Respiri Limited
Annual Report 2023

Plain-text annual report

ANNUAL REPORT 2023 ii | RESPIRI LIMITED EVOLUTION From innovative medical devices company to leading Remote Patient Monitoring provider grounded in R&D . Respiri Limited ABN 98 009 234 173 ANNUAL REPORT 2023 | iii iv | RESPIRI LIMITED BUILDING ON A FOUNDATION OF STRATEGIC FIRSTS ANNUAL REPORT 2023 | v Respiri Limited is the 1st and only known Australian company to: • Gain FDA clearance for its unique WheezeRate Detector, Class II medical device - wheezo® • Deliver end-to-end Remote Patient Monitoring (RPM) services to US health providers • Be successfully reimbursed for RPM by Centers of Medicare and Medicaid (CMS) in the USA 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 2023. This year has seen Respiri accelerate from US market entry to revenue generating in under 12 months. With a strong push to consolidate the early wins, the Company is building on a solid foundation of strategic ‘Firsts’. Respiri Limited is the first and only known Australian company to: • gain FDA clearance for its unique WheezeRate Detector, Class II medical device - wheezo® • be successfully reimbursed for Remote Patient Monitoring (RPM) by Centers of Medicare and Medicaid (CMS) in the USA • deliver end-to-end RPM services to US health providers through newly acquired Access Managed Services LLC (Access) Through the recent acquisition of Access, Respiri now has control of an established and scalable end-to-end RPM offering that provides beyond the clinic solutions across all major disease states including Respiratory, Cardiovascular, Diabetes and Obesity critical competencies that Healthcare Organisations want and need. Further Respiri is the only RPM provider with services underpinned with its own IP protected medical device, wheezo, that allows for differentiated full suite programs including , clinical patient capability, integrated platform, and systems to streamline healthcare provider workflows and training and distribution. Moreover, the acquisition marked a significant step for Respiri as it fast- tracks its Access business development into the broader Remote Patient Monitoring (RPM) health market in the United States. The US RPM market is projected to almost double and reach about US$25 billion by 2028, a CAGR of 11% during the forecast period1 and Respiri is poised to leverage this growth opportunity with a complete and differentiated RPM offering. Approximately 80% of Americans ≥ 55 years of age live with at least one chronic condition with almost 60% of those living with at least two chronic conditions2. Currently, there are few FDA-cleared Medical Devices that provide easy to use and scalable respiratory RPM services, which is a major reason why wheezo® RPM programs have been so well received by Access customers. Healthcare Organisation (HCO) customers typically contract Access to provide all their RPM requirements and not just wheezo®, making each potential client revenue opportunity greater. Respiri’s IP-protected medical device, wheezo®, is used as a key differentiator to help secure contracts. The acquisition also significantly increases the monthly recurring patient revenues for Respiri from US$10- $20 to US$70-$100, reducing the projected monthly breakeven number of patients from 30,000 to 9,000 which the company forecasts to achieve in CY2024. With an addressable US market now more than 3 times larger than the original respiratory market (approximately 150 million patients) and a significant advanced sales pipeline, Respiri is well placed to meet this target. With a growing established customer base and pipeline of opportunities, there is currently a contracted potential reach of 20,000+ patient lives. 1. https://www.arizton.com/market-reports/us-remote-patient-monitoring-market#:~:text=The%20U.S.%20remote%20patient%20monitoring%20 market%20size%20was%20valued%20at (Accessed 7 July 2023) 2. https://www.cdc.gov/nchs/health_policy/adult_chronic_conditions.htm ANNUAL REPORT 2023 | vii Operational achievements Key achievements during the year are outlined below. Product Development – During the year the Company has continued to iterate and improve its wheezo® USA supporting software technology and utilising Artificial Intelligence (AI) driven capabilities to improve productivity and develop predictive clinical capabilities. The mobile application and Health Portal were enhanced with the addition of the CAT, (COPD Assessment Test), a clinically validated tool to assess the impact of disease on a patient’s life. This important feature provides additional clinically objective metrics to the treating physician. The major product advancement in the last year was the establishment of the Health Portal, the SaaS platform, allowing partners and healthcare providers alike to sign up, manage and review patient level health data. The delivery of the Health Portal provides a true end-to-end vertical, enabling US based partners to sell the RPM solution as a total package. The Access platform, Remotli, provides Respiri with a compliant RPM patient management tool that provides for patient management and reimbursement claiming documentation, allowing providers and healthcare organisations to make reimbursement claims. The Acquisition of Access includes key employees, Ms Lisa Dye, Chief Revenue Officer and Mr Chas Cota, Director Strategy and Business Development committing to the business long term. Ms Myra Ameigh, President and CEO of Access will continue to support the business in a strategic advisory capacity and help manage a number of significant private insurer organisations in advanced RPM contract negotiations. To support the US Expansion, Respiri ceased Australian operations with a strategic exit from the Australian Market. To ensure a strong presence on the ground from day one, Respiri appointed Mr William Sigsbee as Head of US Operations and Chief Commercial Officer for the US market. Mr Sigsbee has more than 30 years of healthcare experience in medical devices, services and software solutions, including previous roles as CEO. Mr. Sigsbee brings a wealth of knowledge around the US healthcare market, partnership strategy and distribution of leading-edge patient engagement technologies. We also welcomed Brian Leedman to the Board as an independent Non-executive Director. Brian is a healthcare company entrepreneur and experienced company director having co-founded six healthcare/ biotechnology companies on the ASX including Oncosil Medical, Biolife Sciences (acquired by Imugene Limited in 2014) and ResApp Health (acquired by Pfizer in September 2022). He is the former director of Alcidion Limited and Chairman of Neurotech International, Nutritional Growth Solutions, NeuroScientific Biopharmaceuticals, Ausbiotech (WA) and holds a Bachelor of Economics and a Master of Business Administration from The University of Western Australia. Respiri together with Access Telehealth, secured three more RPM agreements, taking the number of RPM contracted healthcare organisations to 13. Respiri has now secured healthcare customers located in twelve different states in the USA that treat and manage diverse patient groups, including both adult and paediatric patients living with asthma, patients living with COPD, patients living with COPD with underlying cardiovascular disease and primary care patients demonstrating the broad clinical appeal of the wheezo® RPM program. Respiri continued to expand its partnerships to unlock new healthcare organisation opportunities. On 10th July 2023, Respiri entered into a non-exclusive distribution / marketing wheezo® remote patient monitoring (RPM) agreement with Fi-Med Management LLC for an initial 3-year term significantly expanding the wheezo® distribution footprint with Fi-Med existing clients. Fi-Med customers include CommonSpirit Health, one of the largest nonprofit health systems in the USA with 142 hospitals, 2,200+ care sites and over 25,000 physician and advanced practice clinicians across 21 states, representing a significant growth opportunity for Respiri. Other notable customers include Mount Sinai, an integrated health service with 400 ambulatory practice locations throughout the five boroughs of New York City, Westchester, and Long Island; and Essentia Health comprised of 14 hospitals and a further 120 health facilities across Minnesota, Wisconsin, and North Dakota. An initial review of Fi-Med’s customers has identified 29 customers whose patient demographics directly align with a wheezo® RPM program, representing an initial immediate patient pool of approximately 5000. Teams from both companies have been established to maximise these opportunities with more announcements pertaining to these to be shared throughout FY24. viii | RESPIRI LIMITED Chairman & CEO Update continued and value. Such approaches will form the basis of unlocking new business opportunities, especially with US based health insurers and Accountable Care Organisations (ACO) whose business models are based on healthcare cost reduction. Respiri/Access are currently engaged in advanced risk-share business contracts discussions with organisations like these. National Institute for Health Research (NIHR) – First patients were recruited in the last quarter of 2022 to the previously announced the £2 million National Institute of Health Research (NIHR) Funded UK paediatric asthma clinical trial which was awarded to King’s College, London to assess the impact of the wheezo® when combined with a standard integrated care approach for Asthma (the control arm), for their effectiveness and cost-utility. The Technology Enhanced integrAted asthMa care (TEAM- care) trial is a three arm, randomised, 30-month, 1,464 patient clinical trial that aims to assess outcomes for children with Asthma using a technologically enhanced integrated care pathway to address an unmet clinical need by building the clinical and health economic evidence base for NHS adoption of new technologies for asthma self-management, treatment optimisation, and monitoring. On 28 September 2022 Respiri established a cost-effective, Philippine based, Company Centre of Digital Innovation Excellence enabling greater flexibility and agility to meet ongoing USA market opportunities. By in housing key technology competencies and processes; Respiri has focused on improving all aspects of Research and Development; Accessing Tier 1 Filippino software engineering resources; and partnering with technology vendors and service providers to drive cost reductions and increase productivity. Resources have focus on mobile and web apps, web portals, SaaS, and in future will incorporate Machine Learning, system integration and API, as well as full platform and IT ecosystem solutions. AI is central to Respiri’s pathway moving forward. AI is already inherent in Respiri’s current wheeze- identification algorithm and continues to shape the Company’s R&D pipeline, notably Respiri’s improved version of the wheezo solution under development. Respiri also implemented an AI driven capability seeking to improve productivity. Early signs pointed to a +50% improvement in development output with projections for further improvement once rolled out to all facets of product development, communications, and overall operational improvements during and throughout FY24. Respiri expects AI models to play a greater role in delivering best in-class RPM programs for healthcare organisations and more importantly, improved outcomes for patients. One example already underway, is the analysis of multi-year, deidentified large and complex data sets to better assess at-risk, high healthcare cost complex patients. AI model will help Respiri to better understand patients most at risk and help target RPM programs where they will have the most impact ANNUAL REPORT 2023 | ix Respiri looks forward to sharing news on the clinical development of the wearable medical device which will grow the respiratory device offering, allowing Respiri to cater to a broader base of patients and support US healthcare organisations with new patient programs which are currently underserviced. As noted previously, wheezo® will continue to be Respiri’s core medical device offering moving forward. Almost all major existing customers and existing sales pipeline opportunities are underpinned by Respiri’s wheezo® existing innovation. Manufacturing – Respiri has substantial inventory on hand and is well placed to meet US demand. The recent announcement regarding Respiri’s exit from the Australian market further strengthened Respiri’s wheezo® stock on hand position. Respiri expects no major issues moving forward, both on delivering wheezo® devices for US customers and prototypes to support the wearable clinical program. Market exposure Post financial year, the company presented at the Techknow Invest conferences in the Gold Coast and Melbourne and at the highly respected Bioshares Conference in Hobart. Consequently, Respiri was added to the Bioshares Model Portfolio, the only company to be added following the annual conference. Shareholders We would like to thank all shareholders for their continued support of the company, especially the recent Access acquisition. The board and senior management expect the next twelve months to deliver rapid and sustainable growth as the Company approaches cash-positive status in CY2024. Respiri has achieved many business firsts in 2023 and significant revenue milestones that will be achieved in the coming year. We will continue to keep you, the shareholder, well informed and with your continued support of the Board and Executive team we will continue to have a marked impact on the lives of patients living with chronic diseases. Strategic exit from Australian market - In light of Respiri’s focus on the US market, the Board determined to voluntarily withdraw its wheezo® device from the Australian market and simultaneously cancel its registration on the Therapeutic Goods Administration (TGA) to remove any remaining overheads and resources related to the Australia market and continue its focus on scaling US operations. Respiri worked with its Australian distributors and resellers to cease the distribution and sale of the wheezo® to customers. Research and Development – The Company continued work on the wearable prototype during the year and established its first US-based Medical Advisory Board (MAB) to support product and clinical development and further advance wheezo® and the wearable Remote Patient Monitoring as part of standard of care. The founding MAB members comprise a wealth of experience and knowledge and a diverse skill set spanning clinical pulmonology, scientific & clinical expertise and commercial medical device development and commercialisation. William S. Krimsky, FCCP, DAABIP has been serving as the MAB’s first Chair, and the first meeting was held in April 2023 with Professor Gerard J. Criner, MD, FACP, FACCP, Ass. Professor Stephen Selinger, MD and Dr. Jonathan Hovda, M.D., M.B.A rounding out the Key Opinion Leaders (KOL) and have begun forging the Company’s respiratory clinical and product development strategies. Nicholas Smedley Executive Chairman Marjan Mikel CEO and Managing Director x | RESPIRI LIMITED FINANCIAL STATEMENTS 2023 Respiri LimitedABN 98 009 234 173ContentsFor the Year Ended 30 June 2023PageFinancial StatementsChairman and CEO UpdateDirectors' Report1Auditor's Independence Declaration under Section 307C of the Corporations Act 200120Statement of Profit or Loss and Other Comprehensive Income21Statement of Financial Position22Statement of Changes in Equity23Statement of Cash Flows25Notes to the Financial Statements26Directors' Declaration57Independent Audit Report58ANNUAL REPORT 2023 | 1 Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023The Directors of Respiri Limited ("RSH", "Respiri", "Company" or "the Group") submit herewith the annual financial report ofthe Group for the financial year ended 30 June 2023. In order to comply with the Corporations Act 2001, the Directors'Report are as follows:DirectorsThe names of each person who has been a director during the year and to the date of this report are:Mr Nicholas SmedleyExecutive ChairmanAppointed to the Board30 October 2019Last elected by Shareholders16 December 2020ExperienceNicholas is an experienced Investment Banker and M&A Advisor, with14 years’ experience at UBS and KPMG. He has worked on M&Atransactions in the UK, Hong Kong, China, and Australia withtransactions ranging from the A$9bn defence of WMC Resourcesthrough to the investment of $65m into Catch.com.au. Nicholascurrently oversees investments in the Property, Aged care,Technology and Medical Technology space. Key areas of expertiseinclude M&A, Debt structuring, Corporate governance and innovation. QualificationsB.ComInterest in shares and options15,459,668 Ordinary Shares and 30,000,000 Unlisted OptionsDirectorships held in otherlisted entitiesAD1 Holdings LimitedFindi LimitedMr Marjan MikelCEO and Executive DirectorAppointed to the Board25 November 2019Last elected by Shareholders16 December 2020ExperienceMarjan is a highly experienced managing director and board memberwith a career spanning Australia, Europe and Japan, Marjan’s focushas been in the healthcare industry; from pharmaceuticals andinformation services and technology to medical devices and sleepdisorder solutions. He founded and subsequently sold Healthy SleepSolutions after developing it into a successful business, with ResmedLtd as a joint venture/shareholder partner.He is an industry research fellow at University of New South WalesFaculty of Engineering.QualificationsBSc(Hons), Grad Dip Ed, MCom; MAICDInterest in shares and options4,558,687 Ordinary Shares and 30,000,000 Unlisted OptionsDirectorships held in otherlisted entitiesN/A12 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023Directors (continued)Mr Brad SnowNon-Executive DirectorAppointed to the Board20 June 2022ExperienceBrad Snow has 25 years of extensive commercial, operations andbusiness development experience gained within the med-tech,biotech and HIT industries primarily focused in the United States.Brad is currently Chief Executive Officer and Board of Director ofAngel-Medical Systems Inc (AngelMed). AngelMed’s novel device,The Guardian System, is the world’s first and only FDA approved real-time implantable cardiac device to detect acute coronary syndromeevents, including silent heart attacks.Previously, he was Chief Executive Officer and Board of Director ofSonaCare Medical LLC (now Sonablate Corp) a global company withcutting edge (HIFU) ultrasound imaging, assessment and ablationsystem.Brad provided Med Tech Consulting which provided advisory servicesto medical technology clients in relation to commercial strategy,operational improvements, business development and funding. He cofounded DisruptRxtech.com, an artificial intelligence healthcare ITcompany.Earlier in his career, he held executive leadership roles in sales,marketing, and commercial operations for numerous start-up andemerging growth companies in the med-tech space.Interest in shares and optionsNilDirectorships held in otherlisted entitiesAngel-Medical Systems Inc (Listed in the United States)Mr Brian LeedmanNon-Executive DirectorAppointed to the Board22 May 2023ExperienceBrian Leedman is a healthcare company entrepreneur andexperienced company director having co-founded sixhealthcare/biotechnology companies on the ASX including OncosilMedical, Biolife Sciences (acquired by Imugene Limited on 2014) andResApp Health (acquired by Pfizer in September 2022). He is theformer director of Alcidion Limited and Chairman of NeurotechInternational, Nutritional Growth Solutions, NeuroScientificBiopharmaceuticals, Ausbiotech (WA).QualificationsBachelor of Economics and a Master of Business Administration fromthe University of Western AustraliaDirectorships held in otherlisted entitiesOncosil Medical LimitedInterest in shares and options620,068 Ordinary Shares and 20,000,000 Unlisted Options2ANNUAL REPORT 2023 | 3 Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023Company secretaryMr Alastair Beard was appointed as Company Secretary on 13th March 2019 and resigned on the 15th August 2022.Andrew Metcalfe was appointed as Company Secretary on 15th August 2022.Andrew Metcalfe (CPA, FGIA, GAICD) is an experienced Chartered Secretary and Governance Adviser with more than 25years' experience across a broad industry base, having worked with a variety of Board and senior management teams ofASX listed companies.Principal ActivitiesThe Company’s principal activities in the course of the financial year have been the research, development andcommercialisation 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 reviewThe loss of the Company after income tax for the financial year was $5,775,290 (2022: $6,624,313). This result has beenachieved after fully expensing all research and development costs.During the year the Company has continued to iterate and improve its wheezo® USA supporting software technology andutilising Artificial Intelligence (AI) driven capabilities to improve productivity and develop predictive clinical capabilities. Themobile application and Health Portal were enhanced with the addition of the CAT, (COPD Assessment Test), a clinicallyvalidated tool to assess the impact of disease on a patient’s life. This important feature provides additional clinically objective metrics to the treating physician. The major product advancement in the last year was the establishment of the Health Portal, the SaaS platform, allowingpartners and healthcare providers alike to sign up, manage and review patient level health data. The delivery of the HealthPortal provides a true end-to-end vertical, enabling US based partners to sell the RPM solution as a total package. TheAccess platform, Remotli, provides Respiri with a compliant RPM patient management tool that provides for patientmanagement and reimbursement claiming documentation, allowing providers and healthcare organisations to makereimbursement claims. On 28 September 2022 Respiri established a cost-effective, Philippine based, Company Centre of Digital InnovationExcellence enabling greater flexibility and agility to meet ongoing USA market opportunities. By in housing key technologycompetencies and processes; Respiri has focused on improving all aspects of Research and Development; Accessing Tier1 Filippino software engineering resources; and partnering with technology vendors and service providers to drive costreductions and increase productivity. Resources have focus on mobile and web apps, web portals, SaaS, and in future willincorporate Machine Learning, system integration and API, as well as full platform and IT ecosystem solutions.AI is central to Respiri’s pathway moving forward. AI is already inherent in Respiri’s current wheeze-identification algorithmand continues to shape the Company’s R&D pipeline, notably Respiri’s improved version of the wheezo solution underdevelopment. Respiri also implemented an AI driven capability seeking to improve productivity. Early signs pointed to a+50% improvement in development output with projections for further improvement once rolled out to all facets of productdevelopment, communications, and overall operational improvements during throughout FY24. Respiri expects AI modelsto play a greater role in delivering best in-class RPM programs for healthcare organisations and more importantly, improvedoutcomes for patients. One example already underway, is the analysis of multi-year, deidentified large and complex datasets to better assess at-risk, high healthcare cost complex patients. AI model will help Respiri to better understand patientsmost at risk and help target RPM programs where they will have the most impact and value. Such approaches will form thebasis of unlocking new business opportunities, especially with US based health insurers and Accountable CareOrganisations (ACO) whose business models in based on healthcare cost reduction. Respiri/Access are currently engagedin advanced risk-share business contracts discussions with organisations like these. 34 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023Operating and Financial review (continued)First patients were recruited in the last quarter of 2022 to the previously announced the £2 million National Institute ofHealth Research (NIHR) Funded UK paediatric asthma clinical trial which was awarded to King’s College, London to assessthe impact of the wheezo® when combined with a standard integrated care approach for Asthma (the control arm), for theireffectiveness and cost-utility. The Technology Enhanced integrAted asthMa care (TEAM-care) trial is a three arm,randomised, 30-month, 1,464 patient clinical trial that aims to assess outcomes for children with Asthma using atechnologically enhanced integrated care pathway to address an unmet clinical need by building the clinical and healtheconomic evidence base for NHS adoption of new technologies for asthma self-management, treatment optimisation, andmonitoring.In light of Respiri's focus on the US market, the Board determined to voluntarily withdraw its wheezo® device from theAustralian market and simultaneously cancel its registration on the Therapeutic Goods Administration (TGA) to remove anyremaining overheads and resources related to the Australia market and continue its focus on scaling US operations. Respiriworked with its Australian distributors and resellers to cease the distribution and sale of the wheezo® to customers. The Company continued work on the wearable prototype during the year and established its first US-based MedicalAdvisory Board (MAB) established to support product and clinical development and further advance wheezo® and thewearable Remote Patient Monitoring as part of standard of care. The founding MAB members comprise a wealth ofexperience and knowledge and a diverse skill set spanning clinical pulmonology, scientific & clinical expertise andcommercial medical device development and commercialisation. William S. Krimsky, FCCP, DAABIP has been serving asthe MAB’s first Chair, and the first meeting was held in April 2023 with Professor Gerard J. Criner, MD, FACP, FACCP, Ass.Professor Stephen Selinger, MD and Dr. Jonathan Hovda, M.D., M.B.A rounding out the Key Opinion Leaders (KOL) andhave begun forging the Company’s respiratory clinical and product development strategies. Respiri looks forward tosharing news on the clinical development of the wearable medical device which will grow the respiratory device offering,allowing Respiri to cater to a broader base of patients and support US healthcare organizations with new patient programswhich are currently underserviced. As noted previously, wheezo® will continue to be Respiri’s core medical device offeringmoving forward. Almost all major existing customers and existing sales pipeline opportunities are underpinned by Respiri’swheezo® existing innovation. Respiri has substantial inventory on hand and is well placed to meet US demand. The recent announcement regardingRespiri’s exit from the Australian market further strengthened Respiri’s wheezo® stock on hand position. Respiri expectsno major issues moving forward, both on delivering wheezo® devices for US customers and prototypes to support thewearable clinical program.Corporate and Financial HighlightsThe Company recorded revenue of $64,189 representing sales of wheezo® devices to its US and UK Partners. Productmanufacturing cost of sales of $65,602 reflects further improvements in the COGS for manufacturing of wheezo® model4.0. Advertising and Marketing costs for the year of $216,403 include costs associated with the launch of wheezo® in theUS. Employee, consulting and corporate costs of $3,639,567 reflect the additional hire of key management personnel inthe US and other key business roles required to support Respiri’s corporate objectives.At year end the company held $1,231,692 in inventories and $146,162 cash on hand.DividendsThe Company did not pay any dividends during the financial year. The Directors do not recommend the payment of adividend in respect of the 2023 financial year.(PY2022: Nil).Significant Changes in State of AffairsIn the opinion of the Directors, there were no other significant changes in the state of affairs of entities in the Group duringthe financial year under review not otherwise disclosed in the Annual Report. The board decided to focus 100% of itscommercialisation efforts on the US market and for that reason decided to exit the Australian market.4ANNUAL REPORT 2023 | 5 Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023Matters Subsequent to Reporting PeriodSubsequent to year end the company completed a $3.9 million capital raise by way of a successful Share Purchase Planand private placement. In addition to providing working capital the funds were used to complete on the acquisition ofAccess Managed Services LLC (Access). On 14th August 2023 the group entered into a binding Member Interest PurchaseAgreement to acquire Access for up to US$3.0 million with the first tranche paid of US$1.25 million.Likely Developments and Expected ResultsPlease refer to the ‘Operating and Financial Review’ section at the start of the Directors’ Report for information in relation toCompany’s future Developments and Events.Environmental RegulationsThe Group's operations are not regulated by any significant environmental regulations under either Commonwealth or Statelegislation.Risk ManagementThe Board is responsible for overseeing the establishment and implementation of the risk management system, and for thereviewing 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 theCompany. The Board has established a formal process in relation to the maintenance of an internal risk register which isupdated 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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 in56 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023Risk Management (continued)the Company. The above areas, and others not specifically referred to above, may in the future materially affect thefinancial 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 RisksSome of the risks inherent in the development of medical device products to a marketable stage include the uncertainty ofpatent protection and proprietary rights, whether patent applications and issued patents will offer adequate protection toenable product development or may infringe intellectual property rights of other parties, the obtaining of the necessaryregulatory 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. Companiessuch as Respiri Limited are dependent on the success of their medical devices and on the ability to attract funding tosupport these activities.Investment in healthcare technology including medical devices cannot be assessed on the same fundamentals as tradingand manufacturing enterprises and thus investment in these areas must be regarded as speculative taking into accountthese considerations. Meetings of DirectorsA number of formal meetings and circular resolutions were held during the year as tabled below:Directors'MeetingsAudit, Risk andComplianceCommitteeRemuneration &NominationCommitteeNumbereligible toattendNumberattendedNumbereligible toattendNumberattendedNumbereligible toattendNumberattendedMr Nicholas Smedley1110----Mr Marjan Mikel1111----Mr Brad Snow118----Mr Brian Leedman11----For the date of appointment and resignation of each Director and Executive, please refer to the Remuneration Reportsection of the Directors’ Report.6ANNUAL REPORT 2023 | 7 Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023Indemnification of Officers and AuditorsDuring the financial year, the Company maintained an insurance policy to indemnify Directors and Officers against certainliabilities incurred as such a Director or Officer, including costs and expenses associated in successfully defending legalproceedings. 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 theCompany or any related body corporate against a liability incurred as such an Officer or Auditor.Proceedings on Behalf of the CompanyNo proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 ofthe Corporations Act 2001.Non-audit ServicesThe Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor'sexpertise and experience with the Company and/or the Group are important.During the year ended 30 June 2023 the Company did not engage the external auditor to provide non-audit services.Auditor's Independence DeclarationThe auditor's independence declaration in accordance with section 307C of the Corporations Act 2001 for the year ended30 June 2023 has been received and can be found on page 20 of the financial report.78 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023Share Options on Issue as at the Date of this ReportThe unissued ordinary shares of Respiri Limited under option as at the date of this report were: Unlisted optionsClassASX CodeDate of ExpiryExercise Price$No. under Option01RSHAF31 Dec 20230.036,000,00002RSHAG31 Dec 20240.036,000,00008RSHAB12 Jun 20240.1065,000,000(a)09RSHACi30 Sep 20240.2030,000,000(a)14RSHAE1 July 20240.1010,000,00016RSHAC2 Nov 20230.204,800,000(b)17RSHAC15 Jun 20260.308,000,000(b)18RSHAA17 Dec 20250.3065,000,00019RSHAA17 Dec 20250.3010,000,00020RSHAAB31 Jan 20270.203,200,00021RSH ESOP09 Jun 20270.102,000,00022RSHAI01 Mar 20250.105,000,00023RSHAJ01 Mar 20250.2010,000,00024RSHAAD31 Dec 20240.102,500,00024RSHAADI30 Jun 20250.105,000,00024RSHAAD31 Dec 20250.102,500,00024RSHAAD30 Nov 20250101,000,00024RSHAAD30 Nov 20250.101,500,00024RSHAAD31 Jan 20260.101,000,000a)Issued in 5 tranches with different vesting conditions. See Note 21.b)Options granted at EGM held in May 2020. Issued in 3 tranches with different vesting conditions. Of the 3 tranches, 1has not yet been allotted to members. See Note 21.Please refer to Note 21 for further details regarding the above unlisted options on issue as at 30 June 2023.There were no listed options outstanding at the reporting date,Corporate GovernanceIn recognising the need for the highest standards of corporate behaviours and accountability, the Directors of Respirisupport and adhere to good corporate governance practices. The Company’s Corporate Governance Statement is availableon the Company’s website at www.Respiri.co.8ANNUAL REPORT 2023 | 9 Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023Remuneration Report (Audited)This Remuneration Report outlines the Director and Executive remuneration arrangements of the Company as required bythe Corporations Act 2001 and its Regulations. This report details the nature and amount of remuneration of each Director of Respiri Limited and all other KeyManagement Personnel. For the purposes of this report, Key Management Personnel (KMP) are defined as those persons having authority andresponsibility for planning, directing and controlling the major activities of the Company, directly or indirectly, including anyDirector (whether Executive or otherwise) of the Company. For the purposes of this report, the term 'executive' encompasses the Executive Chairman.NamesPositionAppointment/ResignationDirectorsMr Marjan MikelCEOAppointed on 2nd December 2019Executive DirectorAppointed on 25th November 2019Mr Nicholas SmedleyExecutive ChairmanAppointed on 30th October 2019Mr Brad SnowMr Brian LeedmanNon-Executive DirectorNon-Executive DirectorAppointed on 20th June 2022Appointed on 22nd May 2023Other KMPMr George VlachodimitropoulosChief Technology OfficerAppointed on 23rd August 2021Dr Samaneh Sarraf ShiraziChief Research OfficerAppointed on 4th February 2019Mr Peter HildebrandtMr Theo AntonopoulosChief Operating OfficerChief Commercial OfficerAppointed on 1st November 2020Appointed on 7th June 2021Remuneration PolicyRemuneration of all Non-Executive Directors and Officers of the Company is determined by the Board followingrecommendation 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 variablecomponents, 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 isconsistent with industry standards. Non-Executive Directors do not receive performance based bonuses and priorShareholder approval is required to participate in any issue of equity. No retirement benefits are payable other thanstatutory superannuation, if applicable. Voting and comments made at the Company’s Annual General MeetingThe Company did not receive any specific feedback at the AGM or throughout 2023 on its remuneration practices. TheRemuneration Report was adopted at the 2022 AGM by more than 98% of eligible votes received.Remuneration Policy Versus Company Financial PerformanceDirectors have been compensated for work undertaken and the responsibilities assumed in being Directors of this publiclylisted 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.910 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023Remuneration Report (Audited) (continued)Remuneration Policy Versus Company Financial Performance (continued)The Company envisages its performance in terms of earnings will remain negative whilst the Company continues in thedevelopment and commercialisation phase. Shareholder value reflects the speculative and volatile biotechnology marketsector. This pattern is indicative of the Company's performance over the past five years. Accordingly, no dividends have been paidduring the year, or in respect of the 2023 financial year.Net (Loss)/Profit$Share Priceat BalanceSheet Date$Loss perShare (cents)$Financial Year2023(5,775,290)0.04(0.72)2022(6,624,313)0.06(0.91)2021(11,040,347)0.07(1.58)2020(7,260,935)0.09(1.27)2019(8,474,586)0.09(1.69)Performance Based RemunerationThe purpose of a performance bonus is to reward individual performance in line with Company objectives. Consequently,performance based remuneration is paid to an individual where the individual's performance clearly contributes to asuccessful outcome for the Company. This is regularly measured in respect of performance against key performanceindicators (KPI's). The Company uses a variety of short-term and long-term KPI's to determine achievement, depending on the role of theexecutive or director being assessed and the particular KPI being targeted.These include: successful contract negotiations; company share price consistently reaching a targeted rate on the ASX or applicable market over a period of time; andcompletion of set milestones.The Non-Executive Directors do not receive performance-based remuneration.10ANNUAL REPORT 2023 | 11 Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023Remuneration Report (Audited) (continued)Details of Remuneration for the Year Ended 30 June 2023The remuneration for each Director and each of the other Key Management Personnel of the consolidated entity during theyear was as follows:Short-term Employee BenefitsPost-employmentBenefitsShare-basedpayments2023Cash salaryand fees$Cash bonus$Consultingfees$Superannuationcontribution$Shares/Options$$DirectorsMr Marjan Mikel428,306--25,292116,321569,919Mr Nicholas Smedley245,455---64,766310,221Mr Brad Snow 95,269----95,269Mr Brian Leedman13,914--1,530-15,444Other KMPMr GeorgeVlachodimitropoulos250,000--25,2927,304282,596Mr Theo Antonopoulos275,000--25,29221,848322,140Mr Peter Hildebrandt235,000--24,67534,297293,972Dr Samaneh SarrafShirazi176,458--18,528-194,9861,719,402--120,609244,5362,084,547Note: For the date of appointment and resignation of each Director and Executive please refer to the Directors' Reportpages 1-2.1112 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023Remuneration Report (Audited) (continued)Details of Remuneration for the Year (continued) Ended 30 June 2023Short-term Employee BenefitsPost-employmentBenefitsShare-basedpayments2022Cash salaryand fees$Cash bonus$Consultingfees$Superannuationcontribution$Shares/Options$$DirectorsMr Marjan Mikel428,306--23,568155,422607,296Mr Nicholas Smedley245,455---110,070355,525Dr Thomas Duthy(resigned 19 Apr 2022)50,000---(193,578)(143,578)Other KeyManagementPersonnelMr GeorgeVlachodimitropoulos214,382--20,3641,730236,476Mr Theo Antonopoulos275,000--23,56814,483313,051Mr Peter Hildebrandt235,000--23,50034,297292,797Dr Samaneh SarrafShirazi176,458--17,646-194,1041,624,601--108,646122,4241,855,671a) 15,000,000 options granted to Thomas Duthy were forfeited following his resignation on 19th April 2022.b) 20,000,000 unlisted options were granted to senior management personnel at the May 2020 EGM. As at 30 June 2022,of the total granted, 8,000,000 options with a fair value of $159,573 have not yet been formally allotted At Risk Income as a Proportion of Total RemunerationAll Executive Directors and other key management personnel are eligible to receive incentives whether throughemployment contracts or by the recommendation of the Board. Their performance payments are based on a set monetaryvalue, set number of shares or options or as a portion of base salary. Therefore, there is no fixed proportion betweenincentive and non-incentive remuneration. Entitlement to these payments does not depend on the future performance of theCompany. Non-Executive Directors are not entitled to receive bonuses and/or incentives.12ANNUAL REPORT 2023 | 13 Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023Remuneration 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:FixedRemunerationAt Risk - STIAt Risk - LTI2023%2022%2023%2022%2023%2022%DirectorsMr Marjan Mikel (appointed on 25 November 2019)8074--2026Mr Nicholas Smedley (appointed on 30 October 2019)7969--2131Mr Brad Snow (appointed on 20 June 2022)100-----Dr Thomas Duthy (appointed on 11 February 2020,resigned on 19 April 2022)-100----Mr Brian Leedman (appointed on 22nd May 2023)100-----Other Key Management PersonnelMr George Vlachodimitropoulos (appointed on 23August 2021)9799--31Mr Theo Antonopoulos (appointed 7 June 2021)9395--75Mr Peter Hildebrandt (appointed 1 November 2020)8888--1212Dr Samaneh Sarraf Shirazi (appointed 4 February2019)100100----At risk long-term incentive (LTI) relates to remuneration in the form of share based payments, which are subject to vestingconditions based on length of service. At risk short-term incentive (STI) relates to discretionary bonuses approved by theboard in respect of performance during the relevant year.1314 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023Remuneration Report (Audited) (continued)Share-based CompensationAt 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/orconsultants for their contributions to the Group. The Plan is to be used as a method of retaining key personnel for thegrowth and development of the Group. Due to the Group's presence in USA, the Plan has been established to benefitpersonnel in Australia and USA. The terms and conditions of each grant of options affecting Director and other Key Management Personnel remuneration inthe current or future reporting periods are as follows:Grant DateDate Vested &ExercisableExpiry DateExercise Price$Share PriceHurdleFullyVestedValue per Optionat Grant Date$14 Dec 20171 Jul 202031 Dec 20230.030.10Yes0.04814 Dec 20171 Jul 202031 Dec 20240.030.15Yes0.09226 May 202030 Sep 202030 Sep 20240.10N/AYes0.03626 May 202030 Sep 202030 Sep 20240.30N/ANo0.02016 Jun 202012 Jun 202012 Jun 20240.10N/AYes0.04116 Jun 202030 Sep 202030 Sep 20240.20N/ANo0.03122 Oct 202021 Dec 20207 Jun 20211 Nov 202121 Dec 20207 Jun 20221 Nov 202317 Dec 20257 Jun 20240.200.300.20N/AN/AN/ANoYesNo0.0740.0220.01527 Nov 202123 Aug 20232 Nov 20230.20N/ANo0.00322 Feb 202231 Jan 202331 Jan 20270.20N/ANo0.0029 Jun 202214 Jun 202214 Jun 20221 Oct 20221 Nov 202215 Nov 20227 Nov 20221 Jun 20239 Jun 202314 Jun 202214 Jun 20221 Dec 20221 Jun 202330 Nov 202330 Nov 202331 Jan 20249 Jun 20271 Mar 20251 Mar 202531 Dec 202430 Jun 202530 Nov 202530 Nov 202531 Jan 20260.100.100.100.100.100.100.100.10N/AN/AN/AN/AN/AN/AN/AN/ANoYesYesYesYesNoNoNo0.0080.0030.0010.0100.0080.0080.0110.012Options 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 Companyof 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. Planparticipants may not enter into any transaction designed to remove the 'at risk' aspect of an instrument before it vests.14ANNUAL REPORT 2023 | 15 Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023Remuneration 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 andeach of the other Key Management Personnel are set out below:Number of OptionsGranted During the YearNumber of OptionsForfeited/ Lapsed/Cancelled/ ExercisedDuring the YearNumber ofOptionsVestedDuring theYear20232022202320222023DirectorsMr Marjan Mikel--15,000,000--Mr Nicholas Smedley--7,500,000--Dr Thomas Duthy---15,000,000-Other Key ManagementPersonnelMr GeorgeVlachodimitropoulos-2,500,000--2,500,000Mr Theo Antonopoulos-1,000,000--3,000,000Mr Peter Hildebrandt----2,000,000Dr Samaneh Sarraf Shirazi--2,000,000---3,500,00024,500,00015,000,0007,500,000Refer to Page 16 for closing balance of options held by each Director and other Key Management Personnel of RespiriLimited, including their personally related parties, as at 30 June 2023.1516 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023Remuneration Report (Audited) (continued)(a)ShareholdingsThe number of fully paid ordinary shares in the Company held during the financial year by each Director and other KeyManagement Personnel of Respiri Limited, including shares held indirectly by them personally, are set out below:Balance atStart of theYearGrantedasCompensationSharesfromOptionsExercisedNetChangeOtherBalance atEnd of theYear30 June 2023DirectorsMr Marjan Mikel3,308,687--1,250,000(a)4,558,687Mr Nicholas Smedley14,209,668--1,250,000(b)15,459,668Mr Brad Snow-----Mr Brian Leedman---620,068(c)620,068Other Key Management PersonnelMr George Vlachodimitropoulos-----Mr Theo Antonopoulos-----Mr Peter Hildebrandt-----Dr Samaneh Sarraf Shirazi-----17,518,355--3,120,06820,638,423a)At year end, 2,740,506 shares are held directly, 1,818,181 held indirectly.b)At year end, nil shares are held directly and 15,459,668 held indirectly.c)At year end, nil shares are held directly and 620,068 held indirectly.Balance atStart of theYearGranted asCompensationSharesfromOptionsExercisedNetChangeOtherBalance atEnd of theYear30 June 2022DirectorsMr Marjan Mikel3,308,687---3,308,687Mr Nicholas Smedley14,209,668---14,209,668Mr Brad Snow-----Dr Thomas Duthy745,454---745,454Other Key Management PersonnelMr Philippe Ludekens-----Mr Peter Hildebrandt-----Mr Theo Antonopoulos-----Dr Samaneh Sarraf Shirazi-----18,263,809---18,263,80916ANNUAL REPORT 2023 | 17 Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023Remuneration Report (Audited) (continued)(b)Options and RightsThe number of options over ordinary shares in the Company held during the financial year by each Director and other Key Management Personnel of Respiri Limited, including theirpersonally related parties, are set out below:Balance atStart of theYearGranted asCompensationOptionsExercisedNet ChangeOtherBalance atEnd of theYearVested andExercisableUnvested30 June 2023DirectorsMr Nicholas Smedley77,500,000--(7,500,000)(a)70,000,00060,000,00010,000,000Mr Marjan Mikel90,000,000--(15,000,000)(a)75,000,00060,000,00015,000,000Mr Brad Snow-------Mr Brian Leedman-------Other Key ManagementPersonnelMr GeorgeVlachodimitropoulos2,500,000---(b)2,500,0002,500,000-Mr Theo Antonopoulos3,000,000---(b)3,000,0003,000,000-Mr Peter Hildebrandt2,000,000---(b)2,000,0002,000,000-Dr Samaneh Sarraf Shirazi2,000,000--(2,000,000)(b)---177,000,000--(24,500,000)152,500,000127,500,00025,000,000a)15,000,000 options granted to Marjan Mikel and 7,500,000 granted to Nicholas Smedley were cancelled via mutual agreement with the company on 13th October 2022.b)20,000,000 unlisted options were granted to senior management personnel at the May 2020 EGM. As at 30 June 2023, of the total granted, 8,000,000 options with a fair value of$159,573 have not yet been formally allotted.1718 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023Remuneration Report (Audited) (continued)(b)Options and Rights (continued)Balance atStart of theYearGranted asCompensationOptionsExercisedNet ChangeOtherBalance atEnd of theYearVested andExercisableUnvested30 June 2022DirectorsMr Nicholas Smedley77,500,000---77,500,00060,000,00017,500,000Mr Marjan Mikel90,000,000---90,000,00060,000,00030,000,000Dr Thomas Duthy30,000,000--(15,000,000)(a)15,000,00015,000,000--------Other Key ManagementPersonnelMr GeorgeVlachodimitropoulos-2,500,000--(b)2,500,000-2,500,000Mr Theo Antonopoulos2,000,0001,000,000--(b)3,000,000-3,000,000Mr Peter Hildebrandt2,000,000---(b)2,000,000-2,000,000Dr Samaneh Sarraf Shirazi2,000,000---(b)2,000,0002,000,000-203,500,0003,500,000-(15,000,000)192,000,000137,000,00055,000,000a)15,000,000 options granted to Thomas Duthy were forfeited following his resignation on 19th April 2022.b)20,000,000 unlisted options were granted to senior management personnel at the May 2020 EGM. As at 30 June 2022, of the total granted, 8,000,000 options with a fair value of$159,573 have not yet been formally allotted.18ANNUAL REPORT 2023 | 19 Respiri LimitedABN 98 009 234 173Directors' Report30 June 2023Remuneration Report (Audited) (continued)The Directors and other Key Management Personnel are subject to service agreements with normal commercial terms andconditions. The key terms of these agreements are set out below:DurationOn-going termPeriods of Notice Required to TerminateIn the case of:- Marjan Mikel, four weeks' notice of termination by theemployee and the Company;- George Vlachodimitropoulos, four weeks' notice oftermination by the employee and the Company;- Theo Antonopoulos, four weeks' notice of termination bythe employee and the company;- Peter Hildebrandt, four weeks' notice of termination by theemployee and the Company; and- Samaneh Shirazi, four weeks' notice of termination by theemployee and the Company.Mr. Nicholas Smedley and Mr. Marjan Mikel have provided director loans to the company at year end of $100,000 each,interest to be charged at a commerical rate.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 ofDirectors.Mr Nicholas SmedleyExecutive-ChairmanDated this 31st day of August 2023Melbourne, Australia1920 | RESPIRI LIMITED RSM Australia Partners Level 21, 55 Collins Street Melbourne VIC 3000 PO Box 248 Collins Street West VIC 8007 T +61 (0) 3 9286 8000 F +61 (0) 3 9286 8199 www.rsm.com.au AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of Respiri Limited for the year ended 30 June 2023, 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: 31 August 2023 Melbourne, Victoria THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036 Liability limited by a scheme approved under Professional Standards Legislation ANNUAL REPORT 2023 | 21 Respiri LimitedABN 98 009 234 173Statement of Profit or Loss and Other Comprehensive IncomeFor the Year Ended 30 June 2023Note2023$2022$RevenueOperating revenue370,533253,688Non-operating revenue4,2406,875Other income3587,330518,508Total revenue662,103779,071Cost of sales(65,603)(259,292)596,500519,779ExpensesConsulting, employee and director4(3,639,567)(2,970,954)Equity-based payment4,21(335,675)(311,035)Corporate administration(1,375,868)(1,193,459)Depreciation(77,293)(81,954)Marketing and promotion(216,402)(916,587)Research and development(377,725)(1,463,343)Travel(334,260)(206,760)Finance expenses(15,000)-Loss before income tax expense from continuingoperations(5,775,290)(6,624,313)Income tax expense5--Loss after income tax for the year(5,775,290)(6,624,313)Other comprehensive income, net of income taxItems that will not be reclassified subsequently toprofit or lossExchange differences on translation of foreignoperations(554)973Total comprehensive loss for the year(5,775,844)(6,623,340)Loss attributable to:Members of the parent entity(5,775,290)(6,624,313)Total comprehensive loss attributable to:Members of the parent entity(5,775,844)(6,623,340)Basic loss per share (cents)(0.72)(0.91)Diluted loss per share (cents)(0.72)(0.91)The accompanying notes form part of these financial statements.2122 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Statement of Financial PositionAs At 30 June 2023Note2023$2022$ASSETSCURRENT ASSETSCash and cash equivalents9146,1621,217,271Trade and other receivables1047,24450,305Inventories141,231,6921,261,166Other assets131,579,8921,593,921TOTAL CURRENT ASSETS3,004,9904,122,663NON-CURRENT ASSETSProperty, plant and equipment12176,32682,686TOTAL NON-CURRENT ASSETS176,32682,686TOTAL ASSETS3,181,3164,205,349LIABILITIESCURRENT LIABILITIESTrade and other payables151,845,960789,629Other financial liabilities16327,415404,771Deferred revenue64,6533,162TOTAL CURRENT LIABILITIES2,238,0281,197,562NON-CURRENT LIABILITIESOther financial liabilities16116,398-TOTAL NON-CURRENT LIABILITIES116,398-TOTAL LIABILITIES2,354,4261,197,562NET ASSETS826,8903,007,787EQUITYIssued capital17132,099,603128,840,331Reserves186,779,8227,480,008Accumulated losses(138,052,535)(133,312,552)TOTAL EQUITY826,8903,007,787The accompanying notes form part of these financial statements.22ANNUAL REPORT 2023 | 23 Respiri LimitedABN 98 009 234 173Statement of Changes in EquityFor the Year Ended 30 June 20232023IssuedCapital$OptionReserve$ForeignTranslationCurrencyReserve$AccumulatedLosses$Total$Balance at1 July 2022128,840,3317,480,008-(133,312,552)3,007,787Loss after income tax expense for the year---(5,775,290)(5,775,290)Other comprehensive income for the year, net of tax--(554)-(554)Total comprehensive income for the year--(554)(5,775,290)(5,775,844)Transactions with Equity holders in their capacity as Equity holdersShares issued3,650,600---3,650,600Capital raising costs(391,328)---(391,328)Options exercised-----Options issued-----Options cancelled-(634,964)-634,964-Options forfeited/lapsed-(400,343)-400,343-Share-based payment expense -335,675--335,675Balance at30 June 2023132,099,6036,780,376(554)(138,052,535)826,890The accompanying notes form part of these financial statements.2324 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Statement of Changes in EquityFor the Year Ended 30 June 20232022IssuedCapital$OptionReserve$ForeignTranslationCurrencyReserve$AccumulatedLosses$Total$Balance atJuly 1, 2021127,090,4017,168,973(342,930)(126,346,282)7,570,162Loss after income tax expense for the year---(6,624,313)(6,624,313)Disposal of investments in foreign subsidiaries--341,957(341,957)-Other comprehensive income for the year, net of tax--973-973Total comprehensive income for the year--342,930(6,966,270)(6,623,340)Transactions with Equity holders in their capacity as Equity holdersShares issued1,783,000---1,783,000Capital raising costs(33,070)---(33,070)Options exercised-----Options issued-20,808--20,808Options cancelled-(149)--(149)Options forfeited/lapsed-(195,095)--(195,095)Share-based payment expense -485,471--485,471Balance at30 June 2022128,840,3317,480,008-(133,312,552)3,007,787The accompanying notes form part of these financial statements.24ANNUAL REPORT 2023 | 25 Respiri LimitedABN 98 009 234 173Statement of Cash FlowsFor the Year Ended 30 June 2023Note2023$2022$CASH FLOWS FROM OPERATING ACTIVITIES:Receipts from customers135,086255,992Payments to suppliers and employees (inclusive of GST)(5,216,842)(9,258,957)Interest received4,2406,875Grant income36,60021,813R&D tax refund550,730496,695Net cash used in operating activities20(4,490,186)(8,477,582)CASH FLOWS FROM INVESTING ACTIVITIES:Payments for purchases of plant and equipment(21,801)(2,265)Net cash used in investing activities(21,801)(2,265)CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from issues of securities3,650,6001,672,000Capital raising costs(391,328)(33,070)Borrowings200,000-Net cash provided by financing activities3,459,2721,638,930Net increase in cash and cash equivalents held(1,052,715)(6,840,917)Cash and cash equivalents at beginning of year1,217,2717,973,188Effects of exchange rate changes on cash and cash equivalents(18,394)85,000Cash and cash equivalents at end of financial year9146,1621,217,271The accompanying notes form part of these financial statements.2526 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 20231Summary of Significant Accounting PoliciesCorporate InformationRespiri Limited is a listed public company limited by shares incorporated and domiciled in Australia whose shares arepublicly 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, andthe 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 2023 was authorised for issue inaccordance with a resolution of the Directors on 31st August 2022.Statement of ComplianceThe financial report is a general purpose financial report that has been prepared in accordance with the CorporationsAct 2001, Accounting Standards and Australian Accounting Interpretations, and complies with other authoritativepronouncements 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 itcontrolled during the year. The financial report complies with Australian Accounting Standards, as issued by the Australian Accounting Standardsand with International Financial Reporting Standards ('IFRS') as issued by the International Accounting StandardsBoard (IASB).Basis of PreparationThe financial report has been prepared on an accruals basis and is based on historical costs. Cost is based on fairvalues of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unlessotherwise noted and amounts rounded to the nearest dollar.Parent entity informationIn accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entityonly. Supplementary information about the parent entity is disclosed in note 2.Going Concern BasisThe financial statements have been prepared on the going concern basis, which contemplates continuity of normalbusiness 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 $5,775,290 and had net cash outflows fromoperating activities of $4,490,186 for the year ended 30 June 2023.26ANNUAL REPORT 2023 | 27 Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 20231Summary of Significant Accounting Policies (continued)Going Concern Basis (continued)The Directors believe that there are reasonable grounds to believe that the Group will be able to continue as agoing concern, after consideration of the following factors.The Group has prepared budgets and cash flow forecast for the next 12 months from the date of this reportwhich indicate the Group will have a positive cash balance during this period. The cash flow forecasts includefurther capital raising over the next 12 months.As described in Note 23 the Group successfully raised $3,900,000 post period end through a placementoffering.The Directors believe that there are reasonable ground to expect that the Group has the capacity to raisecapital. The Group has a strong track record of accessing capital when it is required to advance its portfolio. In the event that capital raising be unsuccessful and insufficient funds are available to extinguish the debts, therewould be a material uncertainty which may cast significant doubt as to whether the Group will continue as a goingconcern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of businessand at the amounts stated in the financial report.Accordingly, the Directors believe that the Group will be able to continue as a going concern and that it is appropriateto 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 orliabilities that might be necessary if the Group does not continue as a going concern.Accounting Policies(a)Basis for consolidationThe consolidated financial statements incorporate the financial statements of the Company and entitiescontrolled 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 itsinvolvement with the entity and has the ability to affect those returns through its power to direct the activities ofthe entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidatedentity. 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 30June 2023 financial year-end.All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. In theseparate financial statements of the Company, intra-group transactions ('common control transactions') aregenerally accounted for by reference to the existing book value of the items. Where the transaction value ofcommon control transactions differ from their consolidated book value, the difference is recognised as acontribution by or distribution to equity participants by the transacting entities. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with thosepolicies 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 theeffective date of acquisition or up to the effective date of disposal, as appropriate.2728 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 20231Summary of Significant Accounting Policies (continued)(b)Income TaxThe income tax expense is based on the taxable income for the year. It is calculated using the tax rates thathave been enacted or are substantially enacted by the balance date. Current tax for current and prior periods isrecognised 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 differencesbetween the tax base of an asset or liability and its carrying amount in the statement of financial position. Thetax 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 beavailable 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 themarise from the initial recognition of assets and liabilities (excluding a business combination) that affects neithertaxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxabletemporary differences arising from the initial recognition of goodwill. Deferred tax liabilities are recognised for taxable temporary differences associated with investments insubsidiaries, branches and associates, and interests in joint ventures except where the Group is able to controlthe reversal of the temporary differences and it is probable that the temporary differences will not reverse in theforeseeable future. Deferred tax assets arising from deductible temporary differences associated with theseinvestments and interests are only recognised to the extent that it is probable that there will be sufficient taxableprofits against which to utilise the benefits of the temporary differences and they are expected to reverse in theforeseeable future. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) whenthe asset and liability giving rise to them are realised or settled. Current and deferred tax is recognised as anexpense or income in Profit or Loss, except when it relates to items credited or debited directly to equity, inwhich case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting fora 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 themanner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assetsand liabilities. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the sametaxation 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 taxconsolidated 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.28ANNUAL REPORT 2023 | 29 Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 20231Summary of Significant Accounting Policies (continued)(c)Current and non-current classificationAssets and liabilities are presented in the statement of financial position based on current and non-currentclassification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed innormal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12months after the reporting period; or the asset is cash or cash equivalent unless restricted from beingexchanged or used to settle a liability for a least 12 months after the reporting period. All other assets areclassified as non-current. A liability is classified as current when: it is either expected to be settled in normal operating cycle; it is heldprimarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there isno unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. Allother liabilities are classified as non-current.(d)InventoriesRaw 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 bringinginventories to their present location and condition. Cost of purchased inventories is determined after deductingrebates and discounts received or receivable. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs ofcompletion and the estimated selling costs. The Company periodically evaluates the condition and age of inventories and makes provisions for slow movinginventories accordingly. If in a particular period production is not at normal capacity, the costs of inventories does not include additionalfixed overheads in excess of those allocated based on normal capacity. Such unallocated overheads arerecognised as an expense in Profit or Loss in the period in which they are incurred. Furthermore, cost ofinventories does not include abnormal amounts of materials, labour or other costs resulting from inefficiency.(e)Property, plant and equipmentPlant 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 andvariable overheads. Subsequent costs are included in the asset’s carrying amount or recognised as a separateasset, as appropriate, only when it is probable that future economic benefits associated with the item will flow tothe group and the cost of the item can be measured reliably. All other repairs and maintenance are charged toProfit or Loss during the financial period in which they are incurred.DepreciationThe depreciable amount of all plant and equipment is depreciated on a straight-line basis commencing from thetime the asset is held ready for use. 2930 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 20231Summary of Significant Accounting Policies (continued)(e)Property, plant and equipment (continued)The depreciation rates used for each class of depreciable asset are shown below:Fixed asset classDepreciation rateFurniture and Fittings6 - 15%Computer Equipment15 - 33%Medical Equipment15%The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date. Anasset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount isgreater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gainsand losses are included in profit or loss.(f)LeasesLease assessment at contract inceptionAt inception of a contract, the Group assesses whether a lease exists - i.e. does the contract convey the right tocontrol 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 withinthe 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 assetthroughout the period of use.The Group has the right to direct the use of the asset i.e. decision making rights in relation to changinghow and for what purpose the asset is used.Right-of-use assetAt the lease commencement, the Group recognises a right-of-use asset and associated lease liability for thelease term. The lease term includes extension periods where the Group believes it is reasonably certain thatthe option will be exercised.The right-of-use asset is measured using the cost model where cost on initial recognition comprises of thelease liability, initial direct costs, prepaid lease payments, estimated cost of removal and restoration less anylease incentives received.The right-of-use asset is depreciated over the lease term on a straight-line basis and assessed for impairmentin accordance with the impairment of assets accounting policy.30ANNUAL REPORT 2023 | 31 Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 20231Summary of Significant Accounting Policies (continued)(f)Leases (continued)Lease liabilityThe lease liability is initially measured at the present value of the remaining lease payments at thecommencement of the lease. The discount rate is the rate implicit in the lease, however where this cannot bereadily 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 interestrate method. The lease liability is remeasured whether there is a lease modification, change in estimate of thelease term or index upon which the lease payments are based (e.g. CPI) or a change in the Group'sassessment of lease term.Where the lease liability is remeasured, the right-of-use asset is adjusted to reflect the remeasurement or isrecorded 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 exceptionExceptions to lease accountingThe Group has elected to apply the exceptions to lease accounting for both short-term leases (i.e. leases with aterm of less than or equal to 12 months) and leases of low-value assets. The Group recognises the paymentsassociated with these leases as an expense on a straight-line basis over the lease term.(g)Financial assets and liabilitiesRecognitionFinancial assets and financial liabilities are recognised when a group entity becomes a party to the contractualprovisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directlyattributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets andfinancial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financialassets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to theacquisition of financial assets or financial liabilities at fair value through profit or loss are recognisedimmediately in profit or loss.Financial liabilitiesOther 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 theeffective interest method, with interest expense recognised on an effective yield basis. The effective interestmethod is a method of calculating the amortised cost of a financial liability and of allocating interest expenseover the relevant period. The effective interest rate is the rate that exactly discounts estimated future cashpayments through the expected life of the financial liability, or (where appropriate) a shorter period, to the netcarrying amount on initial recognition. A financial liability is removed from the balance sheet when the obligation specified in the contract is dischargedor cancelled or expires. Non-derivative financial liabilities are recognised at amortised cost using the effectiveinterest rate method, comprising original debt less principal payments, amortisation and impairment.3132 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 20231Summary of Significant Accounting Policies (continued)(h)IntangiblesIntellectual propertyThe amortisation period and the amortisation method for an intangible asset is reviewed at least at the end ofeach reporting period. If the expected useful life of the asset is different from the previous estimates, theamortisation shall be changed accordingly. Such changes are accounted for as changes in accountingestimates. (i)Foreign currency transactions and balancesFunctional and presentation currencyThe functional currency of each of the Group’s entities is measured using the currency of the primary economicenvironment in which that entity operates. The consolidated financial statements are presented in Australiandollars which is the parent entity's functional and presentation currency.Transaction and balancesForeign currency transactions are translated into functional currency using the exchange rates prevailing at thedate of the transaction. Foreign currency monetary items are retranslated at the rates prevailing at the reportingdate. Non-monetary items that are measured in terms of historical cost are not retranslated. Non-monetaryitems carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing onthe date when the fair value was determined. Exchange differences arising on the translation of monetary items are recognised in Profit or Loss, exceptwhere 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 theextent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised inProfit or Loss. For the purpose of presenting these consolidated financial statements, the assets and liabilities of the Group’sforeign operations are translated into Australian dollars using exchange rates prevailing at the end of thereporting period. Income and expense items are translated at the average exchange rates for the period, unlessexchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of thetransactions are used. Exchange differences arising, if any, are recognised in other comprehensive income andaccumulated in equity (and attributed to non-controlling interests as appropriate).Group companiesThe financial results and position of foreign operations whose functional currency is different from the Group'spresentation currency are translated as follows:assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;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.32ANNUAL REPORT 2023 | 33 Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 20231Summary of Significant Accounting Policies (continued)(i)Foreign currency transactions and balances (continued)Group companies (continued)Exchange differences arising on translation of foreign operations are transferred directly to the Group's foreigncurrency translation reserve in the Statement of Financial Position. These differences are recognised in theProfit or Loss in the period in which the operation is disposed.(j)Employee benefitsAnnual leave and long service leaveA liability is recognised for the Company’s liability for employee benefits arising from services rendered byemployees to balance date. Employee benefits that are expected to be settled within one year have beenmeasured 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 estimatedfuture cash outflows to be made for those benefits. Short-term benefits include salaries, paid annual leave, paid sick leave, recreation and social securitycontributions (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 aredefined contribution plans. Such payments are made in accordance with the relevant legislation for countryand/or state where an employee normally performs their duties as an employee. Payments are recognised asexpenses as the services are rendered.Shared-based paymentsShared-based compensation benefits are provided to employees via the Respiri Limited Employee Option Planand an employee share scheme. The fair value of options granted under Respiri Limited Option Share Plan is recognised as an employee benefitexpense with a corresponding increase in equity. The fair value is measured at the grant date and recognisedover 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 exerciseprice, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeablenature of the option, the share price at grant date and the expected price volatility of the underlying share, theexpected dividend yield and the risk free interest rate for the term of the option.(k)ProvisionsProvisions are recognised when the Group has a present legal or constructive obligation as a result of pastevents, it is probable that an outflow of resources will be required to settle the obligation and the amount hasbeen reliably measured. Provisions are not recognised for future operating losses. The amount recognised as a provision is the best estimate of the consideration required to settle the presentobligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where aprovision is measured using the cash flows estimated to settle the present obligation, its carrying amount is thepresent value of those cash flows.3334 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 20231Summary of Significant Accounting Policies (continued)(l)Cash and cash equivalentsCash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquidinvestments with original maturities of three months or less. (m)Revenue and other incomeThe revenue recognition policies for the principal revenue streams of the Group are:Revenue from contracts with customersRevenue is recognised at an amount that reflects the consideration to which the Group is expected to beentitled in exchange for transferring goods or services to a customer. For each contract with a customer, theGroup: identifies the contract with a customer; identifies the performance obligations in the contract; determinesthe transaction price which takes into account estimates of variable consideration and the time value of money;allocates the transaction price to the separate performance obligations on the basis of the relative stand-aloneselling price of each distinct good or service to be delivered; and recognises revenue when or as eachperformance obligation is satisfied in a manner that depicts the transfer to the customer of the goods orservices promised.Variable consideration within the transaction price, if any, reflects concessions provided to the customer suchas discounts, rebates and refunds, any potential bonuses receivable from the customer and any othercontingent events. Such estimates are determined using either the 'expected value' or 'most likely amount'method. The measurement of variable consideration is subject to a constraining principle whereby revenue willonly be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulativerevenue recognised will not occur. The measurement constraint continues until the uncertainty associated withthe variable consideration is subsequently resolved. Amounts received that are subject to the constrainingprinciple are recognised as a refund liability.InterestInterest revenue is recognised on a proportional basis taking into account the interest rates applicable to thefinancial assets. All revenue is stated net of the amount of goods and services tax (GST).Sale of goodsRevenue from the sale of goods is recognised at the point in time when the customer obtains control of thegoods, 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 bereceived and all grant conditions will be met. Grants relating to expense items are recognised as income overthe periods necessary to match the grant to the costs they are compensating. Grants relating to the purchase ofproperty, plant and equipment are included in non-current liabilities as deferred income and are credited toProfit 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 obligationto pay royalties (ranging from 3.5% to 5%) conditional on future sales arising from the project. These grants arerecognised upon receipt as a liability if future economic benefits are expected from the project (i.e. sales). If noeconomic benefits are expected, the grants are recognised as a reduction of the related research anddevelopment expenses and the royalty obligation treated as a contingent liability. 34ANNUAL REPORT 2023 | 35 Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 20231Summary of Significant Accounting Policies (continued)(m)Revenue and other income (continued)At the end of each reporting date, the Company evaluates if there is reasonable assurance that the liabilityrecognised, in whole or part, will not be repaid. If there are indications the liability will not be repaid, theappropriate amount of the liability is derecognised and recorded in Profit or Loss as a reduction of research anddevelopment expenses. Otherwise, the appropriate amount of the liability that reflects expected future royaltypayments 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.R&D Tax Concession RefundsR&D Tax concession refunds are recorded as revenue for the year when received, rather than whenexpenditure was incurred.(n)Goods and services tax (GST)Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), exceptwhere the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In thesecircumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of theexpense. 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 ofinvesting and financing activities, which are disclosed as operating cash flows.(o)Share capitalOrdinary share capital is recognised as the fair value of the consideration received by the Company. Anytransaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of theshare proceeds received.(p)Earnings per shareBasic earnings per shareBasics 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 ordinaryshares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during thefinancial year.Diluted earnings per shareDiluted earnings per share adjusts the figures used in the determination of basic earnings per share to take intoaccount the after income tax effect of interest and other financing costs associated with dilutive potentialordinary shares and the weighted average number of shares assumed to have been issued for no considerationin relation to dilutive potential ordinary shares.3536 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 20231Summary of Significant Accounting Policies (continued)(q)New Accounting Standards and InterpretationsAustralian Accounting Standards and Interpretations that have recently been issued or amended but are not yetmandatory, have not been early adopted by the Company for the year ended 30 June 2023.(r)Critical Accounting Estimates and JudgmentsThe 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. Managementcontinually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenueand expenses. Management bases its judgements, estimates and assumptions on historical experience and onother various factors, including expectations of future events, management believes to be reasonable under thecircumstances. 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 arerecognised in the period in which the estimate is revised if the revision affects only that period, or in the periodof 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 thecarrying amounts of assets and liabilities (refer to the respective notes) within the next financial year arediscussed below:Share-based payment transactionsThe consolidated entity measures the cost of equity-settled transactions with employees and consultants byreference to the fair value of the equity instruments at the date at which they are granted. The fair value isdetermined by using the Black Scholes model taking into account the terms and conditions upon which theinstruments were granted. The accounting estimates and assumptions relating to equity-settled share-basedpayments would have no impact on the carrying amounts of assets and liabilities within the next annualreporting period but may impact profit or loss and equity. Segment ReportingOperating segments are identified on the basis of internal reports about components of the Group that areregularly reviewed by the chief operating decision maker in order to allocate resources to the segment and toassess its performance. The operating segments of the Group are determined to be Australia. For moreinformation, refer to Note 19.36ANNUAL REPORT 2023 | 37 Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 20232Parent entityThe following information has been extracted from the books and records of the parent entity and has been preparedin accordance with the accounting standards.2023$2022$Statement of Financial PositionAssetsCurrent assets2,984,8894,118,835Non-current assets270,36082,686Total Assets3,255,2494,201,521LiabilitiesCurrent liabilities2,228,2051,197,562Non-current liabilities116,398-Total Liabilities2,344,6031,197,562EquityIssued capital132,099,603128,840,331Accumulated losses(137,969,333)(133,316,380)Reserves6,780,3767,480,008Total Equity910,6463,003,959Statement of Profit or Loss and OtherComprehensive IncomeLoss after income tax(5,688,260)(6,661,042)Total comprehensive loss(5,688,260)(6,661,042)Parent Entity Contingencies and CommitmentsThe parent entity does not have any contingent liabilities and commitments.Parent Entity Guarantees in Respect of the Debts of its SubsidiariesThe parent entity has no guarantees in respect of its subsidiaries.3738 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 20233Operating Revenue and Other Income2023$2022$Operating revenue- Wheezo Device Sales64,189113,396- Subscriptions Sales5,7212,642- Revenue - RPM Fees623-- License Fees-137,650Total Operating Revenue70,533253,688The group derives its sales revenue from the sale of Wheezo devices, from the sale of subscriptions for its Wheezoapp, and from license fees for use of the Wheezo platform and App.Revenue from the sale of Wheezo devices is based on the contracted sales price. Revenue is recognised at the pointin time when control passes to the customer with the exact timing dependent on the agreed sales terms for eachcontract.2023$2022$Other Income- R&D concession (a)550,730496,695- Grant Income36,60021,813587,330518,508a)The value of any claimable R&D tax concession refund with respect to eligible R&D expenditures incurred duringthe financial year 2023 has not yet been determined and have therefore not been included within the financialstatements for financial year 2023.38ANNUAL REPORT 2023 | 39 Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 20234Expenses2023$2022$Consulting, employee and directorConsulting expenses523,187487,134Employee expenses2,306,6151,741,492Director expenses809,765742,3283,639,5672,970,954Equity-based payment335,675311,035Corporate administrationAudit and accounting fees237,143145,132Foreign exchange loss/(gain)6,50176,839Corporate administration expenses1,096,140926,192Office rentals36,08445,2961,375,8681,193,459Depreciation77,29381,954Marketing and promotion216,402916,587Research and development377,7251,463,343Travel334,260206,760Total expenses6,356,7907,144,0923940 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 20235Income Tax Expense(a) The prima facie tax on loss from ordinary activities before the loss is reconciled to the income tax as follows:2023$2022$Loss before income tax(5,775,290)(6,624,313)Tax%25.00%25.00Income tax benefit calculated(1,443,823)(1,656,078)Add:Tax effect of amounts which are not deductible in calculating incometax:- share-based payments expenses83,91934,909- other expenses not deductible383,864224,323Other non-assessable income(137,682)(124,174)Other deductible items(115,256)(98,860)Deferred tax assets relating to tax losses and temporary differencesnot recognised1,228,9781,619,880Income tax expense--(b)Unrecognised deferred tax assets and liabilities2023$2022$Deferred tax assets and liabilities areattributable to the following: - tax losses28,317,45227,110,841 - prepayments(38,938)(43,270) - provision57,41647,934 - accrual26,90318,35128,362,83327,133,856(c)Components of tax expenseThe components of tax expense comprise:2023$2022$Current tax--Deferred tax--Income tax expense--40ANNUAL REPORT 2023 | 41 Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 20235Income Tax Expense (continued)Included in the total of deferred tax assets attributable to tax losses not recognised are tax losses in relation tooperations in United States of America, and Australia. Tax losses in Australian entities alone of $40,660,793 (2022:$35,744,881) relate to losses generated from 22 November 2006 to 30 June 2023. The ongoing availability of thesetax losses are subject to further review by the Company to ensure compliance with the relevant provisions of AustraliaIncome Tax laws.6Key Management Personnel RemunerationThe aggregate compensation made to Directors and other Key Management Personnel of the Consolidated entity isset out below:2023$2022$Short-term employee benefits1,719,4021,624,601Post-employment benefits120,610108,646Share-based payments (Note 21)244,536122,4242,084,5481,855,6717Auditors' Remuneration2023$2022$Remuneration of Company's auditor, RSM, for:- auditing or reviewing the financial report of the Group63,33657,000Total63,33657,0008Loss per Share2023$2022$Basic loss per share (cents)(0.72)(0.91)Diluted loss per share (cents)(0.72)(0.91)(a) Net loss used in the calculation of basic and dilutedloss per share(5,775,290)(6,624,313)(b) Weighted average number of ordinary sharesoutstanding during the period used in the calculation ofbasic and diluted loss per share806,455,278728,627,533Potential ordinary shares, including options, are excluded from the weighted average number of shares used in thecalculations of basic loss per share as they are considered non-dilutive.4142 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 20239Cash and Cash Equivalents2023$2022$Cash at bank146,1621,217,271146,1621,217,271The interest rates on cash at bank on 30 June 2023 was 4.14% (2022: 0.01%). The Group’s exposure to interest raterisk is discussed in Note 24(b). The maximum exposure to credit risk at the end of the financial year is the carryingamount of each class of cash and cash equivalents mentioned above.10Trade and Other Receivables2023$2022$CURRENTTrade receivables2,8602,250Other receivables (a)44,38448,05547,24450,305a)Other receivables include GST/V.A.T receivable.Refer to Note 24(c) for more information on the Group's credit risk management policy.11Controlled EntitiesPrincipal place ofbusiness / Country ofIncorporationPercentageOwned (%)*2023PercentageOwned (%)*2022Parent EntityRespiri LimitedAustralia100-Subsidiaries of Respiri LimitedKarmelSonix Australia Pty Ltd Australia100100Respiri UK LimitedUnited Kingdom100-Respiri USA IncUnited States of America100100*The percentage of ownership interest held is equivalent to the percentage voting rights for all subsidiaries.42ANNUAL REPORT 2023 | 43 Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 202312Property, plant and equipment2023$2022$Office equipmentAt cost8,6108,610Accumulated depreciation(1,695)(1,025)Total office equipment6,9157,585Computer equipment and softwareAt cost66,80445,003Accumulated depreciation(42,381)(30,987)24,42314,016Right-of-Use assetAt cost149,130199,916Accumulated depreciation(4,142)(138,831)Total Right-of-Use asset144,98861,085Total property, plant and equipment176,32682,686(a)Movements in carrying amounts of property, plant and equipmentMovement in the carrying amounts for each class of property, plant and equipment between the beginning and the endof the current financial year:OfficeEquipment$ComputerEquipment$Right-of-Use Asset$Total$Year ended 30 June 2023Balance at the beginning of year7,58614,01461,08682,686Additions-21,803149,130170,933Disposals----Depreciation expense(671)(11,394)(65,228)(77,293)Balance at the end of the year6,91524,423144,988176,3264344 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 202312Property, plant and equipment (continued)(a)Movements in carrying amounts of property, plant and equipment (continued)OfficeEquipment$ComputerEquipment$Right-of-Use Asset$Total$Year ended 30 June 2022Balance at the beginning of year8,25626,394127,724162,374Additions-2,265-2,265Disposals----Depreciation expense(670)(14,645)(66,638)(81,953)Balance at the end of the year7,58614,01461,08682,68613Other assets2023$2022$CURRENTPrepaid Materials1,389,9521,389,952Prepayments155,750173,080Deposits28,48628,486Unexpired interest5,7042,4031,579,8921,593,92114Inventories2023$2022$CURRENTInventories1,231,6921,261,1661,231,6921,261,166The current year and comparative period Prepaid materials has been reclassified from Inventory to Other Assets (Note13).44ANNUAL REPORT 2023 | 45 Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 202315Trade and Other Payables2023$2022$CURRENTTrade payables1,508,683524,490Accrued expenses337,277265,1391,845,960789,629Terms 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 24(a) for more information on the Group’s foreign currency risk management policy.16Other Financial Liabilities2023$2022$CURRENTLease liabilities32,73270,664Other financial liability unsecured294,683334,107327,415404,7712023$2022$NON-CURRENTLease liabilities116,398-Total116,398-17Issued CapitalThe Company has an unlimited authorised share capital of no par value ordinary shares.2023No.2023$2022No.2022$Fully paid ordinary sharesBalance at beginning of the year761,846,346128,840,331722,840,790127,090,401Shares issued during the year81,390,0003,650,60039,005,5561,783,000Transaction costs relating to share issues-(391,328)-(33,070)Total issued capital843,236,346132,099,603761,846,346128,840,3314546 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 202317Issued Capital (continued)During the year-ended 30 June 2023, the Company issued the following securities:DateDetailsNo. ofSharesIssuePrice$TotalValue$10 Oct 2022Issue of shares to certain professionaland sophisticated investors asannounced to the market on 10 Oct 202239,390,0000.04001,575,60015 Dec 202214 Feb 202315 Mar 2023Issue of shares in lieu of cash paymentfor services rendered as announced tothe market on 15 Dec 2022Issue of shares to certain professionaland sophisticated investors asannounced to the market on 14 Feb 2023Issue of shares to certain professionaland sophisticated investors asannounced to the market on 15 Mar 20232,500,00038,700,000800,0000.04000.05000.0500100,0001,935,00040,00081,390,0003,650,600Terms and Conditions of Issued CapitalOrdinary Shares:Ordinary shareholders have the right to receive dividends as declared and in the event of winding up the Company, toparticipate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up onshares held. Ordinary shares entitle their holder to one vote, either in person or by proxy at a meeting of theCompany.Options: Option holders do not have the right to receive dividends and are not entitled to vote at the meeting of the Companyuntil options are exercised into ordinary shares by payment of the exercise price. Options may be exercised at anytime from the date they vest to their expiry date. Share options convert into ordinary shares on a one for one basis onthe 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, sothat it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capitalstructure 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 toshareholders, 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 seenas a value adding relative to the current company’s share price at the time of the investment. The consolidated entity isnot actively pursuing additional investment in the short-term as it continues to develop its technologies.46ANNUAL REPORT 2023 | 47 Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 202318Reserves2023No.2023$2022No.2022$OptionsBalance at beginning of the year264,000,0007,480,008259,000,0007,168,973Unlisted options issued during the year (a)13,500,00083,92320,200,00020,808Adjustment for options issued in prior year----Expense recorded over vesting period-251,753-485,471Options exercised----Options expired/lapsed (b)(11,500,000)(400,343)(15,000,000)(195,095)Cancellation of options (c)(27,500,000)(634,965)(200,000)(149)Balance at end of the year238,500,0006,780,376264,000,0007,480,008FX ReserveBalance at beginning of the year---(342,930)Other comprehensive income for the year, net oftax-(554)-973Disposal of investments in foreign subsidiaries---341,957Total Reserves238,500,0006,779,822264,000,0007,480,008a)13,500,000 Unlisted Options were granted to consultants.b)4,500,000 Unlisted Options granted to Consultants on 3 June 2020 and 7,000,000 unlisted options granted toConsultants on 16 June 2020 expired during the year.c)1,000,000 Unlisted Options issued to former employee on 22 October 2020 at an exercise price of $0.20 werecancelled. 7,500,000 Unlisted Options issued to Directors on 16 June 2020 at an exercise price of $0.30,7,500,000 Unlisted Options issued to Directors on 16 June 2020 at an exercise price of $0.40, and 7,500,000Unlisted Options issued to Directors on 16 June 2020 at an exercise price of $0.60 were cancelled via mutualagreement. 4,000,000 Unlisted Options issued to former employee on 26 May 2020 at an exercise price of $0.10were cancelled via mutual agreement.4748 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 202318Reserves (continued)During the year-ended 30 June 2023, the Company issued the following options:DateDetailsNo. ofoptionsOption fairvalue$Total value$01 Oct 2022Issue to Consultants for Medical AdvisoryServices rendered - Class 242,500,0000.009824,48001 Nov 2022Issue to Consultants for Medical AdvisoryServices rendered - Class 245,000,0000.008039,84501 Nov 2022Issue to Consultants for Medical AdvisoryServices rendered - Class 242,500,0000.008019,92307 Nov 2022Issue to Consultants for Medical AdvisoryServices rendered - Class 241,500,0000.011116,61115 Nov 202201 Jan 2023Issue to Consultants for Medical AdvisoryServices rendered - Class 24Issue to Consultants for Medical AdvisoryServices rendered - Class 241,000,0001,000,0000.00840.01208,35911,96813,500,000121,187Option Reserve:The option reserve recognises the proceeds from the issue of options over ordinary shares and the expenserecognised in respect of share based payments.19Segment ReportingAASB 8 requires operating segments to be identified on the basis of internal reports about components of the Groupthat are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and toassess its performance.Information reported to the Group’s Chief Operating Decision Makers for the purposes of resource allocation andassessment 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USAThe Australia reportable segment activities include research, development and commercialisation of medical devices,and the production of mobile health applications in Australia.In prior years, the Group has had operations in Israel; however, these operations have ceased and therefore are nolonger reported as a reportable segment.Information regarding these segments is presented below. The accounting policies of the reportable segments are thesame as the Group’s accounting policies.48ANNUAL REPORT 2023 | 49 Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 202319Segment Reporting (continued)MedicalDevicesSegmentAustralia$MedicalDevicesSegmentUSA$SegmentTotal$Corporate$Total$30 June 2023Segment RevenueExternal Sales70,533-70,533-70,533Other income587,330-587,330-587,330Total Segment Revenue657,863-657,863-657,863Interest revenue---4,2404,240Total Revenue657,863-657,8634,240662,103Segment Expenses(443,328)-(443,328)(5,901,773)(6,345,100)EBITDA214,535-214,535(5,901,773)(5,687,237)Segment depreciation expenses---(77,292)(77,292)Interest revenue---4,2404,240Finance costs---(15,000)(15,000)Profit/(loss) before income tax214,535-214,535(5,989,825)(5,775,289)Income tax expense-----Profit/(loss) after income tax214,535-214,535(5,989,825)(5,775,289)AssetsSegment assets1,968,932652,7132,621,644559,6713,181,315Total Assets1,968,932652,7132,621,644559,6713,181,315LiabilitiesSegment liabilities64,652--2,289,7732,354,425Total Liabilities64,652--2,289,7732,354,4254950 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 202319Segment Reporting (continued)MedicalDevicesSegmentAustralia$MedicalDevicesSegmentIsrael$SegmentTotal$Corporate$Total$30 June 2022Segment RevenueExternal sales253,688-253,688-253,688Other income518,508-518,508-518,508Total Segment Revenue772,196-772,196-772,196Interest Revenue---6,8756,875Total Revenue772,196-772,1966,875779,071Segment Expenses(1,722,997)-(1,722,997)(5,591,656)(7,314,653)EBITDA(950,801)-(950,801)(5,591,656)(6,542,457)Segment depreciation expenses---(81,954)(81,954)Interest revenue---6,8756,875Finance costs---(6,777)(6,777)Profit/(loss) before income tax(950,801)-(950,801)(5,673,512)(6,624,313)Income tax expense-----Profit/(loss) after income tax(950,801)-(950,801)(5,673,512)(6,624,313)AssetsSegment assets2,654,947-2,654,9471,550,4034,205,350Total Assets2,654,947-2,654,9471,550,4034,205,350LiabilitiesSegment liabilities---1,197,5621,197,562Total Liabilities---1,197,5621,197,56250ANNUAL REPORT 2023 | 51 Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 202320Cash Flow Information(a)Reconciliation of cash flow from operations with loss after income tax2023$2022$Net loss for the year(5,775,290)(6,624,313)Non-cash flows in profit: - depreciation77,29381,954 - share-based payments335,675422,035 - foreign exchange adjustments17,838(84,027)Changes in assets and liabilities: - (increase)/decrease in trade and otherreceivables3,06285,680 - (increase)/decrease in other assets14,02995,009 - (increase)/decrease in inventories29,474(2,114,073) - increase/(decrease) in trade and otherpayables1,056,331(505,003) - (decrease)/increase in deferred revenue61,4902,304 - (decrease)/increase in other financial liabilities(310,088)162,852Cashflows from operations(4,490,186)(8,477,582)(b)Non-cash financing and investing activitiesPlease refer to Note 17 and 18 for further details regarding equity issued for nil cash consideration.21Share-based Payments(a)Employee share and option planNil options were issued during the current year under ESOP.(b)Fair value of share options granted in the year outside of the ESOPFor the options granted during the financial year, the Black Scholes Option valuation model inputs used todetermine the fair value at the grant date are as follows:No. ofOptionsGrant DateExpiry DateShareprice atgrant dateExercisepriceExpectedvolatilityDividendyield Risk freeinterestrateFV atgrantdate2,500,000(a)01/10/202231/12/20240.0400.10068.81%-3.26%24,4805,000,000(b)01/11/202230/06/20250.0370.10067.11%-3.25%39,8452,500,000(c)01/11/202231/12/20250.0370.10067.11%-3.25%19,9231,500,000(d)07/11/202230/11/20250.0430.10068.37%-3.37%16,6111,000,000(e)15/11/202230/11/20250.0380.10067.36%-3.29%8,3591,000,000(f)01/01/202331/01/20260.0460.10066.10%-3.49%11,9685152 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 202321Share-based Payments (continued)(b)Fair value of share options granted in the year outside of the ESOP (continued)Expected volatility is determined by historical performance of the share price.The weighted average fair value of options granted during the financial year is $0.007 (2022:$0.002)a)Options have vested.b)Options have vested.c)Options will vest after 1 December 2023.d)Options will vest after 30 November 2023.e)Options will vest after 30 November 2023.f)Options will vest after 31 January 2024. (c)Movement in share options during the yearThe following reconciles the share options outstanding at the beginning and end of the year:2023No. ofOptions2023WeightedAverageExercisePrice$2022No. ofOptions2022WeightedAverageExercisePrice$Outstanding at the beginning of the year264,000,0000.22259,000,0000.22Granted13,500,0000.1320,200,0000.17Expired/lapsed(11,500,000)0.10(15,000,000)0.10Cancelled(27,500,000)0.35(200,000)0.10Outstanding at year-end238,500,0000.18264,000,0000.21Exercisable at year-end199,500,0000.18197,500,0000.18(d)Share options exercised during the yearThere were no options exercised during the year. (e)Share options outstanding at the end of the yearThe options outstanding at 30 June 2023 had a weighted average exercise price of $0.18 (2022:$0.21) and aweighted average remaining contractual life between 0.5 to 5.5 years.Exercise price range from $0.03 (2022: $0.03) to $ (2022: $0.6) in respect of options outstanding at 30 June 2023.52ANNUAL REPORT 2023 | 53 Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 202321Share-based Payments (continued)(f)Share-based payments expense2023$2022$Share-based payments - options issued to directors181,087267,009 - options issued to suppliers (a)87,245171,399 - options issued to other key managementpersonnel63,44850,510- options issued to employees3,89517,361 - options to former employees cancelled-(149) - options to former director forfeited-(195,095)335,675311,035a)The Company issued 13,500,000 options to US consultants for medical advisory board services.22Related Party TransactionsThe 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 theparent company and its subsidiaries are eliminated on consolidation and are not disclosed in this note.Mr Nicholas Smedley and Mr Marjan Mikel have provided director loans to the company at year end of $100,000 each,interest to be charged at a commerical rate.23Events Occurring After the Reporting DateSubsequent EventsSubsequent to year end the company completed a $3.9 million capital raise by way of a successful Share PurchasePlan and Private Placement. In addition to providing working capital the funds were used to complete on theacquisition of Access Managed Services LLC (Access). On 14th August 2023, the group entered into a bindingMember Interest Purchase Agreement to acquire Access for up to US$3.0 million with the first tranche paid of US$1.25million.The acquisition has established a scalable end-to-end Remote Patient Monitoring (RPM) offering that provides beyondthe clinic solutions across all major disease states and provided a significant step for the Group as it fast-tracks itsAccess business development into the broader RPM health market in the United States. The initial accounting for thebusiness combination is incomplete at the time the financial statements are authorised for issue.5354 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 202324Financial Risk ManagementThe Group holds the following financial instruments:2023$2022$Financial assetsCash and cash equivalents146,1621,217,271Trade and other receivables47,24350,305Total financial assets193,4051,267,576Financial liabilitiesTrade and other payables1,845,960789,630Other financial liabilities327,415404,771Total financial liabilities2,173,3751,194,401(a)Foreign exchange riskThe Group engages in international purchase transactions and is exposed to foreign currency risk arising fromvarious currency exposures, primarily with respect to the US dollar (USD). The parent has minimal exposure toforeign exchange risk as it does not hold any foreign currency cash reserves and only makes minor foreigncurrency payments. The Group does not make use of derivative financial instruments to hedge foreign exchangerisk.The carrying amount of the foreign currency denominated monetary assets and liabilities at the reporting date is asfollows, all amounts in the table below are displayed in $AUD at year-end spot rates:2023$2022$Cash and trade and other receivables - USD4,36186,0214,36186,021Trade and other payables - CAD(13,889)(8,382) - GBP(3,557)(2,990) - USD(222,223)(50,898)(239,669)(62,270)54ANNUAL REPORT 2023 | 55 Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 202324Financial Risk Management (continued)Sensitivity AnalysisThe following tables demonstrate the sensitivity to a reasonably possible change in USD, CAD, and GBP exchangerates, with all other variables held constant. The impact on the Group’s profit before tax is due to changes in the fairvalue of monetary assets and liabilities including non-designated foreign currency derivatives and embeddedderivatives. The Group’s exposure to foreign currency changes for all other currencies is not material.20232022+5%-5%+5%-5%CADEffect on profit before tax694(694)419(419)GBPEffect on profit before tax178(178)149(149)USDEffect on profit before tax10,893(10,893)(1,756)1,756(b)Interest rate riskThe Group's exposure to interest rate risk is the risk that a financial instrument’s value will fluctuate as a result ofchanges in market interest rates and the effective weighted average interest rates on classes of financial assetsand financial liabilities. The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to interest raterisk (against the implied 30 day bank bill rate). The table also represents the quantitative impact on the financialstatements should the variation occur.Carryingamount$Weightedaverageinterestrate%(4.14%)effect onprofitbefore tax$4.14%effect onprofitbefore tax$30 June 2023Financial assetsCash and cash equivalents146,1624.14(6,051)6,051Total (decrease)/increase146,162-(6,051)6,05130 June 2022Financial assetsCash and cash equivalents1,217,2710.01(12,173)12,173Total (decrease)/increase1,217,271-(12,173)12,1735556 | RESPIRI LIMITED Respiri LimitedABN 98 009 234 173Notes to the Financial StatementsFor the Year Ended 30 June 202324Financial Risk Management (continued)(c)Credit risk Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss tothe Group. The Group has no significant concentration of credit risk in the current or prior year.The Group ensures that surplus cash is invested with financial institutions of appropriate credit worthiness andlimits the amount of credit exposure to any one counter party.(d)Liquidity riskLiquidity risk is the risk that the Group will not pay its debtors when they fall due. Prudent liquidity risk managementimplies maintaining sufficient cash and the availability of funding through an adequate amount of committed creditfacilities. The Group manages liquidity risk by maintaining sufficient bank balances to fund its operations and theavailability of funding through committed credit facilities.Management manages this risk by monitoring rolling forecasts of the Group's liquidity reserve on the basis ofexpected cash flows. The table below analyses the Group's financial liabilities.0-12months$Maturing 1to 3 years$Total$30 June 2023Trade and other payables1,809,736-1,809,736Other borrowings---Lease liabilities32,732116,398149,1301,842,468116,3981,958,86630 June 2022Trade and other payables789,629-789,629Lease liabilities70,664-70,664860,293-860,293(e)Capital Risk ManagementThe Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concernand to maintain a capital structure that maximises shareholder value. In order to maintain or achieve an optimalcapital structure, the Group may issue new shares or reduce its capital, subject to the provisions of the Group'sconstitution. The capital structure of the Group consists of equity attributed to equity holders of the Group, comprisingcontributed equity and reserves disclosed in Notes 17 and 18. By monitoring undiscounted cash flow forecasts andactual cash flows provided to the Board by the Group's Management the Board monitors the need to raiseadditional equity from the equity markets.56ANNUAL REPORT 2023 | 57 Respiri LimitedABN 98 009 234 173Directors' DeclarationThe directors of the Company declare that:1. The financial statements and notes, as set out on pages 21 to 55, and the remuneration disclosures that are containedwithin the Remuneration Report within the Directors' report, set out on pages 9 to 19, are in with the Corporations Act2001 and:a.In the directors' opinion there are reasonable grounds to believe the company will be able to pay its debts as andwhen they become due and payable;b.In the directors' opinion the financial statements and notes also comply with the International Financial ReportingStandards as disclosed in Note 1;c.In the directors' opinion the attached financial statements and notes thereto are in accordance with theCorporations Act 2001, including compliance with accounting standards and giving a true and fair view of thefinancial position and performance of the consolidated entity; andd.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 DirectorsMr Nicholas SmedleyExecutive-ChairmanDated this 31st day of August 2023Melbourne, Australia5758 | RESPIRI LIMITED RSM Australia Partners Level 21, 55 Collins Street Melbourne VIC 3000 PO Box 248 Collins Street West VIC 8007 T +61 (0) 3 9286 8000 F +61 (0) 3 9286 8199 www.rsm.com.au 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 2023, 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 2023 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. THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036 Liability limited by a scheme approved under Professional Standards Legislation ANNUAL REPORT 2023 | 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 $5,775,290 and had net operating cash outflows from operating activities of $4,490,186 during the year ended 30 June 2023. 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 21 in the financial statements The Group has 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 using 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 Key Audit Matters (continued) Key Audit Matter How our audit addressed this matter Inventory valuation Refer to Note 14 in the financial statements The Group has inventory with a carrying value of $1,231,692 as at 30 June 2023. We identified the following areas as key risks in respect of inventory: • The existence and valuation of inventory is considered a key audit matter due to the materiality of the balance; • Assessing the net realisable value of inventories; and • The determination of a provision for obsolescence. Our audit procedures included: • Testing inventory costing by verifying costs against supporting documentation; • Verifying that inventory is being held at the lower of cost and net realisable value; and • Assessing the reasonableness of the Group’s the for determining inventory methodology provision for obsolescence. 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 2023, 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. ANNUAL REPORT 2023 | 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 2023. In our opinion, the Remuneration Report of Respiri Limited, for the year ended 30 June 2023, 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: 31 August 2023 Melbourne, Victoria 62 | RESPIRI LIMITED Respiri LimitedAdditional Information for Listed Public Companies30 June 2023SHAREHOLDERS INFORMATION as at 23 August 2023Equity security holdersTwenty largest quoted equity holdersThe names of the twenty largest security holders of quoted equity securities are listed below:HolderOrdinaryshares held% of totalsharesissuedNETWEALTH INVESTMENTS LIMITED 46,404,6294.77%NETWEALTH INVESTMENTS LIMITED BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD CITICORP NOMINEES PTY LTIMITED37,234,96536,870,32420,950,2083.82%3.79%2.15%MALLAMANDA PTY LTD MR PETER KARL BRAUN18,032,35218,026,1401.85%1.85%MRS TARA MARJORIE HILLOBSIDIAN GLOBAL GP LLC15,191,68914,314,1501.56%1.47%MR SIMON DUMARESQ + DR BELINDA JACKSON MR JOHN ANTHONY DELL12,265,19310,500,0001.26%1.08%ROSHERVILLE PTY LTD 9,800,0001.01%HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITEDCRAFT LAW PTY LTD MR ANDRE SZARUKAN + MS ROSE BRANISKA P & A MIHAILOU PTY LTS MR PAUL ARGENTINO MR GARY RONALD HEATH + MRS MELISSA LOUISSE HEATH 9,276,0598,329,7128,042,1997,989,0567,761,1417,586,2600.95%0.86%0.83%0.82%0.80%0.78%TORRES INVESTMENTS PTY LTD7,424,0700.76%CLEMWELL PTY LTD DL MARSHALL SUPER PTY LTD 7,135,6787,000,0000.73%0.72%Unquoted equity securitiesNo unquoted sharesUnquoted equity securitiesNumber on issueNumber of holdersOptions over ordinary shares issued271,000,0002160ANNUAL REPORT 2023 | 63 Respiri LimitedAdditional Information for Listed Public Companies30 June 2023Voting RightsThe voting rights attached to ordinary shares are set out below: Ordinary SharesOn a show of hands, every member present at a meeting in person or by proxy shall have one vote and upon a poll eachshare shall have one vote.There are no other classes of equity securities.On-market Buy-backsThere is no current on-market buy-back in relation to the Company's securities.Securities subject to voluntary escrowThere are no securities subject to voluntary escrow.Distribution of equitable securitiesAnalysis of number of equitable security holders by size of holding:Number of Holders of ordinary shares1 to 1,0001391,001 to 5,0002645,001 to 10,00047510,001 to 100,0001,426100,001 and above824Unmarketable ParcelsAs at 23rd August 2023 there were 1,236 unmarketable parcels on register.6164 | RESPIRI LIMITED Respiri LimitedAdditional Information for Listed Public Companies30 June 2023SHAREHOLDER ENQUIRIESShareholders with enquiries about their shareholdings should contact the Share Register:Computershare Investor Services Pty LtdYarra Falls452 Johnson StreetAbbostsford, Victoria, 3067Telephone:+61 (0)3 9415 4000Facsimile:+61 (0)3 9473 2500Email:www.investorcentre.com/contactCHANGE OF ADDRESS, CHANGE OF NAME, CONSOLIDATION OF SHAREHOLDINGSShareholders should contact the Share Registry via your Investor Centre portal.REMOVAL FROM THE ANNUAL REPORT MAILING LISTShareholders who no longer wish to receive the Annual Report should notify the Share Registry via the shareholder'srespective Investor Centre portal. These shareholders will continue to receive all other shareholder information.TAX FILE NUMBERSIt is important that Australian resident shareholders, including children, have their tax file number or exemption details notedby 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 contacttheir stockbroker.UNCERTIFIED SHARE REGISTERShareholding statements are issued at the end of each month in which there is a transaction that alters the balance of yourholding.62 Respiri Limited ABN 98 009 234 173 Corporate Directory AUSTRALIAN COMPANY NUMBER (ACN) 009 234 173 DIRECTORS Mr Marjan Mikel Mr Nicholas Smedley Mr Brad Snow Mr Brian Leedman COMPANY SECRETARY Mr Andrew Metcalfe PRINCIPAL PLACE OF BUSINESS Level 9, 432 St Kilda Road Melbourne, Victoria AUSTRALIA 3004 Telephone: +61 (0)3 9653 9160 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 Partners 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) 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 June 2022 Appointed on 22nd May 2023 REGISTERED OFFICE Level 5, LaTrobe Street North Tower Melbourne, Victoria AUSTRALIA 3000 Telephone: +61 (0)3 9642 8000 Fax: +61 (0)3 9642 8222 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 ANNUAL REPORT 2023 | 65 Respiri Limited ABN 98 009 234 173 Corporate Directory AUSTRALIAN COMPANY NUMBER (ACN) 009 234 173 DIRECTORS Mr Marjan Mikel Mr Nicholas Smedley Mr Brad Snow Mr Brian Leedman COMPANY SECRETARY Mr Andrew Metcalfe PRINCIPAL PLACE OF BUSINESS Level 9, 432 St Kilda Road Melbourne, Victoria AUSTRALIA 3004 Telephone: +61 (0)3 9653 9160 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 Partners 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) 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 June 2022 Appointed on 22nd May 2023 REGISTERED OFFICE Level 5, LaTrobe Street North Tower Melbourne, Victoria AUSTRALIA 3000 Telephone: +61 (0)3 9642 8000 Fax: +61 (0)3 9642 8222 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 

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