Respiri Limited Annual Report 2021

Plain-text annual report

T R O P E R L A U N N A 1 2 0 2 RESPIRI LIMITED Respiri Limited ABN 98 009 234 173 ANNUAL REPORT 2021 iii VisionA world without the challenges of asthma.iv RESPIRI LIMITED Mission To improve asthma management by extending care beyond the clinic. ANNUAL REPORT 2021 v Chairman & CEO Update Values We act with Integrity We are Respectful We are Accountable We are One Team We are Innovative vi RESPIRI LIMITED Chairman & CEO Update Dear Fellow Shareholders, On behalf of the Board of Directors of Respiri Limited we are proud to present the company’s Annual Report for the year ended 30 June 2021. This year has been an exceptionally productive and busy period for Respiri, with a resolute focus on the Australian launch of wheezo®, in partnership with Cipla which was achieved on time and on budget, despite significant COVID-19 headwinds including various state lockdowns. Significant progress was also made in both commercialisation and clinical development partnership discussions in the target markets of United Kingdom and USA. In March 2021, the Company announced the receipt of 510(k) clearance from the US Food and Drug Administration (FDA) for wheezo®, thereby permitting Respiri to market and sell wheezo in the United States as a class II medical device, along with the wheezo® App. This clearance by one of the most stringent health regulators globally represents a step- change in technology for patients with respiratory disorders seeking an easy, effective and reproducible measurement of wheeze and associated App that provides patients with one- stop respiratory shop. Importantly the Company continues to use the GINA (Global Initiative for Asthma) guidelines as a strategic filter for all of its patient-centric initiatives. The Company’s plans to launch its UK operations in Q4 2021 and enter the US market in Q3 2022 remains on track. Operational achievements Further detail on some of the key achievements during the year are outlined below. Pharmacy Banner Groups – During the year the company has continued to grow the contracted pharmacy banner group footprint for making wheezo® available for sale to patients and commenced the roll out of the important in-pharmacy education and patient engagement programs that will aid with in-store pharmacist/patient engagement this includes both the Respiri Connect Care Nurse team and the roll out of the Pharmacy Platform Group’s asthma professional service program that was developed in conjunction with Respiri. Major banner groups agreements secured in the year take the total number of banner group to 14 and pharmacies covered by agreements to 1,600 representing approximately 35% of the total number of ex-hospital community pharmacies across Australia. To continue to bolster the pharmacy sales and educational resource, Respiri contracted the services of Hahn Healthcare contract sales force services. Hahn is a respected organisation whose services are used by pharmaceutical and healthcare companies to sell their products. Hahn will sell to those pharmacies that are not target clients for the Cipla sales force and will provide additional Connect Care Nurse services to accelerate the educational programs with pharmacies that are stocking wheezo®. “Significant progress was also made in both commercialisation and clinical development partnership discussions in the target markets of United Kingdom and USA.”ANNUAL REPORT 2021 vii Manufacturing – Significant progress has continued throughout the year with manufacturing and production of wheezo resulting in world class capabilities. Current design Production Quality is excellent with rejection/fall out rates <0.42%. Further, improvements in Cost Of Goods (COGS) have further initial quotes for manufacturing wheezo model 4.0 indicate COGS of US$35, which is the target price the Company set. This version of wheezo® will commence manufacturing in mid-2022 once current ordered batches are completed. Significant work has been dedicated to ensuring the Company has successfully secured sufficient chip inventory in a period of ongoing global supply shortfalls. Shareholders We would like to thank all shareholders for their continued support of the company. The board was pleased with the response to the oversubscribed $12.5m share placement to institutional, professional and sophisticated Australian investors and included a number of new institutional investors onto the share register with strong support from our existing investors earlier in the year. We remain committed to delivering on the achievements to date and committed milestones ahead including the successful launch into the UK and US markets. Thank you for the trust that you have placed in us as a board and executive team and the commitment you continue to show to the Company. Nicholas Smedley Executive Chairman Marjan Mikel CEO and Managing Director International Expansion – The Company has advanced discussions with potential marketing/distribution partners in the United States. The Company commissioned an independent expert evaluation of its wheezo® device (and associated App) to assess its eligibility to qualify for Remote Patient Monitoring (RPM) Current Procedural Terminology (CPT) code reimbursement – a significant insurance reimbursement regime which exists in the US market. The expert, based in the USA, is an experienced advisor to US CPT coding committees and MACRA task forces. The Medicare Access and CHIP Reauthorization Act (MACRA) is a law that governs how the US federal government pays / reimburses physicians. In summary, the expert concluded that wheezo® analyses breath sounds for the presence of a wheeze and that in the expert’s opinion, breath sounds and wheezing are physiologic parameters, which indicates that wheezo® potentially qualifies for Remote Patient Monitoring CPT Codes. Significant progress was also made in both commercialisation and clinical development partnership discussions in the United Kingdom. As per MHRA requirements, the Company appointed European Device Solutions (UK) Ltd as the UK Responsible Person (UK-RP) and has demonstrated that wheezo® will perform safely and achieve the stated performance claims for its intended use. As a result, Respiri can now apply the new UK Conformity Assessed (UKCA) mark on wheezo®. UKCA marking is a new UK product marking that is used for goods being placed on the market in Great Britain (England, Scotland and Wales). It is a prerequisite for the approval of products following Brexit and indicates conformity with applicable regulatory requirements. UKCA replaces CE marking, which can still be used in the UK until 31 March 2021 for products that are currently being sold in the UK but CE cannot be used for any products that have not been sold in the UK market after January 1, 2021. Accordingly, this process fulfils a commercial requirement for wheezo®, which is due to be launched in the UK in Q4 CY 2021. The asthma Telehealth/Remote Patient Monitoring Program – developed together with respiratory specialist Dr Kevin Chan (a leading Respiratory Physician working at Campbelltown Hospital & Sydney Adventist Hospital, Wahroonga) commenced in June and 28 patients with moderate to severe persistent asthma were enrolled into the program. Patients are given a wheezo® and a smart inhaler providing them and the physician with a more comprehensive respiratory digital platform solution that allows for objective assessments to be made in real time from the real world where asthma problems occur. Program outcomes are being carefully monitored. It is planned that this programme will be scaled to other Respiratory physicians and also create a potential corporate health respiratory offering for employers/companies. The programme will also provide a template for a contemplated United States reimbursement business model. viii Financial Statements Respiri Limited ABN 98 009 234 173 Contents For the Year Ended 30 June 2021 Financial Statements Directors' Report Auditor's Independence Declaration under Section 307C of the Corporations Act 2001 Statement of Profit or Loss and Other Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Directors' Declaration Independent Audit Report Page 1 19 20 21 22 24 25 57 58 RESPIRI LIMITED1 Respiri Limited ABN 98 009 234 173 Directors' Report 30 June 2021 The Directors of Respiri Limited ("RSH", "Respiri", "Company" or "the Group") submit herewith the annual financial report of the Group for the financial year ended 30 June 2021. In order to comply with the Corporations Act 2001, the Directors' Report are as follows: Directors The names of each person who has been a director during the year and to the date of this report are: Mr Nicholas Smedley Appointed to the Board Last elected by Shareholders Experience Qualifications Interest in shares and options Directorships held in other listed entities Mr Marjan Mikel Appointed to the Board Last elected by Shareholders Experience Qualifications Interest in shares and options Directorships held in other listed entities Executive Chairman 30 October 2019 16 December 2020 Nicholas is an experienced Investment Banker and M&A Advisor, with 14 years’ experience at UBS and KPMG. He has worked on M&A transactions in the UK, Hong Kong, China, and Australia with transactions ranging from the A$9bn defence of WMC Resources through to the investment of $65m into Catch.com.au. Nicholas currently oversees investments in the Property, Aged care, Technology and Medical Technology space. Key areas of expertise include M&A, Debt structuring, Corporate governance and innovation. B.Com 14,209,668 Ordinary Shares and 77,500,000 Unlisted Options AD1 Holdings Limited Vortiv Limited CEO and Executive Director 25 November 2019 16 December 2020 Marjan is a highly experienced managing director and board member with a career spanning Australia, Europe and Japan, Marjan’s focus has been in the healthcare industry; from pharmaceuticals and information services and technology to medical devices and sleep disorder solutions. He founded and subsequently sold Healthy Sleep Solutions after developing it into a successful business, with Resmed Ltd as a joint venture/shareholder partner. BSc(Hons), Grad Dip Ed, MCom; MAICD 3,308,687 Ordinary Shares and 90,000,000 Unlisted Options N/A 1 ANNUAL REPORT 20212 Respiri Limited ABN 98 009 234 173 Directors' Report 30 June 2021 Directors (continued) Dr Thomas Duthy Appointed to the Board Last elected by Shareholders Experience Qualifications Interest in shares and options Directorships held in other listed entities Company secretary Non-Executive Director 11 February 2020 16 December 2020 Dr Duthy has over 15 years of direct financial markets experience having worked in sell-side equity research, and senior executive roles across investor relations and corporate development. Dr Duthy is the Founder and CEO of Nemean Group Pty Ltd, a boutique corporate advisory and investor relations firm specialising in delivering value- added services across the life sciences, medical devices, healthcare, technology and emerging companies sectors. Prior to establishing Nemean in October 2018, Tom was the Global Head of Investor Relations & Corporate Development at Sirtex Medical Limited (ASX:SRX), which was sold to CDH Investments in September 2018 for A$1.9 billion, which remains the largest medical device transaction in Australian corporate history. Prior to Sirtex, Tom spent ten years as a leading sell-side Healthcare & Biotechnology analyst at Taylor Collison Limited, focused mainly on small cap companies. During this time, approximately $200 million in equity capital was raised for selected portfolio companies. He is a Member of the Australian Institute of Company Directors (MAICD) and the Australasian Investor Relations Association (AIRA). B.Sc. (Hons.), Ph.D, MBA 745,454 Ordinary Shares and 30,000,000 Unlisted Options Invex Therapeutics Limited Mr Alastair Beard was appointed as Company Secretary on 13 March 2019. Mr Beard is a skillful and adaptable Certified Practicing Accountant with diverse private and public company experience including roles as director or Chief Financial Officer in the property, utilities, aquaculture and research-to-commercialisation industries. Principal Activities The Company’s principal activities in the course of the financial year have been the research, development and commercialisation of medical devices, and the development of mobile health applications. There were no significant changes in the nature of the Group's principal activities during the financial year. Operating and Financial review The loss of the Company after income tax for the financial year was $11,040,347 (2020: $7,260,935). This result has been achieved after fully expensing all research and development costs. 2 RESPIRI LIMITED3 Respiri Limited ABN 98 009 234 173 Directors' Report 30 June 2021 Operating and Financial review (continued) During the year the Company has continued to grow the contracted pharmacy banner group footprint for making wheezo® available for sale to patients and commenced the roll out of the important in-pharmacy education and patient engagement programs. The Company has advanced discussions with potential marketing/distribution partners in the United States and significant progress was also made in both commercialisation and clinical development partnership discussions in the United Kingdom. Significant progress has continued throughout the year with manufacturing and production of wheezo® resulting in world class capabilities. Further improvements in Cost Of Goods (COGS) for manufacturing wheezo® model 4.0 indicate COGS of US$35, which is the target price the Company set. Significant work has been dedicated to ensuring the Company has successfully secured sufficient chip inventory in a period of ongoing global supply shortfalls. The asthma Telehealth/Remote Patient Monitoring Program developed together with respiratory specialist Dr Kevin Chan (a leading Respiratory Physician working at Campbelltown Hospital & Sydney Adventist Hospital, Wahroonga) commenced in June 2021 and 22 patients with moderate to severe persistent asthma were enrolled into the program. The program will also provide a template for a contemplated United States reimbursement business model. Corporate & Financial Highlights During the year Respiri completed an oversubscribed $12,500,000 share placement to institutional, professional and sophisticated Australian investors and included a number of new institutional investors onto the share register with strong support from our existing investors. The additional funding has provided Respiri with the financial flexibility to meet stated corporate objectives, which included the commercial launch of wheezo® in Australia, which occurred during the year and in the longer term progressive commercial launches in key offshore markets including the US and Europe/UK. The Company recorded revenue from sales of wheezo® devices of $270,074, representing initial sales to contracted pharmacy banner groups and additional online wheezo® orders. Product manufacturing cost of sales of $1,263,452 reflect the costs associated with initial scale up manufacturing and inventory build including long lead time componentry for devices to support expected future demand. Advertising and marketing costs for the year of $2,185,086 include costs associated with the launch of wheezo® in Australia during the year, promotional activities and costs associated with the patient experiential program. Employee, consulting and corporate costs of $4,964,796 reflect the additional headcount required to support Respiri's corporate objectives, including manufacturing, quality, regulatory and commercial personnel. At year end the company held $537,046 in inventories and $7,973,188 in cash on hand. Dividends The Company did not pay any dividends during the financial year. The Directors do not recommend the payment of a dividend in respect of the 2021 financial year. Significant Changes in State of Affairs In the opinion of the Directors, there were no significant changes in the state of affairs of entities in the Group during the financial year under review not otherwise disclosed in the Annual Report. 3 ANNUAL REPORT 20214 Respiri Limited ABN 98 009 234 173 Directors' Report 30 June 2021 Matters Subsequent to Reporting Period The Victorian Government extended a Declaration of a State of Emergency from the 29 July 2021 and “Stage 4” restrictions continued to apply to Metro Melbourne. This event does not affect amounts recognised in the 2020/21 financial statements. At this stage, it is not possible to estimate what, if any, affect this will have on the Company's financial performance during 2021/22. Except for the above, no other matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years. Likely Developments and Expected Results Please refer to the ‘Operating and Financial Review’ section at the start of the Directors’ Report for information in relation to Company’s future Developments and Events. Environmental Regulations The Group's operations are not regulated by any significant environmental regulations under either Commonwealth or State legislation. Risk Management The Board is responsible for overseeing the establishment and implementation of the risk management system, and for the reviewing and assessing the effectiveness of the Company's implementation of that system on a regular basis. The Board and senior management continue to identify the general areas of risk and their impact on the activities of the Company. The Board has established a formal process in relation to the maintenance of an internal risk register which is updated and reviewed by the Board at its monthly meetings. The potential risk areas for the Company include:       reliance on key personnel efficacy, safety and regulatory risk of medical devices financial position of the Company and the financial outlook; domestic and global economic outlook and share market activity; changing government policy (Australian and overseas); competitors' products and research and development programs;  market demand and market prices for medical device technologies;     environmental regulations; ethical issues relating to medical device research and development; the status of partnership and contractor relationships; other government regulations including those specifically relating to the biomedical and health industries; and 4 RESPIRI LIMITEDRespiri Limited ABN 98 009 234 173 Directors' Report 30 June 2021 Risk Management (continued)  occupational health and safety and equal opportunity law. The above list of risk areas ought not to be taken as an exhaustive one of the risks faced by the Company or by investors in the Company. The above areas, and others not specifically referred to above, may in the future materially affect the financial performance of the Company. The Board and Management will continue to perform a regular review of the following:    the major risks that occur within the business; the degree of risk involved; the current approach to managing the risk; and  where appropriate, determine:   any inadequacies of the current approach; and possible new approaches that more efficiently and effectively address the risk. Healthcare Technology Companies – Inherent Risks Some of the risks inherent in the development of medical device products to a marketable stage include the uncertainty of patent protection and proprietary rights, whether patent applications and issued patents will offer adequate protection to enable product development or may infringe intellectual property rights of other parties, the obtaining of the necessary regulatory authority approvals and difficulties caused by the rapid advancements in technology. Also a particular medical device may fail the clinical development process through lack of efficacy or safety. Companies such as Respiri Limited are dependent on the success of their medical devices and on the ability to attract funding to support these activities. Investment in healthcare technology including medical devices cannot be assessed on the same fundamentals as trading and manufacturing enterprises and thus investment in these areas must be regarded as speculative taking into account these considerations. Meetings of Directors A number of formal meetings and circular resolutions were held during the year as tabled below: Directors' Meetings Audit, Risk and Compliance Committee Remuneration & Nomination Committee Number eligible to attend Number attended Number eligible to attend Number attended Number eligible to attend Number attended Mr Nicholas Smedley Mr Marjan Mikel Dr Thomas Duthy 11 11 11 11 11 11 - - - - - - - - - - - - 5 5 ANNUAL REPORT 20216 Respiri Limited ABN 98 009 234 173 Directors' Report 30 June 2021 Meetings of Directors (continued) For the date of appointment and resignation of each Director and Executive, please refer to the Remuneration Report section of the Directors’ Report. Indemnification of Officers and Auditors During the financial year, the Company maintained an insurance policy to indemnify Directors and Officers against certain liabilities incurred as such a Director or Officer, including costs and expenses associated in successfully defending legal proceedings. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Company has not otherwise, during or since the financial year, indemnified or agreed to indemnify the Auditor of the Company or any related body corporate against a liability incurred as such an Officer or Auditor. Proceedings on Behalf of the Company No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001. Non-audit Services The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor's expertise and experience with the Company and/or the Group are important. During the year ended 30 June 2021 the Company did not engage the external auditor to provide non-audit services. Auditor's Independence Declaration The auditor's independence declaration in accordance with section 307C of the Corporations Act 2001 for the year ended 30 June 2021 has been received and can be found on page 19 of the financial report. 6 RESPIRI LIMITED7 Respiri Limited ABN 98 009 234 173 Directors' Report 30 June 2021 Share Options on Issue as at the Date of this Report The unissued ordinary shares of Respiri Limited under option as at the date of this report were: Unlisted options Class ASX Code Date of Expiry RSHAF RSHAG 31 December 2023 31 December 2024 Exercise Price $ 0.03 0.03 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 RSHAW 21 December 2020 0.12 RSHAA RSHAB RSHACi RSHACii RSHACiii RSHACiv RSHAD RSHAE RSHAH RSHAC RSHAC RSHAA RSHAA 28 May 2023 12 June 2024 1 July 2022 1 July 2024 17 Dec 2025 17 Dec 2025 0.10 0.10 0.20 0.30 0.40 0.60 0.10 0.10 0.10 0.20 0.30 0.30 0.30 No. under Option 6,000,000 6,000,000 5,000,000 5,000,000 65,000,000 (b) 30,000,000 (b) 12,500,000 (b) 12,500,000 (b) 12,500,000 (b) 7,000,000 10,000,000 4,000,000 (a) 6,000,000 (a) 8,000,000 (a) 65,000,000 10,000,000 a) Options granted at EGM held in May 2020. Issued in 3 tranches with different vesting conditions. Of the 3 tranches, 1 has not yet been allotted to members. See Note 23. b) Issued in 5 tranches with different vesting conditions. See Note 23. There were no listed options outstanding at the reporting date. Corporate Governance In recognising the need for the highest standards of corporate behaviours and accountability, the Directors of Respiri support and adhere to good corporate governance practices. The Company’s Corporate Governance Statement is available on the Company’s website at www.Respiri.co. Remuneration Report (Audited) This Remuneration Report outlines the Director and Executive remuneration arrangements of the Company as required by the Corporations Act 2001 and its Regulations. This report details the nature and amount of remuneration of each Director of Respiri Limited and all other Key Management Personnel. For the purposes of this report, Key Management Personnel (KMP) are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company, directly or indirectly, including any Director (whether Executive or otherwise) of the Company. For the purposes of this report, the term 'executive' encompasses the Executive Chairman. 7 ANNUAL REPORT 20218 Respiri Limited ABN 98 009 234 173 Directors' Report 30 June 2021 Remuneration Report (Audited) (continued) Names Directors Mr Marjan Mikel Mr Nicholas Smedley Dr Thomas Duthy Other KMP Mr Philippe Ludekens Dr Samaneh Sarraf Shirazi Mr Peter Hildebrandt Mr Theo Antonopoulos Remuneration Policy Position Appointment/Resignation CEO Executive Director Non-Executive Director Executive Chairman Non-Executive Director General Manager - Commercial Operations Chief Research Officer Chief Operating Officer Chief Commercial Officer Resigned 21 May 2021 Appointed on 1 November 2020 Appointed on 7 June 2021 Remuneration of all Non-Executive Directors and Officers of the Company is determined by the Board following recommendation by the Remuneration and Nomination Committee. The Company is committed to remunerating Executive Directors in a manner that is market-competitive and consistent with "Best Practice" including the interests of shareholders. Remuneration packages are based on fixed and variable components, determined by the Executives' position, experience and performance, and may be satisfied via cash or equity. Non-Executive Directors are remunerated out of the aggregate amount limit approved by shareholders and at a level that is consistent with industry standards. Non-Executive Directors do not receive performance based bonuses and prior Shareholder approval is required to participate in any issue of equity. No retirement benefits are payable other than statutory superannuation, if applicable. Voting and comments made at the Company’s Annual General Meeting The Company did not receive any specific feedback at the AGM or throughout 2021 on its remuneration practices. The Remuneration Report was adopted at the 2021 AGM by more than 93% of eligible votes received. Remuneration Policy Versus Company Financial Performance Directors have been compensated for work undertaken and the responsibilities assumed in being Directors of this publicly listed company based on industry practice. Consistently with good corporate governance practices, compensation of Non- Executive Directors is not linked to specific performance hurdles or objectives. The Company envisages its performance in terms of earnings will remain negative whilst the Company continues in the development and commercialisation phase. Shareholder value reflects the speculative and volatile biotechnology market sector. This pattern is indicative of the Company's performance over the past five years. Accordingly, no dividends have been paid during the year, or in respect of the 2021 financial year. 8 RESPIRI LIMITEDRespiri Limited ABN 98 009 234 173 Directors' Report 30 June 2021 Remuneration Report (Audited) (continued) Financial Year 2021 2020 2019 2018 2017 Performance Based Remuneration 9 Net (Loss)/ Profit Share Price at Balance Sheet Date Loss per Share (cents) $ $ $ (11,040,347) (7,260,935) (8,474,586) (3,207,220) (2,522,052) 0.07 0.09 0.09 0.10 0.04 (1.58) (1.27) (1.69) (0.73) (0.58) The purpose of a performance bonus is to reward individual performance in line with Company objectives. Consequently, performance based remuneration is paid to an individual where the individual's performance clearly contributes to a successful outcome for the Company. This is regularly measured in respect of performance against key performance indicators (KPI's). The Company uses a variety of short-term and long-term KPI's to determine achievement, depending on the role of the executive or director being assessed and the particular KPI being targeted. These include:    successful contract negotiations; company share price consistently reaching a targeted rate on the ASX or applicable market over a period of time; and completion of set milestones. The Non-Executive Directors do not receive performance-based remuneration. 9 ANNUAL REPORT 202110 Respiri Limited ABN 98 009 234 173 Directors' Report 30 June 2021 Remuneration Report (Audited) (continued) Details of Remuneration for the Year Ended 30 June 2021 The remuneration for each Director and each of the other Key Management Personnel of the consolidated entity during the year was as follows: Short-term Employee Benefits Post-employment Benefits Share-based payments Cash salary and fees Cash bonus Consulting fees Superannuation contribution 2021 $ $ $ $ Shares/ Options $ $ Directors Mr Marjan Mikel Dr Thomas Duthy Mr Nicholas Smedley Professor Bruce Thompson Other KMP Mr Philippe Ludekens Mr Peter Hildebrandt Mr Theo Antonopoulos Dr Samaneh Sarraf Shirazi 428,306 60,000 203,636 1,344 214,659 156,667 18,333 167,458 1,250,403 - - - - - - - - - - - - - - - - - - 21,694 - - 128 18,597 14,883 1,742 1,106,111 345,734 929,581 1,556,111 405,734 1,133,217 - 1,472 56,523 79,067 1,493 289,779 250,617 21,568 15,909 56,523 239,890 72,953 2,575,032 3,898,388 Note: For the date of appointment and resignation of each Director and Executive please refer to the Directors' Report. a) 20,000,000 unlisted options were granted to senior management personnel at the May 2020 EGM. As at 30 June 2021, of the total granted, 8,800,000 options with a fair value of $180,119 have not yet been formally allotted. 10 RESPIRI LIMITED11 Respiri Limited ABN 98 009 234 173 Directors' Report 30 June 2021 Remuneration Report (Audited) (continued) Details of Remuneration for the Year (continued) Ended 30 June 2021 Short-term Employee Benefits Post-employment Benefits Share-based payments Cash salary and fees Cash bonus Consulting fees Superannuation contribution 2020 $ $ $ $ Shares/ Options $ $ Directors Mr Marjan Mikel Dr Thomas Duthy Mr Nicholas Smedley Professor Bruce Thompson Mr Mario Gattino Mr Ross Blair-Holt Other Key Management Personnel Mr Philippe Ludekens Dr Samaneh Sarraf Shirazi Ms Koswani Wall 186,998 25,000 88,978 80,603 262,550 26,250 94,032 164,459 188,528 75,000 - - - - - - - - 1,117,398 75,000 At Risk Income as a Proportion of Total Remuneration - - - - - - - - - - 24,639 - - 7,657 16,939 2,494 1,293,708 230,207 1,274,671 1,580,345 255,207 1,363,649 - 362,116 - 88,260 641,605 28,744 8,933 15,986 118,951 15,623 14,907 15,986 (6,908) 196,068 196,527 91,192 3,185,766 4,469,356 All Executive Directors and other key management personnel are eligible to receive incentives whether through employment contracts or by the recommendation of the Board. Their performance payments are based on a set monetary value, set number of shares or options or as a portion of base salary. Therefore, there is no fixed proportion between incentive and non-incentive remuneration. Entitlement to these payments does not depend on the future performance of the Company. Non-Executive Directors are not entitled to receive bonuses and/or incentives. 11 ANNUAL REPORT 202112 Respiri Limited ABN 98 009 234 173 Directors' Report 30 June 2021 Remuneration Report (Audited) (continued) At Risk Income as a Proportion of Total Remuneration (continued) The relative proportions of remuneration income that are at risk, and those that are fixed, are as follows: Directors Mr Nicholas Smedley (appointed on 30 October 2019) Mr Marjan Mikel (appointed on 25 November 2019) Dr Thomas Duthy (appointed on 11 February 2020) Mr Mario Gattino (appointed on 14 December 2017, resigned 25 November 2019) Mr Ross Blair-Holt (appointed on 27 November 2018, resigned 15 November 2019) Prof Bruce Thompson (appointed on 27 November 2018, resigned 11 February 2020) Other Key Management Personnel Mr Philippe Ludekens (appointed on 28 January 2020) Mr Peter Hildebrandt (appointed 1st November 2020) Mr Theo Antonopoulos (appointed 7th June 2021) Dr Samaneh Sarraf Shirazi (appointed 4 February 2019) Ms Koswani Wall (appointed on 1 June 2018, resigned 13 December 2019) Fixed Remuneration At Risk - STI At Risk - LTI 2021 2020 2021 2020 2021 2020 % % % % % % 18 29 15 - - 100 80 68 93 76 - 7 18 10 40 100 100 87 - - 92 100 - - - - - - - - - - - - - - - - - - - - - - 82 71 85 - - - 20 32 7 24 - 93 82 90 60 - - 13 - - 8 - At risk long-term incentive (LTI) relates to remuneration in the form of share based payments, which are subject to vesting conditions based on length of service. At risk short-term incentive (STI) relates to discretionary bonuses approved by the board in respect of performance during the relevant year. 12 RESPIRI LIMITED13 Respiri Limited ABN 98 009 234 173 Directors' Report 30 June 2021 Remuneration Report (Audited) (continued) Share-based Compensation At the General Meeting held on 31 October 2013, Shareholders approved the establishment of the 2013 Employees', Directors' and Consultants' Share and Option Plan (ESOP). The ESOP is intended to reward Directors, employees and/or consultants for their contributions to the Group. The Plan is to be used as a method of retaining key personnel for the growth and development of the Group. Due to the Group's presence in Israel and USA, the Plan has been established to benefit personnel in Australia, Israel and USA. As at 30 June 2021 equity had been issued to 3 directors & 6 employees in Australia, 8 employees in USA and 2 employees in Israel under ESOP. The terms and conditions of each grant of options affecting Director and other Key Management Personnel remuneration in the current or future reporting periods are as follows: Grant Date Date Vested & Exercisable Expiry Date Exercise Price Share Price Hurdle Fully Vested 14 Dec 2017 14 Dec 2017 26 May 2020 26 May 2020 26 May 2020 16 Jun 2020 16 Jun 2020 16 Jun 2020 16 Jun 2020 16 Jun 2020 16 Jun 2020 22 Oct 2020 21 Dec 2020 7 Jun 2021 1 Jul 2020 1 Jul 2020 30 Sep 2020 30 Sep2020 30 Sep 2020 12 Jun 2020 30 Sep 2020 31 Mar 2021 30 Sep 2021 30 Sep 2021 31 Mar 2022 1 Nov 2021 21 Dec 2020 7 Jun 2022 31 Dec 2023 31 Dec 2024 30 Sep 2024 30 Sep 2024 30 Sep 2024 12 Jun 2024 30 Sep 2024 31 Mar 2025 30 Sep 2025 30 Sep 2025 31 Mar 2026 1 Nov 2023 17 Dec 2025 7 Jun 2024 $ 0.03 0.03 0.10 0.20 0.30 0.10 0.20 0.30 0.40 0.40 0.60 0.20 0.30 0.20 0.10 0.15 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A No No No No No Yes No No No No No No Yes No Value per Option at Grant Date $ 0.048 0.092 0.036 0.026 0.020 0.041 0.031 0.027 0.030 0.026 0.023 0.074 0.022 0.015 Options granted under the plan carry no dividend or voting rights until exercised into ordinary fully paid shares. When exercisable, each option is convertible into one ordinary share as soon as practical after the receipt by the Company of the completed exercise form and full payment of the exercise price. The exercise price of options granted under this plan shall be determined by the Committee in its sole discretion. The plan rules contain a restriction on removing the 'at risk' aspect of the instruments granted to executives. Plan participants may not enter into any transaction designed to remove the 'at risk' aspect of an instrument before it vests. 13 ANNUAL REPORT 202114 Respiri Limited ABN 98 009 234 173 Directors' Report 30 June 2021 Remuneration Report (Audited) (continued) Share-based Compensation (continued) Details of options over ordinary shares in the Company provided as remuneration to each Director of the Company and each of the other Key Management Personnel are set out below: Directors Mr Nicholas Smedley Mr Marjan Mikel Dr Thomas Duthy Mr Mario Gattino Mr Ross Blair-Holt Other Key Management Personnel Mr Philippe Ludekens Mr Peter Hildebrandt Mr Theo Antonopoulos Dr Samaneh Sarraf Shirazi Ms Koswani Wall (resigned on 13 December 2019) Number of Options Granted During the Year Number of Options Forfeited/ Lapsed/ Exercised During the Year Number of Options Vested During the Year 2021 2020 2021 2020 2021 2020 30,000,000 30,000,000 5,000,000 - - 47,500,000 60,000,000 25,000,000 - - - - - - 8,000,000 12,000,000 - - - - 30,000,000 30,000,000 - 30,000,000 30,000,000 - 10,000,000 5,000,000 - - - 2,000,000 2,000,000 - 2,000,000 - - 2,000,000 - - - - - - - - - - - 10,000,000 - - - - - - - - - - 69,000,000 136,500,000 - 18,000,000 82,000,000 65,000,000 Refer to Page 16 for closing balance of options held by each Director and other Key Management Personnel of Respiri Limited, including their personally related parties, as at 30 June 2021. 14 RESPIRI LIMITED15 Respiri Limited ABN 98 009 234 173 Directors' Report 30 June 2021 Remuneration Report (Audited) (continued) (a) Shareholdings The number of fully paid ordinary shares in the Company held during the financial year by each Director and other Key Management Personnel of Respiri Limited, including shares held indirectly by them personally, are set out below: 30 June 2021 Directors Mr Nicholas Smedley Mr Marjan Mikel Dr Thomas Duthy Other Key Management Personnel Mr Philippe Ludekens Mr Peter Hildebrandt Mr Theo Antonopoulos Dr Samaneh Sarraf Shirazi Balance at Start of the Year Granted as Compensation Shares from Options Exercised Net Change Other Balance at End of the Year 14,059,668 2,643,119 745,454 - - - - 17,448,241 - - - - - - - - - - - - - - - - 150,000 (a) 14,209,668 3,308,687 665,568 (b) 745,454 - (c) - - - - - - - - 815,568 18,263,809 a) 150,000 fully paid shares were purchased in Dec 2020. At year end, nil shares are held directly and 14,209,668 held indirectly. b) 148,148 fully paid shares were purchased in Dec 2020, and a further 517,420 shares were purchased in June 2021. At year end, 1,490,506 shares are held directly, 1,818,181 held indirectly. c) At year end, nil shares are held directly and 745,454 held indirectly. Balance at Start of the Year Granted as Compensation Shares from Options Exercised Net Change Other Balance at End of the Year 30 June 2020 Directors Mr Nicholas Smedley Mr Marjan Mikel Dr Thomas Duthy Prof Bruce Thomson (resigned on 11 February 2020) Mr Mario Gattino (resigned on 25 November 2019) Mr Ross Blair-Holt (resigned on 15 November 2019) Other Key Management Personnel Mr Philippe Ludekens Dr Samaneh Sarraf Shirazi Ms Koswani Wall (resigned on 13 December 2019) - - - - 420,000 1,120,423 - - 359,206 1,899,629 - - - - - - - - - - - 14,059,668 14,059,668 2,643,119 - 745,454 - - - 420,000 - - - 2,643,119 745,454 - - (1,120,423) - - - - - - - - 359,206 - 16,327,818 18,227,447 15 ANNUAL REPORT 202116 r i e h t i g n d u c n l i , d e t i m L i i r i p s e R f o l e n n o s r e P t n e m e g a n a M y e K i t r e h o d n a r o r i t e c h e t r i g D n h d c u a e c n y b , d r e a e m y L a i i c r n i p a s n e i R f e h o t t i i l f i l l i l t g e n n i n r u o d s r d e P e h n y e n m a p e m g a o n C a M e h y t e n K s r e e r h a t h o s d y n r a a n r o i d t c r o e r r i e D v h o c s a n e o y i t b p o r a f o e y r e a b m c n u a n n e i f h e T h t i l : l w o e b t u o t e s e r a , s e i t r a p d e t a e r l y l l a n o s r e p g n i r u d d l e h y n a p m o C e h t n i s e r a h s y r a n i d r o r e v o s n o i t p o f o r e b m u n e h T : w o l e b t u o t e s e r a , s e i t r a p d e t a l e r y l l a n o s r e p d e t i m L i i r i p s e R t r o p e R ' s r o t c e r i D 1 2 0 2 e n u J 0 3 3 7 1 4 3 2 9 0 0 8 9 N B A ) d e u n i t n o c ( ) d e t i d u A ( t r o p e R n o i t a r e n u m e R ) d e u n i t n o c ( ) d e t i d u A ( t r o p e R n o i t a r e n u m e R i s t h g R d n a s n o i t p O ) b ( s t h g i R d n a s n o i t p O ) b ( d e t s e v n U d n a d e t s e V e l b a s i c r e x E t a e c n a l a B e h t f o d n E r a e Y 0 0 0 , 0 0 5 , 7 1 0 0 0 , 0 0 0 , 0 6 0 0 0 , 0 0 5 , 7 7 0 0 0 , 0 0 0 , 0 3 0 0 0 , 0 0 0 , 0 6 0 0 0 , 0 0 0 , 0 9 0 0 0 , 0 0 0 , 0 2 0 0 0 , 0 0 0 , 0 1 0 0 0 , 0 0 0 , 0 3 0 0 0 , 0 0 5 , 1 7 0 0 0 , 0 0 0 , 4 3 1 0 0 0 , 0 0 5 , 5 0 2 0 0 0 , 0 0 0 , 2 0 0 0 , 0 0 0 , 2 - - - 0 0 0 , 0 0 0 , 2 - 0 0 0 , 0 0 0 , 2 0 0 0 , 0 0 0 , 2 0 0 0 , 0 0 0 , 2 0 0 0 , 0 0 0 , 2 0 0 0 , 0 0 0 , 2 ) a ( ) a ( ) a ( ) a ( t a e t c a n e a c l a n B a l a B e g n a h C t e N s n o i t p O s a d d e t n n a a d r G e t s e V e h t f e o h t t r f a o t S d n E e g n a h C t e N s n o i t p O s a d e t n a r G t a e c n a l a B e h t f o t r a t S r e h t O d e s i c d r e e x t s E e v n n U o i t a s e n b e p a s m c o r C e x E l i r a e Y r a e Y r e h t O d e s i c r e x E n o i t a s n e p m o C r a e Y 1 2 0 2 e n u J 0 3 s r o t c e r i D - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 0 0 0 , 0 0 0 , 2 0 0 0 , 0 - 0 0 , 2 - 0 0 0 , - 0 0 0 2 , - - , 0 0 0 0 0 0 , 2 0 0 0 0 , 0 0 0 0 0 0 , 2 0 0 , , 2 ) b ( ) b ( - - - - 0 0 0 , 0 - 0 0 , 0 3 0 0 0 , 0 - 0 0 , 0 3 0 0 0 , 0 - 0 0 , 5 0 0 0 0 , 0 0 0 0 5 0 , 7 0 4 5 , , 7 4 0 0 0 0 , 0 0 0 0 0 0 , 0 0 6 0 , , 0 6 0 0 0 0 , 0 0 0 0 0 0 , 5 0 2 0 , , 5 2 - - - 0 0 0 , 0 0 0 , 2 1 , 0 0 0 0 0 0 , 6 ) a ( ) 0 0 0 , 0 0 0 , 8 ( 0 0 0 , - 0 0 0 9 6 , 0 0 0 , - 0 0 5 , 6 3 1 ) c ( ) 0 0 0 , 0 0 0 , 0 1 ( 0 0 0 , 0 0 0 , 2 1 0 0 0 , 0 0 5 , 2 4 1 ) 0 0 0 , 0 0 0 , 8 1 ( - - - - - - - - - - l 0 0 0 , 0 0 5 y e , 7 d 4 e m S s - a o h c N l i r M 0 0 0 , 0 0 0 , 0 6 l i e k M - n a j r a M r M 0 0 0 , 0 0 0 , 5 2 y h t u D s - a m o h T r D - - - t n e m e g a n a M y e K r e h t O 0 0 0 , 0 0 0 , 4 1 - l e n n o s r e P s n e k e d u L e - p p i l i h P r M l , 0 0 0 0 s 0 o 0 , u 2 o p o n o t n - A o e h T r M t d n a r b e d l i H r e t e P r M i , 0 0 z 0 a r 0 i h 0 S 0 , 2 f a r r a S h e - n a m a S r D 0 0 0 , 0 0 5 , 6 3 1 0 0 0 , 0 0 0 , 4 2 - 0 0 0 , 0 0 0 , 0 1 ) 9 1 0 2 r e b m e c e D 3 1 n o d e n g i s e r ( l l a W i n a w s o K s M f o e u a v l r i a f a h t i w s n o i t p o 0 0 0 , 0 0 8 , 8 , d e t n a r g l a t o t e h t f o , 1 2 0 2 e n u J 0 3 t a s A . M G E 0 2 0 2 y a M e h t t a l e n n o s r e p t n e m e g a n a m i r o n e s o t d e t n a r g e r e w s n o i t p o d e t s i l n u 0 0 0 , 0 0 0 , 0 2 ) a 6 1 n e e b t o n e v a h 4 5 1 9 6 $ , f o e u a v l r i a f a h t i w s n o . 9 1 0 2 r e b m e c e D n i n o i t a n g s e r i i t p o 0 0 0 , 0 0 0 , 4 1 , d e t n a r g l a t o t e h t f O . M G E 0 2 0 2 y a M e h t t a l e n n o s r e p t n e m e g a n a m r o i n e s o t d e t n a r g e r e w s n o i t p o d e t s i l n u 0 0 0 , 0 0 0 , 0 2 . d e t t o l l a y l l a m r o f n e e b t e y t o n e v a h . 9 1 0 2 r e b o t c O n 9 1 1 , 0 8 1 $ i n o i t a n g s e i r g n i w o l l o f d e l l e c n a c O E C r e m r o f o t d e u s s i s n o i t p o 0 0 0 , 0 0 0 , 8 l e n n o s r e P t n e m e g a n a M y e K r e h t O i z a r i h S f a r r a S h e n a m a S r D s n e k e d u L e p p i l i h P r M y e l d e m S s a l o h c i N r M 0 2 0 2 e n u J 0 3 s r o t c e r i D y h t u D s a m o h T r D o n i t t a G o i r a M r M t l o H - r i a l B s s o R r M l e k i M n a j r a M r M n o s p m o h T e c u r B f o r P g n i w o l l o f d e l l e c n a c O X C r e m r o f o t d e u s s i s n o i t p o 0 0 0 , 0 0 0 , 0 1 ) c . 0 2 0 2 e n u J 0 3 t a s a d e t o l l a y l l a m r o f ) a ) b t r o p e R ' s r o t c e r i D 0 2 0 2 e n u J 0 3 d e t i m i L i r i p s e R 3 7 1 4 3 2 9 0 0 8 9 N B A RESPIRI LIMITED 17 - - - - - - - - - - - - - - 0 0 0 , 0 0 5 , 7 4 0 0 0 , 0 0 0 , 0 6 0 0 0 , 0 0 0 , 5 2 - - - 0 0 0 , 0 0 0 , 2 1 0 0 0 , 0 0 0 , 6 ) 0 0 0 , 0 0 0 , 8 ( - - - - - - - - - 0 0 0 , 0 0 0 , 2 0 0 0 , 0 0 0 , 2 - - - - - - ) 0 0 0 , 0 0 0 , 0 1 ( 0 0 0 , 0 0 0 , 2 1 0 0 0 , 0 0 5 , 2 4 1 ) 0 0 0 , 0 0 0 , 8 1 ( - - - - - - - - - - - 7 1 0 0 0 , 0 0 5 , 7 4 0 0 0 , 0 0 0 , 0 6 0 0 0 , 0 0 0 , 5 2 - - - - - - - 0 0 0 , 0 0 0 , 2 0 0 0 , 0 0 0 , 2 - - - - - 0 0 0 , 0 0 0 , 4 1 - 0 0 0 , 0 0 0 , 0 1 0 0 0 , 0 0 5 6 3 1 , 0 0 0 , 0 0 0 , 4 2 d e t s e v n U $ d n a d e t s e V e l b a s i c r e x E $ t a e c n a l a B e h t f o d n E r a e Y $ e g n a h C t e N r e h t O $ d e s i c r e x E n o i t a s n e p m o C r a e Y s n o i t p O s a d e t n a r G t a e c n a l a B e h t f o t r a t S ) d e u n i t n o c ( ) d e t i d u A ( t r o p e R n o i t a r e n u m e R ) d e u n i t n o c ( i s t h g R d n a s n o i t p O ) b ( t r o p e R ' s r o t c e r i D 1 2 0 2 e n u J 0 3 3 7 1 4 3 2 9 0 0 8 9 N B A 0 2 0 2 e n u J 0 3 s r o t c e r i D d e t i m L i i r i p s e R y h t u D s a m o h T r D o n i t t a G o i r a M r M l i e k M n a j r a M r M t l o H l - r i a B s s o R r M n o s p m o h T e c u r B f o r P t n e m e g a n a M y e K r e h t O l e n n o s r e P l y e d e m S s a o h c N l i r M i z a r i h S f a r r a S h e n a m a S r D d e n g s e r ( i l l a W i n a w s o K s M ) 9 1 0 2 r e b m e c e D 3 1 n o s n e k e d u L e p p i l i h P r M ANNUAL REPORT 2021 18 Respiri Limited ABN 98 009 234 173 Directors' Report 30 June 2021 Remuneration Report (Audited) (continued) The Directors and other Key Management Personnel are subject to service agreements with normal commercial terms and conditions. The key terms of these agreements are set out below: Duration Periods of Notice Required to Terminate On-going term In the case of: - Marjan Mikel, one months' notice of termination by the employee and the Company; - Peter Hildebrandt, one months' notice of termination by the employee and the Company; - Theo Antonopoulos, one months' notice of termination by the employee and the company; and - Samaneh Shirazi, one months' notice of termination by the employee and the Company. This is the end of the Audited Remuneration Report. This director's report, incorporating the remuneration report, is signed in accordance with a resolution of the Board of Directors. Mr Nicholas Smedley Executive-Chairman Dated this the 27th day of August 2021 Melbourne, Australia 18 RESPIRI LIMITED19 ANNUAL REPORT 202119 AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of Respiri Limited for the year ended 30 June 2021, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. RSM AUSTRALIA PARTNERS B Y CHAN Partner Dated: 27 August 2021 Melbourne, Victoria 20 Respiri Limited ABN 98 009 234 173 Statement of Profit or Loss and Other Comprehensive Income For the Year Ended 30 June 2021 Revenue Operating revenue Non-operating revenue Other income Total revenue Expenses Cost of sales Consulting, employee and director Equity-based payment Corporate administration Depreciation Marketing and promotion Research and development Travel Loss before income tax expense from continuing operations Income tax expense Loss after income tax for the year Other comprehensive income, net of income tax Items that will not be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations Total comprehensive loss for the year Loss attributable to: Members of the parent entity Total comprehensive loss attributable to: Members of the parent entity Basic loss per share (cents) Diluted loss per share (cents) Note 2021 $ 2020 $ 3 3 4 23 270,074 1,352 1,165,921 - 1,660 2,205,307 1,437,347 2,206,967 (1,263,452) (3,330,901) (2,530,169) (1,633,895) (79,601) (2,185,086) (1,387,084) (67,506) - (1,738,111) (3,270,907) (1,526,472) (10,380) (783,872) (2,035,426) (102,734) (11,040,347) - (7,260,935) - 5 (11,040,347) (7,260,935) (19,833) (7,573) (11,060,180) (7,268,508) (11,040,347) (7,260,935) (11,060,180) (7,268,508) (1.58) (1.58) (1.27) (1.27) The accompanying notes form part of these financial statements. 20 RESPIRI LIMITEDRespiri Limited ABN 98 009 234 173 Statement of Financial Position As At 30 June 2021 ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Other assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, plant and equipment Other assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables Borrowings Other financial liabilities Deferred revenue TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Other financial liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Retained earnings TOTAL EQUITY 21 Note 2021 $ 2020 $ 9 10 14 13 12 13 15 16 17 17 7,973,188 135,986 537,046 298,978 3,552,334 8,199 309,219 561,363 8,945,198 4,431,115 162,374 - 162,374 187,725 64 187,789 9,107,572 4,618,904 1,294,633 - 171,255 857 1,131,283 717,144 147,655 - 1,466,745 1,996,082 70,665 70,665 128,046 128,046 1,537,410 2,124,128 7,570,162 2,494,776 18 19 127,090,401 6,826,043 (126,346,282) 113,694,614 4,106,097 (115,305,935) 7,570,162 2,494,776 The accompanying notes form part of these financial statements. 21 ANNUAL REPORT 202122 l a t o T $ d e t a l u m u c c A s e s s o L n g i e r o F n o i t a l s n a r T y c n e r r u C e v r e s e R $ $ n o i t p O e v r e s e R $ d e u s s I l a t i p a C $ 6 7 7 , 4 9 4 , 2 ) 5 3 9 , 5 0 3 , 5 1 1 ( ) 7 9 0 , 3 2 3 ( 4 9 1 , 9 2 4 , 4 4 1 6 , 4 9 6 3 1 1 , ) 0 5 3 , 7 4 5 ( 0 0 0 , 0 5 6 2 4 7 , 7 1 6 , 1 ) 6 5 7 , 2 ( ) 9 0 5 , 2 7 ( 9 3 2 , 0 9 4 , 1 0 0 2 , 0 0 0 , 3 1 - - - - - - - - - - - - - - ) 7 4 3 , 0 4 0 , 1 1 ( ) 7 4 3 , 0 4 0 , 1 1 ( - ) 3 3 8 , 9 1 ( - ) 3 3 8 , 9 1 ( ) 0 8 1 , 0 6 0 , 1 1 ( ) 7 4 3 , 0 4 0 , 1 1 ( ) 3 3 8 , 9 1 ( - - - - - ) 6 5 7 , 2 ( ) 9 0 5 , 2 7 ( ) 7 3 9 , 2 9 2 ( 2 4 7 , 7 1 6 , 1 9 3 2 , 0 9 4 , 1 - - - - - - - ) 0 5 3 , 7 4 5 ( 7 3 9 2 4 9 , 0 0 2 , 0 0 0 , 3 1 2 6 1 , 0 7 5 , 7 ) 2 8 2 , 6 4 3 , 6 2 1 ( ) 0 3 9 , 2 4 3 ( 3 7 9 , 8 6 1 , 7 1 0 4 , 0 9 0 , 7 2 1 l s r e d o h y t i u q E s a y t i c a p a c r i e h t n i l s r e d o h y t i u q E h t i w s n o i t c a s n a r T d e u s s i s e r a h S x a t f o t e n , r a e y e h t r o f e m o c n i i e v s n e h e r p m o c r e h t O r a e y e h t r o f e s n e p x e x a t e m o c n i r e t f a s s o L 0 2 0 2 , 1 y l u J t a e c n a l a B r a e y e h t r o f e m o c n i e v i s n e h e r p m o c l a t o T y t i u q E n i s e g n a h C f o t n e m e t a t S 1 2 0 2 e n u J 0 3 d e d n E r a e Y e h t r o F 3 7 1 4 3 2 9 0 0 8 9 N B A 1 2 0 2 d e t i m L i i r i p s e R e s n e p x e t n e m y a p d e s a b - e r a h S d e s p a l / d e t i e f r o f s n o i t p O 1 2 0 2 e n u J 0 3 t a e c n a l a B i d e s c r e x e s n o i t p O d e l l e c n a c s n o i t p O d e u s s i s n o i t p O s t s o c i g n s a r i l a t i p a C . s t n e m e t a t s l i a c n a n i f e s e h t f o t r a p m r o f s e t o n i g n y n a p m o c c a e h T 2 2 3 2 n g i e r o F n o i t a l s n a r T y c n e r r u C e v r e s e R l a t o T $ d e t a l u m u c c A s e s s o L $ $ n o i t p O e v r e s e R $ d e u s s I l a t i p a C $ ) 4 0 7 , 2 6 5 , 1 ( ) 1 4 5 , 6 9 1 , 9 0 1 ( ) 4 2 5 , 5 1 3 ( 0 0 0 , 6 0 9 , 1 1 6 3 , 3 4 0 , 6 0 1 ) 2 1 9 , 4 1 7 ( 5 6 1 , 6 1 6 , 8 0 6 9 , 2 3 7 , 3 ) 5 2 2 , 8 5 ( - ) 0 0 0 , 0 5 2 ( - - - - - - 1 4 5 , 1 5 1 , 1 - - - - - - - ) 5 3 9 , 0 6 2 , 7 ( ) 5 3 9 , 0 6 2 , 7 ( ) 3 7 5 , 7 ( ) 3 7 5 , 7 ( ) 8 0 5 , 8 6 2 , 7 ( ) 5 3 9 , 0 6 2 , 7 ( ) 3 7 5 , 7 ( - - - - - ) 5 2 2 , 8 5 ( ) 1 4 5 , 1 5 1 , 1 ( 3 9 8 , 4 5 2 ) 5 0 8 , 9 6 9 ( 7 6 0 , 8 7 4 , 3 3 9 8 , 4 5 2 5 6 1 , 6 1 6 , 8 ) 0 0 0 , 0 5 2 ( - - - - - 6 7 7 , 4 9 4 , 2 ) 5 3 9 , 5 0 3 , 5 1 1 ( ) 7 9 0 , 3 2 3 ( 4 9 1 , 9 2 4 , 4 4 1 6 , 4 9 6 , 3 1 1 s r e d l o h y t i u q E s a y t i c a p a c r i e h t n i s r e d l o h y t i u q E h t i w s n o i t c a s n a r T x a t f o t e n , r a e y e h t r o f e m o c n i e v i s n e h e r p m o c r e h t O r a e y e h t r o f e s n e p x e x a t e m o c n i r e t f a s s o L 9 1 0 2 , 1 y l u J t a e c n a l a B r a e y e h t r o f e m o c n i e v i s n e h e r p m o c l a t o T d e s p a l / d e t i e f r o f s n o i t p O s t s o c g n i s i a r l a t i p a C d e u s s i s n o i t p O d e u s s i s e r a h S s e r a h s d e l l e c n a C s n o i t p o d e r i p x E 0 2 0 2 e n u J 0 3 t a e c n a l a B y t i u q E n i s e g n a h C f o t n e m e t a t S 1 2 0 2 e n u J 0 3 d e d n E r a e Y e h t r o F d e t i m i L i r i p s e R 3 7 1 4 3 2 9 0 0 8 9 N B A 0 2 0 2 . s t n e m e t a t s l a i c n a n i f e s e h t f o t r a p m r o f s e t o n g n i y n a p m o c c a e h T RESPIRI LIMITED 23 3 2 . s t n e m e t a t s l i a c n a n i f e s e h t f o t r a p m r o f s e t o n i g n y n a p m o c c a e h T l a t o T $ d e t a l u m u c c A s e s s o L n g i e r o F n o i t a l s n a r T y c n e r r u C e v r e s e R $ $ n o i t p O e v r e s e R $ d e u s s I l a t i p a C $ ) 4 0 7 , 2 6 5 , 1 ( ) 1 4 5 , 6 9 1 , 9 0 1 ( ) 4 2 5 , 5 1 3 ( 0 0 0 , 6 0 9 , 1 1 6 3 , 3 4 0 6 0 1 , 5 6 1 , 6 1 6 , 8 ) 2 1 9 , 4 1 7 ( 0 6 9 , 2 3 7 , 3 ) 5 2 2 , 8 5 ( - - - - ) 0 0 0 , 0 5 2 ( - - 1 4 5 , 1 5 1 , 1 - - - - - - ) 5 3 9 , 0 6 2 , 7 ( ) 5 3 9 , 0 6 2 , 7 ( - ) 3 7 5 , 7 ( - ) 3 7 5 , 7 ( ) 8 0 5 , 8 6 2 , 7 ( ) 5 3 9 , 0 6 2 , 7 ( ) 3 7 5 , 7 ( - - - - - - - 5 6 1 , 6 1 6 , 8 3 9 8 , 4 5 2 ) 5 0 8 , 9 6 9 ( 7 6 0 , 8 7 4 , 3 3 9 8 4 5 2 , ) 5 2 2 , 8 5 ( ) 1 4 5 , 1 5 1 , 1 ( - - - ) 0 0 0 , 0 5 2 ( 6 7 7 , 4 9 4 , 2 ) 5 3 9 , 5 0 3 , 5 1 1 ( ) 7 9 0 , 3 2 3 ( 4 9 1 , 9 2 4 , 4 4 1 6 , 4 9 6 , 3 1 1 l s r e d o h y t i u q E s a y t i c a p a c r i e h t n i l s r e d o h y t i u q E h t i w s n o i t c a s n a r T d e u s s i s e r a h S x a t f o t e n , r a e y e h t r o f e m o c n i i e v s n e h e r p m o c r e h t O r a e y e h t r o f e s n e p x e x a t e m o c n i r e t f a s s o L 9 1 0 2 , 1 y l u J t a e c n a l a B r a e y e h t r o f e m o c n i e v i s n e h e r p m o c l a t o T y t i u q E n i s e g n a h C f o t n e m e t a t S 1 2 0 2 e n u J 0 3 d e d n E r a e Y e h t r o F 3 7 1 4 3 2 9 0 0 8 9 N B A 0 2 0 2 d e t i m L i i r i p s e R d e s p a l / d e t i e f r o f s n o i t p O d e u s s i s n o i t p O s e r a h s d e l l e c n a C s n o i t p o d e r i p x E 0 2 0 2 e n u J 0 3 t a e c n a l a B s t s o c i g n s a r i l a t i p a C ANNUAL REPORT 2021 24 Respiri Limited ABN 98 009 234 173 Statement of Cash Flows For the Year Ended 30 June 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers Payments to suppliers and employees (inclusive of GST) Interest received Grant income R&D tax refund ATO cashflow boost Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Payments for purchases of plant and equipment Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issues of securities Proceeds from exercise of options Capital raising costs Repayment of from borrowings Net cash provided by financing activities Net increase in cash and cash equivalents held Cash and cash equivalents at beginning of year Effects of exchange rate changes on cash and cashequivalents Cash and cash equivalents at end of financial year Note 2021 $ 2020 $ 270,931 (8,777,301) 1,352 129,211 986,710 50,000 - (6,894,923) 1,660 - 2,155,307 50,000 22 (7,339,097) (4,687,956) (54,252) (54,252) (12,863) (12,863) 12,430,200 650,000 (547,350) (744,515) 11,788,335 4,394,986 3,552,334 8,531,528 - (425,382) (146,808) 7,959,338 3,258,519 306,655 25,868 (12,840) 9 7,973,188 3,552,334 The accompanying notes form part of these financial statements. 24 RESPIRI LIMITED 25 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 1 Summary of Significant Accounting Policies Corporate Information Respiri Limited is a listed public company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on the Australian Stock Exchange. The addresses of its registered office and principal place of business are disclosed in company details. The principal activities of the Company are the research, development and commercialisation of medical devices, and the production of mobile health applications. The Company is a for-profit company. The financial report of Respiri Limited (the Company) for the year ended 30 June 2021 was authorised for issue in accordance with a resolution of the Directors on 26th August 2021. Statement of Compliance The financial report is a general purpose financial report that has been prepared in accordance with the Corporations Act 2001, Accounting Standards and Australian Accounting Interpretations, and complies with other authoritative pronouncements from the Australian Accounting Standards Board, as appropriate for for-profit orientated entities. The financial report covers Respiri Limited as a consolidated entity consisting of Respiri Limited and the entities it controlled during the year. The financial report complies with Australian Accounting Standards, as issued by the Australian Accounting Standards and with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board (IASB). Basis of Preparation The financial report has been prepared on an accruals basis and is based on historical costs. Cost is based on fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted and amounts rounded to the nearest dollar. Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 2. Going Concern Basis The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business. As disclosed in the financial statements, the Group incurred a loss of $11,040,347 and had net cash outflows from operating activities of $7,339,097 for the year ended 30 June 2021. These factors indicate a material uncertainty which may cast significant doubt as to whether the Group will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. The Directors believe that there are reasonable grounds to believe that the Group will be able to continue as a going concern, after consideration of the following factors: 25 ANNUAL REPORT 202126 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 1 Summary of Significant Accounting Policies (continued) Going Concern Basis (continued)     The Group completed an oversubscribed $12,500,000 share placement in October 2020 resulting in cash and cash equivalents of $7,973,188 on hand at 30 June 2021. As at that date the Group had net current assets of $7,478,453 and net assets of $7,570,162. The Group has prepared budgets and cash flow forecast for the next 12 months from the date of this report which indicate the Group will have a positive cash balance during this period. The Group has generated revenue in the year ended 30 June 2021 of $270,074 and is expecting to continue to increase revenue over the next 12 months. The Directors believe that there are reasonable grounds to expect that the Group has the capacity to raise capital. The Group has a strong track record of accessing capital when it is required to advance its portfolio. Accordingly, the Directors believe that the Group will be able to continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report. The financial report does not include any adjustments relating to the amounts or classification of recorded assets or liabilities that might be necessary if the Group does not continue as a going concern. Accounting Policies (a) Basis for consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) (referred to as "the Company" in these financial statements). Control is achieved where the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases. A list of controlled entities is contained in Note 11 to the financial statements. All controlled entities have 30 June 2021 financial year-end. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. In the separate financial statements of the Company, intra-group transactions ('common control transactions') are generally accounted for by reference to the existing book value of the items. Where the transaction value of common control transactions differ from their consolidated book value, the difference is recognised as a contribution by or distribution to equity participants by the transacting entities. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those policies applied by the parent entity. Subsidiaries are accounted for at cost in the parent entity. The results of subsidiaries acquired or disposed of during the year are included in profit or loss from the effective date of acquisition or up to the effective date of disposal, as appropriate. 26 RESPIRI LIMITED27 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 1 Summary of Significant Accounting Policies (continued) (b) Income Tax The income tax expense is based on the taxable income for the year. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent that it is unpaid (or refundable). Deferred tax is accounted for using the balance sheet liability method. Temporary differences are differences between the tax base of an asset or liability and its carrying amount in the statement of financial position. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes. In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (excluding a business combination) that affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from the initial recognition of goodwill. Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries, branches and associates, and interests in joint ventures except where the Group is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with these investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realised or settled. Current and deferred tax is recognised as an expense or income in Profit or Loss, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company/Group intends to settle its current tax assets and liabilities on a net basis. Respiri Limited (head entity) and its wholly owned Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. Where the Company is entitled to a tax rebate under the R&D Tax Concession during a particular financial year, the rebate is recorded as revenue for the year when received, rather than when expenditure was incurred. (c) 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 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 a least 12 months after the reporting period. All other assets are classified as non-current. 27 ANNUAL REPORT 202128 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 1 Summary of Significant Accounting Policies (continued) (c) Current and non-current classification (continued) A liability is classified as current when: it is either expected to be settled in 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. (d) Inventories Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value on a ‘weighted average’ basis. The cost of inventories comprises cost of purchase and costs incurred in bringing inventories to their present location and condition. Cost of purchased inventories is determined after deducting rebates and discounts received or receivable. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated selling costs. The Company periodically evaluates the condition and age of inventories and makes provisions for slow moving inventories accordingly. If in a particular period production is not at normal capacity, the costs of inventories does not include additional fixed overheads in excess of those allocated based on normal capacity. Such unallocated overheads are recognised as an expense in Profit or Loss in the period in which they are incurred. Furthermore, cost of inventories does not include abnormal amounts of materials, labour or other costs resulting from inefficiency. (e) Property, plant and equipment Plant and equipment is stated at cost, less accumulated depreciation and impairment. Cost includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to Profit or Loss during the financial period in which they are incurred. Depreciation The depreciable amount of all plant and equipment is depreciated on a straight-line basis commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable asset are shown below: Fixed asset class Furniture and Fittings Computer Equipment Medical Equipment Depreciation rate 6 - 15% 15 - 33% 15% 28 RESPIRI LIMITED29 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 1 Summary of Significant Accounting Policies (continued) (e) Property, plant and equipment (continued) The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in profit or loss. (f) Leases Lease assessment at contract inception At inception of a contract, the Group assesses whether a lease exists - i.e. does the contract convey the right to control the use of an identified asset for a period of time in exchange for consideration. This involves an assessment of whether:    The contract involves the use of an identified asset - this may be explicitly or implicitly identified within the agreement. If the supplier has a substantive substitution right then there is no identified asset. The Group has the right to obtain substantially all of the economic benefits from the use of the asset throughout the period of use. The Group has the right to direct the use of the asset i.e. decision making rights in relation to changing how and for what purpose the asset is used. Right-of-use asset At the lease commencement, the Group recognises a right-of-use asset and associated lease liability for the lease term. The lease term includes extension periods where the Group believes it is reasonably certain that the option will be exercised. The right-of-use asset is measured using the cost model where cost on initial recognition comprises of the lease liability, initial direct costs, prepaid lease payments, estimated cost of removal and restoration less any lease incentives received. The right-of-use asset is depreciated over the lease term on a straight-line basis and assessed for impairment in accordance with the impairment of assets accounting policy. Lease liability The lease liability is initially measured at the present value of the remaining lease payments at the commencement of the lease. The discount rate is the rate implicit in the lease, however where this cannot be readily determined then the Group's incremental borrowing rate is used. Subsequent to initial recognition, the lease liability is measured at amortised cost using the effective interest rate method. The lease liability is remeasured whether there is a lease modification, change in estimate of the lease term or index upon which the lease payments are based (e.g. CPI) or a change in the Group's assessment of lease term. 29 ANNUAL REPORT 202130 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 1 Summary of Significant Accounting Policies (continued) (f) Leases (continued) Lease liability (continued) Where the lease liability is remeasured, the right-of-use asset is adjusted to reflect the remeasurement or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero. Adoption of short-term leases or low value asset exception Exceptions to lease accounting The Group has elected to apply the exceptions to lease accounting for both short-term leases (i.e. leases with a term of less than or equal to 12 months) and leases of low-value assets. The Group recognises the payments associated with these leases as an expense on a straight-line basis over the lease term. (g) Financial assets and liabilities Recognition Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss. Financial liabilities Other financial liabilities, including borrowings and trade and other payables, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition. A financial liability is removed from the balance sheet when the obligation specified in the contract is discharged or cancelled or expires. Non-derivative financial liabilities are recognised at amortised cost using the effective interest rate method, comprising original debt less principal payments, amortisation and impairment. 30 RESPIRI LIMITED31 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 1 Summary of Significant Accounting Policies (continued) (h) Intangibles Intellectual property Intellectual property relates to technology assets, know-how and patents related to assets acquired on acquisition of Respiri (Israel) Limited (previously KarmelSonix (Israel) Limited) and is recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a straight-line basis over the expected life, being 10 years. Amortisation commences when the asset is available for use, that is, when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. The amortisation period and the amortisation method for an intangible asset is reviewed at least at the end of each reporting period. If the expected useful life of the asset is different from the previous estimates, the amortisation shall be changed accordingly. Such changes are accounted for as changes in accounting estimates. (i) Foreign currency transactions and balances Functional and presentation currency The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity's functional and presentation currency. Transaction and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are retranslated at the rates prevailing at the reporting date. Non-monetary items that are measured in terms of historical cost are not retranslated. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Exchange differences arising on the translation of monetary items are recognised in Profit or Loss, except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in Profit or Loss. For the purpose of presenting these consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into Australian dollars using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (and attributed to non-controlling interests as appropriate). Group companies The financial results and position of foreign operations whose functional currency is different from the Group's presentation currency are translated as follows:  assets and liabilities are translated at year-end exchange rates prevailing at that reporting date; 31 ANNUAL REPORT 202132 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 1 Summary of Significant Accounting Policies (continued) (i) Foreign currency transactions and balances (continued) Group companies (continued)   income and expenses are translated at average exchange rates for the period; and retained earnings are translated at the exchange rates prevailing at the date of the transaction. Exchange differences arising on translation of foreign operations are transferred directly to the Group's foreign currency translation reserve in the Statement of Financial Position. These differences are recognised in the Profit or Loss in the period in which the operation is disposed. (j) Employee benefits Annual leave and long service leave A liability is recognised for the Company’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Short-term benefits include salaries, paid annual leave, paid sick leave, recreation and social security contributions (Israel only) and are recognised as expenses as the services are rendered. Post employment benefits include superannuation and payments to insurance companies (Israel only) and are defined contribution plans. Such payments are made in accordance with the relevant legislation for country and/or state where an employee normally performs their duties as an employee. Payments are recognised as expenses as the services are rendered. Shared-based payments Shared-based compensation benefits are provided to employees via the Respiri Limited Employee Option Plan and an employee share scheme. The fair value of options granted under Respiri Limited Option Share Plan is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at the grant date and recognised over the period during which the employees become unconditionally entitled to the options. The fair value at grant date was determined using an option pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the option, the share price at grant date and the expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. (k) Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably measured. Provisions are not recognised for future operating losses. 32 RESPIRI LIMITED33 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 1 Summary of Significant Accounting Policies (continued) (k) Provisions (continued) The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. (l) Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less. (m) Revenue and other income The revenue recognition policies for the principal revenue streams of the Group are: Interest Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. All revenue is stated net of the amount of goods and services tax (GST). Sale of goods Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which is generally at the time of delivery. Government Grants Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and all grant conditions will be met. Grants relating to expense items are recognised as income over the periods necessary to match the grant to the costs they are compensating. Grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to Profit or Loss over the expected useful life of the related asset on a straight-line basis. Government grants received in Israel as support for research and development projects, include an obligation to pay royalties (ranging from 3.5% to 5%) conditional on future sales arising from the project. These grants are recognised upon receipt as a liability if future economic benefits are expected from the project (i.e. sales). If no economic benefits are expected, the grants are recognised as a reduction of the related research and development expenses and the royalty obligation treated as a contingent liability. At the end of each reporting date, the Company evaluates if there is reasonable assurance that the liability recognised, in whole or part, will not be repaid. If there are indications the liability will not be repaid, the appropriate amount of the liability is derecognised and recorded in Profit or Loss as a reduction of research and development expenses. Otherwise, the appropriate amount of the liability that reflects expected future royalty payments is recognised with a corresponding adjustment to research and development expenses. Royalty payments are treated as a reduction of the liability. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established. 33 ANNUAL REPORT 202134 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 1 Summary of Significant Accounting Policies (continued) (m) Revenue and other income (continued) R&D Tax Concession Refunds R&D Tax concession refunds are recorded as revenue for the year when received, rather than when expenditure was incurred. (n) Goods and services tax (GST) Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the Statement of Financial Position sheet are shown inclusive of GST. Cash flows are presented in the Statement of Cash Flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. (o) Share capital Ordinary share capital is recognised as the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. (p) Earnings per share Basic earnings per share Basics earnings per share is calculated by dividing the profit attributed to the owners of Respiri Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. (q) New Accounting Standards and Interpretations Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2021. 34 RESPIRI LIMITED35 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 1 Summary of Significant Accounting Policies (continued) (r) Critical Accounting Estimates and Judgments The preparation of the financial statements requires the Directors and 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 estimates and underlying assumptions are continually evaluated. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below: Share-based payment transactions The consolidated entity measures the cost of equity-settled transactions with employees and consultants 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. Segment Reporting Operating segments are identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. The operating segments of the Group are determined to be Australia and Israel. For more information, refer to Note 21. 35 ANNUAL REPORT 202136 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 2 Parent entity The following information has been extracted from the books and records of the parent entity and has been prepared in accordance with the accounting standards. Statement of Financial Position Assets Current assets Non-current assets Total Assets Liabilities Current liabilities Non-current liabilities Total Liabilities Equity Issued capital Accumulated losses Reserves Total Equity Statement of Profit or Loss and Other Comprehensive Income Loss after income tax Total comprehensive income 2021 $ 2020 $ 8,927,189 165,130 4,409,427 190,479 9,092,319 4,599,906 1,417,618 70,665 1,972,140 128,046 1,488,283 2,100,186 127,090,401 (126,655,338) 7,168,973 113,694,614 (115,624,088) 4,429,194 7,604,036 2,499,720 (11,031,250) (7,278,391) (11,031,250) (7,278,391) Parent Entity Contingencies and Commitments The parent entity does not have any contingent liabilities and commitments. Parent Entity Guarantees in Respect of the Debts of its Subsidiaries The parent entity has no guarantees in respect of its subsidiaries. 3 Revenue and Other Income Operating revenue - Wheezo Device Sales - Subscriptions Sales Total Revenue 2021 $ 2020 $ 269,342 732 270,074 The group derives its sales revenue from the sale of Wheezo devices and from the sale of subscriptions for its Wheezo app. - - - 36 RESPIRI LIMITED37 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 3 Revenue and Other Income (continued) Revenue from the sale of Wheezo devices is based on the contracted sales price. Revenue is recognised at the point in time when control passes to the customer with the exact timing dependent on the agreed sales terms for each contract. Other Income - R&D concession (a) - Grant Income - ATO cashflow boost 2021 $ 2020 $ 986,710 129,211 50,000 2,155,307 - 50,000 1,165,921 2,205,307 a) The value of any allocable R&D tax concession refund with respect to eligible R&D expenditures incurred during the financial year 2021 has not yet been determined and have therefore not been included within the financial statements for financial year 2021. 4 Expenses Consulting, employee and director Consulting expenses Employee expenses Director expenses Equity-based payment Corporate administration Audit and accounting fees Foreign exchange loss/(gain) Corporate administration expenses Office rentals Depreciation Marketing and promotion Research and development Travel Total expenses 2021 $ 2020 $ 1,430,493 1,186,772 713,636 436,958 570,793 730,360 3,330,901 1,738,111 2,530,169 3,270,907 180,016 45,700 1,357,596 50,583 185,104 5,266 1,272,356 63,747 1,633,895 1,526,473 79,602 10,380 2,185,087 783,872 1,387,084 2,035,426 67,506 102,734 11,214,244 9,467,903 37 ANNUAL REPORT 202138 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 5 Income Tax Expense (a) The prima facie tax on loss from ordinary activities before the loss is reconciled to the income tax as follows: Loss before income tax Tax Income tax benefit calculated Add: Tax effect of amounts which are not deductible in calculating income tax: - share-based payments expenses - other expenses not deductible Other non-assessable income Other deductible items Deferred tax assets relating to tax losses and temporary differences not recognised Income tax expense (b) Unrecognised deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following: - tax losses - prepayments - provision - accrual (c) Components of tax expense The components of tax expense comprise: Current tax Deferred tax Income tax expense 2021 $ 2020 $ (11,040,347) 27.50 % (7,260,935) 27.50 % (3,036,095) (1,996,757) 695,796 42,547 (285,095) (93,306) 899,499 24,289 (606,459) 18,932 2,676,153 1,660,496 - - 2021 $ 2020 $ 25,511,746 (56,663) 35,894 22,999 22,812,318 (45,735) 16,500 54,740 25,513,976 22,837,823 2021 $ 2020 $ - - - - - - 38 RESPIRI LIMITED39 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 5 Income Tax Expense (continued) Included in the total of deferred tax assets attributable to tax losses not recognised are tax losses in relation to operations in Israel, United States of America, and Australia. Tax losses in Australian entities alone of $30,039,956 (2020: $21,605,123) relate to losses generated from 22 November 2006 to 30 June 2021. The ongoing availability of these tax losses are subject to further review by the Company to ensure compliance with the relevant provisions of Australia Income Tax laws. 6 Key Management Personnel Remuneration The aggregate compensation made to Directors and other Key Management Personnel of the Consolidated entity is set out below: Short-term employee benefits Post-employment benefits Share-based payments (Note 23) 7 Auditors' Remuneration Remuneration of Company's auditor, RSM, for: - auditing or reviewing the financial report of the Group Remuneration of Subsidiary Company's auditor, Ernst & Young Israel, for: - auditing or reviewing the financial report of the subsidiary (a) Total 2021 $ 1,250,404 72,952 2,575,030 2020 $ 1,192,398 91,192 3,185,766 3,898,386 4,469,356 2021 $ 2020 $ 45,000 45,000 9,334 54,334 40,000 40,000 9,378 49,378 a) Audit fees paid to Ernst & Young Israel for the auditing and/or review of the financial report of Respiri (Israel) Ltd. 8 Loss per Share Basic loss per share (cents) Diluted loss per share (cents) (a) Net loss used in the calculation of basic and diluted loss per share (b) Weighted average number of ordinary shares outstanding during the period used in the calculation of basic and diluted loss per share 2021 $ 2020 $ (1.58) (1.58) (1.27) (1.27) (11,040,347) (7,260,935) 699,081,480 570,054,649 Potential ordinary shares, including options, are excluded from the weighted average number of shares used in the calculations of basic loss per share as they are considered non-dilutive. 39 ANNUAL REPORT 202140 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 9 Cash and Cash Equivalents Cash at bank 2021 $ 2020 $ 7,973,188 3,552,334 7,973,188 3,552,334 The interest rates on cash at bank on 30 June 2021 was 0.9% (2020: 0.9%). The Group’s exposure to interest rate risk is discussed in Note 26(b). The maximum exposure to credit risk at the end of the financial year is the carrying amount of each class of cash and cash equivalents mentioned above. 10 Trade and Other Receivables CURRENT Trade receivables Other receivables (a) 2021 $ 2020 $ 96,000 39,986 135,986 - 8,199 8,199 a) Other receivables include GST/V.A.T receivable. Refer to Note 26(c) for more information on the Group's credit risk management policy. 11 Controlled Entities Parent Entity Respiri Limited Subsidiaries of Respiri Limited KarmelSonix Australia Pty Ltd iSonea (Israel) Limited iSonea USA Inc. Principal place of business / Country of Incorporation Percentage Owned (%)* Percentage Owned (%)* 2021 2020 Australia Australia Israel United States of America - 100 100 100 - 100 100 100 *The percentage of ownership interest held is equivalent to the percentage voting rights for all subsidiaries. 40 RESPIRI LIMITEDRespiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 12 Property, plant and equipment Office equipment At cost Accumulated depreciation Total office equipment Computer equipment and software At cost Accumulated depreciation Right-of-Use asset At cost Accumulated depreciation Total Right-of-Use asset Total property, plant and equipment 41 2021 $ 2020 $ 8,610 (354) 8,256 (60,127) 86,521 26,394 199,916 (72,192) 127,724 162,374 4,145 (6) 4,139 42,305 (29,577) 12,728 175,740 (4,882) 170,858 187,725 (a) Movements in carrying amounts of property, plant and equipment Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year: Year ended 30 June 2021 Balance at the beginning of year Additions Disposals Depreciation expense Balance at the end of the year Year ended 30 June 2020 Balance at the beginning of year Additions Depreciation expense Balance at the end of the year Office Equipment Computer Equipment Right-of- Use Asset $ $ $ Total $ 4,139 4,465 - (348) 12,728 25,665 (55) (11,944) 170,858 24,176 - (67,310) 187,725 54,306 (55) (79,602) 8,256 26,394 127,724 162,374 Office Equipment Computer Equipment Right-of- Use Asset $ $ $ Total $ - 4,145 (6) 9,502 8,718 (5,492) - 175,740 (4,882) 9,502 188,603 (10,380) 4,139 12,728 170,858 187,725 41 ANNUAL REPORT 202142 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 13 Other assets CURRENT Prepayments Deposits Provision for unpaid share capital Prepaid materials NON-CURRENT Other 14 Inventories CURRENT Inventories 15 Trade and Other Payables CURRENT Trade payables Accrued expenses 2021 $ 2020 $ 192,775 36,203 70,000 - 298,978 - - 146,366 48,997 - 366,000 561,363 64 64 2021 $ 2020 $ 537,046 537,046 309,219 309,219 2021 $ 2020 $ 1,080,478 214,155 870,436 260,847 1,294,633 1,131,283 Terms and conditions of the above financial liabilities:   Trade payables are non-interest bearing and are normally settled on between 30 - 45 day terms Accrued expenses are non-interest bearing Refer to Note 26(a) for more information on the Group’s foreign currency risk management policy. 42 RESPIRI LIMITEDRespiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 16 Borrowings Opening balance Add: Loan drawdown (a) Add: Capitalised interest Less: Repayments Closing balance 43 2021 2020 $ 717,144 - 27,370 (744,514) $ 806,442 1,265,864 121,922 (1,477,084) - 717,144 a) Short term R&D credit loan facility of $600,182 provided by Fundsquire in the prior year based on 80% of expected FY2020 R&D tax refund at interest rate of 1.75% per month was repaid in full in September 2020. 17 Other Financial Liabilities CURRENT Lease liabilities Other financial liability (a) Other financial liability unsecured 2021 $ 2020 $ 71,805 12,912 86,538 47,694 12,912 87,049 171,255 147,655 a) Detailed information in relation to the Chief Scientist grants received in Israel is contained in Note 20. NON-CURRENT Lease liabilities Total 2021 $ 2020 $ 70,665 70,665 128,046 128,046 43 ANNUAL REPORT 202144 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 18 Issued Capital The Company has an unlimited authorised share capital of no par value ordinary shares. Fully paid ordinary shares Balance at beginning of the year Shares issued during the year Options exercised during the year (a) Transaction costs relating to share issues 2021 No. 2021 $ 2020 No. 2020 $ 651,714,790 71,126,000 - - 113,694,614 13,650,200 292,937 (547,350) 525,883,098 128,956,692 (3,125,000) - 106,043,361 8,616,165 (250,000) (714,912) Total issued capital 722,840,790 127,090,401 651,714,790 113,694,614 a) In December 2020, 5,000,000 options were exercised by Fawkner Capital for the equivalent number of ordinary shares, and in March 2021 a further 500,000 options were exercised by Baker Young for the equivalent number of shares. During the year-ended 30 June 2021, the Company issued the following securities: Date Details 21 Jul 2020 21 Jul 2020 28 Oct 2020 28 Oct 2020 28 Oct 2020 26 Nov 2020 19 Jan 2021 18 Mar 2021 Issue of shares to former CEO for part of legal settlement as announced to the market on 29 June 2020 Issue of shares to former CEO for part of legal settlement as announced to the market on 29 June 2020 Issue of shares to certain professional and sophisticated investors as announced to the market on 20 October 2020 Issue of shares in lieu of cash payment for services rendered as announced to the market on 20 October 2020 Issue of shares upon exercise of Options as announced to the market on 28 October 2020 Issue of shares to certain professional and sophisticated investors as announced to the market on 20 October 2020 Issue of shares upon exercise of Options as announced to the market on 18 January 2021 Issue of shares upon exercise of Options as announced to the market on 18 March 2021 No. of Shares Issue Price $ Total Value $ 625,000 0.0800 50,000 500,000 0.1000 50,000 62,500,000 0.2000 12,500,000 2,000,000 0.2000 400,000 2,000,000 0.1200 240,000 1,000 0.2000 200 3,000,000 0.1200 360,000 500,000 0.1000 50,000 71,126,000 13,650,200 44 RESPIRI LIMITED45 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 18 Issued Capital (continued) Terms and Conditions of Issued Capital Ordinary Shares: Ordinary shareholders have the right to receive dividends as declared and in the event of winding up the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy at a meeting of the Company. Options: Option holders do not have the right to receive dividends and are not entitled to vote at the meeting of the Company until options are exercised into ordinary shares by payment of the exercise price. Options may be exercised at any time from the date they vest to their expiry date. Share options convert into ordinary shares on a one for one basis on the date they are exercised. Capital Risk Management: The consolidated entity’s objective when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as a value adding relative to the current company’s share price at the time of the investment. The consolidated entity is not actively pursuing additional investment in the short-term as it continues to develop its technologies. 45 ANNUAL REPORT 202146 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 19 Reserves Options Balance at beginning of the year Unlisted options issued during the year (a) Adjustment for options issued in prior year Expense recorded over vesting period Options exercised (b) Options expired/forefeited (c) Cancellation of options (d) 2021 No. 2021 $ 2020 No. 2020 $ 191,500,000 75,000,000 - - (5,500,000) - (2,000,000) 4,429,195 1,494,743 - 1,613,237 (292,937) (2,756) (72,509) 59,000,000 174,500,000 - - - (18,000,000) (24,000,000) 1,906,000 3,319,526 413,433 - - (58,225) (1,151,540) Balance at end of the year 259,000,000 7,168,973 191,500,000 4,429,194 FX Reserve Balance at beginning of the year Other comprehensive income for the year, net of tax Balance at end of the year Total Reserves - - - (323,097) (19,833) (342,930) - - - (315,524) (7,573) (323,097) 259,000,000 6,826,043 191,500,000 4,106,097 a) 65,000,000 unlisted options were granted to directors and 10,000,000 were granted to employees/consultants at the Dec 2020 EGM. As at 30 June 2021 these options have been allotted to directors and consultants respectively. b) c) In Dec 2020, 5,000,000 options were exercised by Fawkner Capital for the equivalent number of ordinary shares, and in March 2021 a further 500,000 options were exercised by Baker Young for the equivalent number of shares. 250,000 unlisted options granted to former employee on 22 October 2020 were forfeited and returned to the ESOP pool following resignation. d) 2,000,000 Unlisted Options issued to former employee on 26 May 2020 exercisable at 0.10 on or before 30 November 2024 were cancelled. During the year-ended 30 June 2021, the Company issued the following options: Date Details 21 Dec 2020 16 Feb 2021 Issue to Directors - Class 18 Issue to Consultants for Corporate Advisory services rendered - Class 19 No. of options 65,000,000 10,000,000 75,000,000 Option fair value $ 0.0220 0.0220 Total value $ 1,427,192 67,551 1,494,743 46 RESPIRI LIMITED47 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 19 Reserves (continued) Option Reserve: The option reserve recognises the proceeds from the issue of options over ordinary shares and the expense recognised in respect of share based payments. 20 Contingent Liabilities Office of the Chief Scientist- Israel On 21st February 2021 Isonea Ltd, a wholly owned subsidiary of Respiri Limited, received written confirmation from the Israel Innovation Authority (formerly Office of Chief Scientist) that the matter, to which the previously disclosed contingent liability related, is now closed. Accordingly there is no longer a contingent liability in relation to this matter and the directors resolved to place the company into voluntary liquidation in accordance with Israel Companies Law. 21 Segment Reporting AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. Information reported to the Group’s Chief Operating Decision Makers for the purposes of resource allocation and assessment of performance is more specifically focused on the geographical locations of the Group’s operations. The Group’s reportable segments under AASB 8 are therefore as follows:   Australia Israel The Australia reportable segment activities include research, development and commercialisation of medical devices, and the production of mobile health applications in Australia. The Israel reportable segment activities include research, development and commercialisation of medical devices, and the production of mobile health applications in Israel. In prior years, the Group has had operations in United States; however, these operations have ceased and therefore are no longer reported as a reportable segment. Information regarding these segments is presented below. The accounting policies of the reportable segments are the same as the Group’s accounting policies. 47 ANNUAL REPORT 202148 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 21 Segment Reporting (continued) 30 June 2021 Segment Revenue External sales Other income Total Segment Revenue Interest revenue Total Revenue Segment Expenses EBITDA Segment depreciation expenses Interest revenue Finance costs Profit/(loss) before income tax Income tax expense Medical Devices Segment Medical Devices Segment Segment Australia Israel Total Corporate Total $ $ $ $ $ 270,074 1,165,921 1,435,995 - 1,435,995 - - - - - 270,074 1,165,921 1,435,995 - - - 270,074 1,165,921 - 1,352 1,435,995 1,352 1,435,995 1,352 1,437,347 (2,650,993) (109,166) (2,760,158) (9,610,047) (12,370,205) (1,214,998) - - - (109,166) (1,324,163) - - - - - - (9,610,047) (10,934,210) (79,601) 1,352 (27,888) (79,601) 1,352 (27,888) (1,214,998) - (109,166) (1,324,163) - - (9,716,184) (11,040,347) - - Profit/(loss) after income tax (1,214,998) (109,166) (1,324,163) (9,716,184) (11,040,347) Assets Segment assets Total Assets Liabilities Segment liabilities Total Liabilities 540,963 14,814 555,777 8,551,795 9,107,572 540,963 14,814 555,777 8,551,795 9,107,572 - - 49,127 49,127 1,488,282 1,537,410 49,127 49,127 1,488,282 1,537,410 48 RESPIRI LIMITED49 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 21 Segment Reporting (continued) 30 June 2020 Segment Revenue External sales Other income Total Segment Revenue Interest revenue Total Revenue Segment Expenses EBITDA Segment depreciation expenses Interest revenue Finance costs Profit/(loss) before income tax Income tax expense Medical Devices Segment Australia $ Medical Devices Segment Israel $ Segment Total Corporate $ $ Total $ - 2,155,307 2,155,307 - 2,155,307 - - - - - - 2,155,307 2,155,307 - - 50,000 50,000 1,660 - 2,205,307 2,205,307 1,660 2,155,307 51,660 2,206,967 (2,066,593) (124,275) (2,190,868) (7,142,806) (9,333,674) 88,714 - - - 88,714 - (124,275) - - - (124,275) - (35,561) - - - (7,092,806) (10,380) 1,660 (123,848) (7,128,367) (10,380) 1,660 (123,848) (35,561) - (7,225,374) - (7,260,935) - Profit/(loss) after income tax 88,714 (124,275) (35,561) (7,225,374) (7,260,935) Assets Segment assets Total Assets Liabilities Segment liabilities Total Liabilities 4,108 4,108 - - 18,368 22,476 4,596,428 4,618,904 18,368 22,476 4,596,428 4,618,904 23,942 23,942 2,100,186 2,124,128 23,942 23,942 2,100,186 2,124,128 49 ANNUAL REPORT 202150 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 22 Cash Flow Information (a) Reconciliation of cash flow from operations with loss after income tax Net loss for the year Non-cash flows in profit: - depreciation - share-based payments - capitalised interest on loan - foreign exchange adjustments - facility fees on loan - lawsuit settlement - shares issued Changes in assets and liabilities: - (increase)/decrease in trade and other receivables - (increase)/decrease in other assets - (increase)/decrease in inventories - increase/(decrease) in trade and other payables - (decrease)/increase in deferred revenue - (decrease)/increase in other financial liabiltiies Cashflows from operations 2021 $ 2020 $ (11,040,347) (7,260,935) 79,602 3,432,716 27,370 (45,700) - 100,000 10,380 3,219,841 121,922 5,266 22,636 - (57,787) 262,449 (227,826) 153,368 (25,545) (309,219) 163,350 (625,670) 857 (33,781) - - (7,339,097) (4,687,956) (b) Non-cash financing and investing activities Please refer to Note 18 and 19 for further details regarding equity issued for nil cash consideration. 23 Share-based Payments (a) Employee share and option plan The following options were issued during the current year under ESOP: No. of Options Grant date Expiry date Share price at grant date $ 65,000,000 (a) 21 Dec 2020 17 Dec 2025 0.120 Exercise price Expected volatility Dividend yield Risk-free interest rate $ 0.300 49.06% - 0.36% Fair value at grant date $ 0.022 a) Options have vested. The weighted average fair value of the share options granted during the financial year is $0.022 (2020: $0.034). 50 RESPIRI LIMITED51 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 23 Share-based Payments (continued) (b) Fair value of share options granted in the year outside of the ESOP For the options granted during the financial year, the Black Scholes Option valuation model inputs used to determine the fair value at the grant date are as follows: No. of Options 10,000,000 Grant Date Expiry Date 17/12/2025 16/02/2021 (a) Share price at grant date 0.140 Exercise price 0.300 Expected volatility 49.06 % Dividend yield - Risk free interest rate %0.36 FV at grant date 0.022 a) Options will vest after 15 March 2022 (c) Movement in share options during the year The following reconciles the share options outstanding at the beginning and end of the year: 2021 Weighted Average Exercise Price $ 0.21 0.30 - - - 0.22 0.17 2020 No. of Options 59,000,000 174,500,000 - (18,000,000) (24,000,000) 191,500,000 82,000,000 2020 Weighted Average Exercise Price $ 0.08 0.20 - - - 0.21 0.10 2021 No. of Options 191,500,000 75,000,000 (5,500,000) - (2,000,000) 259,000,000 172,500,000 Outstanding at the beginning of the year Granted Exercised Expired/lapsed Cancelled Outstanding at year-end Exercisable at year-end (d) Share options exercised during the year No. of Options 2,000,000 3,000,000 500,000 Exercise Date Expiry Date 21/12/2020 21/12/2020 28/05/2023 28/10/2020 21/12/2020 18/03/2021 (a) (a) (b) Share price at grant date Exercise price 0.175 0.120 0.165 0.120 0.120 0.100 a) 2 million options were exercised for the equivalent number of shares in Oct 2020 and a further 3 million options were exercised for the equivalent number of shares in Dec 2020 by Fawkner Capital b) 500,000 options were exercised for the equivalent number of shares in Mar 2021 by Baker Young Stockbrokers. 51 ANNUAL REPORT 202152 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 23 Share-based Payments (continued) (e) Share options outstanding at the end of the year The options outstanding at 30 June 2021 had a weighted average exercise price of $0.22 (2020:$0.21) and a weighted average remaining contractual life between 0.5 to 5.5 years. Exercise price range from $0.03 (2020: $0.03) to $0.6 (2020: $0.6) in respect of options outstanding at 30 June 2021. (f) Share-based payments expense Share-based payments - options issued to directors - options issued to suppliers (a) - options issued to other key management personnel - options issued to employees - options issued to former CEO - options to former CXO cancelled - options to former CEO cancelled - options to former employees cancelled (b) - options to former employees forfeited (c) - shares issued to suppliers (d) 2021 $ 2020 $ 2,381,425 502,548 2,798,586 403,828 193,605 30,403 - - - (72,509) (2,756) 400,000 78,075 39,038 413,434 (6,908) (51,318) - - - 3,432,716 3,674,735 a) The Company issued 10,000,000 options to consultants for corporate advisory services in February 2021. b) The Company cancelled 2,000,000 options issued to former employee following resignation in February 2021. c) The Company recovered 250,000 options issued to former employee forfeited following resignation in March 2021. d) The Company issued 2,000,000 shares to a consultant for corporate advisory services in October 2020. 24 Related Party Transactions The Group's related parties comprise of subsidiaries and key management personnel. Disclosures relating to key management personnel are set out in the remuneration report. Transactions between the parent company and its subsidiaries are eliminated on consolidation and are not disclosed in this note. As part of its December 2020 placement, 815,568 fully paid ordinary shares were issued to the Company Directors during the year. 52 RESPIRI LIMITED53 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 25 Events Occurring After the Reporting Date The Victorian Government extended a Declaration of a State of Emergency from the 29 July 2021 and “Stage 4” restrictions continued to apply to Metro Melbourne. This event does not affect amounts recognised in the 2020/21 financial statements. At this stage, it is not possible to estimate what, if any, affect this will have on the Company's financial performance during 2021/22. Except for the above, no other matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years. 26 Financial Risk Management The Group holds the following financial instruments: Financial assets Cash and cash equivalents Trade and other receivables Total financial assets Financial liabilities Trade and other payables Other borrowings Other financial liabilities Other financial liabilities - Non-current Total financial liabilities (a) Foreign exchange risk 2021 $ 2020 $ 7,973,188 135,986 3,552,334 8,199 8,109,174 3,560,533 1,294,633 - 171,255 70,665 1,131,283 717,144 147,655 128,046 1,536,553 2,124,128 The Group engages in international purchase transactions and is exposed to foreign currency risk arising from various currency exposures, primarily with respect to the US dollar (USD) and Israeli shekel (ILS). The parent has minimal exposure to foreign exchange risk as it does not hold any foreign currency cash reserves and only makes minor foreign currency payments. The Group does not make use of derivative financial instruments to hedge foreign exchange risk. The carrying amount of the foreign currency denominated monetary assets and liabilities at the reporting date is as follows, all amounts in the table below are displayed in $AUD at year-end spot rates: 53 ANNUAL REPORT 202154 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 26 Financial Risk Management (continued) (a) Foreign exchange risk (continued) Cash and trade and other receivables - ILS - USD Trade and other payables - ILS - USD Sensitivity Analysis 2021 $ 2020 $ 6,167 - 6,167 (36,215) - (36,215) 4,400 - 4,400 (11,029) - (11,029) The following tables demonstrate the sensitivity to a reasonably possible change in USD and ILS exchange rates, with all other variables held constant. The impact on the Group’s profit before tax is due to changes in the fair value of monetary assets and liabilities including non-designated foreign currency derivatives and embedded derivatives. The Group’s exposure to foreign currency changes for all other currencies is not material. USD Effect on profit before tax ILS Effect on profit before tax (b) Interest rate risk 2021 2020 +5% -5% +5% -5% - - 1,502 (1,502) - 331 - (331) The Group's exposure to interest rate risk is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on classes of financial assets and financial liabilities. The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to interest rate risk (against the implied 30 day bank bill rate). The table also represents the quantitative impact on the financial statements should the variation occur. 54 RESPIRI LIMITEDRespiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 26 Financial Risk Management (continued) (b) Interest rate risk (continued) 30 June 2021 Financial assets Cash and cash equivalents Total (decrease)/increase Financial liabilities Fundsquire loan Total (decrease)/increase 30 June 2020 Financial assets Cash and cash equivalents Total (decrease)/increase Financial liabilities Fundsquire loan Total (decrease)/increase (c) Credit risk 55 Weighted average interest rate Carrying amount (1%) effect on profit before tax 1% effect on profit before tax $ % $ $ 7,973,188 7,973,188 - - 3,552,334 3,552,334 (717,144) (717,144) 0.01 - 0.01 - 0.90 - 0.90 - (79,732) (79,732) 79,732 79,732 - - - - (35,523) (35,523) 35,523 35,523 7,171 7,171 (7,171) (7,171) Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Group. The Group has no significant concentration of credit risk in the current or prior year. The Group ensures that surplus cash is invested with financial institutions of appropriate credit worthiness and limits the amount of credit exposure to any one counter party. (d) Liquidity risk Liquidity risk is the risk that the Group will not pay its debtors when they fall due. Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. The Group manages liquidity risk by maintaining sufficient bank balances to fund its operations and the availability of funding through committed credit facilities. Management manages this risk by monitoring rolling forecasts of the Group's liquidity reserve on the basis of expected cash flows. The table below analyses the Group's financial liabilities. 55 ANNUAL REPORT 202156 Respiri Limited ABN 98 009 234 173 Notes to the Financial Statements For the Year Ended 30 June 2021 26 Financial Risk Management (continued) (d) Liquidity risk (continued) 30 June 2021 Trade and other payables Other borrowings Lease liabilities 30 June 2020 Trade and other payables Other borrowings Lease liabilities (e) Capital Risk Management 0-12 months Maturing 1 to 3 years $ $ Total $ 1,294,633 - 71,805 - - 70,664 1,294,633 - 142,469 1,366,438 70,664 1,437,102 1,131,283 717,144 47,693 - - 128,046 1,131,283 717,144 175,739 1,896,120 128,046 2,024,166 The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern and to maintain a capital structure that maximises shareholder value. In order to maintain or achieve an optimal capital structure, the Group may issue new shares or reduce its capital, subject to the provisions of the Group's constitution. The capital structure of the Group consists of equity attributed to equity holders of the Group, comprising contributed equity and reserves disclosed in Notes 18 and 19. By monitoring undiscounted cash flow forecasts and actual cash flows provided to the Board by the Group's Management the Board monitors the need to raise additional equity from the equity markets. 56 RESPIRI LIMITED57 Respiri Limited ABN 98 009 234 173 Directors' Declaration The directors of the Company declare that: 1. the financial statements and notes, as set out on pages 20 to 56, and the remuneration disclosures that are contained within the Remuneration Report within the Directors' report, set out on pages 7 to 18, are in with the Corporations Act 2001 and: a. In the directors' opinion there are reasonable grounds to believe the company will be able to pay its debts as and when they become due and payable; In the directors' opinion the financial statements and notes also comply with the International Financial Reporting Standards as disclosed in Note 1; In the directors' opinion the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the financial position and performance of the consolidated entity; and b. c. d. The directors have been given the declaration required by s295A of the Corporations Act 2001. Signed in accordance with a resolution of the directors made pursuant to s.295(5) Corporations Act 2001. On behalf of the Directors Mr Nicholas Smedley Executive-Chairman Dated this the 27th day of August 2021 Melbourne, Australia 57 ANNUAL REPORT 202158 RESPIRI LIMITED58 INDEPENDENT AUDITOR’S REPORT To the Members of Respiri Limited Opinion We have audited the financial report of Respiri Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration. In our opinion the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: i. giving a true and fair view of the Group's financial position as at 30 June 2021 and of its financial performance for the year then ended; and ii. complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 59 ANNUAL REPORT 2021 59 Material Uncertainty Related to Going Concern We draw attention to Note 1 in the financial report, which indicates that the Group incurred a net loss of $11,040,347 and had net operating cash outflows from operating activities of $7,339,097 during the year ended 30 June 2021. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. Key Audit Matter How our audit addressed this matter Share based payments Refer to Note 23 in the financial statements Respiri Limited have an Employee’s, Directors’ and Consultants’ Share and Option Plan (ESOP). The ESOP is intended to reward directors, employees and/or consultants for their contributions to the Group. We identified share-based payments as a key risk due the complexity in the valuation of the options issued, and the estimates made by management in relation to the achievement of vesting conditions. Our audit procedures in relation to share based payments included: • Assessing the reasonableness of option valuation inputs into the Black Scholes Option Valuation Model including assessment of the share volatility rates applied in comparison to entities in the similar industry; • Performing a recalculation the Black Scholes Option Valuation Model for a sample of options issued; • Testing a sample of options issued to signed ESOP agreements; • Reviewing the accounting for the share-based payments in accordance with AASB 2 Share-based Payments; and • Reviewing the reasonableness of management’s estimates of the likelihood of the achievement of vesting conditions for the options issued. 60 RESPIRI LIMITED 60 Key Audit Matters (continued) Key Audit Matter How our audit addressed this matter Valuation of inventory Refer to Note 14 in the financial statements The Group has inventory with a carrying value of $537,046 as at 30 June 2021. The valuation of inventory is considered a Key Audit Matter, due to the estimates involved with determining the net realisable value of the newly launched products. Our audit procedures included: • Testing inventory costing by verifying the key inputs in the costing calculations against supporting documentation; and • Evaluating the reasonableness of management's estimates of net realisable value, in consideration with the varying levels of gross margin achieved depending on the sales channel utilised. Other Information The directors are responsible for the other information. The other information comprises the information included in the Group's annual report for the year ended 30 June 2021, but does not include the financial report and the auditor's report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. 61 ANNUAL REPORT 2021 61 Auditor's Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This description forms part of our auditor's report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the directors' report for the year ended 30 June 2021. In our opinion, the Remuneration Report of Respiri Limited, for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. RSM AUSTRALIA PARTNERS B Y CHAN Partner Dated: 27 August 2021 Melbourne, Victoria 62 SHAREHOLDERS INFORMATION as at 25 August 2021 Equity security holders Twenty largest quoted equity holders The names of the twenty largest security holders of quoted equity securities are listed below: Holder Ordinary shares held % of total shares issued INVESTMENT HOLDINGS PTY LTD 66,504,827 9.20% MR PETER KARL BRAUN 15,004,325 2.08% NETWEALTH INVESTMENTS LIMITED 14,385,375 1.99% NETWEALTH INVESTMENTS LIMITED 14,121,560 1.95% MALLAMANDA PTY LTD P & A MIHAILOU PTY LTD 8,597,203 1.19% 8,000,000 1.11% ROSHERVILLE PTY LTD 8,000,000 1.11% HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED CITICORP NOMINEES PTY LIMITED 7,741,488 1.07% 7,159,990 0.99% COONAN FAMILY SUPERANNUATION FUND PTY LTD 7,000,000 0.97% EQUITAS NOMINEES PTY LIMITED 6,642,449 0.92% ATLANTIS INVESTIGATIONS PTY LIMITED 6,225,078 0.86% CLEMWELL PTY LTD DR BELINDA DEBORAH JACKSON DIXSON TRUST PTY LIMITED MR ROSS SPENCE BAYNES 6,035,678 0.83% 5,903,111 0.82% 5,850,000 0.81% 5,680,000 0.79% BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD 5,539,608 0.77% MR WILLIAM JOHN RICHARDS & MRS MARY MITCHELL RICHARDS 5,380,000 0.74% MORE INVESTMENT GROUP PTY LTD 5,301,818 0.73% MR GARY RONALD HEATH & MRS MELISSA LOUISE HEATH 5,201,819 0.72% Unquoted equity securities No unquoted shares Unquoted equity securities Number on issue Number of holders Options over ordinary shares issued 259,000,000 19 RESPIRI LIMITED 63 Substantial Holders Holder Designation Ordinary shares held % of total shares issued INVESTMENT HOLDINGS PTY LTD 66,504,827 9.20% Voting Rights The voting rights attached to ordinary shares are set out below: Ordinary shares On a show of hands every member present at a meeting in person or proxy shall have one vote and upon a poll each share shall have one vote. There are no other classes of equity securities. On-market Buy-backs There is no current on-market buy-back in relation to the Company’s securities. Securities subject to voluntary escrow There are no securities subject to voluntary escrow. Distribution of equitable securities Analysis of number of equitable security holders by size of holding: 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and above Unmarketable Parcels As at 25th August 2021 there were 493 unmarketable parcels on the register Number of Holders of ordinary shares 133 344 612 1749 824 ANNUAL REPORT 2021 SHAREHOLDER ENQUIRIES Shareholders with enquiries about their shareholdings should contact the Share Register: Computershare Investor Services Pty Ltd Yarra Falls 452 Johnston Street Abbotsford, Victoria, 3067 Telephone: +61 (0)3 9415 4000 Facsimilie: +61 (0)3 9473 2500 Email: www.investorcentre.com/contact CHANGE OF ADDRESS, CHANGE OF NAME, CONSOLIDATION OF SHAREHOLDINGS Shareholders should contact the Share Registry via your Investor Centre portal. REMOVAL FROM THE ANNUAL REPORT MAILING LIST Shareholders who no longer wish to receive the Annual Report should notify the Share Registry via the shareholder’s respective Investor Centre portal. These shareholders will continue to receive all other shareholder information. TAX FILE NUMBERS It is important that Australian resident shareholders, including children, have their tax file number or exemption details noted by the Share Registry. CHESS (Clearing House Electronic Sub-register System) Shareholders wishing to move to uncertified holdings under the Australian Stock Exchange (CHESS) system should contact their stockbroker. UNCERTIFIED SHARE REGISTER Shareholding statements are issued at the end of each month in which there is a transaction that alters the balance of your holding. STATUTORY INFORMATION AUSTRALIAN COMPANY NUMBER (ACN) 009 234 173 Respiri Limited is a Public Company Limited by shares and is domiciled in Australia. Appointed on 25th November 2019 Appointed on 30th October 2019 Appointed on 11th February 2020 REGISTERED OFFICE Level 10, 446 Collins Street Melbourne, Victoria AUSTRALIA 3000 Telephone: + 61 (0)3 9602 3366 Fax: + 61 (0)3 9602 3606 SOLICITORS Gadens Lawyers Level 13, Collins Arch 447 Collins Street Melbourne, Victoria, 3000 AUSTRALIA Telephone: +61 (0)3 9252 2555 Fax: +61 (0)3 9252 2500 BANKERS National Australia Bank (NAB) 330 Collins Street, Melbourne, Victoria, 3000 Australia DIRECTORS Mr Marjan Mikel Mr Nicholas Smedley Dr Thomas Duthy COMPANY SECRETARY Mr Alastair Beard PRINCIPAL PLACE OF BUSINESS Level 9, 432 St Kilda Road Melbourne, Victoria AUSTRALIA 3004 Telephone: +61 1300 11 7377 SHARE REGISTRY Computershare Investor Services Pty Ltd Yarra Falls 452 Johnston Street Abbotsford, Victoria, 3067 Australia Telephone: +61 (0)3 9415 4000 Facsimile: +61 (0)3 9473 2500 AUDITORS RSM Australia Pty Ltd Level 21, 55 Collins Street Melbourne, Victoria, 3000 Australia Telephone: +61 (0) 3 9286 8000 WEBSITE www.respiri.co SECURITIES QUOTED Australian Securities Exchange - Ordinary Fully Paid Shares (Code: RSH)

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