions from the nose, soft palate and tongue that can
contribute to OSA and snoring.
During the financial year ended 30 June 2020, Oventus was
primarily focused on rolling out its devices across its key
North American market via the ‘Lab in Lab’ model. ‘Lab in
Lab’ is a collaborative Sleep Physician/ Dental strategy that
streamlines patients’ access to treatment and incorporates
digital technology via intra oral scanning to achieve
operational efficiencies, accuracy and ultimately patient
outcomes.
Review of operations
‘Lab in Lab’ model
During the financial year, Oventus made significant progress
with the rollout of the ‘Lab in Lab’ model across North
America due to strong demand from sleep groups across
both the Canadian and US markets.
Demand was reinforced by the impact of COVID-19, with
many potential customers (sleep apnea groups) considering
the ‘Lab in Lab’ model as a new way to recover lost
revenues during forced COVID-19 closures amid national
lockdowns across the US and Canada.
18
Oventus continued to have a robust pipeline of contract
negotiations and, as at 30 June 2020, had 57 contracted
sites in North America, capable of generating $13.2m in
annualized revenue at minimum quotas.
The Company also had 22 launched sites, including post
COVID-19 relaunches at various stages of reopening. These
launched sites are capable of generating $5.3m annualized
revenue at minimum quotas.
As at the end of the financial year, 11 sites were in the
implementation phase and Oventus remains focused on
bringing existing contracts and sites back online as North
America continues to reopen from COVID-19 lockdown.
Key agreements secured during the period include one
with fast growing sleep group Aeroflow in February, with
the company having identified OSA therapeutics as a key
growth driver for its business.
Under the agreement, Aeroflow will initially introduce
Oventus technology across the Southeastern US states
before rolling it out nationally as it continues on an
aggressive growth path across the US.
In May, Oventus also secured an agreement with Canadian
respiratory services provider, Careica Health, which will see
Oventus technology offered to CPAP-intolerant individuals
via an extension to the company’s well-known SLEEP
program.
Impact of COVID-19 and implementation of telehealth
When the impact of COVID-19 became clear in March,
Oventus moved quickly to protect its customers and
business plan, adapt workflows and processes to enable
business continuation.
To support its sites, the Company introduced a telehealth
service, swiftly putting in place key initiatives to enable
existing ‘Lab in Lab’ sites to continue to identify OSA
patients for treatment. Many of these measures are more
efficient and the inclusion of telehealth has become a
permanent workflow change for Oventus.
Under the model, patients in the US and Canada receive
initial online or phone consultations at which time Oventus
undertakes any verification required to have a payer (or
insurer) cover device costs.
Whilst patient flow into physical sites overall was reduced
due to government-enforced lockdowns due to COVID-19,
this was offset in part by an increase in the conversion rate
of patients moving from the step of initial consultation to
booking in for in-person appointments as the sites reopen.
The telehealth service also enabled the company to
continue to engage with customers and patients through
the shutdown period.
In April and May, while physical delivery of treatment to
patients was restricted, many of the devices delivered
were to first responders in Canada who required treatment
alternatives to CPAP.
Directors’ ReportAnnual Report 2020 Oventus Medical LimitedFor the year ended 30 June 2020
While patient flow at launched sites remains subdued due
to COVID-19, Oventus remains optimistic about growth due
to a mix of factors, including: higher conversion rates as a
result of refined workflows and introduction of telehealth;
strong demand for the technology and clinical business
model; continued contract negotiation and execution; a
full launch calendar through to the end of CY2020 and
an overall increase in the number of operational sites.
As North America slowly reopens by region, Oventus is
ready to accelerate revenue growth with a broad, efficient
network of ‘Lab in Lab’ clinics.
Given the expected ongoing uncertainty and volatility due
to COVID-19, Oventus will continue to actively monitor and
review its response to market conditions and measures will
be updated as appropriate.
Capital raisings
During the financial year, Oventus conducted two capital
raises. In July 2019, it raised A$9.3 million through an
oversubscribed Placement to institutional and sophisticated
investors and underwritten Entitlement Offer. In May 2020,
it raised A$6.65 million through a Placement to institutional
and sophisticated investors and Share Purchase Plan (SPP).
Both offers were significantly oversubscribed. Under the
May 2020 Placement and SPP, the Company offered one
free attaching unlisted option for every two new shares
subscribed for (Options). The Shares under the Placement
and SPP had an issue price of A$0.24 each. The Options
offered under the SPP and the Placement will have an
exercise price of A$0.36 and will expire on 30 June 2021.
Funds raised are being deployed to meet the growing
demand for Oventus’ ‘Lab in Lab’ business model.
Financial position and results
The Company’s cash position was $8.5 million as at
30 June 2020, providing over five quarters of funding,
without the benefit of revenue improvement which is
expected to increase during the September quarter as
the number of live ‘Lab in Lab’ sites increase and patient
bookings continue to grow.
The loss for the Consolidated Entity amounted to
$10,126,364 (2019: loss of $7,848,255).
Total revenues for the year ended 30 June 2020 were
$419,298 (2019: $331,837), including device sales of $358,921
(2019: $331,837) a service-fee revenue of $60,377 related
to the ‘Lab in Lab’ business which commenced in August
2019. Gross profit from revenues totalled $187,562 (2019:
$173,598), including gross profit from ‘Lab in Lab’ revenues
of $6,628.
The Consolidated Entity incurred operating expenses
of $10,656,953 for the year ended 30 June 2020 (2019:
$8,486,805). Operating expenses include non-cash
charges of $1,526,652 (2019: $768,453) for amortisation
of intangible assets and depreciation and share based
payments of $308,838 (2019: $190,736) and are reflected
net of development expenditures capitalised in the
statement of financial position. Development expenditures
that were capitalised decreased to $779,618 for the year
ended 30 June 2020 from $1,318,854 in 2019. The increase
in operating expenditures related primarily to building out
the operational, sales and marketing capability in North
America and the introduction of products into the sleep
channel. During the year, the Consolidated Entity received
$828,120 from the Australian Federal Government as a
cash rebate for the Company’s 2019 financial year R&D
spend (2019: $1,039,988 related to 2018 financial year).
The Company’s net spend was also enhanced through the
receipt of $300,000 in proceeds from sale of a 3D printer,
completing the process of fully outsourcing manufacturing
and reducing fixed expenses during the March 2020 quarter.
Dividends
There were no dividends to shareholders paid,
recommended or declared during the current or previous
financial period.
Board and executive management changes
In December, Oventus appointed US medical device
industry expert, Paul Molloy to the Board as Non-Executive
Director. Mr Molloy brings considerable global and US
medical device industry expertise to Oventus, with
twenty-five years’ experience leading a range of public,
private and venture capital-funded healthcare companies.
His experience in establishing and managing international
operations will prove invaluable as Oventus continues to
execute commercially on its ‘Lab in Lab’ program.
He is currently President and CEO of ClearFlow Inc.,
a US-based medical device company. Before joining
ClearFlow, Paul was CEO at VasoNova Inc.- a Silicon
Valley-based, venture funded vascular navigation company
which was acquired by Teleflex Inc. (NYSE, TFX), in January
2011. Following the acquisition, he was appointed President
of Teleflex’ largest division – ARROW Vascular – having
full P&L responsibilities for direct sales, US and overseas
manufacturing plants, R&D and strategic planning.
Mr Molloy replaced co-founder, Chief Technology Officer
and former CEO, Neil Anderson who has moved to a
Consultancy Agreement with the Company.
In February, Oventus appointed specialist US healthcare
investor, Jake Nunn to the Board as Non-Executive Director.
Mr Nunn brings relevant sector knowledge from decades
spent in US healthcare portfolio management, financial
analysis and other board roles.
Jake is currently a venture advisor at New Enterprise
Associates (NEA), where he was a partner from 2006 to
2018. NEA is one of the world’s largest and most active
venture capital firms, specialising in global healthcare
and technology. Prior to that, he was a partner with MPM
Capital, held portfolio management and analyst roles with
Franklin Templeton and GE, amongst others. He now serves
as Venture Advisor to NEA and holds a number of board
roles with US listed healthcare businesses.
19
Directors’ ReportFor the year ended 30 June 2020 Significant changes in the state of affairs
Other than as stated above and in the accompanying financial report, there were no significant changes in the state of affairs of
the Consolidated Entity during the reporting period.
The Company’s capital raising activities for the prior two fiscal years are shown in the table below.
Equity – share capital
Opening Balance
Ordinary shares issued:
1 August 2019
28 August 2019
17 September 2019
8 May 2020
18 June 2020
18 June 2020
Share issue costs
At reporting date
30 June
2020
Number of
Shares
#
30 June
2020
Value of
Shares
$
30 June
2019
Number of
Shares
#
30 June
2019
Value of
Shares
$
105,939,212
29,640,394
105,939,212
29,640,394
15,757,491
5,987,847
6,085,092
2,312,335
2,747,922
1,044,210
19,010,416
4,562,500
364,584
87,600
8,332,984
2,000,001
–
(1,301,124)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
158,237,701
44,333,763
105,939,212
29,640,394
Significant matters subsequent to the period
In July, Oventus announced additional ‘Lab in Lab’ agreements across 9 sites with two new sleep groups, Tri Hospital Sleep
and Ontario Sleep Care, both located in Canada. Under these agreements, Oventus technology will be offered to patients of
the 9 sites.
Tri Hospital Sleep in Ontario is one of Mississauga’s largest privately-owned providers of diagnostics and treatment for OSA.
Under the agreement, ‘Lab in Lab’ facilities will be implemented in its largest location with 14 beds of sleep diagnostics.
Once fully deployed, Tri Hospital Sleep expects to order 20 O2Vent Optima devices per month.
Ontario Sleep Care is a large, privately-owned provider of treatment for OSA with 8 locations across the province of Ontario,
Canada. The agreement provides Oventus’ O2Vent Optima and ExVent therapy across the network of sites as an alternative
for CPAP-intolerant individuals. Patients will also be referred to the 8 sites from satellite locations. Once fully deployed, each
Ontario Sleep Care location expects to order 10 O2Vent Optima devices per month.
Both agreements have a term of three years, with an automatic three-year renewal, unless a party elects not to renew no later
than 180 days prior to the end of the third year.
On the 7th of August 2020, the Company issued 6,900,000 options to Directors under the Executive Share Option
Plan following shareholder approval under ASX Listing Rule 10.14 and Chapter 2E of the Corporations Act and issued
2,955,000 options to non-related party employees.
Expected future developments
Oventus’ focus for Q1 FY21 is targeted in the following areas:
– Supporting customers with the reopening of ‘Lab in Lab’ sites which are able to resume business operations;
– Launching further sites, including the initial 8 sites scheduled for launch in July;
– Making further improvements to the homecare model, in order to remove barriers to remote patient treatment;
– Retaining a continued focus on revenue improvement and cost control; and
– Adding a modest number of additional team members in North America who can maintain existing ‘Lab in Lab’ customers
and support with increasing the speed at which contracted implementations can be rolled out.
Environmental regulations
The Company’s operations are not regulated by any significant environmental regulations under the law of the
Commonwealth or of a State or Territory.
20
Directors’ ReportAnnual Report 2020 Oventus Medical LimitedFor the year ended 30 June 2020
Information on directors and company secretary
Mel Bridges
(Chairman) (Non-Executive Director) (Appointed 17 December 2018)
Qualifications
Experience
Bachelor Degree of Science (Chemistry), Honorary Doctorate from Queensland University of
Technology and Fellow of the Australian Institute of Company Directors.
Mel has over 35 years’ experience founding and building international lifescience, diagnostic and
medical device companies and commercialising a wide range of Australian technology. He is
responsible for numerous commercial and M&A transactions and liquidity events, including
listings on the ASX.
Mel has received national and state business awards including the 2005 AusBiotech Chairman’s
Industry Medal and 2004 Queensland Entrepreneur of the Year. Mel has founded and developed
medical device and diagnostic companies, including Pacific Diagnostics (acquired by Baxter),
PanBio Ltd (acquired by Inverness Medical), and ImpediMed Ltd (ASX: IPD).
Other current directorships None
Former directorships
(last 3 years)
Mel was previously a Non-Executive Director of ASX 100 Company ALS Ltd until his retirement
in July 2019 and was a director of Tissue Therapies Ltd (March 2009 to December 2015), Benitec
BioPharma Limited (October 2007 to June 2014) and Anatara Lifesciences Ltd (until May 2018).
Special responsibilities
Mel is the chair of the Remuneration Committee and serves on the Audit and Risk Management
Committee.
Interest in shares
3,116,380 ordinary shares
Interest in options
629,179 options
Sue MacLeman
(Non-Executive Director)
Qualifications
Experience
Other current directorships
Bachelor of Pharmacy from the University of Queensland, Masters of Marketing at Melbourne
University (Melbourne Business School), a Masters of Law degree (Deakin University), Fellow
and Chair Health Forum ATSE, Fellow ACPP and Fellow/Graduate of AICD.
Sue MacLeman has more than 30 years’ experience as a pharmaceutical, biotechnology and
medical technology executive having held senior roles in corporate, medical, commercial
and business development. Sue has also served as CEO and Board member of several ASX
and NASDAQ listed companies in the pharmaceutical sector. Sue is also appointed to several
academic and government advisory committees including CSIRO Health and Biosecurity
Advisory Committee, Prime Ministers Digital Expert Advisory Committee, DMTC Medical
Countermeasures and various COVID-19 taskforces.
Sue is currently the Chair of MTPConnect (Medical Technology and Pharmaceuticals Industry
Innovation Growth Centre MTPII-GC Ltd) ,Chair of Anatara Lifesciences Ltd (ASX:ANR), Chair
of Tali Digital Ltd (ASX:TD1), Non-Executive Director at Palla Pharma Ltd (ASX:PAL) and Non
Executive Director of Veski.
Former directorships:
RHS Ltd (August 2014 – June 2018)
Special responsibilities
Sue is the chair of the Audit and Risk Management Committee and serves on the Remuneration
Committee.
Interest in shares
54,132 ordinary shares
Interest in options
551,720 options
21
Directors’ ReportFor the year ended 30 June 2020 Sharad Joshi
(Non-Executive Director)
Qualifications
Experience
Bachelor of Mechanical Engineering, & Pre-Med with Biology minor from Northeastern
University in Boston, Massachusetts, Master of Business Administration, cum laude, from
Babson College Olin School of Business, Wellesley, Massachusetts.
Sharad has been active in the medical technology industry for over 30 years, held senior
positions for the past 10 years including as a global entrepreneurial medical devices CEO with
experience in launching medical devices, a strong track record of driving rapid global growth
and laying the strategic foundations for sustained success through strategic and biomedical
product innovation.
Sharad brings deep expertise in the North American market in product development, marketing
and sales, most recently as CEO of US headquartered Microline Surgical (a wholly owned
subsidiary of Tokyo Stock Exchange listed HOYA Corporation) where he was responsible for
executing growth strategy and market building, selling into 60 countries. Sharad is currently
the President and Chief Executive Officer of NanoDiagnostics / BioDirection, Inc in Hopkinton
Massachusetts.
Other current directorships Member of the Massachusetts Medical Board, Board Member BioDirection Inc.
Former directorships
(last 3 years):
Massachusetts Medical Device Association
Interest in shares
201,139 ordinary shares
Interest in options
450,000
Paul Molloy
(Non-Executive Director) – Appointed 16 December 2019
Qualifications
Experience
MBA from the University of Chicago Booth School of Business and Certified Registered Nurse
Anaesthetist (CRNA) from Academisch Medisch Centrum, Alkmaar, Netherlands.
Paul Molloy has considerable global and US medical device industry expertise, with
twenty-five years’ experience leading a range of public, private and venture capital funded
healthcare companies. He is currently President and CEO of ClearFlow Inc., a US-based
medical device company. Before joining ClearFlow, Paul was CEO at VasoNova Inc.- a Silicon
Valley-based, venture funded vascular navigation company which was acquired by Teleflex Inc.
(NYSE, TFX), in January 2011. Following the acquisition, he was appointed President of Teleflex’
largest division – ARROW Vascular – having full P&L responsibilities for direct sales, US and
overseas manufacturing plants, R&D and strategic planning.
Mr Molloy has also exited a number of leading US medical devices firms, including publicly
traded cerebral oxygenation monitoring firm, CAS Medical Inc., and Revolutionary Medical
Devices. He also serves on the Board at Augustine Medical a privately held market leader in
medical arena temperature management.
Other current directorships None
Former directorships
(last 3 years):
None
Interest in shares
104,167 ordinary shares
Interest in options
552,083
22
Directors’ ReportAnnual Report 2020 Oventus Medical LimitedFor the year ended 30 June 2020 Jake Nunn
(Non-Executive Director) – Appointed 20 February 2020
Qualifications
Experience
MBA from the Stanford Graduate School of Business and an AB in Economics. Jake holds the
Chartered Financial Analyst designation, is a member of the CFA Society of San Francisco, and
recently completed the Stanford GSB Directors’ Consortium executive education program.
Jake Nunn has more than 25 years’ experience in the life science industry as an investor,
independent director, research analyst and investment banker. Jake is currently a venture
advisor at New Enterprise Associates (NEA), where he was a partner from 2006 to 2018. Jake
is a Director of Addex Therapeutics (SIX,Nasdaq: ADXN), Qool Therapeutics, Inc., Regulus
Therapeutics (Nasdaq: RGLS) and Trevena, Inc. (Nasdaq: TRVN). He was a previous Director of
several companies in the pharmaceutical sector including Dermira Inc. (acquired by Eli Lilly) and
Hyperion Therapeutics (acquired by Horizon Pharma plc), and a board observer at Vertiflex, Inc.
(acquired by Boston Scientific).
Prior to NEA, Jake was a Partner specializing in life sciences investing at MPM Capital. Previously,
he was a healthcare research analyst and portfolio manager at Franklin Templeton Investments
and an investment banker with Alex. Brown & Sons.
Other current directorships
Jake is a Non-Executive Director at Addex Therapeutics, Qool Therapeutics, Regulus
Therapeutics, and Trevena, Inc.
Former directorships
(last 3 years):
Dermira, Inc. (May 2011 - February 2020)
Interest in shares
156,250 ordinary shares
Interest in options
578,125
Chris Hart
(Executive Director) (Founder) (Managing Director and Chief Executive Officer)
Qualifications
Experience
Bachelor of Dental Science with Honours, Bachelor of Science in Biochemistry, Master of
Philosophy in Biomedical Science.
Chris is the founder of the Company and inventor of the O2Vent design concept. Chris is overseeing
the launch of the O2Vent Optima to patients and through clinicians and heads the management
team as they roll out the Oventus Sleep Treatment Platform across Australia, the United States and
Canada. Chris is also heavily involved with training and presenting to the dental and sleep sector.
Prior to establishing Oventus, Chris owned and managed a multi-site national dental practice,
training institute and management consultancy which he sold to private equity investors.
Chris also acts as an adviser to various bodies within the dental industry on the commercial
aspects of health care delivery.
Other current directorships None
Former directorships
(last 3 years):
None
Interest in shares
26,542,513 ordinary shares
Interest in options
5,971,464 options
Neil Anderson
(Executive Director) Resigned 16 December 2019 (Chief Technical Officer)
Qualifications
Experience
Bachelor of Applied Science (Hons), Diploma of Management, Graduate of the Institute of
Company Directors (GAICD).
Neil has over 30 years’ experience in commercialising medical devices and managing the
process from conception to market release including applied research, developing prototypes
and testing, product development, manufacturing, regulatory submissions and clinical trials.
Prior to taking on the role with Oventus, Neil founded and held the role of chief executive officer
of CathRx for 10 years. In this role, Neil managed the process from the invention of the company’s
technology through to commercialising a range of products leading to sales in Europe.
Other current directorships None
Former directorships
(last 3 years):
None
Interest in shares
5,837,365 ordinary shares
Interest in options
451,464 options
23
Directors’ ReportFor the year ended 30 June 2020 Stephen Denaro
(Company Secretary)
Qualifications
Experience
Bachelor of Business, Chartered Accountant, a Member of AICD and a Graduate Diploma in
Applied Corporate Governance.
Steve has extensive experience in mergers and acquisitions, business valuations, accountancy
and income tax compliance services, as well as board corporate governance. Steve provides
company secretary services for a number of biotech and software companies. Steve is also a
member of the Institute of Chartered Accountants in Australia, and the Australian Institute of
Company Directors.
Interest in shares
178,273 ordinary shares
Interest in options
225,366 options
Meetings of directors
During the financial year, 14 meetings of directors were held. Attendances were:
Mel Bridges (Chairman)
Neil Anderson
Chris Hart
Sue MacLeman
Sharad Joshi
Paul Molloy
Jake Nunn
Full Board
Number eligible
to attend
Number attended
14
6
14
14
14
8
7
13
5
13
13
12
7
7
Meetings of remuneration committee and audit and risk management committee
During the financial year, 1 meeting of the Remuneration and Nomination Committee were held and 2 meetings of the Audit
and Risk Management Committee was held. Attendances were:
Remuneration and Nomination
Audit and Risk Management
Number eligible
to attend
Number
attended
Number eligible
to attend
Number
attended
Mel Bridges (Chairman)
Sue MacLeman
1
1
1
1
2
2
1
2
24
Directors’ ReportAnnual Report 2020 Oventus Medical LimitedFor the year ended 30 June 2020 Remuneration report (Audited)
Key management personnel (KMP) covered in
this report
The following persons were directors of Oventus Medical
Limited during the financial year:
– Mel Bridges (Chairman) (Non-Executive Director)
– Chris Hart (Executive Director) (Founder)
– Neil Anderson (Executive Director)
(until 16 December 2019)
– Sue MacLeman (Non-Executive Director)
– Sharad Joshi (Non-Executive Director)
– Paul Molloy (Non-Executive Director appointed
16 December 2019)
– Jake Nunn (Non-Executive Director appointed
25 February 2020)
Other key management personnel
The following persons also had the authority and
responsibility for planning, directing and controlling the
major activities of the Group, directly or indirectly, during
the financial year:
– Daniel Parry (Chief Financial and Operations Officer)
– Robin Randolph (Sr. VP Sales, Marketing, Operations)
– Stephen Denaro (Company Secretary)
Remuneration policy and link to performance
The Group’s remuneration policy adopted has been
designed to:
a. Align with shareholder and business objectives and
expectations;
b. Attract and retain suitably qualified and experienced
people;
c. Provide a level and composition of remuneration that
is reasonable, fair and aligned to market;
d. Encourage directors and executives to pursue the long
term growth and success of the Company, balanced
against the need to also achieve critical short term
business objectives;
e. Align corporate and individual performance;
f. Be internally consistent;
g. Be transparent with respect to setting performance
goals and the measurement of performance against
those goals; and
h. Align with regional and industry standards and
regulatory requirements.
The remuneration policy links to the Group’s long-term
performance by providing incentives to key management
personnel based upon milestones which need to be met
in the short to medium term which but which are essential
requirements for the Group’s long term performance.
The issue of options to key personnel aligns their
compensation to increases in share prices and, accordingly,
increases in shareholder wealth. The remuneration policy is
not based on earnings as this is not seen as the appropriate
indicator of performance for key management personnel at
this stage of the Group’s life cycle.
Elements of remuneration
Remuneration packages may consist of fixed remuneration,
short-term incentives and long term equity-based benefits.
Remuneration packages can be tailored to an individual’s
requirements to maximize available salary packaging
options.
Total fixed remuneration consist of base salary, non-cash
benefits provided inclusive of FBT (Fringe Benefit Tax) costs,
as well as employer contributions to superannuation.
Short-term incentives consist of cash bonuses payable
under the Company’s Employee Incentive Plan, and are
paid on the basis of an individual’s performance and
contributions during the year.
The Employee Incentive Plan is managed by the
Remuneration and Nomination Committee, which sets and
reviews relevant performance targets against which an
individual’s and the Company’s short-term performance are
measured.
Long-term benefits are provided by way of equity based
incentives under the Company’s Employee Option Plan,
and are granted based on an assessment made by the
Remuneration and Nomination Committee taking account
of an individual’s position, service and market-based
assessment and an individual’s capacity to influence
corporate value.
The Employee Option Plan is managed by the
Remuneration and Nomination Committee who
recommends grants to individuals and the terms and
performance criteria applicable.
Responsibilities of Remuneration and Nomination
Committee
1.
The Remuneration and Nomination Committee is
responsible for determining appropriate levels and
structure of remuneration for executives.
2.
3.
The Remuneration and Nomination Committee is
responsible for approving performance metrics for
executives and measuring performance against those
metrics.
The Remuneration and Nomination Committee will
review the remuneration of executives annually,
taking account of market movements, comparative
remuneration information and individual performance.
25
Directors’ ReportFor the year ended 30 June 2020 Remuneration expenses for KMP
Short-term benefits
Post-
employment
benefits
Share-based
payments
Cash salary
& fees
$
Bonus
$
Other
Benefits
$
Termination
benefits
$
Super
$
Equity-
settled
$
Total
$
For the year ended 30 June 2020
Non-executive directors
Mel Bridges
Sue MacLeman
Sharad Joshi
Paul Molloy (from 16 Dec 2019)
Jake Nunn (from 25 Feb 2020)
Executive directors
Chris Hart
Neil Anderson
(resigned 16 Dec 2019)
63,265
42,557
55,317
29,724
8,232
–
–
–
–
–
–
–
–
–
–
6,010
4,043
–
–
–
512,434
40,000
310,525
10,718
–
–
–
–
–
–
11,855
11,855
35,564
–
–
81,130
58,455
90,881
29,724
8,232
67,748
941,425
Total for directors
817,779
40,000
310,525
106,250
–
–
10,000
30,771
86,348
11,855
214,453
86,348
138,877
1,424,300
Other key management personnel
Stephen Denaro
Daniel Parry
Robin Randolph
Total for other KMP
For the year ended 30 June 2019
Non-executive directors
Mel Bridges
Sue MacLeman
Sharad Joshi
Executive directors
Chris Hart
Neil Anderson
Total for directors
Other key management personnel
Stephen Denaro
Daniel Parry
Robin Randolph
Total for other KMP
22,020
232,771
306,159
560,950
73,059
50,228
41,241
398,988
231,668
795,185
22,913
225,000
249,188
497,102
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
39,013
39,013
19,972
–
19,972
6,941
4,772
–
37,904
22,002
71,619
–
21,375
–
21,375
1,258
29,677
25,443
23,278
282,420
331,602
56,378
637,300
5,855
5,855
85,855
60,855
–
41,241
11,710
11,710
448,603
265,381
35,131
901,935
3,657
21,187
26,570
267,562
11,903
300,104
36,747
594,236
–
–
–
–
–
–
–
–
–
–
–
–
–
26
Directors’ ReportAnnual Report 2020 Oventus Medical LimitedFor the year ended 30 June 2020 The number of options held as at end of reporting period for KMP are as follows:
Directors
Chris Hart
Mel Bridges
Neil Anderson
Sue MacLeman
Sharad Joshi
Paul Molloy
Jake Nunn
Other KMP
Dan Parry
Robin Randolph
Steve Denaro
Opening
Balance
Movement
Closing
Balance
30 June 2020
Vested as of
30 June 2020
Vested &
Exercisable
as of
30 June 2020
401,464
570,000
971,464
424,795
424,795
200,732
401,464
200,732
128,447
329,179
295,844
295,844
50,000
50,988
451,464
418,129
251,720
218,385
–
–
–
150,000
150,000
52,083
78,125
52,083
78,125
49,995
52,083
78,125
418,129
218,385
49,995
52,083
78,125
300,000
–
300,000
166,662
166,662
300,000
100,000
400,000
166,662
166,662
125,366
–
125,366
108,696
108,696
Contractual arrangements for executive KMP
Remuneration and employment terms for executive directors and other key management personnel are detailed in the
employment agreements. The employment agreements do not have a fixed term. The Group may terminate the contracts
immediately if the executive engages in serious misconduct, wilfully disobeys a lawful and reasonable direction or becomes
bankrupt. Otherwise, the Group or the executive may terminate the contracts by giving three months’ notice.
Non-executive director arrangements
The Board’s policy is to remunerate non-executive Directors at market rates for comparable companies for the time,
commitment and responsibilities undertaken by non-executive Directors.
Remuneration payable to non-executive Directors consists of fixed fees payable within the aggregate director fees approved
by shareholders. In addition, statutory employer superannuation contributions are payable where relevant, as are non-cash
benefits in lieu of fees.
Base fixed fees payable to non-executive Directors take account of work undertaken on Board committees. Additional fixed
fees will be paid to directors who chair a Board committee.
In addition, non-executive Directors may participate under the terms of the Company’s Employee Option Plan, subject to the
relevant approval of shareholders.
Other than by way of payment of statutory employer superannuation contributions, retirement benefits are not granted to
non-executive Directors.
The Remuneration and Nomination Committee reviews the remuneration of non-executive Directors annually. If considered
necessary, the Remuneration and Nomination Committee will recommend that shareholders be asked to consider, and if
considered appropriate, to approve any increase in the aggregate non-executive Director fees. The total amount of fixed fees
paid to non-executive Directors must not exceed the maximum amount authorised by shareholders from time to time. As at
30 June 2020, the Consolidated Entity was a listed entity and the requirement to have non-executive director remuneration
authorised is subject to approval at the Company’s annual general meeting.
Where relevant, the Remuneration and Nomination Committee will seek advice from independent third parties to bench mark
non-executive Director remuneration against relevant market practice.
End of Remuneration Report
27
Directors’ ReportFor the year ended 30 June 2020 Shares under option
Unissued ordinary shares
Unissued ordinary shares of Oventus Medical Limited under option at the date of this report are as follows:
Expiry date
23 February 2021
30 June 2021
30 June 2021
1 December 2021
12 December 2022
24 February 2022
18 December 2022
2 July 2023
8 August 2023
15 January 2024
22 May 2024
8 December 2024
8 December 2024
Exercise
price
Number
under option
$0.578
2,274,954
$0.360
4,166,289
$0.360
9,687,477
$1.055
300,000
$0.961
600,000
$0.940
49,998
$1.016
200,000
$0.480
300,000
$0.424
380,000
$0.423
225,000
$0.403
100,000
$1.063
1,000,000
$0.423
370,000
Key Management Personnel Options
The number of options that have vested as of the reporting period 30 June 2020 are as follows:
Exercise
Price
Issue Date
FV per Option
@ Grant Date
Closing
Balance
Vested as of
30 June 2020
Chris Hart
Unlisted options - Vesting 17/2/17 Expiring 23/2/21
$0.578
31-May-16
Unlisted options - Vesting 17/2/18 Expiring 23/2/21
$0.578
31-May-16
Unlisted options - Vesting 17/2/19 Expiring 23/2/21
$0.578
31-May-16
Unlisted options - Vesting 4/10/20 Expiring 8/12/24
$1.063
10-Dec-19
Unlisted options - Vesting 4/10/21 Expiring 8/12/24
$1.063
10-Dec-19
Unlisted options - Vesting 11/10/22 Expiring 8/12/24
$1.063
10-Dec-19
Unlisted options - Vesting 14/12/19 Expiring 8/12/24
$0.423
10-Dec-19
Unlisted options - Vesting 14/12/20 Expiring 8/12/24
$0.423
10-Dec-19
Unlisted options - Vesting 14/12/21 Expiring 8/12/24
$0.423
10-Dec-19
Mel Bridges
Unlisted options - Vesting 17/2/17 Expiring 23/2/21
$0.578
31-May-16
Unlisted options - Vesting 17/2/18 Expiring 23/2/21
$0.578
31-May-16
Unlisted options - Vesting 17/2/19 Expiring 23/2/21
$0.578
31-May-16
Unlisted options - Vesting 18/6/20 Expiring 30/6/21
$0.360
18-Jun-20
Unlisted options - Vesting 14/12/19 Expiring 8/12/24
$0.423
10-Dec-19
Unlisted options - Vesting 14/12/20 Expiring 8/12/24
$0.423
10-Dec-19
Unlisted options - Vesting 14/12/21 Expiring 8/12/24
$0.423
10-Dec-19
$0.133
$0.133
$0.133
$0.384
$0.384
$0.384
$0.474
$0.474
$0.474
$0.133
$0.133
$0.133
$0.240
$0.474
$0.474
$0.474
133,807
133,807
133,850
166,650
166,650
166,700
23,331
23,331
23,338
133,807
133,807
133,850
–
–
–
23,331
–
–
971,464
424,795
66,903
66,903
66,926
78,447
16,665
16,665
16,670
66,903
66,903
66,926
78,447
16,665
–
–
329,179
295,844
28
Directors’ ReportAnnual Report 2020 Oventus Medical LimitedFor the year ended 30 June 2020 Exercise
Price
Issue Date
FV per Option
@ Grant Date
Closing
Balance
Vested as of
30 June 2020
Neil Anderson
Unlisted options - Vesting 17/2/17 Expiring 23/2/21
Unlisted options - Vesting 17/2/18 Expiring 23/2/21
Unlisted options - Vesting 17/2/19 Expiring 23/2/21
Unlisted options - Vesting 14/12/19 Expiring 8/12/24
Unlisted options - Vesting 14/12/20 Expiring 8/12/24
Unlisted options - Vesting 14/12/21 Expiring 8/12/24
Sue MacLeman
Unlisted options - Vesting 17/2/17 Expiring 23/2/21
Unlisted options - Vesting 17/2/18 Expiring 23/2/21
Unlisted options - Vesting 17/2/19 Expiring 23/2/21
Unlisted options - Vesting 18/6/20 Expiring 30/6/21
Unlisted options - Vesting 14/12/19 Expiring 8/12/24
Unlisted options - Vesting 14/12/20 Expiring 8/12/24
Unlisted options - Vesting 14/12/21 Expiring 8/12/24
$0.578
$0.578
$0.578
$0.423
$0.423
$0.423
$0.578
$0.578
$0.578
$0.360
$0.423
$0.423
$0.423
31-May-16
31-May-16
31-May-16
10-Dec-19
10-Dec-19
10-Dec-19
31-May-16
31-May-16
31-May-16
18-Jun-20
10-Dec-19
10-Dec-19
10-Dec-19
Sharad Joshi
Unlisted options - Vesting 14/12/19 Expiring 8/12/24
Unlisted options - Vesting 14/12/20 Expiring 8/12/24
Unlisted options - Vesting 14/12/21 Expiring 8/12/24
$0.423
$0.423
$0.423
10-Dec-19
10-Dec-19
10-Dec-19
$0.133
$0.133
$0.133
$0.474
$0.474
$0.474
$0.133
$0.133
$0.133
$0.240
$0.474
$0.474
$0.474
$0.474
$0.474
$0.474
133,807
133,807
133,850
16,665
16,665
16,670
133,807
133,807
133,850
16,665
–
–
451,464
418,129
66,903
66,903
66,926
988
16,665
16,665
16,670
251,732
49,995
49,995
50,010
66,903
66,903
66,926
988
16,665
–
–
218,385
49,995
–
–
150,000
49,995
Paul Molloy
Unlisted options - Vesting 18/6/20 Expiring 30/6/21
$0.360
18-Jun-20
$0.240
52,083
52,083
Jake Nunn
Unlisted options - Vesting 18/6/20 Expiring 30/6/21
$0.360
18-Jun-20
$0.240
78,125
78,125
Dan Parry
Unlisted options - Vesting 05/12/18 Expiring 18/12/22
Unlisted options - Vesting 05/12/19 Expiring 18/12/22
Unlisted options - Vesting 12/12/20 Expiring 18/12/22
Unlisted options - Vesting 16/01/20 Expiring 15/01/24
Unlisted options - Vesting 16/01/21 Expiring 15/01/24
Unlisted options - Vesting 16/01/22 Expiring 15/01/24
Robin Randolph
Unlisted options - Vesting 17/05/19 Expiring 2/07/23
Unlisted options - Vesting 17/05/20 Expiring 2/07/23
Unlisted options - Vesting 24/05/21 Expiring 2/07/23
Unlisted options - Vesting 16/01/20 Expiring 15/01/24
Unlisted options - Vesting 16/01/21 Expiring 15/01/24
Unlisted options - Vesting 16/01/22 Expiring 15/01/24
Unlisted options - Vesting 4/10/20 Expiring 8/12/24
Unlisted options - Vesting 4/10/21 Expiring 8/12/24
Unlisted options - Vesting 11/10/22 Expiring 8/12/24
$1.016
$1.016
$1.016
$0.423
$0.423
$0.423
$0.480
$0.480
$0.480
$0.423
$0.423
$0.423
$1.063
$1.063
$1.063
19-Dec-17
19-Dec-17
19-Dec-17
16-Jan-19
16-Jan-19
16-Jan-19
03-Jul-18
03-Jul-18
03-Jul-18
16-Jan-19
16-Jan-19
16-Jan-19
10-Dec-19
10-Dec-19
10-Dec-19
$0.312
$0.312
$0.312
$0.155
$0.155
$0.155
$0.149
$0.149
$0.149
$0.155
$0.155
$0.155
$0.384
$0.384
$0.384
66,666
66,666
66,668
33,330
33,330
33,340
66,666
66,666
–
33,330
–
–
300,000
166,662
66,666
66,666
66,668
33,330
33,330
33,340
33,330
33,330
33,340
66,666
66,666
–
33,330
–
–
–
–
–
400,000
166,662
29
Directors’ ReportFor the year ended 30 June 2020 Exercise
Price
Issue Date
FV per Option
@ Grant Date
Closing
Balance
Vested as of
30 June 2020
Steve Denaro
Unlisted options - Vesting 17/2/17 Expiring 23/2/21
Unlisted options - Vesting 17/2/18 Expiring 23/2/21
Unlisted options - Vesting 17/2/19 Expiring 23/2/21
Unlisted options - Vesting 16/01/20 Expiring 15/01/24
Unlisted options - Vesting 16/01/21 Expiring 15/01/24
Unlisted options - Vesting 16/01/22 Expiring 15/01/24
$0.578
$0.578
$0.578
$0.423
$0.423
$0.423
31-May-16
31-May-16
31-May-16
16-Jan-19
16-Jan-19
16-Jan-19
$0.133
$0.133
$0.133
$0.155
$0.155
$0.155
33,451
33,451
33,464
8,330
8,330
8,340
33,451
33,451
33,464
8,330
–
–
125,366
108,696
No option holder has any right under the options to participate in any other share issue of the company or any other entity.
Insurance of officers and indemnities
The Company maintains and pays premiums in respect of directors’ and officers’ insurance. Premiums paid in respect of
insurance amounted to $251,237 (2019: $152,690).
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought
against the officers in their capacity as officers of entities in the Group, and any other payments arising from liabilities incurred
by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving
a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage
for themselves or someone else or to cause detriment to the company. It is not possible to apportion the premium between
amounts relating to the insurance against legal costs and those relating to other liabilities.
Proceedings on behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to
which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those
proceedings.
The Company was not a party to any such proceedings during the period.
Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the directors of Oventus Medical
Limited support and have adhered to key principles of corporate governance.
Please refer to the Corporate Governance Statement of Oventus Medical Limited on website www.o2vent.com via the tab
headed “Investor Centre” for more information.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor
are outlined in Note 19 to the financial statements.
There were no non-audit services provided by the auditor (or by another person or firm on the auditor’s behalf) during the
financial year.
Auditor’s independence declaration
The auditor’s independence declaration is set out on the following page and forms part of the Directors’ Report for the year
ended 30 June 2020.
This report is made in accordance with a resolution of directors.
Mel Bridges
Director
Brisbane
31st August 2020
30
Directors’ ReportAnnual Report 2020 Oventus Medical LimitedFor the year ended 30 June 2020 Auditor’s Independence Declaration
AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF OVENTUS MEDICAL LIMITED AND CONTROLLED
ENTITIES
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2020, there have
been no contraventions of:
(a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(b)
any applicable code of professional conduct in relation to the audit.
PKF BRISBANE AUDIT
CAMERON BRADLEY
PARTNER
BRISBANE
31 AUGUST 2020
31
Consolidated Statement of Comprehensive Income
Device Sale Revenue
Service Fee Revenue
Total Revenues
Cost of Sales
Gross Profit
Less: Expenses
Staff Costs
Staff Costs – Share Based Payments
Depreciation and amortisation
Administration
Travel
Sales & Marketing
Information technology costs
IP Audit Legal & Consulting
Insurance
Clinical Studies, Research & Regulatory
Office & Lab
Total expenses
Other income (expenses)
Interest income
Interest expense
Other income
Note
30 June
2020
$
358,921
60,377
419,298
231,736
187,562
30 June
2019
$
331,837
–
331,837
158,239
173,598
3
4,820,231
3,741,566
308,888
1,526,652
347,969
822,751
520,699
427,277
375,704
380,761
571,831
322,453
190,736
768,453
471,585
722,350
670,926
383,463
362,047
282,016
389,202
346,222
10,425,216
8,328,566
45,003
154,539
(5,370)
71,657
111,290
–
152,174
306,713
Loss before income tax expense
Income tax expense
(10,126,364)
(7,848,255)
15
–
–
Loss for the year attributable to members of the company
(10,126,364)
(7,848,255)
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss when specific
conditions are met:
Exchange differences on translating foreign operations
Total comprehensive loss attributable to members of the company
(13,118)
(116,147)
(10,139,482)
(7,964,402)
Earnings per share for profit/(loss) from continuing operations:
24
Basic earnings per share
Diluted earnings per share
(7.75)
(7.75)
(7.41)
(7.41)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes. .
32
For the year ended 30 June 2020Annual Report 2020 Oventus Medical Limited
Consolidated Statement of Financial Position
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Right of use assets
Intangible assets
Deposits
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Other current liabilities
Total current liabilities
Non-current liabilities
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share based payment reserve
Translation reserve
Accumulated losses
Total equity
Note
30 June
2020
$
30 June
2019
$
4
5
6
7
8
9
10
11
11
12
13
14
8,455,393
2,998,563
179,113
79,068
1,274,242
1,363,614
9,908,748
4,441,245
966,271
699,398
44,033
–
3,333,320
3,744,100
74,732
74,732
4,418,356
4,518,230
14,327,104
8,959,475
1,699,751
1,391,918
321,511
135,016
2,021,262
1,526,934
89,817
89,817
75,936
75,936
2,111,079
1,602,870
12,216,025
7,356,605
44,333,763
29,640,394
711,364
500,212
(125,370)
(112,252)
(32,703,732)
(22,671,750)
12,216,025
7,356,605
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
33
As at 30 June 2020
Consolidated Statement of Changes in Equity
Balance at 1 July 2018
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction costs and
tax
Share based payments
Total transactions with owners in their capacity
as owners:
Contributed
Equity
$
Share Based
Payments
Reserve
$
Translation
Reserve
$
Accumulated
Losses
$
Total
$
29,640,394
309,476
3,895
(14,823,495)
15,130,270
–
–
-
–
–
–
–
–
-
–
190,736
190,736
–
(7,848,255)
(7,848,255)
(116,147)
–
(116,147)
(116,147)
(7,848,255)
(7,964,402)
–
–
–
–
–
–
–
190,736
190,736
Balance at 30 June 2019
29,640,394
500,212
(112,252)
(22,671,750)
7,356,605
–
–
–
(3,304)
(3,304)
29,640,394
500,212
(112,252)
(22,675,054)
7,353,300
Cumulative adjustment upon adoption of new
accounting standards – AASB 16
Balance at 1 July 2019
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
–
–
–
Contributions of equity, net of transaction costs
and tax
14,693,369
Share based payments
Write-off of forfeit options
–
–
308,838
(97,686)
Total transactions with owners in their capacity
as owners:
14,693,369
211,152
–
–
–
–
–
(10,126,364)
(10,126,364)
(13,118)
–
(13,118)
(13,118)
(10,126,364)
(10,139,482)
–
–
–
–
–
–
14,693,369
308,838
97,686
–
97,686
15,002,207
Balance at 30 June 2020
44,333,763
711,364
(125,370)
(32,703,732)
12,216,025
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
34
For the year ended 30 June 2020Annual Report 2020 Oventus Medical Limited Consolidated Statement of Cash Flows
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
R&D grants and concessions received
Interest and other finance costs paid
Note
30 June
2020
$
30 June
2019
$
392,580
348,000
(8,929,306)
(6,644,951)
39,600
192,649
828,120
1,192,162
–
–
Net cash outflow from operating activities
23
(7,669,006)
(4,912,140)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Proceeds from (payments for) term-deposits
Proceeds from sale of property, plant and equipment
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issue of shares, net of transaction costs
Net cash inflow from financing activities
Net increase (decrease) in cash held
Cash and cash equivalents at the beginning of the financial period
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
(652,342)
(66,836)
(1,163,041)
(1,874,861)
–
302,613
(5,638)
69,527
(1,512,770)
(1,877,808)
12
14,756,209
14,756,209
–
–
5,574,433
(6,789,948)
2,998,563
9,894,959
(117,603)
(106,449)
8,455,393
2,998,563
35
For the year ended 30 June 2020
Notes to the Financial Statements
For the year ended 30 June 2020
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, revised or amending Accounting Standards and
Interpretations adopted
The Group has adopted all of the new, revised or amending
Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board (‘AASB’) that are
mandatory for the current reporting period. Any new, revised
or amending 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 Group.
Basis of preparation
These general purpose financial statements have been
prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’) and the Corporations
Act 2001, as appropriate for for-profit oriented entities.
These financial statements also comply with International
Financial Reporting Standards as issued by the International
Accounting Standards Board (‘IASB’).
Historical cost convention
These financial statements have been prepared under the
historical cost convention on an accrual basis of accounting
and a going concern assumption.
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 Group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to
the financial statements, are disclosed in Note 2.
Parent entity information
In accordance with the Corporations Act 2001, these
financial statements present the results of the Group only.
Supplementary information about the parent entity is
disclosed in Note 20.
Principles of consolidation
The Statement of Comprehensive Income and Statement of
Financial Position as at 30 June 2020 incorporate the assets,
liabilities and results of the Company and its controlled
entities. A subsidiary is any entity over which the Company
has the power to govern the financial and operating
policies, generally accompanying a shareholding of more
than one half of the voting rights.
All intercompany balances and transactions between
entities in the Group, including any unrealised profits
or losses, have been eliminated on consolidation.
Accounting policies of controlled entities are consistent
with the policies adopted by the parent unless otherwise
stated below.
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.
A list of controlled entities is at Note 21.
Comparative information
Where necessary, comparative figures have been adjusted
to conform to changes in presentation in the current year.
Segment reporting
The Group is a medical device developer operating within
a sole industry, being the development of oral appliances
for sleep disorders. The Group operates predominantly
in Australia and has established sales and marketing
operations in the United States of America in January 2017.
For management purposes, the Group has two operating
segments: Australia and North America, comprising United
States of America and Canada.
Unless stated otherwise, all amounts reported to the Board
of Directors, being the chief operating decision makers
with respect to operating segments, are determined in
accordance with accounting policies that are consistent
with those adopted in the annual financial statements of
the Group.
Revenue recognition
Revenue from contracts with customers is measured at
the transaction price specified in the contract and is net of
amounts expected to be refunded to the customer such
as rebates. The entity is an agent for revenue recognition
purposes with regard to contracts with distributors and
records revenue at net amount of distributor fees. There
are no contracts with customers that have significant
financing components.
The Group manufactures and sells devices for the
treatment of obstructive sleep apnea. Revenue is
recognised when control of the products has transferred
to the distributor / customer. For such transactions, this
is when the products are delivered to the distributors /
customers. Volume discounts can be provided with the
sale of these items, depending on the volume of aggregate
sales made to eligible distributors / customers. Revenue
from these sales is based on the price stipulated in the
contract, recognition of revenue and distribution discounts
are calculated on a monthly basis.
36
Annual Report 2020 Oventus Medical Limited A receivable is recognised when the goods are delivered.
The Group’s right to consideration is deemed unconditional
at this time, as only the passage of time is required before
payment of that consideration is due. There is no significant
financing component because sales (which include
those with volume discounts) are made within a credit term
of 30 days.
The Group provides services to clinicians delivering the
Group’s oral appliances out of Sleep Labs and other
facilities contracted by the Group, which includes the use
of clinical space equipped for the fitting and delivery of
oral appliances, patient management, marketing and other
support infrastructure. Revenue is recognised over time as
the service is provided to the clinicians. The Master Services
Agreement with the clinician allows the clinician the right
to cancel the agreement with one to three month’s notice
without penalty.
All revenue is stated net of the amount of goods and
services tax (GST).
Government grants
Grants from government, including Australian Research and
Development Tax Incentive (RDTI), are recognised at their
fair value where there is a reasonable assurance that the
grant will be received, and the Company will comply with
all attached conditions.
Where a grant is received relating to research and
development costs that have been expensed, the grant
is recognised as other income when the grant becomes
receivable. When the grant relates to an asset, the cost of
the asset is shown net of the grant or receivable.
Income tax
The income tax expense or benefit for the period is the
tax payable on that period’s taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by
the changes in deferred tax assets and liabilities attributable
to temporary differences, unused tax losses and the
adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for
temporary differences at the tax rates expected to be
applied when the assets are recovered or liabilities are
settled, based on those tax rates that are enacted or
substantively enacted, except for:
– When the deferred income tax asset or liability
arises from the initial recognition of goodwill or an
asset or liability in a transaction that is not a business
combination and that, at the time of the transaction,
affects neither the accounting nor taxable profits; or
– When the taxable temporary difference is associated
with interests in subsidiaries, associates or joint
ventures, and the timing of the reversal can be
controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised
deferred tax assets are reviewed at each reporting date.
Deferred tax assets recognised are reduced to the extent
that it is no longer probable that future taxable profits will
be available for the carrying amount to be recovered.
Previously unrecognised deferred tax assets are recognised
to the extent that it is probable that there are future taxable
profits available to recover the asset.
Deferred tax assets and liabilities are offset only where
there is a legally enforceable right to offset current tax
assets against current tax liabilities and deferred tax
assets against deferred tax liabilities; and they relate to
the same taxable authority on either the same taxable
entity or different taxable entities which intend to settle
simultaneously.
Cost of Goods Sold
The Consolidated Entity has progressed from the pilot
phase of manufacturing devices for the Australian
and North American markets to scalable production
within the ordinary course of business. Accordingly, the
Consolidated Entity has presented applicable expenditures
as Costs of Sales in the current period and reclassified
comparative amounts.
Inventories
Raw materials and stores, work in progress and finished
goods are stated at the lower of cost and net realisable
value. Cost comprises direct materials, direct labour and
an appropriate proportion of variable and fixed overhead
expenditure. Costs are assigned to individual items of
inventory on the basis of weighted average costs. Costs
of purchased inventory are determined after deducting
rebates and discounts. Net realisable value is the estimated
selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs
necessary to make the sale.
Expenses
All expenses are recognised in the Statement of
Comprehensive Income on an accrual basis. Amounts
disclosed as expenses are net of taxes paid except
where the amount of goods and services tax incurred
is not recoverable from the taxation authority. In these
circumstances, the tax is recognised as part of the expense.
37
Notes to the Financial Statementscontinued Class of fixed asset
Useful lives
Office furniture & fixtures
Computer equipment
Sleep and production equipment
Dental imaging equipment
Motor vehicles
Intangible assets
5 years
4 years
7 years
7 years
8 years
Patents, trademarks and licences
Patents, trademarks and licences are recognised at
cost less accumulated amortisation and accumulated
impairment losses. Amortisation is recognised on a straight-
line basis over their estimated useful lives. The estimated
useful life and amortisation method are reviewed at the end
of each reporting period, with the effect of any changes
in estimate being accounted for on a prospective basis.
The Group’s estimate of the useful lives of its patents,
trademarks and licenses is 20 years.
Research and development expenditure
Expenditure on research activities is recognised as an
expense when incurred.
An internally generated intangible asset arising from
development (or from the development phase of an internal
project) is recognised if, and only if, all of the following have
been demonstrated:
– the technical feasibility of completing the intangible
asset so that it will be available for use or sale;
– the intention to complete the intangible asset and use
or sell it;
– the ability to use or sell the intangible asset;
– how the intangible asset will generate probable future
economic benefits;
– the availability of adequate technical, financial and other
resources to complete the development and to use
– the ability to measure reliably the expenditure
attributable to the intangible asset during its
development.
The amount initially recognised for internally generated
intangible assets is the sum of the expenditure incurred
from the date when the intangible asset first meets
the recognition criteria listed above. Any research and
development tax offsets or grants received relating
to development costs are deducted from the total
development cost. Where no internally generated
intangible asset can be recognised, development
expenditure is recognised in profit or loss in the period in
which it is incurred.
1. Significant accounting policies (continued)
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 Group’s
normal operating cycle; it is held primarily for the purpose of
trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless
restricted from being exchanged or used to settle a liability for
at least 12 months after the reporting period. All other assets
are classified as non-current.
A liability is classified as current when: it is either expected
to be settled in the Group’s normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled
within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability
for at least 12 months after the reporting period. All other
liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as
non-current.
Cash and cash equivalents
Cash and cash equivalents include cash on hand and at
banks, short-term deposits with an original maturity of
three months or less held at call with financial institutions,
and bank overdrafts. Bank overdrafts are shown
within borrowings in current liabilities in the Statement of
Financial Position.
Trade and other receivables
Trade receivables are recognised initially at fair value and
subsequently shown net of provision for bad debts. Trade
receivables are generally due for settlement within 30 days
for device revenue and 60 days for service fees.
They are presented as current assets unless collection
is not expected for more than 12 months after the
reporting date.
The Group has no significant concentrations of credit risk
with any single counterparty or group of counterparties.
Details with respect to credit risk of trade and other
receivables are provided in Note 5.
Trade and other receivables that are neither past due
nor impaired are considered to be of high credit quality.
Aggregates of such amounts are detailed in Note 5.
Plant and equipment
Each class of plant and equipment is carried at cost or fair
value less, where applicable, any accumulated depreciation
and any accumulated impairment losses.
Plant and equipment is measured on a cost basis.
Depreciation
The depreciable amount of all property, plant and
equipment is depreciated over their estimated useful lives
commencing from the time the asset is held ready for use.
Land and the land component of any class of property,
plant and equipment is not depreciated.
38
Notes to the Financial StatementscontinuedAnnual Report 2020 Oventus Medical Limited Subsequent to initial recognition, internally generated
intangible assets are reported at cost less accumulated
amortisation and accumulated impairment losses.
Amortisation is recognised on a straight line basis over the
estimated useful life of 5 years. The estimated useful life
and amortisation method are reviewed at the end of each
reporting period, with the effect of any changes in estimate
being accounted for on a prospective basis.
Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised
when the Group becomes a party to the contractual
provisions to the instrument. For financial assets, this is the
date that the Group commits itself to either the purchase or
sale of the asset.
Trade receivables are initially measured at the
transaction price if the trade receivables do not contain a
significant financing component or if the practical expedient
was applied.
Classification and subsequent measurement
Financial liabilities
There has been no impact on the accounting for the
Group’s financial liabilities which continue to be classified
and measured at amortised cost using the effective
interest method.
Financial assets
Financial assets are subsequently measured at either:
– Amortised cost
– Fair value through other comprehensive income; or
– Fair value through profit or loss
Measurement is on the basis of two primary criteria:
– the contractual cash flow characteristics of the financial
asset; and
– the business model for managing the financial assets
A financial asset that meets the following conditions is
subsequently measured at amortised cost:
– the financial asset is managed solely to collect
contractual cash flows; and
– the contractual terms within the financial asset give
rise to cash flows that are solely payments of principal
and interest on the principal amount outstanding on
specified dates
Cash, funds on deposit and trade receivables are measured
at amortised cost.
Derecognition
Financial liabilities
A liability is derecognised when it is extinguished (ie when
the obligation in the contract is discharged, cancelled or
expires). An exchange of an existing financial liability for a
new one with substantially modified terms, or a substantial
modification to the terms of a financial liability is treated as
an extinguishment of the existing liability and recognition of
a new financial liability.
The difference between the carrying amount of the financial
liability derecognised and the consideration paid and
payable, including any non-cash assets transferred or
liabilities assumed, is recognised in profit or loss.
Financial assets
A financial asset is derecognised when the holder’s
contractual rights to its cash flows expires, or the asset is
transferred in such a way that all the risks and rewards of
ownership are substantially transferred.
Impairment
The Group recognises a loss allowance for expected
credit losses.
The Group’s financial assets that are subject to AASB 9’s
new expected credit loss model include:
– Trade and other receivables
The Group applies the simplified approach to measuring
expected credit losses for trade receivables where the
lifetime expected credit loss is recognised. To measure
the expected credit losses, the trade receivables have
been grouped by days past due and default rates have
been applied to each group. The default rates have been
estimated based on historical rates over a 4 year period.
On adoption of AASB 9, the resulting expected credit loss
calculated under this method was compared to the existing
provision recognised under AASB 139. As this did not
result in a material difference, no adjustment was made on
adoption of the standard.
Trade and other payables
Trade payables represent liabilities for goods and services
provided to the Group prior to the end of financial period,
which are unsecured and are usually paid within 30 days
of recognition. Trade and other payables are presented
as current liabilities unless payment is not due within
12 months from reporting date. They are recognised initially
at their fair value and subsequently measured at amortised
cost using the effective interest method.
39
Notes to the Financial Statementscontinued Lease payments included in the measurement of the
lease liability are as follows:
– fixed lease payments less any lease incentives;
– variable lease payments that depend on an index
or rate, initially measured using the index or rate at
the commencement date;
– the amount expected to be payable by the lessee
under residual value guarantees;
– the exercise price of purchase options, if the
lessee is reasonably certain to exercise the
options;
– lease payments under extension options,
if the lessee is reasonably certain to exercise the
options; and
– payments of penalties for terminating the lease,
if the lease term reflects the exercise of an option
to terminate the lease.
The right-of-use assets comprise the initial
measurement of the corresponding lease liability, any
lease payments made at or before the commencement
date and any initial direct costs. The subsequent
measurement of the right-of-use assets is at cost less
accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the lease
term or useful life of the underlying asset, whichever is
the shortest.
Where a lease transfers ownership of the underlying
asset or the cost of the right-of-use asset reflects that
the Group anticipates to exercise a purchase option, the
specific asset is depreciated over the useful life of the
underlying asset.
b.
Initial Application of AASB 16: Leases
The Group has adopted AASB 16: Leases
retrospectively with the cumulative effect of initially
applying AASB 16 recognised at 1 July 2019. In
accordance with AASB 16 the comparatives for the
2018 reporting period have not been restated.
The Group has recognised a lease liability and
right-of-use asset for all leases (with the exception
of short-term and low-value leases) recognised as
operating leases under AASB 117: Leases where the
Group is the lessee.
There has been no significant change from prior year
treatment for leases where the Group is a lessor.
Lease liabilities are measured at the present value
of the remaining lease payments. The Group’s
incremental borrowing rate as at 1 July 2019 was used
to discount the lease payments.
1. Significant accounting policies (continued)
Impairment of non-financial assets
Goodwill, intangible assets not yet ready for use and
intangible assets that have an indefinite useful life are not
subject to amortisation and are therefore tested annually
for impairment, or more frequently if events or changes in
circumstances indicate that they might be impaired.
An impairment loss is recognised where the carrying
amount of the asset exceeds its recoverable amount. The
recoverable amount of an asset is defined as the higher of
its fair value less costs to sell and value in use.
For an asset measured at cost, an impairment loss is
recognised in profit or loss where the carrying amount of
the asset exceeds its recoverable amount.
Reversal of impairment loss for an asset measured at
cost other than goodwill is recognised immediately in profit
or loss.
Provisions
A provision is recognised in the statement of financial
position when the Group has a present legal or constructive
obligation as a result of a past event, and it is probable that
an outflow of economic benefits will be required to settle
the obligation, and the amount has been reliably estimated.
Leases
The Consolidated Entity has considered the implications
of new or amended Accounting Standards which have
become applicable for the current financial reporting
period. The Group had to change its accounting policies
and make adjustments as a result of adopting the following
Standard:
– AASB 16: Leases
This note describes the nature and effect of the adoption
of AASB 16: Leases on the Group’s financial statements
and discloses the new accounting policies that have been
applied from 1 July 2019, where they are different to those
applied in prior periods.
a. Leases
The Group as lessee
At inception of a contract, the Group assesses if
the contract contains or is a lease. If there is a lease
present, a right-of-use asset and a corresponding lease
liability are recognised by the Group where the Group
is a lessee. However, all contracts that are classified
as short-term leases (ie a lease with a remaining lease
term of 12 months or less) and leases of low-value
assets are recognised as an operating expenses on a
straight-line basis over the term of the lease.
Initially the lease liability is measured at the present
value of the lease payments still to be paid at the
commencement date. The lease payments are
discounted at the interest rate implicit in the lease.
If this rate cannot be readily determined, the Group
uses the incremental borrowing rate.
40
Notes to the Financial StatementscontinuedAnnual Report 2020 Oventus Medical Limited
The right-of-use assets for the remaining leases have
been measured and recognised in the statement
of financial position as at 1 July 2019 by taking into
consideration the lease liability and the prepaid and
accrued lease payments previously recognised as at
1 July 2019 (that are related to the lease).
The following practical expedients have been used by
the Group in applying AASB 16 for the first time:
– for a portfolio of leases that have reasonably
similar characteristics, a single discount rate has
been applied.
– leases that have remaining lease term of less than
12 months as at 1 July 2019 have been accounted
for in the same was as short-term leases.
– the use of hindsight to determine lease terms on
contracts that have options to extend or terminate.
– applying AASB 16 to leases previously identified as
leases under AASB 117: Leases and Interpretation
4: Determining whether an arrangement contains
a lease without reassessing whether they are, or
contain, a lease at the date of initial application.
– not applying AASB 16 to leases previously not
identified as containing a lease under AASB 117
and Interpretation 4.
The difference of $177,086 between the lease liability
($179,440) as at 1 July 2019 and the discounted
operating lease commitments as at 30 June 2019
($356,526) comprises short-term leases of $177,086,
which are expensed on a straight-line basis.
The Group’s weighted average incremental
borrowing rate on 1 July 2019 applied to the lease
liabilities was 4.5%.
Employee entitlements
Liabilities for salaries including annual leave expected
to be settled within 12 months of the reporting date are
recognised in current employee entitlements in respect
of employee services up to the reporting date, and are
measured at the amounts expected to be paid when the
liabilities are settled.
The liability for long service leave is based on current
salary levels, years of completed service and the estimated
probability that the employee will remain with the Group.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the
amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is
recognised as a part of the cost of 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 taxation authority
is included with other receivables or payables in the
balance sheet.
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 taxation authority, are presented as operating
cash flows.
Contributed equity
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.
Share-based payment transactions
The Group measures the cost of equity-settled transactions
with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair
value is determined by using 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.
The annualised volatility was computed based on the daily
standard deviation of the stock multiplied by the square
root of 252 trading days in the financial year.
New standards and interpretations not yet adopted
Certain new accounting standards and interpretations
have been published that are not mandatory for 30 June
2020 reporting periods and have not been early adopted
by the Group. The Group’s assessment of the impact of
these new standards are that they are not likely to have a
material impact on the financial position or performance of
the group.
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.
41
Notes to the Financial Statementscontinued
2. Critical accounting judgements, estimates and assumptions (continued)
Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant
and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations
or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously
estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written
down.
Development costs
The Group capitalises development costs for a project in accordance with the accounting policy as per Note 1. Initial
capitalisation of costs is based on management’s judgement that technological and economic feasibility is confirmed, usually
when a product development project has reached a defined milestone according to an established project management
model. In determining the amounts to be capitalised, management makes assumptions regarding the expected future
cash generation of the project and the expected period of benefits. At 30 June 2020, the carrying amount of capitalised
development costs was $2,051,623 (2019: $2,688,803).
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have,
on the group based on known information. This consideration extends to the nature of the services offered, customers, supply
chain, staffing and geographic regions in which the group operates. Other than as addressed in specific notes, there does not
currently appear to be either any significant impact upon the financial statements or any significant uncertainties with respect
to events or conditions which may impact the group unfavourably as at the reporting date or subsequently as a result of the
Coronavirus (COVID-19) pandemic.
There were significant trading disruptions between April and May 2020, however various Government stimulus measures were
obtained in Australia, United States and Canada were the Group operates and trading has returned to pre-pandemic levels.
The board continues to actively monitor the situation.
Going concern
The financial statements have been prepared on a going concern basis that presumes the realisation of assets and the
discharge of liabilities in the normal course of operations for the foreseeable future.
The ability of the Group to continue on a going concern basis is dependent upon the following:
– The successful development of the Group’s product
– Success in achieving budgeted sales and positive cash flow from operations, and
– The ability to raise further capital as required.
During the year, the Group made a loss before tax of $10,126,364 (2019: loss of $7,848,255) and has accumulated losses of
$32,703,732. However, as at 30 June 2020, the current assets exceed its current liabilities by $7,887,486. Thus, the directors
have a reasonable expectation that the Group has adequate resources to continue in operational existence in the foreseeable
future. However, additional capital raising may be required in the future to meet expansionary and long-term goals.
3. Staff Costs
30 June
2020
$
30 June
2019
$
5,968,572
4,363,361
(548,937)
(621,795)
(599,404)
–
4,820,231
3,741,566
Short term employee benefits expense
Less
Employee costs capitalised to R&D Intangible assets
COVID19 related Government stimulus received
42
Notes to the Financial StatementscontinuedAnnual Report 2020 Oventus Medical Limited
4. Cash and cash equivalents
Cash on hand
Cash at bank
Short-term deposits
5. Trade and other receivables
Trade receivables
GST receivable
Other receivables
Less allowance for doubtful debts
Trade and other receivables
Not Past Due
Past Due 0-30 Days
Past Due 90 Days and over
Past Due 61-90 Days
30 June
2020
$
30 June
2019
$
48
308
2,455,345
1,498,255
6,000,000
1,500,000
8,455,393
2,998,563
30 June
2020
$
80,446
40,170
71,979
30 June
2019
$
70,250
33,881
4,940
192,595
109,071
(13,482)
(30,003)
179,113
79,068
30 June
2020
$
21,486
31,396
7,639
19,925
80,446
As at 30 June 2020, trade receivables of $13,482 (2019: $30,003) were past due and considered impaired.
6. Other current assets
Prepayments
Accrued research & development tax credit
Inventory
Other assets
30 June
2020
$
30 June
2019
$
446,107
95,636
588,890
1,032,999
54,842
184,403
93,545
141,434
1,274,242
1,363,614
43
Notes to the Financial Statementscontinued 7. Property, plant and equipment
On 21 June 2018, the Group entered into an Equipment Ownership & Management Agreement with CSIRO with headquarters
in Canberra, ACT 2601 wherein both parties agreed to share equally in the ownership and maintenance of the Arcam
Equipment (the Equipment) in the period from 1 July 2018 to 30 June 2026. The transaction was accounted for as a joint
operation in accordance with AASB 11, Joint arrangements. Accordingly, the Group’s share in the Equipment has been
disclosed separately as “Assets Under Joint Arrangement”. In March 2020 the Group disposed of its share in the Arcam
Equipment for cash consideration of $300,000.
Computer
and office
furniture and
equipment
$
Sleep and
production
equipment
$
Company
Vehicles
$
Leasehold
improvement
$
Assets
Under Joint
Arrangement
$
48,255
23,089
–
–
–
(21,137)
50,207
256,228
133,313
–
(14,279)
7,820
(63,502)
319,580
101,530
(51,323)
50,207
529,550
(209,970)
319,580
50,207
57,040
–
–
–
(33,705)
73,542
319,580
602,760
–
(5,818)
2,880
(86,221)
833,181
Total
$
702,089
156,402
–
(14,279)
7,820
(152,634)
699,398
86,237
311,369
–
–
–
–
–
–
–
–
(28,743)
57,494
(39,252)
272,117
230,883
(173,389)
57,494
311,369
(39,252)
272,117
1,173,332
(473,934)
699,398
57,494
272,117
–
–
–
–
–
–
–
–
–
–
–
39,502
–
–
–
–
–
–
–
(4,008)
35,494
(33,440)
24,054
699,398
699,302
–
–
–
(311,369)
(317,187)
61,888
(22,636)
–
–
–
–
64,768
(180,010)
966,271
1,555,447
(589,176)
966,271
158,570
1,126,492
(85,028)
73,542
(293,311)
833,181
39,502
(4,008)
35,494
230,883
(206,829)
24,054
Year ended 30 June 2019
Opening net book amount
Additions
Reclassification
Disposals - cost
Disposals - accumulated
depreciation
Depreciation charge
Closing net book amount
At 30 June 2019
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2020
Opening net book amount
Additions
Reclassification
Disposals - cost
Disposals - accumulated
depreciation
Depreciation charge
Closing net book amount
At 30 June 2020
Cost
Accumulated depreciation
Net book amount
44
Notes to the Financial StatementscontinuedAnnual Report 2020 Oventus Medical Limited 8. Right of use assets
Year ended 30 June 2020
Opening net book amount
Initial adoption of AASB 16 – cost
Initial adoption of AASB 16 – accumulated depreciation
Depreciation expense
Closing net book amount
At 30 June 2020
Cost
Accumulated depreciation
Net book amount
9.
Intangible assets
Year ended 30 June 2019
Opening net book amount
Additions
Tax concession received or receivable
Amortisation expense
Closing net book amount
At 30 June 2019
Cost
Accumulated amortisation
Net book amount
Year ended 30 June 2020
Opening net book amount
Additions
Tax concession received or receivable
Amortisation expense
Closing net book amount
At 30 June 2020
Cost
Accumulated amortisation
Net book amount
Lease right of
use asset
$
Total
$
–
–
264,209
264,209
(88,071)
(88,071)
(132,105)
(132,105)
44,033
44,033
264,209
264,209
(220,176)
(220,176)
44,033
44,033
Patents,
trademarks
and licences
$
Software
$
Development
costs
$
Total
$
644,309
348,519
–
103,293
2,464,345
3,211,947
54,854
1,318,854
1,722,227
–
(574,255)
(574.255)
(49,851)
(45,827)
(520,141)
(615,819)
942,977
112,320
2,688,803
3,744,100
1,052,446
356,212
3,794,623
5,203,281
(109,469)
(243,892)
(1,105,820)
(1,459,181)
942,977
112,320
2,688,803
3,744,100
942,977
315,113
–
112,320
2,688,803
3,744,100
48,161
779,618
1,142,892
–
(339,135)
(574,255)
(65,864)
(71,010)
(1,077,663)
(1,214,537)
1,192,226
89,471
2,051,623
3,333,320
1,367,559
404,373
4,235,106
6,007,038
(175,333)
(314,902)
(2,183,483)
(2,673,718)
1,192,226
89,471
2,051,623
3,333,320
Development costs are shown net of amounts received or receivable subject to the research and development tax
concession.
45
Notes to the Financial Statementscontinued 10. Trade and other payables
Trade creditors
PAYG Withholding payable
Employee benefits payable
Other creditors
11. Other liabilities
Current
Employee benefits – annual leave
Lease liability
Non-current
Employee benefits – long service leave
12. Equity – Share capital
Opening Balance
Ordinary shares issued:
1 August 2019
28 August 2019
17 September 2019
8 May 2020
18 June 2020
18 June 2020
Share issue costs
At reporting date
30 June
2020
$
512,631
23,687
224,291
939,142
30 June
2019
$
730,794
170,768
18,747
471,610
1,699,751
1,391,918
30 June
2020
$
30 June
2019
$
275,294
135,016
46,217
321,511
–
135,016
89,817
89,817
75,936
75,936
30 June
2020
Number of
Shares
#
30 June
2020
Value of
Shares
$
30 June
2019
Number of
Shares
#
30 June
2019
Value of
Shares
$
105,939,212
29,640,394
105,939,212
29,640,394
15,757,491
5,987,847
6,085,092
2,312,335
2,747,922
1,044,210
19,010,416
4,562,500
364,584
87,600
8,332,984
2,000,001
–
(1,301,124)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
158,237,701
44,333,763
105,939,212
29,640,394
Rights of each type of share
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of
shares held.
At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has
one vote on a show of hands.
46
Notes to the Financial StatementscontinuedAnnual Report 2020 Oventus Medical Limited 13. Equity – Share based payment reserve
Share based payment reserve at beginning of year
Share based payment expense
Transfer to accumulated losses
Share based payment reserve at end of year
30 June
2020
$
30 June
2019
$
500,212
309,476
308,838
190,736
(97,686)
–
711,364
500,212
The share-based payment reserve is used to recognise the value of equity-settled share based payments provided to
employees, including key management personnel, as part of their remuneration. Refer to Note 25 for further details.
14. Accumulated losses
Accumulated losses at beginning of year
Cumulative adjustment upon adoption of new accounting standard – AASB 16
Transfer from share-based payments reserve
Loss for the period
Accumulated losses at end of year
15. Income tax expense
Current tax
Adjustment recognised for prior periods
Aggregate income tax expense
30 June
2020
$
30 June
2019
$
(22,671,750)
(14,823,495)
(3,304)
97,686
–
–
(10,126,364)
(7,848,255)
(32,703,732)
(22,671,750)
30 June
2020
$
30 June
2019
(restated)
$
–
–
–
–
–
–
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense from continuing operations
(10,126,364)
(7,848,255)
Profit before income tax expense from discontinued operations
Tax at the statutory tax rate of 27.5%
(2,784,750)
(2,158,270)
Tax effect amounts which are not deductible in calculating taxable income:
Non-assessable or deductible items
Research and development concession
Unused tax losses for which no deferred tax asset has been recognised
Income tax expense
80,864
28,371
(21,681)
290,360
(2,675,515)
(1,889,591)
2,675,515
1,889,591
–
–
30 June
2020
$
30 June
2019
$
Tax losses
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit at 27.5%
30,538,564
20,809,419
8,398,105
5,722,590
47
Notes to the Financial Statementscontinued
16. Financial instruments
The Group’s activities expose it to a variety of financial risks: market risk (which includes foreign currency risk), interest rate risk,
credit risk and liquidity risk. The Group uses different methods to measure different types of risk to which it is exposed. These
methods include sensitivity analysis in the case of interest rates and foreign exchange risk and aging analysis for credit risk.
Risk management is carried out by the chief executive officer under policies approved by the directors. These policies include
identification and analysis of risks and appropriate procedures to address these and report to the board of directors annually
as to the effectiveness of the Group’s management of its key business risks.
Market risk
Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates will affect the
Group’s income.
Foreign currency risk
Exposure to foreign currency risk may result in the fair value or future cash flows of a financial instrument fluctuating due to
movement in foreign exchange rates of currencies in which the Group holds financial instruments which are other than the
AUD functional currency of the Group.
With instruments being held by overseas operations, fluctuations in the US dollar and Canadian dollar may impact on the
Group’s financial results unless those exposures are appropriately hedged.
The following table shows the foreign currency risk on the financial assets and liabilities of the Group’s operations
denominated in currencies other than the functional currency of the operations. The foreign currency risk in the books of the
Parent Entity is considered immaterial and is therefore not shown.
2020
Consolidated Group
Australian dollar
Cash and Cash Equivalents
Trade and Other Receivables
Trade and Other Payables
US dollar
Cash and Cash Equivalents
Trade and Other Receivables
Trade and Other Payables
Canadian dollar
Cash and Cash Equivalents
Trade and Other Receivables
Trade and Other Payables
Net Financial Assets / (Liabilities) in AUD
AUD
$
USD
$
CAD
$
Total AUD
$
6,769,988
(29,554)
12,387
6,752,821
8,078,962
–
–
8,078,962
97,951
20,217
14,813
132,981
(1,406,925)
(49,771)
(2,426)
(1,459,122)
–
–
–
–
–
–
–
–
134,459
321,750
10,534
(1,684)
–
–
132,776
321,750
10,534
(197,825)
(1,684)
(199,508)
–
–
–
–
62,641
54,681
49,081
62,641
54,681
49,081
(41,121)
(41,121)
Statement of financial position exposure
6,769,988
104,905
73,344
6,948,238
2019
Consolidated Group
Australian dollar
Cash and Cash Equivalents
Trade and Other Receivables
Trade and Other Payables
US dollar
Cash and Cash Equivalents
Trade and Other Payables
Net Financial Assets / (Liabilities) in AUD
AUD
$
USD
$
CAD
$
Total AUD
$
1,822,603
2,826,645
76,584
(1,080,625)
–
–
–
(9,139)
(42,011)
1,771,454
–
32,025
(41,164)
(55,737)
171,919
(227,656)
–
463
2,826,645
109,071
(42,473)
(1,164,262)
–
–
–
(55,737)
171,919
(227,656)
Statement of financial position exposure
1,822,603
(64,876)
(42,011)
1,715,717
48
Notes to the Financial StatementscontinuedAnnual Report 2020 Oventus Medical Limited Interest rate risk
The Group’s main interest rate risk arises from cash and cash equivalents.
The Group has reviewed its sensitivity to interest rate risks and determined that this is not material.
As at the reporting date, the Group had the following cash and cash equivalents:
Consolidated
Cash on hand
Short term deposits
Cash at bank
Deposits
30 June 2020
30 June 2019
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$
Balance
$
nil
48
nil
308
1.43%
6,000,000
2.35%
1,500,000
nil
2,455,345
nil
1,498,255
1.43%
74,732
2.35%
74,732
Net exposure to cash flow interest rate risk
8,530,125
3,073,295
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.
The management assess the credit quality of its customers taking into account their financial position and past experience.
The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of
any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial
statements. The Group does not hold any collateral.
Financial assets
Set out below is an overview of financial assets, other than cash and short-term deposits, held by the Group as at 30 June
2020 and 2019:
Financial assets at amortised cost:
Trade and other receivables
Total
30 June
2020
$
30 June
2019
$
192,595
192,595
109,071
109,071
Remaining contractual maturities
The following tables detail the Group’s remaining contractual maturity for its financial 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.
Non-derivatives
Non-interest bearing
Trade and other payables
Total non-derivatives
* Weighted average interest rate
30 June 2020
30 June 2019
Weighted
average
interest rate
%
1 year or less
$
Weighted
average
interest rate
%
1 year or less
$
nil
1,699,751
nil
1,391,919
1,699,751
1,391,919
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
49
Notes to the Financial Statementscontinued
17. Related party transactions
No related party transactions were recorded for the financial reporting year (2019: nil).
18. Key management personnel
Directors
The following persons were directors of Oventus Medical Limited during the financial year:
– Mel Bridges (Chairman) (Non-Executive Director)
– Christopher Hart (Executive Director) (Founder) (Managing Director and Chief Executive Officer)
– Neil Anderson (Executive Director) (Chief Technical Officer) (resigned 16 December 2019)
– Sue MacLeman (Non-Executive Director)
– Sharad Joshi (Non-executive Director)
– Paul Molloy (Non-executive Director from 16 December 2019)
– Jake Nunn (Non-executive Director from 20 February 2020)
Other key management personnel
The following persons also had the authority and responsibility for planning, directing and controlling the major activities of
the Group, directly or indirectly, during the financial year:
– Daniel Parry (Chief Financial and Operations Officer from 5 December 2017)
– Robin Randolph (Sr. VP Sales, Marketing, Operations)
– Stephen Denaro (Company Secretary)
Compensation
Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or payable to each
member of the Group’s key management personnel (KMP) for the year ended 30 June 2020.
The totals of remuneration paid to KMP of the Company and the Group during the year are as follows:
Short-term employee benefits
Post-employment benefits
Share-based payments
Termination payments
30 June
2020
$
30 June
2019
$
1,418,729
1,292,287
50,743
195,255
86,348
132,007
71,878
–
1,751,075
1,496,172
Short-term employee benefits
These amounts include fees and benefits paid to the non-executive Chair and non-executive directors as well as all salary,
paid leave benefits, fringe benefits and cash bonuses awarded to executive directors and other KMP.
Post-employment benefits
These amounts are the current-year’s estimated costs of providing for the Group’s defined benefits scheme post-retirement,
superannuation contributions made during the year and post-employment life insurance benefits.
Other long-term benefits
These amounts represent long service leave benefits accruing during the year, long-term disability benefits and deferred
bonus payments.
Share-based payments
These amounts represent the expense related to the participation of KMP in equity-settled benefit schemes as measured
by the fair value of the options, rights and shares granted on grant date.
Further information in relation to KMP remuneration can be found in the directors’ report.
50
Notes to the Financial StatementscontinuedAnnual Report 2020 Oventus Medical Limited
19. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by PKF Brisbane Audit the auditor of
the Group:
Audit services - PKF Brisbane Audit
Audit or review of the financial statements
20. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Accumulated losses
Total equity
30 June
2020
$
30 June
2019
$
48,400
47,400
30 June
2020
$
30 June
2019
$
(1,073,159)
(374,510)
(1,073,159)
(374,510)
8,361,151
2,394,551
42,223,176
27,628,347
1,013,218
1,013,218
69,614
69,614
44,364,778
29,640,394
(3,154,820)
(2,081,661)
41,209,958
27,558,733
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 2020 and 2019.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2020 and 2019.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment at as 30 June 2020 and 2019.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in Note 1, except for the
following:
– Investments in subsidiaries 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.
51
Notes to the Financial Statementscontinued
21. Interest in subsidiaries
The consolidated financial statements include the financial statements of Oventus Medical Limited and subsidiaries listed in
the following table:
Name
Country of Incorporation
Oventus Manufacturing Pty Ltd
Oventus CRM Pty Ltd
Oventus Medical USA, Inc.
Dental Sleep Care Alliance, LLC
Oventus Medical Canada, Inc.
Australia
Australia
United States
United States
Canada
Equity Interest
2020
100%
100%
100%
100%
100%
2019
100%
100%
100%
100%
100%
Dental Sleep Care Alliance, LLC was incorporated as a wholly owned subsidiary of Oventus Medical USA, Inc. on 22 April 2019.
The purpose of this entity is to provide patient management and billing services to practitioners in the USA.
Oventus Medical Canada, Inc. was incorporated as a wholly owned subsidiary of the Company on 20 May 2019. The purpose
of this entity is to market and distribute the Group’s devices in Canada and to provide patient management and billing services
to practitioners in Canada.
The principal activities of the remaining subsidiaries are:
– Oventus Manufacturing Pty Ltd - operating entity responsible for the development and manufacture of the
Group’s devices.
– Oventus CRM Pty Ltd – provides appointment management and billing services to practitioners in Australia
– Oventus Medical USA, Inc. – market and distribute the Group’s devices in the USA.
22. Subsequent events
In July, Oventus announced additional ‘Lab in Lab’ agreements across 9 sites with two new sleep groups, Tri Hospital Sleep
and Ontario Sleep Care, both located in Canada. Under these agreements, Oventus technology will be offered to patients of
the 9 sites.
Tri Hospital Sleep in Ontario is one of Mississauga’s largest privately-owned providers of diagnostics and treatment for OSA.
Under the agreement, ‘Lab in Lab’ facilities will be implemented in its largest location with 14 beds of sleep diagnostics. Once
fully deployed, Tri Hospital Sleep expects to order 20 O2Vent Optima devices per month.
Ontario Sleep Care is a large, privately-owned provider of treatment for OSA with 8 locations across the province of Ontario,
Canada. The agreement provides Oventus’ O2Vent Optima and ExVent therapy across the network of sites as an alternative
for CPAP-intolerant individuals. Patients will also be referred to the 8 sites from satellite locations. Once fully deployed, each
Ontario Sleep Care location expects to order 10 O2Vent Optima devices per month.
Both agreements have a term of three years, with an automatic three-year renewal, unless a party elects not to renew no later
than 180 days prior to the end of the third year.
On the 7th of August 2020, the Company issued 6,900,000 options to Directors under the Executive Share Option Plan
following shareholder approval under ASX Listing Rule 10.14 and Chapter 2E of the Corporations Act and issued 2,955,000
options to non-related party employees.
52
Notes to the Financial StatementscontinuedAnnual Report 2020 Oventus Medical Limited 23. Reconciliation of loss after income tax to net cash from operating activities
Loss after income tax expense for the year
Adjustments for:
Depreciation and amortisation
Net loss (gain) on disposal of assets
Share-based payments
Research and development tax concession
Foreign exchange fluctuations
Change in operating assets and liabilities:
(Increase) / decrease in trade and other receivables
(Increase) in other assets
Increase / (decrease) in trade and other payables
Increase in employee benefits
Decrease in other liabilities
Net cash outflow from operating activities
24. Loss per share
Loss per share from continuing operations
Loss after income tax
Loss after income tax attributable to the owners of Oventus Medical Limited
30 June
2020
$
30 June
2019
$
(10,126,364)
(7,848,255)
1,526,652
768,453
(50,194)
308,838
339,134
–
190,736
574,255
(10,986)
(9,698)
(100,045)
483,139
89,372
8,603
307,833
830,443
(153,621)
–
200,375
90,184
(7,669,006)
(4,912,140)
30 June
2020
$
30 June
2019
$
(10,126,364)
(7,848,255)
(10,126,364)
(7,848,255)
Numbers
Weighted average number of ordinary shares used in calculating basic loss per share
130,615,992
105,939,212
Adjustments for calculation of diluted loss per share:
Options over ordinary shares
–
–
Weighted average number of ordinary shares used in calculating diluted loss per share
130,615,992
105,939,212
Basic loss per share
Diluted loss per share
Cents
Cents
(7.75)
(7.75)
(7.41)
(7.41)
53
Notes to the Financial Statementscontinued
25. Share-based payments
Share options
Share options are issued to eligible participants under the Company’s Employee Share Option Plan. The Company has options
outstanding of 5,799,952 as at 30 June 2020 (2019: 4,579,952).
The offer has a three-year vesting period with an expiry of five years and is equity-settled.
Set out below are summaries of options granted under the plan:
Fair Value
per option
at grant
date
Balance at
the start
of
the year
Exercise
price
Expired/
forfeited/
other
Granted
Exercised
Vested at
the end of
the year
Balance at
the end of
the year
Grant date
Expiry date
As at 30 June
2020
24/02/2016
23/02/2021
$0.13
$0.58 2,274,954
14/04/2016
14/04/2021 cancelled
$0.73
–
1/12/2016
1/12/2021
$0.42
$1.06
300,000
23/05/2017
12/12/2022
25/02/2017
24/02/2022
18/12/2017
18/12/2022
3/07/2018
2/07/2023
9/10/2018
8/08/2023
16/01/2019
15/01/2024
21/05/2019
22/05/2024
10/12/2019
08/12/2024
10/12/2019
08/12/2024
$0.11
$0.12
$0.31
$0.15
$0.14
$0.16
$0.12
$0.38
$0.47
$0.96
600,000
$0.94
49,998
$1.02
200,000
$0.48
450,000
$0.42
380,000
$0.42
225,000
$0.40
100,000
As at 30 June
2019
24/02/2016
23/02/2021
$0.13
$0.58
2,274,954
14/04/2016
14/04/2021 cancelled
$0.73
–
1/12/2016
1/12/2021
$0.42
$1.06
300,000
$1.06
$0.42
– 1,200,000
(200,000)
–
370,000
–
4,579,952 1,570,000
(350,000)
– 3,916,584 5,799,952
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(150,000)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 2,274,954 2,274,954
–
–
–
–
–
–
–
–
–
–
–
–
–
300,000
300,000
600,000
600,000
49,998
49,998
133,332
200,000
199,992
450,000
126,664
380,000
74,990
225,000
33,333
100,000
– 1,000,000
123,321
370,000
– 2,274,954 2,274,954
–
–
–
–
–
–
–
–
–
–
–
199,980
300,000
399,998
600,000
–
49,998
66,666
200,000
149,996
450,000
380,000
225,000
100,000
$0.96
600,000
$0.94
49,998
$1.02
200,000
$0.48
$0.42
$0.42
$0.40
–
–
–
–
850,000
(400,000)
380,000
225,000
100,000
–
–
–
3,424,952 1,555,000
(400,000)
– 3,091,594 4,579,952
23/05/2017
12/12/2022
25/02/2017
24/02/2022
18/12/2017
18/12/2022
3/07/2018
9/10/2018
2/07/2023
8/08/2023
16/01/2019
15/01/2024
21/05/2019
22/05/2024
$0.11
$0.12
$0.31
$0.15
$0.14
$0.16
$0.12
54
Notes to the Financial StatementscontinuedAnnual Report 2020 Oventus Medical Limited
26. Significant agreements and commitments for expenditure
a) Operating Lease Commitments
Not later than 1 year
Later than 1 but not later than 5
Taringa lease
Residential lease for CEO in the US
30 June 2020
30 June 2019
192,117
–
239,332
135,876
192,117
375,208
30 June 2020
30 June 2019
1 Year
> 1 Year
1 Year
> 1 Year
46,217
145,900
192,117
–
–
–
45,292
135,876
194,040
239,332
135,876
The Taringa office property lease is a non-cancellable lease with a 2-year term beginning on 01 November 2018 and expiring
on 31 Oct 2020. The minimum lease payments shall be increased by a fixed rate of 3% per annum.
The residential lease for Dr. Chris Hart in the US is only for a period of 12 months from May 2020 to April 2021 with a contracted
amount of USD$120,000.
b) Other Commitments
Cooperative Research Centre Project
(CRC Project) commitment
30 June 2020
30 June 2019
524,740
524,740
624,740
624,740
This is the remaining amount of payable by Oventus (lead participant) to the CRC project (Targeted Therapy for Sleep Apnoea:
A Novel Personalised Approach) as per contract. The other parties to the project are Medical Monitoring Solutions Pty Ltd,
Commonwealth Scientific and Industrial Research Organisation, Western Sydney University, Neuroscience Research Australia
and Flinders University.
Contingent provisions within the licence agreement require that the licence and services fees shall be increased by the
consumer price index (CPI) per annum.
55
Notes to the Financial Statementscontinued
27. Segment reporting
Management currently identifies the Group’s two regions as its operating segments (see Note 1). These operating segments
are monitored by the Group’s chief operating decision maker and strategic decisions are made on the basis of adjusted
segment operating results.
Segment information for the reporting period follows:
Device Sale Revenue
Service Fee Revenue
Cost of Sales
Gross Profit
Staff costs
Sales and marketing
Other expenses
30 June 2020
North
America
$
Australia
$
Total
$
Australia
$
30 June 2019
North
America
$
Total
$
215,234
143,687
358,921
256,326
75,511
331,837
–
60,377
60,377
–
–
–
(138,572)
(93,164)
(231,736)
(114,669)
(43,570)
(158,239)
76,662
110,900
187,562
141,657
31,941
173,598
(2,474,297)
(2,654,822)
(5,129,119)
(2,626,196)
(1,306,106)
(3,932,302)
(207,575)
(313,124)
(520,699)
(261,203)
(409,723)
(670,926)
(3,542,610)
(1,232,788)
(4,775,398)
(2,885,621)
(839,717)
(3,725,338)
Segment operating loss
(6,147,820)
(4,089,834)
(10,237,654)
(5,631,362)
(2,523,606)
(8,154,968)
Segment assets
Segment liabilities
13,154,262
1,172,842
14,327,104
8,302,828
656,646
8,959,475
1,728,010
383,068
2,111,078
747,162
855,708
1,602,870
Unallocated items:
Interest income and expense and other income are not allocated to operating segments as they are not considered part of the
core operations of any segments.
56
Notes to the Financial StatementscontinuedAnnual Report 2020 Oventus Medical Limited Directors’ Declaration
The directors have determined that the company is not a reporting entity and that this special purpose financial report should
be prepared in accordance with the accounting policies outlined in Note 1 to the financial statements.
– the financial statements and notes, as set out on pages 32 to 56 present fairly the company’s financial position as at
30 June 2020 and its performance for the year ended on that date in accordance with the accounting policies described
in Note 1 to the financial statements; and
– in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and
when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
On behalf of the directors
Mel Bridges
Director
Brisbane
31st August 2020
57
Directors’ DeclarationFor the year ended 30 June 2020 Independent Auditor’s Report
To the Members
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF OVENTUS MEDICAL LIMITED
Report on the Financial Report
Opinion
We have audited the accompanying financial report of Oventus Medical Limited (the company), which comprises
the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss
and other comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies
and other explanatory information, and the Directors’ Declaration of the company and the consolidated entity
comprising the company and the entities it controlled at the year’s end or from time to time during the financial
year.
In our opinion the accompanying financial report of Oventus Medical Limited is in accordance with the
Corporations Act 2001, including:
i) Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its
performance for the year ended on that date; and
ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of
our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We are independent of the consolidated entity in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
58
Annual Report 2020 Oventus Medical Limited
Key Audit Matter
A key audit matter is a matter that, in our professional judgement, was of most significance in our audit of the
financial report of the current year. This matter was addressed in the context of our audit of the financial report as
a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter. For each
matter below, our description of how our audit addressed the matter is provided in that context
Capitalisation and Valuation of Internal Development Costs
Why significant
How our audit addressed the key audit matter
The Consolidated entity’s intangible assets as at 30 June
2020 include capitalised development costs with a carrying
value of $2,051,623 (2019: $2,688,803), as disclosed in
Note 9.
The Consolidated entity’s accounting policy in respect of
development costs are outlined in Note 1 and Note 2.
Capitalised development costs are significant to the audit
due to the amount of expenditure being capitalised and the
specific criteria that have to be met for capitalisation.
We note significant judgement is required:
•
•
the
treatment of development
in determining
expenditure
in accordance with AASB 138
Intangible Assets, and the Consolidated entity’s
accounting policy. In particular:
o
o whether project costs in the design and
development of a potential product meet
the recognition conditions for an asset
o whether a product development project is
technically and economically feasible
in making assumptions regarding the
expected future cash generation of the
project, discount rates to be applied and
the expected period of benefits.
in determining that capitalised development costs
have useful lives of 5 years which determines the
amortisation rate
in determining whether facts and circumstances indicate that
development costs capitalised should be
for
impairment
in accordance with Australian Accounting
Standard AASB 136 Impairment of Assets.
tested
Our work included, but was not limited to, the following
procedures:
•
•
•
testing, on a sample basis, development
expenditure incurred during the year for compliance
with AASB 138 and the Consolidated entity’s
accounting policy; and
review the reasonableness of estimated useful life
and amortisation method and check on a sample
basis whether they are properly calculated and
disclosed in the financial statements
to assess whether there are indicators of
impairment:
o
obtaining and assessing evidence of external
changes within the Consolidated entity’s
market or internal changes such as the sales
performance of existing products
holding discussions with the directors and
management as to the status of project
developments as well as assessing if there
was evidence that a product has been
discontinued
obtaining and assessing evidence of the
Consolidated entity’s future intention for the
products, including reviewing future budgeted
expenditure and sales forecasts
• assessing the appropriateness of the related
o
o
disclosures in Notes 1, 2 and 9.
59
Independent Auditor’s Reportcontinued
Other Information
Those charged with governance are responsible for the other information. The other information comprises the
information included in the consolidated entity’s annual report for the year ended 30 June 2020, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon, with the exception of the Remuneration Report.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Directors’ for the Financial Report
The Directors of the company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the Directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the consolidated entity’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Directors either intend to liquidate the consolidated entity or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
consolidated entity’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the Directors.
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Independent Auditor’s ReportcontinuedAnnual Report 2020 Oventus Medical Limited
• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the consolidated entity’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures
in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the consolidated entity to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and
whether the financial report represents the underlying transactions and events in a manner that achieves fair
presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the consolidated entity to express an opinion on the group financial report. We are responsible
for the direction, supervision and performance of the group audit. We remain solely responsible for our audit
opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Directors, we determine those matters that were of most significance in
the audit of the financial report of the current period and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
Report on the Remuneration Report
Opinion
We have audited the Remuneration Report included in the Directors’ Report for the year ended 30 June 2020.
In our opinion, the Remuneration Report of Oventus Medical Limited for the year ended 30 June 2020.
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Independent Auditor’s Reportcontinued
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
PKF BRISBANE
CAMERON BRADLEY
PARTNER
31 August 2020
BRISBANE
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Independent Auditor’s ReportcontinuedAnnual Report 2020 Oventus Medical Limited
Shareholder Information
The shareholder information set out below was applicable as at 25 September 2020.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Substantial holders
Substantial holders in the company are set out below:
Christopher Hart
Thorney Group
Neil Anderson
Unquoted equity securities
Employee options
SPP and Placement options
Total
Number of
holders of
ordinary
shares
Units
% of total
shares issued
117
330
239
58,124
929,084
1,910,426
768
28,066,907
0.04
0.59
1.21
17.73
197
127,297,876
80.43
1,651
158,262,417
100.00
Ordinary Shares
Number
held
% of total
shares issued
26,542,513
22,013,646
5,598,477
16.77
13.91
3.54
2020 Number
15,654,952
13,829,050
29,484,002
Voting rights
The voting rights attached to ordinary shares and options 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
There are no voting rights attached to options. Upon exercise of the option, the issued shares will confer full voting rights.
Warrants
There are no voting rights attached to warrants. Upon conversion of the warrant, the issued shares will confer full voting rights.
There are no other classes of equity securities.
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Shareholder InformationFor the year ended 30 June 2020 continued
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Name
Ordinary Shares
Number
held
% of total
shares issued
CHRISTOPHER PATRICK HART
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