1
Annual Report
Year Ended 30 June 2022
Total Brain Limited
Contents
30 June 2022
2
Corporate directory
3
Chairman's letter
4
Directors' report
5
Auditor's independence declaration
19
Financial statements cover
20
Statement of profit or loss and other comprehensive income
21
Statement of financial position
22
Statement of changes in equity
23
Statement of cash flows
24
Notes to the financial statements
25
Directors' declaration
64
Independent auditor's report to the members of Total Brain Limited
65
Shareholder information
69
Back cover
71
Total Brain Limited
Corporate directory
30 June 2022
3
Directors
Dr Evian Gordon (Executive Chairman)
Mr Matthew Morgan (Non-Executive Director)
Mr David Torrible (Non-Executive Director)
Mr David Daglio (Non-Executive Director)
Company secretary
Mr Phillip Hains
Mr Nathan Jong
Registered office
15 Belvoir Street
Surry Hills NSW 2010
Telephone: +61 2 9213 6666
Email: ir@totalbrain.com
Share register
Boardroom Pty Limited
Level 12, 225 George Street
Sydney NSW 2000
Telephone: +61 2 9290 9600
Email: enquiries@boardroomlimited.com.au
Auditor
Grant Thornton Audit Pty Ltd
Level 18, 145 Ann Street
Brisbane QLD 4001
Stock exchange listing
Total Brain Limited shares are listed on the Australian Securities Exchange (ASX
code: TTB).
Website
http://www.totalbrain.com
Corporate Governance Statement The directors and management are committed to conducting the business of
Total Brain Limited in an ethical manner and in accordance with the highest
standards of corporate governance. Total Brain Limited has adopted and has
substantially complied with the ASX Corporate Governance Principles and
Recommendations (Fourth Edition) ('Recommendations') to the extent
appropriate to the size and nature of its operations.
The Group’s Corporate Governance Statement, which sets out the corporate
governance practices that were in operation during the financial year and
identifies and explains any Recommendations that have not been followed and
ASX Appendix 4G are released to the ASX on the same day the Annual Report is
released. The Corporate Governance Statement and Corporate Governance
Compliance Manual can be found on the Company’s website at
http://www.totalbrain.com/investors/
Total Brain Limited
Chairman's letter
30 June 2022
4
30 September 2022
Dear Shareholders,
On behalf of the Board of Directors of Total Brain Limited (the ‘Company’ or ‘TTB’), I present our Annual Report for the
Fiscal Year ended 30 June 2022 (‘FY2022’).
FY2022 was a particularly challenging year for the Company with slower than planned increases in new revenues and roll-
outs of existing sales, in conjunction with a challenging period in the latter half of the year for the capital markets due to a
precipitous downturn in the broader macroeconomic healthtech environment.
During the year the Company signed 26 new customers and grew annual recurring revenue by $912,000. The Company
entered commercial agreements for the Group’s standardised methodology and database assets with Johnson and Johnson
and Alto Neuroscience for upfront payments of $3,719,869.
The rate of growth in sales of the Total Brain app were however lower than expectations and during the month of October
2021, the Company undertook a significant right-sizing exercise in order to minimise ongoing expenditure. Subsequent to
this decision the Board then appointed Incentrum Group, a global merchant bank, to explore strategic alternatives for the
Company. Incentrum Group assisted TTB in preparing a tailored positioning of the Company with potential buyers and
ultimately soliciting offers for the sale of all or part of the Company’s business.
The process included Incentrum Group contacting a number of strategic and financial buyers with interest in the sector.
During the latter period of that process, the broader market conditions for non-profitable technology businesses significantly
deteriorated, impacting the Company’s ability to raise working capital at an appropriate price and ultimately the value
attributed to the Company by third parties in a corporate transaction.
After the end of the financial year, on 5th August 2022, the Company entered into a binding sale agreement with Sondermind
Inc, pursuant to which Sondermind has agreed to purchase the business of the Company through a sale of assets by the
Company and its subsidiaries (‘Proposed Transaction’).
As the Proposed Transaction will be a disposal of the Company’s main undertaking, TTB will be seeking shareholder
approval at the next general meeting of shareholders in late October 2022. TTB shareholders are encouraged to participate
in the meeting after having considered the notice of meeting and the independent’s expert report which was undertaken by
PKF Melbourne Corporate Pty Ltd.
TTB directors unanimously recommend that all TTB shareholders vote in favour of the Proposed Transaction and each
director intends to vote all TTB shares held or controlled by them in favour, subject to the independent expert concluding
that the Proposed Transaction is in the best interests of TTB shareholders and in the absence of a Superior Proposal (as
defined in Annexure B of the 5 August 2022 announcement).
In closing, I would like to acknowledge the disappointing expectations and sincerely thank all shareholders for their
longstanding support of the mental health and wellbeing commercial initiatives of the Company.
Yours sincerely,
Dr Evian Gordon, MBBCh, PhD, FAIS
Total Brain Limited
Directors' report
30 June 2022
5
The directors present their report, together with the financial statements, on the consolidated entity (referred to
hereafter as the 'Group') consisting of Total Brain Limited (referred to hereafter as the 'Company' or 'parent entity') and
the entities it controlled at the end of, or during, the year ended 30 June 2022.
Directors
The following persons were directors of Total Brain Limited during the whole of the financial year and up to the date of
this report, unless otherwise stated:
Dr Evian Gordon - Executive Chairman
Mr Matthew Morgan - Non-Executive Director
Mr David Torrible - Non-Executive Director
Mr David Daglio - Non-Executive Director
Mr Louis Gagnon - Managing Director and Chief Executive Officer (resigned on 12 November 2021)
Principal activities
The principal activity of the Group is developing and selling brain health products.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
The loss for the Group after providing for income tax amounted to $14,496,718 (30 June 2021: $8,316,773).
During the financial year, the Board appointed Incentrum Group to explore strategic alternatives for the Company
including a sale of the company and or its assets. On 5 August 2022 (the 'Announcement Date'), the Company
announced a binding agreement with SonderMind Inc. ('SonderMind' or the 'purchaser') to purchase the Group's
business through a sale of assets (‘Proposed Transaction’), which is subject to shareholder approval.
The purchase price is US$10,000,000 (approximately AU$14,000,000), less adjustments and liabilities, including the
value of assumed employee entitlements of any transferring employees, any debt funding provided by or on behalf of
SonderMind to fund the Group's working capital requirements and an agreed adjustment on account of certain tax
liabilities. The purchase is subject to a number of conditions including shareholder approval, which is expected to be
voted on at a general meeting held in late October 2022.
Material business risks
The following is a summary of material business risks that could adversely affect the Company’s financial performance
and growth potential in future years and how the Company proposes to mitigate such risks.
Risk of the Proposed Transaction not receiving shareholder approval
After the end of the financial year on 5 August 2022 (the 'Announcement Date'), the Company announced the binding
agreement with SonderMind Inc. ('SonderMind' or the 'purchaser') to purchase the Group's business through a sale of
assets (‘Proposed Transaction’).
The purchase is subject to various conditions including shareholder approval, which is expected to be voted on at a
general meeting held in late October 2022.
The Company appointed a well credentialed investment bank ('Incentrum Group') to help realise maximum value for
shareholders. Incentrum ran a competitive sale process and as an alternative the Directors consulted with local
corporate financiers regarding raising capital to continue funding the Company.
On completion of the process and after consideration of the alternatives, if the Proposed Transaction is not approved,
the Company is not expected to have sufficient funds to continue its product development and continue trading.
Going concern
The intention is to wind-up the Company post completion of the Proposed Transaction and therefore the preparation
of the financial statements is on a realisation basis of accounting.
Total Brain Limited
Directors' report
30 June 2022
6
Statements made by the auditor regarding going concern
The directors have prepared the financial statements on the basis that the consolidated entity is not a going concern.
The auditor has included an ‘emphasis of matter’ paragraph contained within their auditor’s report in relation to this
matter.
Significant changes in the state of affairs
On 21 July 2021, the Group received commitments from eligible investors to raise capital. The capital raising comprised
(i) $2,499,998 received from 9,615,378 shares issued on 29 July 2021 at $0.26 per share ('Placement'), and (ii)
$4,022,586 received relating to 15,471,969 share issued pertaining to a 1 for 7 non-renounceable entitlement offer at
$0.26 per share which closed on 19 August 2021 ('Entitlement Offer'). Participants in both the Placement and
Entitlement Offer received 1 free attaching option for every 2 new shares issued. The options have an exercise price
of $0.36 and expire 12 months from the date of issue.
On 4 April 2022, the Company entered into a convertible note subscription agreement with Zoltan Varga to issue
1,278,485 notes with a face value of $1 per note. The convertible note is convertible to $0.138 per share with a maturity
date of 18 months from the issue date.
On 19 May 2022, the Company received a research and development ('R&D') tax refund of $2,364,995 as part of the
Australian government's R&D tax incentive.
There were no other significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
On 5 August 2022, the Company announced the binding agreement to sell the Group’s business through a sale of
assets and then commence winding up of the Company. Refer to note 2 for further details.
No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly
affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
Likely developments and expected results of operations
The intention is to wind-up the Company post completion of the sale referred to in the ‘Review of Operations’ section.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
Information on directors
Name:
Dr Evian Gordon
Title:
Executive Chairman
Qualifications:
BSc (Hons), PhD, MBBCh
Experience and expertise:
Dr Gordon has over 30 years of experience in human brain research. He was the
director of the Brain Dynamics Centre at Westmead Hospital and a senior lecturer
in the Department of Psychological Medicine at the University of Sydney. Dr
Gordon edited the book Integrative Neuroscience and has more than 200
publications credited to him.
Other current directorships:
None
Former directorships (last 3
years):
None
Special responsibilities:
None
Interests in shares:
1,315,756 ordinary shares
Interests in options:
1,205,156 options over ordinary shares
Total Brain Limited
Directors' report
30 June 2022
7
Name:
Mr Matthew Morgan
Title:
Non-Executive Director
Qualifications:
MBA, B Com, B App Sc
Experience and expertise:
Mr Morgan is a former venture capitalist who is the Principal of Millers Point
Company, an advisory firm focused on emerging growth companies. He was a co-
founder of Diversa Ltd (ASX DVA) which was sold to OneVue (ASX OVH).
Other current directorships:
Non-Executive Director and Chairman of the Audit and Risk Committee of Vernbrec
Ltd (ASX VBC)
Former directorships (last 3
years):
Sensera Ltd (ASX SE1) and Leaf Resources Ltd (ASX LER)
Special responsibilities:
Chairman of the Audit and Risk Committee and member of the Nomination and
Remuneration Committee
Interests in shares:
513,970 ordinary shares
Interests in options:
432,123 options over ordinary shares
Name:
Mr David Torrible
Title:
Non- Executive Director
Qualifications:
BA (Hons)
Experience and expertise:
Mr Torrible is an active non-executive director and advisor to private companies,
financial firms and charities since 2012 when he retired as a partner of Goldman
Sachs. Prior to 2012 he worked for 19 years as an equity specialist serving
institutional accounts in Asian capital markets. He has worked in Hong Kong,
Indonesia, USA and Australia. He is experienced in relationship management,
capital market risk and successfully managing geographically diverse teams.
Other current directorships:
None
Former directorships (last 3
years):
None
Special responsibilities:
Chairman of the Nomination and Remuneration Committee and member of the
Audit and Risk Committee
Interests in shares:
7,370,793 ordinary shares
Interests in options:
864,375 options
Name:
Mr David Daglio
Title:
Non- Executive Director
Qualifications:
B.Eng, MBA, CFA
Experience and expertise:
David is an accomplished institutional investment manager with Mellon, a US Asset
Manager of US$500 billion in assets, where David served as Executive Vice
President and Chief Investment Officer. David remains a Non-Executive Director
of Mellon.
Other current directorships:
Non-Executive Director of Mellon (US)
Former directorships (last 3
years):
None
Special responsibilities:
Member of remuneration Committee
Interests in shares:
8,403,529 ordinary shares
Interests in options:
726,674 options
Total Brain Limited
Directors' report
30 June 2022
8
Name:
Mr Louis Gagnon
Title:
Managing Director and Chief Executive Officer (resigned on 12
November 2021)
Qualifications:
MSC, BBA
Experience and expertise:
Mr Gagnon has been the Chief Executive Officer (CEO) of the Company since 23
May 2017. Louis has over 25 years of experience as a high-growth global digital
business leader, most notably at Amazon’s subsidiary Audible, where he served
as Chief Product and Marketing Officer. Prior to working with the Company, Louis
was an Advisor to TPG Capital following a short CEO assignment to turn around
portfolio company Ride.com. His other past roles include Chief Product and
Marketing Officer at Yodle and Senior VP of Global Products at Monster
Worldwide.
Other current directorships:
None
Former directorships (last 3
years):
None
Special responsibilities:
None
Interests in shares:
None
Interests in options:
2,701,897 options over ordinary shares
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships
of all other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships of all other types of entities, unless otherwise stated.
Company secretaries
Mr Phillip Hains has held the role of Joint Company Secretary since June 2018. Mr Hains is a Chartered Accountant
operating a specialist public practice, 'The CFO Solution'. The CFO Solution focuses on providing back office support,
financial reporting and compliance systems for listed public companies. A specialist in the public company environment,
Mr Hains has served the needs of a number of company boards and their related committees. He has over 30 years'
experience in providing businesses with accounting, administration, compliance and general management services.
He holds a Master of Business Administration from RMIT University and a Public Practice Certificate from the Chartered
Accountants Australia and New Zealand.
Mr Nathan Jong (CA) has held the role as Joint Company Secretary since 18 November 2019. Mr Jong is a qualified
chartered accountant with over 10 years of experience in providing finance and corporate compliance advisory services
to a range of businesses including multinational ASX/NASDAQ listed companies. Mr Jong is also a member of CFO
Solution.
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held during
the year ended 30 June 2022, and the number of meetings attended by each director were:
Full Board
Nomination and
Remuneration Committee
Audit and Risk Committee
Attended
Held
Attended
Held
Attended
Held
Dr Evian Gordon
8
10
-
-
-
-
Mr Matthew Morgan
10
10
1
1
4
4
Mr David Torrible
9
10
1
1
4
4
Mr David Daglio
8
10
1
1
-
-
Mr Louis Gagnon (resigned on
12 November 2021)
4
5
-
-
-
-
Held: represents the number of meetings held during the time the director held office or was a member of the relevant
committee.
Total Brain Limited
Directors' report
30 June 2022
9
Remuneration report (audited)
The remuneration report details the key management personnel ('KMP') remuneration arrangements for the Group, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
KMP are those persons having authority and responsibility for planning, directing and controlling the activities of the
entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
●
Principles used to determine the nature and amount of remuneration
●
Details of remuneration
●
Service agreements
●
Share-based compensation
●
Additional information
●
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the Group's employee reward framework is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework aligns employee reward with the achievement of strategic
objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for
the delivery of reward. The Board of Directors ('the Board') ensures that employee reward satisfies the following key
criteria for good reward governance practices:
●
competitiveness and reasonableness;
●
acceptability to shareholders;
●
performance linkage / alignment of executive compensation; and
●
transparency.
The Nomination and Remuneration Committee is responsible for determining and reviewing remuneration
arrangements for its directors, executives and the general remuneration framework for all employees. The performance
of the Group depends on the quality of its directors, executives and capability of the entire team. The remuneration
philosophy is to attract, motivate and retain high performance and high quality personnel.
The Nomination and Remuneration Committee has structured an executive remuneration framework that is market
competitive and complementary to the reward strategy of the Group. The Committee uses external remuneration
reports to benchmark the framework with companies of similar size, market capitalisation and operations in similar
geography.
The reward framework is designed to align employee rewards to shareholders' interests. The Board have considered
that it should seek to enhance shareholders' interests by:
●
focusing on sustained growth in shareholder wealth;
●
delivering constant or increasing return on assets as well as focusing the executive on key non-financial drivers
of value; and
●
attracting and retaining high calibre executives.
Additionally, the reward framework should seek to enhance employees' interests by:
●
rewarding capability and experience;
●
reflecting competitive reward for contribution to growth in shareholder wealth; and
●
providing a clear structure for earning rewards.
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
Total Brain Limited
Directors' report
30 June 2022
10
Non-executive directors' remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive
directors' fees and payments are reviewed by the Nomination and Remuneration Committee. The Nomination and
Remuneration Committee may, from time to time, receive advice from independent remuneration consultants to ensure
non-executive directors' fees and payments are appropriate and in line with the market but primarily refer to
Independently published remuneration reports for ASX listed companies and early stage technology Companies in the
USA to benchmark the framework with Companies of similar size, market capitalisation and operations in similar
geography.
Executive remuneration
The Group aims to reward executives based on their position and responsibility, with a level and mix of remuneration
which has both fixed and variable components.
The executive remuneration and reward framework has four components:
●
base pay;
●
short-term performance incentives;
●
equity-based payments; and
●
other remuneration such as superannuation and non-monetary benefits including health insurance for US
employees.
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed by the
Nomination and Remuneration Committee based on individual and business unit performance, the overall performance
of the Group and comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the Group and provides additional value to the executive.
The short-term incentives ('STI') program is designed to align the targets of the business units with the performance
hurdles of executives and employees. STI payments are granted to executives based on specific annual targets and
key performance indicators ('KPI's') being achieved. KPI's include revenue and or profit contribution, customer
satisfaction, leadership contribution and product management. Short-term incentives included the provision of cash
and or equity-based incentives.
The long-term incentives ('LTI') include long service leave and equity-based payments in the form of options which are
exercisable at a premium to the share price at the time they are issued. Options vest annually over a period of three or
four years. The Nomination and Remuneration Committee reviewed the long-term equity-linked performance incentives
specifically for executives during the year ended 30 June 2022.
Group performance and link to remuneration
Remuneration for certain individuals is directly linked to the performance of the Group. A portion of cash bonus and
incentive payments are dependent on defined revenue and earnings targets being met. The remaining portion of the
cash bonus and incentive payments are at the discretion of the Nomination and Remuneration Committee based on
established KPI’s per employee.
Use of remuneration consultants
During the financial year ended 30 June 2022, the Group had not engaged any remuneration consultants to review or
advise upon its existing remuneration policies, including the implementation of the LTI.
Voting and comments made at the Company's 2021 Annual General Meeting ('AGM')
At the 30 November 2021 AGM, 98.46% of the votes received supported the adoption of the remuneration report for
the year ended 30 June 2021. The Company did not receive any specific feedback at the AGM regarding its
remuneration practices.
Total Brain Limited
Directors' report
30 June 2022
11
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the Group are set out in this section.
The key management personnel of the Group consisted of the following directors of Total Brain Limited:
●
Dr Evian Gordon - Executive Chairman
●
Mr Matthew Morgan - Non-Executive Director
●
Mr David Torrible - Non-Executive Director
●
Mr David Daglio - Non-Executive Director
●
Mr Louis Gagnon - Managing Director and Chief Executive Officer (resigned 12 November 2021)
And the following persons:
●
Mr Matthew Mund - Chief Operating Officer (COO)
●
Mr Emil Vasilev - Vice President of Finance (resigned 3 December 2021)
Short-term benefits
Post-
employ-
ment
benefits
Long-term
benefits
Share-based payments
Cash
salary
Cash
Non-
Super-
Long
service
Equity-
settled
Equity-
settled
and fees
bonus
monetary
annuation
leave
shares
options
Total
2022
$
$
$
$
$
$
$
$
Non-Executive
Directors:
Mr Matthew
Morgan
30,938
-
-
-
-
-
-
30,938
Mr David Torrible
31,250
-
-
3,125
-
-
-
34,375
Mr David Daglio
25,313
-
-
-
-
-
-
25,313
Executive
Directors:
Dr Evian Gordon
348,910
-
-
-
-
-
10,019
358,929
Mr Louis Gagnon
418,692
-
-
-
-
-
173,569
592,261
Other Key
Management
Personnel:
Mr Matthew
Mund
348,910
-
-
-
-
-
54,659
403,569
Mr Emil Vasilev*
115,112
-
-
-
-
-
(13,505)
101,607
1,319,125
-
-
3,125
-
-
224,742 1,546,992
*
Represents remuneration from 1 July 2021 to the date of resignation.
Total Brain Limited
Directors' report
30 June 2022
12
Short-term benefits
Post-
employ-
ment
benefits
Long-term
benefits
Share-based payments
Cash
salary
Cash
Non-
Super-
Long
service
Equity-
settled
Equity-
settled
and fees
bonus
monetary
annuation
leave
shares
options
Total
2021
$
$
$
$
$
$
$
$
Non-Executive
Directors:
Mr Matthew
Morgan
55,000
-
-
-
-
-
-
55,000
Mr David Torrible
50,228
-
-
4,772
-
-
-
55,000
Mr David Daglio
45,000
-
-
-
-
-
-
45,000
Executive
Directors:
Dr Evian Gordon
334,533
-
-
-
-
-
(42,582)
291,951
Mr Louis Gagnon
401,440
-
-
-
-
-
137,489
538,929
Other Key
Management
Personnel:
Mr Matthew
Mund
334,533
-
-
-
-
-
86,100
420,633
Mr Emil Vasilev
253,911
-
-
-
-
-
18,096
272,007
1,474,645
-
-
4,772
-
-
199,103 1,678,520
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Fixed remuneration
At risk - STI
At risk - LTI
Name
2022
2021
2022
2021
2022
2021
Non-Executive Directors:
Mr Matthew Morgan
100%
100%
-
-
-
-
Mr David Torrible
100%
100%
-
-
-
-
Mr David Daglio
100%
100%
-
-
-
-
Executive Directors:
Dr Evian Gordon
97%
115%
-
-
3%
(15%)
Mr Louis Gagnon
71%
74%
-
-
29%
26%
Other Key Management
Personnel:
Mr Matthew Mund
86%
80%
-
-
14%
20%
Mr Emil Vasilev
113%
93%
-
-
(13%)
7%
Total Brain Limited
Directors' report
30 June 2022
13
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:
Name:
Dr Evian Gordon
Title:
Executive Chairman
Term of agreement:
No fixed term
Details:
Written notice to or from the Board required to terminate. Entitled to 9 months of
gross salary.
Name:
Mr Matthew Morgan
Title:
Non-Executive Director
Term of agreement:
No fixed term
Details:
No notice required to terminate. Entitled to 0% of gross fees.
Name:
Mr David Torrible
Title:
Non-Executive Director
Term of agreement:
No fixed term
Details:
No notice required to terminate. Entitled to 0% of gross fees.
Name:
Mr David Daglio
Title:
Non-Executive Director
Term of agreement:
No fixed term
Details:
No notice required to terminate. Entitled to 0% of gross fees.
Name:
Mr Matthew Mund
Title:
Chief Operating Officer
Term of agreement:
No fixed term
Details:
No notice required to terminate. Entitled to 6 months of gross salary, medical
insurances and pro-rata portion of annual bonus.
KMP have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during the
year ended 30 June 2022.
Total Brain Limited
Directors' report
30 June 2022
14
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other
key management personnel in this financial year or future reporting years are as follows:
Number of
Fair value
options
Vesting date and
Exercise
per option
Name
granted
Grant date
exercisable date Expiry date
price
at grant date
Dr Evian Gordon
120,000 06/08/2020
06/08/2023
06/08/2025
$0.3700
$0.1800
120,000 06/08/2020
06/08/2024
06/08/2025
$0.4400
$0.1700
120,000 06/08/2020
06/08/2024
06/08/2025
$0.5000
$0.1600
Mr Louis Gagnon
866,667 6/08/2020
6/08/2023
06/08/2025
$0.3700
$0.1800
866,667 6/08/2020
6/08/2024
06/08/2025
$0.4400
$0.1700
866,666 6/08/2020
6/08/2024
06/08/2025
$0.5000
$0.1600
Mr Matthew
Mund
654,669 6/08/2020
6/08/2023
06/08/2025
$0.3700
$0.1800
654,669 6/08/2020
6/08/2024
06/08/2025
$0.4400
$0.1700
654,669 6/08/2020
6/08/2024
06/08/2025
$0.5000
$0.1600
Mr Emil Vasilev*
180,000 6/08/2020
6/08/2023
06/08/2025
$0.3700
$0.1800
180,000 6/08/2020
6/08/2024
06/08/2025
$0.4400
$0.1700
180,000 6/08/2020
6/08/2024
06/08/2025
$0.5000
$0.1600
*
Mr Emil Vasilev resigned on 3 December 2021 and forfeited the options on that day.
Options granted carry no dividend or voting rights.
Additional information
The earnings of the Group for the five years to 30 June 2022 are summarised below:
2022
2021
2020
2019
2018
$
$
$
$
$
Sales revenue
8,415,593
3,694,268
3,877,529
2,602,137
2,608,990
Loss after income tax
(14,496,718)
(8,316,773)
(7,647,544)
(8,570,754) (23,101,340)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
2022
2021
2020
2019
2018
Share price at financial year end ($)
0.04
0.31
0.38
0.20
0.40
Basic earnings per share (cents per share)
(11.11)
(7.68)
(8.07)
(14.58)
(63.80)
Diluted earnings per share (cents per share)
(11.11)
(7.68)
(8.07)
(14.58)
(63.80)
Total Brain Limited
Directors' report
30 June 2022
15
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each director and other members of key
management personnel of the Group, including their personally related parties, is set out below:
Balance at
Received
Balance at
the start of
as part of
Disposals/
the end of
the year
remuneration
Additions
other
the year
Ordinary shares
Dr Evian Gordon
1,315,756
-
-
-
1,315,756
Mr Matthew Morgan
449,724
-
64,246
-
513,970
Mr David Torrible
6,055,265
-
1,315,528
-
7,370,793
Mr David Daglio
6,950,180
-
1,453,349
-
8,403,529
Mr Louis Gagnon
415,923
-
203,795
(619,718)
-
Mr Matthew Mund
988,782
-
403,219
-
1,392,001
Mr Emil Vasilev
70,220
-
-
(70,220)
-
16,245,850
-
3,440,137
(689,938)
18,996,049
Option holding
The number of options over ordinary shares in the Company held during the financial year by each director and other
members of key management personnel of the Group, including their personally related parties, is set out below:
Balance at
Balance at
the start of
the end of
Vested and
the year
Additions
Lapsed
Forfeited
the year
exercisable
Options over ordinary shares
Dr Evian Gordon
1,205,156
-
-
-
1,205,156
845,156
Mr Matthew Morgan
425,000
32,123
(25,000)
-
432,123
432,123
Mr David Torrible
206,612
657,763
-
-
864,375
864,375
Mr David Daglio
-
726,674
-
-
726,674
726,674
Mr Louis Gagnon
8,746,593
101,897
-
(6,146,593)
2,701,897
2,701,897
Mr Matthew Mund
5,037,304
-
-
-
5,037,304
3,073,298
Mr Emil Vasilev
1,193,076
-
-
(1,193,076)
-
-
16,813,741
1,518,457
(25,000)
(7,339,669)
10,967,529
8,643,523
Loans from key management personnel and their related parties
There were no loans from key management personnel and their related parties as at 30 June 2022.
There were no other transactions with key management personnel and their related parties.
This concludes the remuneration report, which has been audited.
Total Brain Limited
Directors' report
30 June 2022
16
Shares under option
The following options over ordinary shares of Total Brain Limited were outstanding at the date of this report.
Exercise
Number
price
under
Grant date
Expiry date
$
option
16/07/2017
16/07/2022
0.80
3,073,296
14/12/2017
10/01/2023
1.00
400,000
08/01/2018
07/01/2023
0.80
768,324
01/04/2018
31/03/2023
0.80
260,869
31/07/2018
30/07/2023
0.80
52,734
28/02/2019
27/02/2024
0.80
50,781
18/03/2019
18/03/2024
0.45
50,000
31/03/2019
30/03/2024
0.80
25,781
31/08/2019
30/08/2024
0.80
130,859
15/11/2019
15/11/2024
0.80
50,000
17/12/2019
17/12/2024
1.00
24,000
16/01/2020
16/01/2024
0.45
206,612
10/02/2020
10/02/2025
1.00
50,000
06/08/2020
06/08/2025
0.37
1,968,686
06/08/2020
06/08/2025
0.44
1,968,686
06/08/2020
06/08/2025
0.50
1,968,679
06/08/2020
14/12/2022
0.80
845,156
06/08/2020
21/11/2024
0.44
55,664
06/08/2020
11/06/2025
0.44
55,078
06/08/2020
30/06/2025
0.44
44,922
06/08/2020
26/08/2025
0.44
19,922
06/08/2020
22/09/2025
0.44
29,297
06/08/2020
13/10/2025
0.44
175,000
17/08/2020
17/08/2025
0.37
951,672
17/08/2020
17/08/2025
0.44
951,672
17/08/2020
17/08/2025
0.50
951,672
17/11/2020
17/11/2025
0.44
15,234
26/12/2020
26/12/2025
0.44
18,750
01/01/2021
01/01/2026
0.44
4,883
13/01/2021
13/01/2026
0.44
37,500
25/04/2021
25/04/2026
0.44
14,531
22/06/2021
22/06/2026
0.44
32,813
29/06/2021
29/06/2026
0.44
22,266
19/07/2021
19/07/2026
0.20
35,156
13/08/2021
13/08/2026
0.20
33,516
12/11/2021
12/11/2026
0.20
3,003,289
18/01/2022
18/01/2027
0.20
19,922
18/04/2022
18/04/2027
0.20
32,813
15/12/2017
15/12/2022
1.00
5,000,000
06/07/2022
06/07/2027
0.20
31,641
09/08/2022
09/08/2027
0.20
30,469
16/08/2022
16/08/2027
0.20
31,641
23,493,786
Shares issued on the exercise of options
There were no ordinary shares of Total Brain Limited issued on the exercise of options during the year ended 30 June
2022 and up to the date of this report.
Total Brain Limited
Directors' report
30 June 2022
17
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a
director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to ensure the directors and executives
of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance
prohibits disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of
the Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the
auditor are outlined in note 26 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed
by the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 26 to the financial statements do not compromise
the external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
●
none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants (including Independence Standards) issued by the Accounting
Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a
management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing
economic risks and rewards.
Officers of the Company who are former partners of Grant Thornton
There are no officers of the Company who are former partners of Grant Thornton.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set
out immediately after this directors' report.
Total Brain Limited
Directors' report
30 June 2022
18
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act
2001.
On behalf of the directors
___________________________
Mr Matthew Morgan
Non-Executive Director
30 September 2022
Grant Thornton Audit Pty Ltd
King George Central
Level 18
145 Ann Street
Brisbane QLD 4000
GPO Box 1008
Brisbane QLD 4001
T +61 7 3222 0200
www.grantthornton.com.au
ACN-130 913 594
Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389.
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or
refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL).
GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member
firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one
another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127
556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards
Legislation.
Independent Auditor’s Report
To the Directors of Total Brain Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit
of Total Brain Limited for the year ended 30 June 2022, I declare that, to the best of my knowledge and belief,
there have been:
a
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
b
no contraventions of any applicable code of professional conduct in relation to the audit.
Grant Thornton Audit Pty Ltd
Chartered Accountants
CDJ Smith
Partner – Audit & Assurance
Brisbane, 30 September 2022
20
Financial Statements
Year Ended 30 June 2022
ir@totalbrain.com
ASX: TTB
ABN. 24. 094. 069. 682
Total Brain Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2022
Consolidated
Discontinued operations
Note
2022
2021
$
$
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
21
Revenue
5
8,415,593
3,694,268
Interest income calculated using the effective interest method
102
816
Expenses
Cost of equipment and third-party drug trial expense
6
(766,532)
(264,802)
Employee benefits expense
6
(8,923,094)
(7,225,012)
Corporate and operating costs
7
(3,659,701)
(3,397,549)
Depreciation and amortisation expense
6
(1,140,341)
(669,175)
Write down to recoverable amount of intangible assets
14
(7,581,129)
-
Reversals/(impairment) of receivables
10
1,205
(860)
Share-based payments expense
21
(561,654)
(489,543)
Net foreign exchange gains/(losses)
6
2,957
(25,017)
Finance costs
6
(284,124)
(5,064)
Loss before income tax benefit
(14,496,718)
(8,381,938)
Income tax benefit
8
-
65,165
Loss after income tax benefit for the year attributable to the owners of
Total Brain Limited
(14,496,718)
(8,316,773)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
50,226
(578,563)
Other comprehensive income for the year, net of tax
50,226
(578,563)
Total comprehensive income for the year attributable to the owners of
Total Brain Limited
(14,446,492)
(8,895,336)
Cents
Cents
Basic earnings per share
33
(11.11)
(7.68)
Diluted earnings per share
33
(11.11)
(7.68)
Refer to note 2 for basis of preparation.
Total Brain Limited
Statement of financial position
As at 30 June 2022
Consolidated
Note
2022
2021
$
$
The above statement of financial position should be read in conjunction with the accompanying notes
22
Assets
Current assets
Cash and cash equivalents
9
713,499
1,427,349
Trade and other receivables
10
703,413
5,102,392
Contract assets
11
-
2,774
Prepayments
290,595
218,353
1,707,507
6,750,868
Assets classified as held for sale
12
12,984,536
-
Total current assets
14,692,043
6,750,868
Non-current assets
Plant and equipment
13
-
283,185
Intangibles
14
-
17,043,682
Prepayments
-
10,560
Total non-current assets
-
17,337,427
Total assets
14,692,043
24,088,295
Liabilities
Current liabilities
Trade and other payables
15
2,212,005
513,744
Contract liabilities
16
-
934,181
Borrowings
17
1,213,726
4,266,720
Employee benefits
18
146,926
391,599
3,572,657
6,106,244
Liabilities directly associated with assets classified as held for sale
19
867,035
-
Total current liabilities
4,439,692
6,106,244
Total liabilities
4,439,692
6,106,244
Net assets
10,252,351
17,982,051
Equity
Issued capital
20
84,515,549
78,425,180
Reserves
21
4,965,616
4,288,967
Accumulated losses
(79,228,814) (64,732,096)
Total equity
10,252,351
17,982,051
Refer to note 2 for basis of preparation.
Total Brain Limited
Statement of changes in equity
For the year ended 30 June 2022
The above statement of changes in equity should be read in conjunction with the accompanying notes
23
Issued
Accumulated
Total equity
capital
Reserves
losses
Consolidated
$
$
$
$
Balance at 1 July 2020
78,425,180
4,377,987 (56,415,323)
26,387,844
Loss after income tax benefit for the year
-
-
(8,316,773)
(8,316,773)
Other comprehensive income for the year, net of tax
-
(578,563)
-
(578,563)
Total comprehensive income for the year
-
(578,563)
(8,316,773)
(8,895,336)
Transactions with owners in their capacity as owners:
Share-based payments (note 20)
-
489,543
-
489,543
Balance at 30 June 2021
78,425,180
4,288,967 (64,732,096)
17,982,051
Issued
Accumulated
Total equity
capital
Reserves
losses
Consolidated
$
$
$
$
Balance at 1 July 2021
78,425,180
4,288,967 (64,732,096)
17,982,051
Loss after income tax expense for the year
-
- (14,496,718) (14,496,718)
Other comprehensive income for the year, net of tax
-
50,226
-
50,226
Total comprehensive income for the year
-
50,226 (14,496,718) (14,446,492)
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs (note 20)
6,090,369
-
-
6,090,369
Share-based payments (note 34)
-
561,654
-
561,654
Convertible note reserves (note 21)
-
64,769
-
64,769
Balance at 30 June 2022
84,515,549
4,965,616 (79,228,814)
10,252,351
Total Brain Limited
Statement of cash flows
For the year ended 30 June 2022
Consolidated
Note
2022
2021
$
$
The above statement of cash flows should be read in conjunction with the accompanying notes
24
Cash flows from operating activities
Receipts from customers (inclusive of GST)
7,693,577
3,867,348
Payments to suppliers and employees (inclusive of GST)
(11,760,550) (12,170,226)
Interest received
102
816
Interest and other finance costs paid
(138,462)
-
Net cash used in operating activities
31
(4,205,333)
(8,302,062)
Cash flows from investing activities
Payments for property, plant and equipment
13
(13,467)
(75,785)
Payments for intangibles
14
(4,227,906)
(5,008,261)
Receipts of research and development tax incentive
2,364,995
1,139,349
Net cash used in investing activities
(1,876,378)
(3,944,697)
Cash flows from financing activities
Proceeds from issue of shares
20
6,522,594
-
Proceeds from borrowings
32
2,767,062
3,155,081
Share issue transaction costs
(471,815)
-
Repayment of borrowings
32
(3,447,793)
-
Net cash from financing activities
5,370,048
3,155,081
Net decrease in cash and cash equivalents
(711,663)
(9,091,678)
Cash and cash equivalents at the beginning of the financial year
1,427,349
11,104,729
Effects of exchange rate changes on cash and cash equivalents
(2,187)
(585,702)
Cash and cash equivalents at the end of the financial year
9
713,499
1,427,349
Total Brain Limited
Notes to the financial statements
30 June 2022
25
Note 1. General information
The financial statements cover Total Brain Limited as a Group consisting of Total Brain Limited and the entities it
controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Total
Brain Limited's functional and presentation currency.
Total Brain Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
15 Belvoir Street
Surry Hills NSW 2010
A description of the nature of the Group's operations and its principal activities are included in the directors' report,
which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 30 September 2022.
The directors have the power to amend and reissue the financial statements.
The financial statements have been prepared on a realisation basis of accounting as described in note 2.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Assets held for sale
During the financial year, management decided to sell the Group's business. On 5 August 2022 (the 'Announcement
Date'), the Company announced the binding agreement entered into with SonderMind Inc. ('SonderMind' or the
'purchaser') to purchase the Group's business through a sale of assets. The Board considered that the sale met the
criteria to be classified as held for sale in accordance with AASB 5 'Non-current assets held for sale and discontinued
operations' for the following reasons:
●
the decision to realise the carrying value of the assets via a sale transaction occurred in March 2022.
●
the business is available for immediate sale and can be sold to the buyer in its current condition;
●
the actions to complete the sale were initiated and expected to be completed within one year from the date of
initial classification;
●
the buyer has been identified and a binding agreement has been signed; and
●
the Company intends to hold an extraordinary general meeting, to obtain shareholder approval of the sale, within
45 days of the Announcement Date.
The purchase price is US$10,000,000 (approximately AU$14,000,000), less adjustments and liabilities, including the
value of assumed employee entitlements of any transferring employees, any debt funding provided by or on behalf of
SonderMind to fund the Group's working capital requirements and an agreed adjustment on account of certain tax
liabilities. The purchase is subject to a number of conditions including shareholder approval. Post completion of the
transaction, the Group intends to return any funds to shareholders via a share buy-back facility and then commence
winding-up the Company.
The results of the purchase agreement is that the assets and liabilities related to the sale are presented separately in
notes 12 and 19 respectively and the Group will have no ongoing business. The intention is to wind-up the Company
post completion of the sale and therefore the preparation of the financial statements is on a realisation basis of
accounting as described below.
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
26
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as
appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board ('IASB').
The financial statements can only be prepared on a going concern basis where there is neither the intention nor the
need to liquidate the Company or cease trading. If such intention or need exists, the financial statements cannot be
prepared on a going concern basis.
Accordingly, the directors have determined that the going concern basis of accounting is not appropriate because of
the intention to wind-up the Company post completion of the business sale transaction and therefore these financial
statements have not been prepared on a going concern basis but have been prepared on a realisation basis of
accounting.
Realisation basis of accounting
Under the realisation basis of accounting, assets are written down to their estimated net realisable value, (where
relevant), and liabilities are stated at their estimated settlement amounts and relevant estimates are reviewed and
adjusted as appropriate. All assets and liabilities are presented as current.
The principal accounting policies adopted are consistent with those of previous financial year except for the changes
specified above which related to realisation basis of accounting.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 3.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 29.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Total Brain Limited
('Company' or 'parent entity') as at 30 June 2022 and the results of all subsidiaries for the year then ended. Total Brain
Limited and its subsidiaries together are referred to in these financial statements as the 'Group'.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the
asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with
the policies adopted by the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly
in equity attributable to the parent.
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
27
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-
controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The
Group recognises the fair value of the consideration received and the fair value of any investment retained together
with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for
the allocation of resources to operating segments and assessing their performance.
Foreign currency translation
The presentation currency of the Group’s financial statements is Australian dollars.
The functional currency of Brain Resource Inc., a subsidiary of the ultimate parent company, Total Brain Limited, is US
dollars.
Foreign currency transactions
Foreign currency transactions are translated into the Company's functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the
average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting
foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in
equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed
of.
Revenue recognition
The Group recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in
exchange for transferring goods or services to a customer. For each contract with a customer, the Group: identifies the
contract with a customer; identifies the performance obligations in the contract; determines the transaction price which
takes into account estimates of variable consideration and the time value of money; allocates the transaction price to
the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or
service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that
depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as
discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events.
Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of
variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that
it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The
measurement constraint continues until the uncertainty associated with the variable consideration is subsequently
resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability.
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
28
Sale of software licenses
Software revenue comprises fees from subscribers to access the Group’s software platform during the license period.
Subscription-based arrangements generally have annual contractual terms.
In some customer contracts, software and other deliverables (such as services or support) are bundled together. The
goods and services provided under these arrangements are highly interrelated and are therefore accounted for as a
single performance obligation. The Group recognises revenue rateably as the services are performed, commencing
with the date the service is made available to customers and all other revenue recognition criteria have been satisfied.
If, at the outset of an arrangement, revenue cannot be measured reliably, revenue recognition is deferred until the
relating fees become due and payable by the customer. Additionally, if at the outset of an arrangement it is determined
that collectability is not probable, revenue recognition is deferred until the earlier of when collectability becomes
probable or payment is received.
Rendering of services
Revenue from a contract to provide services is recognised over time as the services are rendered based on either a
fixed price or an hourly rate.
Interest income
Interest income is recognised as interest accrues using the effective interest method. This is a method of calculating
the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective
interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to the net carrying amount of the financial asset.
Government grants
Government grants are recognised at fair value where there is a reasonable certainty that the grant will be received
upon meeting all grant terms and conditions. A forgivable loan is recognised as a government grant when there is a
reasonable assurance that the Group will meet the terms of the forgiveness of the loan. Grants related to assets are
deducted from the carrying amount of the assets presented in the statement of financial position. Government grants
relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs
that they are intended to compensate.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable
to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied
when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively
enacted, except for:
●
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability
in a transaction that is not a business combination and that, at the time of the transaction, affects neither the
accounting nor taxable profits; or
●
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures,
and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in
the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred
tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available
for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that
it is probable that there are future taxable profits available to recover the asset.
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
29
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12
months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or
used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is
held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is
no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other
liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term,
highly liquid investments with original maturities of three months or less that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement
within 30 days.
The Group has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected
loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Government grant receivable for research and development tax incentive ('R&D') is recognised to the degree that the
Group can reliably estimate that R&D expenditure for the full year will fall within the eligibility requirements. Advances
in other receivables are provided as an advance contractual payment generally covering the payable expected to
accrue over a 60-90 day period.
Contract assets
Contract assets are recognised when the Group has transferred goods or services to the customer but where the Group
is yet to establish an unconditional right to consideration. Contract assets are treated as financial assets for impairment
purposes.
Non-current assets or disposal groups classified as held for sale
Non-current assets and assets of disposal groups are classified as held for sale if their carrying amount will be
recovered principally through a sale transaction rather than through continued use. They are measured at the lower of
their carrying amount and fair value less costs of disposal. For non-current assets or assets of disposal groups to be
classified as held for sale, they must be available for immediate sale in their present condition and their sale must be
highly probable.
An impairment loss is recognised for any initial or subsequent write down of the non-current assets and assets of
disposal groups to fair value less costs of disposal. A gain is recognised for any subsequent increases in fair value less
costs of disposal of a non-current assets and assets of disposal groups, but not in excess of any cumulative impairment
loss previously recognised.
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
30
Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other
expenses attributable to the liabilities of assets held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of disposal groups classified as held for sale are presented
separately on the face of the statement of financial position, in current assets. The liabilities of disposal groups classified
as held for sale are presented separately on the face of the statement of financial position, in current liabilities.
Plant and equipment
Plant and equipment are stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a diminishing value basis to write off the net cost of each item of plant and equipment
(excluding land) over their expected useful lives as follows:
Plant and equipment
3-10 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting
date.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit
to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Leases
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with
terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or
loss as incurred.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair
value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Finite life
intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses
recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between
net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life
intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted
for prospectively by changing the amortisation method or period. The Group's databases are considered to be indefinite
life assets because there is no foreseeable limit to the cash flows generated by them.
Database
Costs relating to the Group’s database are capitalised as an asset and are not subsequently amortised. The Group's
databases are considered to be indefinite life assets because there is no foreseeable limit to the cash flows generated
by them.
Software
Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their
expected benefit, being their finite life of 5 years.
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
31
Research and development
Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is
probable that the project will be a success considering its commercial and technical feasibility; the Group is able to use
or sell the asset; the Group has sufficient resources; and intent to complete the development; and its costs can be
measured reliably. Capitalised development costs are amortised on a straight-line basis over the period of their
expected benefit, being their finite life of 5 years.
The Total Brain International Database and associated analysis tools (‘TBID’) is treated as a single integrated asset
for presentation and impairment testing. Amortisation of components of TBID that are ready for use are calculated on
a straight line basis over 5 years.
Impairment of non-financial assets
Goodwill is not subject to amortisation and is tested annually for impairment, or more frequently if events or changes
in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is
the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the
asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped
together to form a cash-generating unit.
Fair value less costs of disposal is determined by the directors based on an assessment of the price that would be
received to sell the asset in an orderly transaction between market participants at the measurement date.
Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the
financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not
discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
Contract liabilities
Contract liabilities represent the Group's obligation to transfer goods or services to a customer and are recognised
when a customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to
consideration (whichever is earlier) before the Group has transferred the goods or services to the customer.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method.
Convertible notes payable
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the
statement of financial position, net of transaction costs.
On the issue of the convertible notes the fair value of the liability component is determined using a market rate for an
equivalent non-convertible bond and this amount is carried as a non-current liability on the amortised cost basis until
extinguished on conversion or redemption. The increase in the liability due to the passage of time is recognised as a
finance cost. The remainder of the proceeds are allocated to the conversion option that is recognised and included in
shareholders equity as a convertible note reserve, net of transaction costs. The carrying amount of the conversion
option is not remeasured in the subsequent years. The corresponding interest on convertible notes is expensed to
profit or loss.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed
in the period in which they are incurred.
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
32
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to
be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the
liabilities are settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date
are measured at the present value of expected future payments to be made in respect of services provided by
employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of
employee departures and periods of service. Expected future payments are discounted using market yields at the
reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible,
the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled share-based compensation benefits are provided to employees and contractors.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees and
contractors in exchange for the rendering of services.
The cost of equity-settled transactions is measured at fair value on grant date. Fair value is independently determined
using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of
the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the
expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions
that do not determine whether the Group receives the services that entitle the employees to receive payment. No
account is taken of any other vesting conditions.
The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts
already recognised in previous periods.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been
made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the
total fair value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated
as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the
vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award
is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled
and new award is treated as if they were a modification.
Fair value measurement
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and
transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the
fair value measurement.
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 2. Significant accounting policies (continued)
33
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is
either not available or when the valuation is deemed to be significant. External valuers are selected based on market
knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to
another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and
a comparison, where applicable, with external sources of data.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of
tax, from the proceeds.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Total Brain Limited, excluding
any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and
the weighted average number of additional ordinary shares that would have been outstanding assuming conversion of
all dilutive potential ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax
authority.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2022. The Group
has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements and
estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its
judgements, estimates and assumptions on historical experience and on other various factors, including expectations
of future events, management believes to be reasonable under the circumstances. The resulting accounting
judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to
the respective notes) within the next financial year are discussed below.
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 3. Critical accounting judgements, estimates and assumptions (continued)
34
Income tax
The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in
determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary
course of business for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated
tax audit issues based on the Group's current understanding of the tax law. Where the final tax outcome of these
matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in
the period in which such determination is made.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Government grants for research and development tax incentive (R&D)
The Group recognises government grants related to the research and development tax incentive (R&D) as a deduction
from the carrying amount of the relevant qualifying assets, in accordance with the accounting policy disclosed in Note
2. A government grant receivable in respect of the incentive is recognised when there is reasonable certainty that the
grant will be received upon meeting the terms and conditions associated with the grant.
Significant judgement is required in determining the value of the government grant claim and associated receivable,
and the amounts to be deducted from the carrying value of the relevant qualifying assets. The Group determines these
amounts based on Advance / Overseas Findings received from AusIndustry in previous periods. In the current period,
management determined (in conjunction with assistance from external consultants) that a receivable of $nil (2021:
$2,389,484) should be recognised at 30 June 2022, and an amount of $24,489 (2021: $2,375,878) should be deducted
from the carrying amount of its qualifying intangible assets in respect of eligible expenditure incurred, based on the
Advance / Overseas Findings obtained in previous periods and the application of those findings and consideration of
other applicable R&D Incentive interpretations to the facts and circumstances at Total Brain Limited. In circumstances
where different judgements are made in respect of these matters, such differences will impact the government grant
receivable and the amount deducted from the carrying value of the qualifying intangible asset.
Note 4. Operating segments
Identification of reportable operating segments
The Group is organised into one operating segment being the development and commercialisation of brain health
products, primarily delivered to a range of users through the one Total Brain platform. This operating segment is based
on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating
Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources. There is no
aggregation of operating segments.
The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies
adopted for internal reporting to the CODM are consistent with those adopted in the financial statements.
The information reported to the CODM is on a monthly basis.
Major customers
During the year ended 30 June 2022, the Group derived $4,114,000 from two customers (2021: $2,192,000 from three
customers).
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 4. Operating segments (continued)
35
Geographical information
Geographical non-current
assets
2022
2021
$
$
United States
-
682,326
Australia
-
16,655,101
-
17,337,427
The geographical non-current assets above are exclusive of, where applicable, financial instruments, deferred tax
assets, post-employment benefits assets and rights under insurance contracts.
The majority of revenue is derived in the United States.
Note 5. Revenue
Consolidated
2022
2021
$
$
Total Brain - Population Health *
4,159,479
3,345,693
Total Brain - Provider Support **
455,136
264,501
Precision Medicine/Pharma Support ***
3,719,869
-
Other Revenue
81,109
84,074
Revenue
8,415,593
3,694,268
Revenue from contracts with customers is derived from the Group’s combined database which includes both Total
Brain International Database ('TBID') and Data Licensing data. The revenue is split based on go to market channels
as follows:
*
Population Health revenue primarily comprises fees received from large consumer groups, corporations and
platforms who provide access to the Group's software platform to their constituents.
Customers include:
(i) Corporate - B2B customers who provide access to the Group’s software platform to their employees; and
(ii) Affinity - Partners who provide access to the Group’s software platform to their members.
**
Provider Support revenue comprises revenue from clinics who provide access to the Group’s software platform
to their clients.
***
Precision Medicine/Pharma Support revenue comprises revenue received from customers who are provided
access to the data assets.
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 5. Revenue (continued)
36
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Consolidated
2022
2021
$
$
Major revenue lines
Software license
4,677,458
3,672,483
Services and access fees
3,738,135
21,785
8,415,593
3,694,268
Timing of revenue recognition
Revenue transferred over time
4,677,458
3,672,483
Revenue transferred at a point in time
3,738,135
21,785
8,415,593
3,694,268
Total Brain Limited
Notes to the financial statements
30 June 2022
37
Note 6. Expenses
Consolidated
2022
2021
$
$
Loss before income tax includes the following specific expenses:
Cost of sales
Cost of equipment and third-party drug trial expense
766,532
264,802
Depreciation
Plant and equipment
61,268
80,342
Amortisation
Development
1,079,073
588,833
Total depreciation and amortisation
1,140,341
669,175
Finance costs
Interest and finance charges paid/payable on borrowings
284,124
5,064
Net foreign exchange loss
Net foreign exchange loss
2,957
25,017
Leases
Short-term lease payments*
149,185
167,787
Research and development tax incentive costs
Research and development expenditure recognised as an expense
162,695
139,745
Employee benefits expense**
Employee benefits expense excluding superannuation
8,457,933
6,761,612
Defined contribution superannuation expense
465,161
463,400
Total employee benefits expense
8,923,094
7,225,012
Government grants offset against employee benefit expense
Government grants***
-
1,507,814
Offset against cost of intangibles
-
(608,539)
Total government grants offset against employee benefit expense*
-
899,275
*
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases
with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed
to profit or loss on a straight-line basis.
** Government grants offset against employee benefits expense total to $nil (2021; $899,275).
*** During the Coronavirus (‘COVID-19’) pandemic, the Group has received stimulus support payments of $nil (2021:
$100,500) from the Australian Government and $nil (US$nil) (2021: $1,407,314 (US$1,051,700)) from the US
Government (refer to note 17 for more information). These have been recognised as government grants in the
financial statements and recorded as offsets against the cost of intangibles and offset against employee benefits
expense over the periods in which the related employee benefits are recognised as an expense.
Total Brain Limited
Notes to the financial statements
30 June 2022
38
Note 7. Corporate and operating costs
Consolidated
2022
2021
$
$
Insurance and professional fees
1,564,608
1,359,526
Communications expense
448,982
423,380
Marketing and agent support expenses
1,000,585
1,096,086
Occupancy expenses
472,642
454,204
Travel expenses
97,294
589
Other expenses
75,567
59,116
Loss on disposal of plant and equipment
23
4,648
3,659,701
3,397,549
Note 8. Income tax
Consolidated
2022
2021
$
$
Income tax benefit
Deferred tax - origination and reversal of temporary differences
-
(65,165)
Aggregate income tax benefit
-
(65,165)
Deferred tax included in income tax benefit comprises:
Decrease in deferred tax liabilities
-
(65,165)
Numerical reconciliation of income tax benefit and tax at the statutory rate
Loss before income tax benefit
(14,496,718)
(8,381,938)
Tax at the statutory tax rate of 25% (2021: 26%)
(3,624,180)
(2,179,304)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Share-based payments
140,414
127,281
Permanent differences from research and development refund
1,005,231
1,428,197
Effect of FX movement on translation
566,881
(545,868)
Share issue costs
(117,953)
-
Non-assessable income
-
(375,652)
Sundry items
(131,653)
173,282
(2,161,260)
(1,372,064)
Current year tax losses not recognised
(4,960)
2,423,275
Prior year tax losses not recognised now recouped
1,818,579
(1,267,285)
Adjustment to deferred tax balances as a result of change in statutory tax rate
(83,632)
5,058
Prior year (over) / under provisions
431,273
145,851
Income tax benefit
-
(65,165)
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 8. Income tax (continued)
39
Consolidated
2022
2021
$
$
Tax losses not recognised
Unused tax losses for which no deferred tax asset has been recognised
42,143,585
35,075,683
Potential tax benefit at statutory tax rates
10,846,895
9,119,678
The above potential tax benefit for tax losses has not been recognised in the statement of financial position. These tax
losses can only be utilised in the future if the continuity of ownership test is passed, or failing that, the same business
test is passed.
Brain Resource, Inc., incorporated in California USA has carry-forward unused tax losses of $31,099,814 as at 30 June
2022 (2021: $30,828,698). The Company recognised deferred tax assets in respect of these tax losses as at 30 June
2022 of $nil (2021: $nil). The losses remain available to offset future income tax, but the directors have chosen not to
recognise a deferred tax asset in respect of them, until it is demonstrated that the realisation of the deferred tax is more
likely than not.
The Australian based companies have carry-forward unused tax losses of $29,754,684 as of 30 June 2022 (2021:
$27,308,124). The Company concluded that $4,677,728 (2021: $5,995,896) of the deferred tax asset relating to carry-
forward unused tax losses in Australia of $15,524,623 (2021: $15,115,574) is recoverable, within the requisite
timeframes, based on budget estimates for future taxable income as approved by the Company’s Board of Directors.
Consolidated
2022
2021
$
$
Deferred tax liability
Deferred tax liability comprises temporary differences attributable to:
Amounts recognised in profit or loss:
Development costs
4,170,228
5,571,167
Losses carried forward
(15,524,623) (15,115,574)
Tax losses not recognised as DTA
10,846,895
9,119,678
Provisions
(82,056)
(101,815)
Foreign exchange
589,556
526,544
Deferred tax liability
-
-
Movements:
Opening balance
-
65,165
Credited to profit or loss
-
(65,165)
Closing balance
-
-
Note 9. Cash and cash equivalents
Consolidated
2022
2021
$
$
Current assets
Cash at bank
713,499
1,427,349
Total Brain Limited
Notes to the financial statements
30 June 2022
40
Note 10. Trade and other receivables
Consolidated
2022
2021
$
$
Current assets
Trade receivables
703,479
286,124
Less: Allowance for expected credit losses
(66)
(1,241)
703,413
284,883
Other receivables
-
7,660
Government grant receivable for research and development tax incentive (R&D)
-
2,389,484
Government grant receivable - others*
-
2,420,365
-
4,817,509
703,413
5,102,392
*
$1,017,191 was received on 12 July 2021. Also, the related loan was forgiven - refer note 17.
Allowance for expected credit losses
The Group has recognised a reversal of $1,205 (2021: loss of $860) in profit or loss in respect of the expected credit
losses for the year ended 30 June 2022.
The ageing of the receivables and allowance for expected credit losses provided for above are as follows:
Expected credit loss rate
Carrying amount
Allowance for expected
credit losses
2022
2021
2022
2021
2022
2021
Consolidated
%
%
$
$
$
$
Not overdue
0.02%
0.09%
276,232
165,257
54
149
0 to 3 months overdue
0.09%
0.74%
366,876
101,745
348
756
3 to 6 months overdue
(0.58%)
1.76%
57,591
19,121
(336)
336
Over 6 months overdue
-
-
2,779
-
-
-
703,478
286,123
66
1,241
The Group is not affected by Coronavirus (COVID-19) pandemic, thus no revisions on the calculation of expected credit
losses has been applied as at 30 June 2022.
Movements in the allowance for expected credit losses are as follows:
Consolidated
2022
2021
$
$
Opening balance
1,241
384
Additional provisions/(reversals) recognised
(1,205)
860
Receivables written off during the year as uncollectable
-
(3)
Exchange differences
30
-
Closing balance
66
1,241
Total Brain Limited
Notes to the financial statements
30 June 2022
41
Note 11. Contract assets
Consolidated
2022
2021
$
$
Current assets
Contract assets
-
2,774
Reconciliation
Reconciliation of the written down values at the beginning and end of the current and
previous financial year are set out below:
Opening balance
2,774
3,025
Additions
61,968
2,774
Transfer to trade receivables
(3,011)
(2,780)
Classified as held for sale (note 12)
(61,968)
-
Exchange differences
237
(245)
Closing balance
-
2,774
Allowance for expected credit losses
The Group has recognised a loss of $nil (2021: $nil) in profit or loss in respect of the expected credit losses on contract
assets for the year ended 30 June 2022.
Note 12. Assets classified as held for sale
Consolidated
2022
2021
$
$
Current assets
Contract assets
61,968
-
Property, plant and equipment (note 13)
251,466
-
Intangibles (note 14)
12,671,102
-
12,984,536
-
As disclosed in note 2, these are the assets directly associated with the sale of the business to SonderMind.
Note 13. Plant and equipment
Consolidated
2022
2021
$
$
Non-current assets
Plant and equipment - at cost
-
1,232,904
Less: Accumulated depreciation
-
(949,719)
-
283,185
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 13. Plant and equipment (continued)
42
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:
Plant and
equipment
Consolidated
$
Balance at 1 July 2020
310,356
Additions
75,785
Disposals
(4,648)
Exchange differences
(17,966)
Depreciation expense
(80,342)
Balance at 30 June 2021
283,185
Additions
13,467
Classified as held for sale (note 12)
(251,466)
Disposals
(23)
Exchange differences
16,105
Depreciation expense
(61,268)
Balance at 30 June 2022
-
Note 14. Intangibles
Consolidated
2022
2021
$
$
Non-current assets
Database - at cost
-
22,226,145
Less: Accumulated impairment
-
(9,323,043)
-
12,903,102
Development - at cost
-
7,793,270
Less: Accumulated amortisation
-
(3,107,910)
Less: Accumulated impairment
-
(544,780)
-
4,140,580
-
17,043,682
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 14. Intangibles (continued)
43
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:
Database Development
Total
Consolidated
$
$
$
Balance at 1 July 2020
12,901,952
2,098,092
15,000,044
Additions*
1,150
5,007,111
5,008,261
R&D tax incentive
-
(2,375,878)
(2,375,878)
Exchange differences
-
88
88
Amortisation expense
-
(588,833)
(588,833)
Balance at 30 June 2021
12,903,102
4,140,580
17,043,682
Additions*
1,166
4,226,740
4,227,906
Classified as held for sale (note 12)
(5,323,139)
(7,347,963) (12,671,102)
R&D tax incentive
-
24,489
24,489
Exchange differences
-
35,227
35,227
Write down to recoverable amount
(7,581,129)
-
(7,581,129)
Amortisation expense
-
(1,079,073)
(1,079,073)
Balance at 30 June 2022
-
-
-
*Government grants offset against additions is $nil (2021: $608,539).
Write down to recoverable amount
Immediately before the classification as held for sale, the recoverable amount of the intangible assets was estimated
and no impairment loss was identified. Following the classification, a write down of $7,581,129 was recognised in profit
or loss, to reduce the carrying amount of assets held for sale to their fair value less cost of disposal. The fair value
measurement hierarchy is level 3.
Note 15. Trade and other payables
Consolidated
2022
2021
$
$
Current liabilities
Trade payables
189,031
204,778
Accrued expenses
1,972,070
257,539
Other payables
50,904
51,427
2,212,005
513,744
Refer to note 23 for further information on financial instruments.
Total Brain Limited
Notes to the financial statements
30 June 2022
44
Note 16. Contract liabilities
Consolidated
2022
2021
$
$
Current liabilities
Contract liabilities
-
934,181
Reconciliation
Reconciliation of the written down values at the beginning and end of the current and
previous financial year are set out below:
Opening balance
934,181
956,760
Payments received in advance
656,231
936,937
Transfer to revenue
(964,662)
(882,073)
Exchange differences
64,139
(77,443)
Liabilities directly associated with assets classified as held for sale (note 19)
(689,889)
-
Closing balance
-
934,181
Unsatisfied performance obligations
The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the end
of the reporting period was $689,889 as at 30 June 2022 ($934,181 as at 30 June 2021) and is expected to be
recognised as revenue in future periods as follows:
Consolidated
2022
2021
$
$
Within 6 months
-
664,103
6 to 12 months
-
257,697
12 to 18 months
-
12,381
-
934,181
Note 17. Borrowings
Consolidated
2022
2021
$
$
Current liabilities
Bank loan
-
2,420,365
Other loans
-
1,846,355
Convertible notes payable
1,213,726
-
1,213,726
4,266,720
Refer to note 23 for further information on financial instruments.
Bank loans
On 3 May 2020, a bank loan of $1,017,191 was granted. The loan matures 1 May 2022. Interest is 1% per annum paid
monthly in arrears. No repayments are due within six months from the date of disbursements of the bank loan. This
loan was forgiven on 12 July 2021 (and was offset against the Government grant receivable of an identical amount,
and as such there was no effect on statement of profit or loss).
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 17. Borrowings (continued)
45
On 2 April 2021, a bank loan of $1,403,174 was granted. The loan matures on 2 April 2026. Interest is 1% per annum
paid monthly in arrears. No repayments are due within six months from the date of disbursements of the bank loan.
This loan was forgiven on 29 April 2022 (and was offset against the Government grant receivable of an identical
amount, and as such there was no effect on statement of profit or loss).
Other loans
During the year ended 30 June 2022, the term of the other loan of $1,289,754 (30 June 2021: $1,846,355) has been
extended by 4 months to 18 March 2022. Interest accrues at the rate of 12% per annum. The loan was repaid during
the year.
During the year ended 30 June 2022, the Group received and repaid the following additional loans from non-related
parties:
●
On 9 August 2021, the Group received a $28,007 loan from an unrelated party. The loan is payable in monthly
instalments ending on 26 April 2022 with an interest rate of 5.85% per month.
●
On 25 August 2021, the Group received a $166,398 loan from an unrelated party. The loan is payable in monthly
instalments ending on 25 May 2022 with an interest rate of 3.98% per month.
●
On 7 December 2021, the Group received a $2,000,000 loan from an unrelated party. The loan is payable on 31
May 2022 with an interest rate of 1.1% per month. Prepaid interest of $127,600 was paid to the lender.
●
On 21 March 2022, the Company has paid $560,462 in principal and interest to F45 Inc to finalise the repayment
of the US$380,000 loan between the parties.
Convertible notes payable
The Group raised $1,278,485 on 4 April 2022 through the issuance of 1,278,485 convertible notes. The convertible
notes have a face value of $1.00 per note. The note has a fixed 12.00% coupon interest rate (accrued daily) and
matures 18 months from the date of issue (maturity date) or the occurrence of the event of default whichever is earlier.
Events of default include an insolvency event, a failure of the Company to pay any amount due and payable to the
noteholder when due, the Company breaching a moratorium on senior debt and representation or warranty given by
the Company under the agreement being not true in a material respect. The conversion price is $0.138 per share. The
holder must issue a conversion notice, provided that the conversion amount is at least the lower of $100,000 and the
balance of monies owing.
Note 18. Employee benefits
Consolidated
2022
2021
$
$
Current liabilities
Annual leave
137,174
245,746
Long service leave
9,752
145,853
146,926
391,599
Total Brain Limited
Notes to the financial statements
30 June 2022
46
Note 19. Liabilities directly associated with assets classified as held for sale
Consolidated
2022
2021
$
$
Current liabilities
Deferred revenue
689,889
-
Employee benefits
177,146
-
867,035
-
As disclosed in note 2, these are the assets directly associated with the sale of the business to SonderMind.
Note 20. Issued capital
Consolidated
2022
2021
2022
2021
Shares
Shares
$
$
Ordinary shares - fully paid
133,721,131 108,303,784
84,515,549
78,425,180
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance
1 July 2020
108,303,784
78,425,180
Balance
30 June 2021
108,303,784
78,425,180
Issue of shares from share placement
29 July 2021
9,615,378
$0.2600
2,499,998
Issue of shares from entitlement offer
19 August 2021
15,471,969
$0.2600
4,022,586
Issue of shares (non-cash)
02 June 2022
330,000
$0.1200
39,600
Share issue transaction costs, net of tax
(471,815)
Balance
30 June 2022
133,721,131
84,515,549
Ordinary shares
Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to
shareholders should the Company be wound up, in proportions that consider both the number of shares held and the
extent to which those shares are paid up. The fully paid ordinary shares have no par value and the Company does not
have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can
provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is
calculated as total borrowings less cash and cash equivalents.
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 20. Issued capital (continued)
47
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group would look to raise capital when an opportunity to invest in a business or company was seen as value
adding relative to the current Company's share price at the time of the investment. The Group is not actively pursuing
additional investments in the short term as it continues to integrate and grow its existing businesses in order to
maximise synergies.
The Group is not subject to any financing covenants.
The capital risk management policy remains unchanged from the 30 June 2021 Annual Report.
Note 21. Reserves
Consolidated
2022
2021
$
$
Foreign currency reserve
(102,546)
(152,772)
Share-based payments reserve
5,003,393
4,441,739
Convertible note reserve
64,769
-
4,965,616
4,288,967
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operation to Australian dollars.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Convertible note reserve
The reserve is used to recognise the equity component of the convertible note which is an embedded option to convert
the liability into equity.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Foreign
Share-based Convertible
currency
payments
note
Total
Consolidated
$
$
$
$
Balance at 1 July 2020
425,791
3,952,196
-
4,377,987
Foreign currency translation
(578,563)
-
-
(578,563)
Share-based payments
-
489,543
-
489,543
Balance at 30 June 2021
(152,772)
4,441,739
-
4,288,967
Foreign currency translation
50,226
-
-
50,226
Share-based payments
-
561,654
-
561,654
Issue of convertible notes
-
-
64,769
64,769
Balance at 30 June 2022
(102,546)
5,003,393
64,769
4,965,616
Total Brain Limited
Notes to the financial statements
30 June 2022
48
Note 22. Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 23. Financial instruments
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and
interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of
the Group. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price
risks and ageing analysis for credit risk.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of
Directors ('the Board'). These policies include identification and analysis of the risk exposure of the Group and
appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the
Group's operating units. Finance reports to the Board on a monthly basis.
Market risk
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk
through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial
liabilities denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity
analysis and cash flow forecasting.
The carrying amount of the Group's foreign currency denominated financial assets and financial liabilities at the
reporting date were as follows:
Assets
Liabilities
2022
2021
2022
2021
Consolidated
$
$
$
$
US dollars
1,298,509
3,970,863
2,541,690
5,463,484
The Group had net liabilities denominated in foreign currencies of $1,243,181 (assets of $1,298,509 less liabilities of
$2,541,690) as at 30 June 2022 (2021: $1,465,600 (assets of $3,970,863 less liabilities of $5,463,484)). Based on this
exposure, had the Australian dollars weakened/strengthened by 10% (2021: weakened/strengthened by 10%) against
these foreign currencies with all other variables held constant, the Group's profit before tax for the year would have
been $66,544] lower/higher (2021: $997,839 lower/higher) and equity would have been $60,897 lower/higher (2021:
$106,061 lower/higher). The percentage change is the expected overall volatility of the significant currencies, which is
based on management's assessment of reasonable possible fluctuations taking into consideration movements over
the last 12 months each year and the spot rate at each reporting date. The actual foreign exchange gain for the year
ended 30 June 2022 was $2,957 (2021: loss of $25,017).
Price risk
The Group is not exposed to any significant price risk.
Interest rate risk
The Group's main interest rate risk arises from short-term deposits. Interest rates applicable to cash financial assets
were 0.1% (2021: 0.1%) with maturities of less than 1 year. All other balances are non-interest-bearing.
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 23. Financial instruments (continued)
49
The Group's exposure to market interest rates relates primarily to the short term deposits. The Board has formed the
view that these funds be held in either bank deposits or AAA short term bonds. Currently holdings are in cash deposits
with the National Australia Bank and Citibank. Based on an average cash balance, constant currency weightings and
an average interest rate, a +/-10% increase in interest rates would have equated to a change in the after tax result of
around [+/-0%] (2021: +/-0%).
As at the reporting date, the Group had the following variable rate short-term deposits outstanding:
2022
2021
Weighted
average
interest rate
Balance
Weighted
average
interest rate
Balance
Consolidated
%
$
%
$
Cash and short-term deposits
0.01%
713,499
0.01%
1,427,349
Net exposure to cash flow interest rate risk
713,499
1,427,349
An analysis by remaining contractual maturities is shown in 'liquidity and interest rate risk management' below.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and
setting appropriate credit limits. The Group obtains guarantees where appropriate to mitigate credit risk. The maximum
exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions
for expected credit losses of those assets, as disclosed in the statement of financial position and notes to the financial
statements. The Group does not hold any collateral.
The Group has adopted a lifetime expected loss allowance in estimating expected credit losses to trade receivables
through the use of a provisions matrix using fixed rates of credit loss provisioning. These provisions are considered
representative across all customers of the Group based on recent sales experience, historical collection rates and
forward-looking information that is available. As disclosed in note 10, no revisions were required to the calculation of
expected credit losses as a result of Coronavirus (COVID-19) pandemic.
The Group has a credit risk exposure with two major customers (2021: two major customers), which as at 30 June
2022 owed the Group $384,548 (55% of trade receivables) (2021: $143,529 (50% of trade receivables)). This balance
was within its terms of trade and no impairment was made as at 30 June 2022. There are no guarantees against this
receivable but management closely monitors the receivable balance on a monthly basis and is in regular contact with
this customer to mitigate risk.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this
include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make
contractual payments for a period greater than 1 year.
Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility, including through accessing
new equity funding. All trade creditors and other payables and interest-bearing loans have a maturity profile of being
repayable within six months (2021: within six months).
The Group manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual and
forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 23. Financial instruments (continued)
50
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables
have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which
the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as
remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of
financial position.
1 year or less
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Remaining
contractual
maturities
Consolidated - 2022
$
$
$
$
$
Non-derivatives
Non-interest bearing
Trade payables
189,031
-
-
-
189,031
Other payables
50,904
-
-
-
50,904
Interest-bearing -
Convertible notes
1,508,822
-
-
-
1,508,822
Total non-derivatives
1,748,757
-
-
-
1,748,757
1 year or less
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Remaining
contractual
maturities
Consolidated - 2021
$
$
$
$
$
Non-derivatives
Non-interest bearing
Trade payables
204,778
-
-
-
204,778
Other payables
51,427
-
-
-
51,427
Interest-bearing - variable
Bank loans
2,420,365
-
-
-
2,420,365
Other loans
1,846,355
-
-
-
1,846,355
Total non-derivatives
4,522,925
-
-
-
4,522,925
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Total Brain Limited
Notes to the financial statements
30 June 2022
51
Note 24. Fair value measurement
Fair value hierarchy
The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly
Level 3: Unobservable inputs for the asset or liability
Level 1
Level 2
Level 3
Consolidated - 2022
$
$
$
Assets
Assets classified as held for sale
-
-
12,984,536
Total assets
-
-
12,984,536
Liabilities
Liabilities directly associated with assets classified as held for sale
-
-
867,035
Total liabilities
-
-
867,035
Assets and liabilities held for sale are measured at fair value on a non-recurring basis.
There were no transfers between levels during the financial year.
These assets and liabilities are classified as level 3 fair values in the fair value hierarchy due to the inclusion of
unobservable inputs including counterparty and own credit risk.
Note 25. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set
out below:
Consolidated
2022
2021
$
$
Short-term employee benefits
1,319,125
1,474,645
Post-employment benefits
3,125
4,772
Share-based payments
224,742
199,103
1,546,992
1,678,520
Total Brain Limited
Notes to the financial statements
30 June 2022
52
Note 26. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Grant Thornton, the auditor
of the Company:
Consolidated
2022
2021
$
$
Audit services - Grant Thornton
Audit or review of the financial statements
125,000
121,000
Other services - Grant Thornton
Transfer pricing review services
5,271
23,000
130,271
144,000
Note 27. Contingent liabilities
The Group has given bank guarantees as at 30 June 2022 of $10,560 (2021: $10,560) to various landlords.
Note 28. Related party transactions
Parent entity
Total Brain Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 30.
Key management personnel
Disclosures relating to key management personnel are set out in note 25 and the remuneration report included in the
directors' report.
Transactions with related parties
The following transactions occurred with related parties:
Consolidated
2022
2021
$
$
Payment for other expenses:
Interest paid to key management personnel
8,978
1,981
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
The following balances are outstanding at the reporting date in relation to loans with related parties:
Consolidated
2022
2021
$
$
Other loans from key management personnel:
David Daglio
-
133,815
David Torrible
-
334,538
Louis Gagnon
-
66,907
Matthew Mund
-
133,859
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 28. Related party transactions (continued)
53
Terms and conditions
Refer to note 17 for the terms and conditions of other loans.
Note 29. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Parent
2022
2021
$
$
Loss after income tax
(14,224,815)
(9,117,005)
Total comprehensive income
(14,224,815)
(9,117,005)
Statement of financial position
Parent
2022
2021
$
$
Total current assets
11,508,236
24,669
Total assets
11,508,746
19,606,739
Total current liabilities
1,256,395
1,846,355
Total liabilities
1,256,395
1,846,355
Equity
Issued capital
84,515,539
78,425,180
Share-based payments reserve
5,003,393
4,441,739
Convertible note reserve
64,769
-
Accumulated losses
(79,331,350) (65,106,535)
Total equity
10,252,351
17,760,384
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2022 and 30 June 2021.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2022 and 30 June 2021.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2022 and 30 June 2021.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for
the following:
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
●
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be
an indicator of an impairment of the investment.
Total Brain Limited
Notes to the financial statements
30 June 2022
54
Note 30. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 2:
Ownership interest
Principal place of business /
2022
2021
Name
Country of incorporation
%
%
BRC Operations Pty Ltd
Australia
100.00%
100.00%
BRC IP Pty Ltd
Australia
100.00%
100.00%
BRC Distribution Pty Ltd
Australia
100.00%
100.00%
BRC International Pty Ltd
Australia
100.00%
100.00%
BRC Development Pty Ltd
Australia
100.00%
100.00%
PoweringUpMBS Pty Ltd
Australia
100.00%
100.00%
Brain Resource, Inc.
United States
100.00%
100.00%
MyBrainSolutions, Inc
United States
100.00%
100.00%
Brain Resource Europe Limited
Ireland
100.00%
100.00%
Note 31. Reconciliation of loss after income tax to net cash used in operating activities
Consolidated
2022
2021
$
$
Loss after income tax benefit for the year
(14,496,718)
(8,316,773)
Adjustments for:
Depreciation and amortisation
1,140,341
669,175
Write down to recoverable amounts of intangibles
7,581,129
-
Net loss on disposal of property, plant and equipment
23
4,648
Share-based payments
561,654
489,543
Foreign exchange differences
(2,957)
25,017
Impairment of receivables
(1,205)
860
Finance costs - non-cash
95,793
5,064
Non-cash payment to supplier
39,600
-
Change in operating assets and liabilities:
Increase in trade and other receivables
(409,665)
(1,029,456)
Decrease/(increase) in contract assets
(59,194)
251
Increase in prepayments
(61,682)
(77,934)
Increase in trade and other payables
1,719,367
30,187
Decrease in contract liabilities
(244,292)
(65,165)
Decrease in employee benefits
(67,527)
(37,479)
Net cash used in operating activities
(4,205,333)
(8,302,062)
Total Brain Limited
Notes to the financial statements
30 June 2022
55
Note 32. Changes in liabilities arising from financing activities
Bank loan
Other loans
Convertible
notes
payable
Total
Consolidated
$
$
$
$
Balance at 1 July 2020
1,106,575
-
-
1,106,575
Net cash from financing activities
1,313,790
1,841,291
-
3,155,081
Other changes
-
5,064
-
5,064
Balance at 30 June 2021
2,420,365
1,846,355
-
4,266,720
Net cash from/(used in) financing activities
-
(1,959,216)
1,278,485
(680,731)
Loan forgiveness
(2,627,531)
-
-
(2,627,531)
Accrued interest
-
104,235
-
104,235
Exchange differences
207,166
8,626
-
215,792
Other changes
-
-
(64,759)
(64,759)
Balance at 30 June 2022
-
-
1,213,726
1,213,726
Note 33. Earnings per share
Consolidated
2022
2021
$
$
Loss after income tax attributable to the owners of Total Brain Limited
(14,496,718)
(8,316,773)
Number
Number
Weighted average number of ordinary shares used in calculating basic earnings per
share
130,533,037
108,303,784
Weighted average number of ordinary shares used in calculating diluted earnings per
share
130,533,037
108,303,784
Cents
Cents
Basic earnings per share
(11.11)
(7.68)
Diluted earnings per share
(11.11)
(7.68)
23,490,269 options (2021: 29,190,244 options) over ordinary shares are not included in the calculation of diluted
earnings per share because they are anti-dilutive for the year ended 30 June 2022. These options could potentially
dilute basic earnings per share in the future.
Total Brain Limited
Notes to the financial statements
30 June 2022
56
Note 34. Share-based payments
A share option plan has been established by the Group and approved by shareholders at a general meeting, whereby
the Group may, at the discretion of the Nomination and Remuneration Committee, grant options over ordinary shares
in the Company to the personnel of the Group. The options are issued for nil consideration and are granted in
accordance with performance guidelines established by the Nomination and Remuneration Committee.
On 5 August 2020, the shareholders at an extraordinary general meeting approved the adoption of a new share option
plan.
Total expense arising from share-based payment transactions during the financial year was $561,654 (30 June 2021:
$489,543).
Options modification
As per resolution 4 and 5 of the Notice of Meeting issued to the ASX on 6 Jul 2020, which were subsequently approved
at an extraordinary general meeting of shareholders on 5 August 2020, several of the options on issue at that point
were significantly ‘out of the money’. In order to re-align the relevant director’s and employee’s remuneration packages
based on the prevailing share price to ensure that the options suitably incentivised them to build shareholder value,
those options, which had exercise prices ranging from $1.20 to $2.40 were cancelled and re-issued at an exercise
price of $0.80.
The incremental fair value granted was $163,980.
The incremental fair value granted was measured by comparing the fair value on the grant date of the cancelled options
to the fair value on the grant date of the re-issued options.
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 34. Share-based payments (continued)
57
Set out below are summaries of options granted under the plan:
2022
Balance at
Expired/
Balance at
Exercise
the start of
Replaced/
forfeited/
the end of
Grant date
Expiry date
price
the year
Granted
(cancelled)
other*
the year
21/12/2016
29/11/2021
$2.0000
49,950
-
-
(49,950)
-
22/05/2017
22/05/2022
$0.8000
500,000
-
-
(500,000)
-
01/07/2017
17/05/2022
$0.8000
653,075
-
-
(653,075)
-
16/07/2017
16/07/2022
$0.8000
3,073,296
-
-
-
3,073,296
14/12/2017
22/05/2022
$0.8000
2,823,296
-
-
(2,823,296)
-
14/12/2017
10/01/2023
$1.0000
400,000
-
-
-
400,000
14/12/2017
22/05/2022
$0.8000
2,823,296
-
-
(2,823,296)
-
15/12/2017
15/12/2022
$1.0000
-
-
-
-
-
08/01/2018
07/01/2023
$0.8000
768,324
-
-
-
768,324
24/02/2018
23/02/2023
$0.8000
30,000
-
-
(30,000)
-
28/02/2018
27/02/2023
$0.8000
30,000
-
-
(30,000)
-
01/04/2018
31/03/2023
$0.8000
525,363
-
-
(264,494)
260,869
31/07/2018
30/07/2023
$0.8000
52,734
-
-
-
52,734
28/02/2019
27/02/2024
$0.8000
50,781
-
-
-
50,781
18/03/2019
18/03/2024
$0.4500
50,000
-
-
-
50,000
31/03/2019
30/03/2024
$0.8000
25,781
-
-
-
25,781
17/06/2019
16/06/2024
$0.4500
50,000
-
-
(50,000)
-
31/07/2019
30/07/2024
$0.8000
14,192
-
-
(14,192)
-
31/08/2019
30/08/2024
$0.8000
217,578
-
-
(86,719)
130,859
30/09/2019
29/09/2024
$0.8000
42,500
-
-
(42,500)
-
23/10/2019
22/10/2024
$0.8000
25,000
-
-
(25,000)
-
15/11/2019
15/11/2024
$0.8000
50,000
-
-
-
50,000
17/12/2019
17/12/2024
$1.0000
24,000
-
-
-
24,000
16/01/2020
16/01/2024
$0.4500
206,612
-
-
-
206,612
10/02/2020
10/02/2025
$1.0000
50,000
-
-
-
50,000
06/08/2020
06/08/2025
$0.3700
2,267,042
-
-
(298,356)
1,968,686
06/08/2020
06/08/2025
$0.4400
2,267,042
-
-
(298,356)
1,968,686
06/08/2020
06/08/2025
$0.5000
2,267,034
-
-
(298,355)
1,968,679
06/08/2020
14/12/2022
$0.8000
845,156
-
-
-
845,156
06/08/2020
21/11/2024
$0.4400
55,664
-
-
-
55,664
06/08/2020
26/11/2024
$0.4400
25,781
-
-
(25,781)
-
06/08/2020
03/12/2024
$0.4400
54,688
-
-
(54,688)
-
06/08/2020
01/01/2025
$0.4400
25,781
-
-
(25,781)
-
06/08/2020
25/05/2025
$0.4400
42,969
-
-
(42,969)
-
06/08/2020
09/06/2025
$0.4400
31,641
-
-
(31,641)
-
06/08/2020
11/06/2025
$0.4400
55,078
-
-
-
55,078
06/08/2020
30/06/2025
$0.4400
70,703
-
-
(25,781)
44,922
06/08/2020
01/07/2025
$0.4400
117,188
-
-
(117,188)
-
Subtotal
20,661,545
-
-
(8,611,418)
12,050,127
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 34. Share-based payments (continued)
58
2022
Balance at
Expired/
Balance at
(continued)
Exercise
the start of
Replaced/
forfeited/
the end of
Grant date
Expiry date
price
the year
Granted
(cancelled)
other*
the year
06/08/2020
06/07/2025
$0.44
25,781
-
-
-
25,781
06/08/2020
20/07/2025
$0.44
22,266
-
-
(22,266)
-
06/08/2020
26/08/2025
$0.44
19,922
-
-
-
19,922
06/08/2020
22/09/2025
$0.44
29,297
-
-
-
29,297
06/08/2020
13/10/2025
$0.44
175,000
-
-
-
175,000
17/08/2020
17/08/2025
$0.37
951,672
-
-
-
951,672
17/08/2020
17/08/2025
$0.44
951,672
-
-
-
951,672
17/08/2020
17/08/2025
$0.50
951,672
-
-
-
951,672
09/10/2020
09/01/2026
$0.44
35,156
-
-
(35,156)
-
17/11/2020
17/11/2025
$0.44
15,234
-
-
-
15,234
26/12/2020
26/12/2025
$0.44
18,750
-
-
-
18,750
01/01/2021
01/01/2026
$0.44
4,883
-
-
-
4,883
13/01/2021
13/01/2026
$0.44
37,500
-
-
-
37,500
26/01/2021
26/01/2026
$0.44
28,125
-
-
(28,125)
-
09/02/2021
09/02/2026
$0.44
32,813
-
-
(32,813)
-
16/02/2021
16/02/2026
$0.44
33,984
-
-
(33,984)
-
25/04/2021
25/04/2026
$0.44
14,531
-
-
-
14,531
22/06/2021
22/06/2026
$0.44
51,563
-
-
(18,750)
32,813
29/06/2021
29/06/2026
$0.44
22,266
-
-
-
22,266
19/07/2021
19/07/2026
$0.20
-
35,156
-
-
35,156
13/08/2021
13/08/2026
$0.20
-
33,516
-
-
33,516
12/11/2021
12/11/2026
$0.20
-
3,566,330
-
(498,588)
3,067,742
18/01/2022
18/01/2027
$0.20
-
19,922
-
-
19,922
18/04/2022
18/04/2027
$0.20
-
32,813
-
-
32,813
Grand total
24,083,632
3,687,737
-
(9,281,100)
18,490,269
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 34. Share-based payments (continued)
59
2021
Balance at
Expired/
Balance at
Exercise
the start of
Replaced/
forfeited/
the end of
Grant date
Expiry date
price
the year
Granted
(cancelled)
other*
the year
21/12/2016
29/11/2021
$2.0000
49,950
-
-
-
49,950
22/05/2017
22/05/2022
$0.8000
500,000
-
-
-
500,000
01/07/2017
17/05/2022
$0.8000
150,000
-
-
-
150,000
01/07/2017
17/05/2022
$0.8000
326,538
-
-
-
326,538
01/07/2017
17/05/2022
$1.2000
58,846
-
(58,846)
-
-
01/07/2017
17/05/2022
$1.6000
58,846
-
(58,846)
-
-
01/07/2017
17/05/2022
$1.6000
58,846
-
(58,846)
-
-
16/07/2017
16/07/2022
$0.8000
200,000
-
-
-
200,000
16/07/2017
16/07/2022
$0.8000
1,536,648
-
-
-
1,536,648
16/07/2017
16/07/2022
$1.2000
445,549
-
(445,549)
-
-
16/07/2017
16/07/2022
$1.6000
445,549
-
(445,549)
-
-
16/07/2017
16/07/2022
$1.6000
445,549
-
(445,549)
-
-
24/07/2017
24/07/2022
$0.8000
50,000
-
-
(50,000)
-
24/07/2017
24/07/2022
$0.8000
845,156
-
-
(845,156)
-
24/07/2017
24/07/2022
$1.2000
265,052
-
-
(265,052)
-
24/07/2017
24/07/2022
$1.6000
265,052
-
-
(265,052)
-
24/07/2017
24/07/2022
$1.6000
265,052
-
-
(265,052)
-
14/12/2017
22/05/2022
$0.8000
2,823,296
-
-
-
2,823,296
14/12/2017
22/05/2022
$1.2000
941,099
-
(941,099)
-
-
14/12/2017
22/05/2022
$1.6000
941,099
-
(941,099)
-
-
14/12/2017
22/05/2022
$1.6000
941,099
-
(941,099)
-
-
14/12/2017
10/01/2023
$1.0000
400,000
-
-
-
400,000
08/01/2018
07/01/2023
$0.8000
192,081
-
-
-
192,081
08/01/2018
07/01/2023
$1.2000
192,081
-
(192,081)
-
-
08/01/2018
07/01/2023
$1.6000
384,162
-
(384,162)
-
-
24/02/2018
23/02/2023
$0.8000
30,000
-
-
-
30,000
28/02/2018
27/02/2023
$0.8000
30,000
-
-
-
30,000
01/04/2018
31/03/2023
$0.8000
63,147
-
-
(4,375)
58,772
01/04/2018
31/03/2023
$1.2000
47,360
-
(44,079)
(3,281)
-
01/04/2018
31/03/2023
$1.6000
47,360
-
(44,079)
(3,281)
-
01/04/2018
31/03/2023
$1.6000
136,530
-
(133,249)
(3,281)
-
01/04/2018
31/03/2023
$2.4000
136,530
-
(133,249)
(3,281)
-
01/04/2018
31/03/2023
$0.8000
89,171
-
-
(16,602)
72,569
01/04/2018
31/03/2023
$1.2000
89,170
-
(89,170)
-
-
30/04/2018
29/04/2023
$0.8000
9,766
-
-
(9,766)
-
30/04/2018
29/04/2023
$1.2000
9,766
-
-
(9,766)
-
30/04/2018
29/04/2023
$1.6000
9,766
-
-
(9,766)
-
30/04/2018
29/04/2023
$2.4000
9,766
-
-
(9,766)
-
31/07/2018
30/07/2023
$0.8000
20,508
-
-
(7,324)
13,184
31/07/2018
30/07/2023
$1.2000
20,508
-
(20,508)
-
-
Subtotal
13,530,898
-
(5,377,059)
(1,770,801)
6,383,038
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 34. Share-based payments (continued)
60
2021
Balance at
Expired/
Balance at
(continued)
Exercise
the start of
Replaced/
forfeited/
the end of
Grant date
Expiry date
price
the year
Granted
(cancelled)
other*
the year
31/07/2018
30/07/2023
$1.6000
20,508
-
(20,508)
-
-
31/07/2018
30/07/2023
$2.4000
20,508
-
(20,508)
-
-
31/12/2018
30/12/2023
$0.8000
7,031
-
-
(7,031)
-
31/12/2018
30/12/2023
$1.2000
7,031
-
(7,031)
-
-
31/12/2018
30/12/2023
$1.6000
7,031
-
(7,031)
-
-
31/12/2018
30/12/2023
$2.4000
7,031
-
(7,031)
-
-
28/02/2019
27/02/2024
$0.8000
12,695
-
-
-
12,695
28/02/2019
27/02/2024
$1.2000
12,695
-
(12,695)
-
-
28/02/2019
27/02/2024
$1.6000
12,695
-
(12,695)
-
-
28/02/2019
27/02/2024
$2.4000
12,695
-
(12,695)
-
-
31/03/2019
30/03/2024
$0.8000
6,445
-
-
-
6,445
31/03/2019
30/03/2024
$1.2000
6,445
-
(6,445)
-
-
31/03/2019
30/03/2024
$1.6000
6,445
-
(6,445)
-
-
31/03/2019
30/03/2024
$2.4000
6,445
-
(6,445)
-
-
30/04/2019
29/04/2024
$0.8000
4,981
-
-
(4,981)
-
30/04/2019
29/04/2024
$1.2000
4,981
-
(4,981)
-
-
30/04/2019
29/04/2024
$1.6000
4,981
-
(4,981)
-
-
30/04/2019
29/04/2024
$2.4000
4,981
-
(4,981)
-
-
31/07/2019
30/07/2024
$0.8000
3,548
-
-
-
3,548
31/07/2019
30/07/2024
$1.2000
3,548
-
(3,548)
-
-
31/07/2019
30/07/2024
$1.6000
3,548
-
(3,548)
-
-
31/07/2019
30/07/2024
$2.4000
3,548
-
(3,548)
-
-
31/08/2019
30/08/2024
$0.8000
54,395
-
-
-
54,395
31/08/2019
30/08/2024
$1.2000
54,395
-
(54,395)
-
-
31/08/2019
30/08/2024
$1.6000
54,395
-
(54,395)
-
-
31/08/2019
30/08/2024
$2.4000
54,395
-
(54,395)
-
-
30/09/2019
29/09/2024
$0.8000
33,125
-
-
-
33,125
30/09/2019
29/09/2024
$1.2000
3,125
-
(3,125)
-
-
30/09/2019
29/09/2024
$1.6000
3,125
-
(3,125)
-
-
30/09/2019
29/09/2024
$2.4000
3,125
-
(3,125)
-
-
18/03/2019
18/03/2019
$0.4500
12,500
-
-
-
12,500
18/03/2019
18/03/2020
$0.4500
12,500
-
-
-
12,500
18/03/2019
18/03/2021
$0.4500
12,500
-
-
-
12,500
18/03/2019
18/03/2022
$0.4500
12,500
-
-
-
12,500
17/06/2019
16/06/2024
$0.4500
12,500
-
-
-
12,500
17/06/2019
16/06/2024
$0.4500
12,500
-
-
-
12,500
17/06/2019
16/06/2024
$0.4500
12,500
-
-
-
12,500
17/06/2019
16/06/2024
$0.4500
12,500
-
-
-
12,500
23/10/2019
22/10/2024
$0.8000
6,250
-
-
-
6,250
23/10/2019
22/10/2024
$0.8000
6,250
-
-
-
6,250
23/10/2019
22/10/2024
$0.8000
6,250
-
-
-
6,250
23/10/2019
22/10/2024
$0.8000
6,250
-
-
-
6,250
16/01/2020
16/01/2024
$0.4500
206,612
-
-
-
206,612
01/07/2017
17/05/2022
$0.8000
-
-
176,538
-
176,538
16/07/2017
16/07/2022
$0.8000
-
-
1,336,648
-
1,336,648
14/12/2017
22/05/2022
$0.8000
-
-
2,823,296
-
2,823,296
08/01/2018
07/01/2023
$0.8000
-
-
576,243
-
576,243
01/04/2018
31/03/2023
$0.8000
-
-
443,826
(49,805)
394,021
31/07/2018
30/07/2023
$0.8000
-
-
61,523
(21,973)
39,550
31/12/2018
30/12/2023
$0.8000
-
-
21,094
(21,094)
-
Subtotal
771,508
-
5,121,492
(104,884)
5,788,116
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 34. Share-based payments (continued)
61
2021
Balance at
Expired/
Balance at
(continued)
Exercise
the start of
Replaced/
forfeited/
the end of
Grant date
Expiry date
price
the year
Granted
(cancelled)
other*
the year
28/02/2019
27/02/2024
$0.8000
-
-
38,086
-
38,086
31/03/2019
30/03/2024
$0.8000
-
-
19,336
-
19,336
30/04/2019
29/04/2024
$0.8000
-
-
14,942
(14,942)
-
31/07/2019
30/07/2024
$0.8000
-
-
10,644
-
10,644
31/08/2019
30/08/2024
$0.8000
-
-
163,184
-
163,184
30/09/2019
29/09/2024
$0.8000
-
-
9,375
-
9,375
06/08/2020
06/08/2025
$0.3700
-
2,314,963
-
(47,921)
2,267,042
06/08/2020
06/08/2025
$0.4400
-
2,314,963
-
(47,921)
2,267,042
06/08/2020
06/08/2025
$0.5000
-
2,314,955
-
(47,920)
2,267,035
06/08/2020
14/12/2022
$0.8000
-
845,156
-
-
845,156
06/08/2020
21/11/2024
$0.4400
-
55,664
-
-
55,664
06/08/2020
26/11/2024
$0.4400
-
25,781
-
-
25,781
06/08/2020
03/12/2024
$0.4400
-
54,688
-
-
54,688
06/08/2020
01/01/2025
$0.4400
-
25,781
-
-
25,781
06/08/2020
25/05/2025
$0.4400
-
42,969
-
-
42,969
06/08/2020
10/05/2025
$0.4400
-
22,266
-
(22,266)
-
06/08/2020
09/06/2025
$0.4400
-
31,641
-
-
31,641
06/08/2020
11/06/2025
$0.4400
-
55,078
-
-
55,078
06/08/2020
30/06/2025
$0.4400
-
70,703
-
-
70,703
06/08/2020
01/07/2025
$0.4400
-
117,188
-
-
117,188
06/08/2020
06/07/2025
$0.4400
-
25,781
-
-
25,781
06/08/2020
20/07/2025
$0.4400
-
22,266
-
-
22,266
06/08/2020
26/08/2025
$0.4400
-
19,922
-
-
19,922
06/08/2020
22/09/2025
$0.4400
-
29,297
-
-
29,297
06/08/2020
13/10/2025
$0.4400
-
175,000
-
-
175,000
17/12/2019
17/12/2024
$1.0000
-
24,000
-
-
24,000
15/11/2019
15/11/2024
$0.8000
-
50,000
-
-
50,000
10/02/2020
10/02/2025
$1.0000
-
50,000
-
-
50,000
17/08/2020
17/08/2025
$0.3700
-
951,672
-
-
951,672
17/08/2020
17/08/2025
$0.4400
-
951,672
-
-
951,672
17/08/2020
17/08/2025
$0.5000
-
951,672
-
-
951,672
09/10/2020
09/01/2026
$0.4400
-
35,156
-
-
35,156
17/11/2020
17/11/2025
$0.4400
-
15,234
-
-
15,234
26/12/2020
26/12/2025
$0.4400
-
18,750
-
-
18,750
01/01/2021
01/01/2026
$0.4400
-
4,883
-
-
4,883
13/01/2021
13/01/2026
$0.4400
-
37,500
-
-
37,500
26/01/2021
26/01/2026
$0.4400
-
28,125
-
-
28,125
09/02/2021
09/02/2026
$0.4400
-
32,813
-
-
32,813
16/02/2021
16/02/2026
$0.4400
-
33,984
-
-
33,984
25/04/2021
25/04/2026
$0.4400
-
14,531
-
-
14,531
22/06/2021
22/06/2026
$0.4400
-
51,564
-
-
51,564
29/06/2021
29/06/2026
$0.4400
-
22,266
-
-
22,266
Grand total
14,302,403
11,837,884
-
(2,056,655)
24,083,632
Weighted average exercise price
$1.1220
$0.4680
$2.3020
$1.0470
$0.6410
*
Represents a correction for options which were issued under the share option plan in prior periods but which were
not included in the above table in prior periods.
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 34. Share-based payments (continued)
62
Set out below are the options exercisable at the end of the financial year:
2022
2021
Grant Date
Expiry Date
Number
Number
21/12/2016
29/11/2021
-
49,950
22/05/2017
22/05/2022
-
500,000
01/07/2017
17/05/2022
-
476,538
16/07/2017
16/07/2022
3,073,296
1,736,648
14/12/2017
10/01/2022
400,000
3,223,296
08/01/2018
07/01/2023
768,324
192,081
24/02/2018
23/02/2023
-
30,000
28/02/2018
27/02/2023
-
30,000
01/04/2018
31/03/2023
260,869
131,341
31/08/2019
30/08/2024
65,430
54,395
31/07/2018
30/07/2023
39,551
13,184
28/02/2019
27/02/2024
38,086
12,695
31/03/2019
30/03/2024
-
6,445
30/04/2019
29/04/2024
-
3,548
18/03/2019
18/03/2019
-
12,500
18/03/2019
18/03/2020
-
12,500
17/06/2019
16/06/2024
-
37,500
23/10/2019
22/10/2024
-
12,500
16/01/2020
16/01/2024
206,612
206,612
30/09/2019
29/09/2024
-
33,125
18/03/2019
18/03/2021
-
12,500
01/07/2017
17/05/2022
-
176,538
16/07/2017
16/07/2022
-
1,336,648
14/12/2017
22/05/2022
-
2,823,296
08/01/2018
07/01/2023
-
576,243
01/04/2018
31/03/2023
-
277,374
31/07/2018
30/07/2023
-
13,184
28/02/2019
27/02/2024
-
12,695
31/03/2019
30/03/2024
19,336
6,445
06/08/2020
14/12/2022
845,156
845,156
06/08/2020
21/11/2024
27,832
13,916
06/08/2020
26/11/2024
-
6,445
06/08/2020
03/12/2024
-
13,672
06/08/2020
01/01/2025
-
6,445
06/08/2020
25/05/2025
-
10,742
06/08/2020
09/06/2025
-
7,910
06/08/2020
11/06/2025
27,538
13,769
06/08/2020
30/06/2025
22,460
17,675
17/12/2019
17/12/2024
18,000
12,000
15/11/2019
15/11/2024
37,500
25,000
10/02/2020
10/02/2025
-
25,000
18/03/2019
18/03/2024
50,000
-
10/02/2020
10/02/2025
37,500
-
06/08/2020
06/07/2025
6,445
-
06/08/2020
26/08/2025
4,980
-
06/08/2020
22/09/2025
7,324
-
06/08/2020
13/10/2025
43,750
-
17/11/2020
17/11/2025
3,808
-
26/12/2020
26/12/2025
4,687
-
01/01/2021
01/01/2026
1,220
-
6,009,704
13,007,511
Total Brain Limited
Notes to the financial statements
30 June 2022
Note 34. Share-based payments (continued)
63
2022
2021
Grant Date
Expiry Date
Number
Number
13/01/2021
13/01/2026
9,375
-
25/04/2021
25/04/2026
3,632
-
22/06/2021
22/06/2026
8,203
-
29/06/2021
29/06/2026
5,566
-
12/11/2021
12/11/2026
766,938
-
6,803,418
13,007,511
The weighted average remaining contractual life of options outstanding at the end of the financial year was 2.74 years
(2021: 2.49 years).
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at
the grant date, are as follows:
Grant date
Expiry date
Share price
at grant date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
interest rate
Fair value at
grant date
19/07/2021
19/07/2026
$0.3130
$0.2000
75.00%
-
0.5950%
$0.2160
13/08/2021
13/08/2026
$0.2510
$0.2000
75.00%
-
0.6200%
$0.1630
12/11/2021
12/11/2026
$0.1520
$0.2000
75.00%
-
1.4350%
$0.0850
18/01/2022
18/01/2027
$0.1210
$0.2000
75.00%
-
1.5850%
$0.0620
18/04/2022
18/04/2027
$0.1080
$0.2000
75.00%
-
2.6250%
$0.0540
It is noted that some of the options in the above table have Grant dates that relate to prior reporting periods. The
relating share-based payment expense in relation to these options has been recognised in the current reporting period
only.
Any effect on prior period share-based payment expense has been considered immaterial by management.
Note 35. Events after the reporting period
On 5 August 2022, the Company announced the binding agreement to sell the Group’s business through a sale of
assets and then commence winding up of the Company. Refer to note 2 for further details.
No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly
affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
Total Brain Limited
Directors' declaration
30 June 2022
64
In the directors' opinion:
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards,
the Corporations Regulations 2001 and other mandatory professional reporting requirements;
●
the attached financial statements and notes comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board as described in note 2 to the financial statements;
●
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30
June 2022 and of its performance for the financial year ended on that date; and
●
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Mr Matthew Morgan
Non-Executive Director
30 September 2022
Grant Thornton Audit Pty Ltd
King George Central
Level 18
145 Ann Street
Brisbane QLD 4000
GPO Box 1008
Brisbane QLD 4001
T +61 7 3222 0200
www.grantthornton.com.au
ACN-130 913 594
Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389.
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or
refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL).
GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member
firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one
another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127
556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards
Legislation.
Independent Auditor’s Report
To the Members of Total Brain Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Total Brain Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated
statement of profit or loss and other comprehensive income, consolidated statement of changes in equity
and consolidated statement of cash flows for the year then ended, and notes to the consolidated 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:
a giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its performance
for the year ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the 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 (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
© 2022 Grant Thornton Australia Limited.
Emphasis of matter – Realisation basis of accounting
We draw attention to note 2 alternative basis of preparation (realisation basis) in the notes to the financial
statements, which indicates the Company’s determination that they are no longer a going concern based on the
Directors’ intent to wind-up the Company post completion of the business sale transaction. Our opinion is not
modified in relation to 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.
Key audit matter
How our audit addressed the key audit matter
Revenue Recognition (Note 5)
The Group has recognised $8,415,593 of revenue during the
period
AASB 15 Revenue from Contracts with Customers requires
companies to assess revenue recognition using a five-step
approach to meeting performance obligations.
This area is a key audit matter due to the judgement required
in assessing revenue recognition and the presumed
increased level of risk in relation to revenue recognition,
particularly for Total Brain Limited, given the focus by
stakeholders on revenue growth.
Our procedures included, amongst others:
•
Understanding and documenting the relevant
processes and controls to record revenue;
•
Reviewing revenue recognition policies and
Management’s assessment of the application of
the five-step model under AASB 15;
•
Performing cut-off testing to assess whether
revenue has been recorded in the correct period
by inspecting supporting documentation;
•
Analytically reviewing revenue values and
associated ratios, with any items outside of the
audit expectations investigated further;
•
Testing a sample of revenue transactions to
evaluate whether revenue recognition is
appropriate by inspecting sales contracts,
assessing Management’s identification of
performance obligations and variable
consideration, and evaluating the timing of
revenue recognition; and
•
Evaluating the adequacy of the related disclosures
in the financial report.
© 2022 Grant Thornton Australia Limited.
Assets and Liabilities Held for Sale (Notes 2, 12 and 19)
Total Brain Limited has determined that in March 2022, the
assets and liabilities to be sold to Sondermind Inc. meet the
classification of Held for Sale assets and liabilities under
AASB 5 Non-current Assets Held for Sale and Discontinued
Operations. Management has measured these assets and
liabilities at the lower of their carrying amounts and fair value
less costs to sell.
The carrying amounts of the intangible assets and other
assets have been written down to their recoverable amounts
with reference to the contract price within the Sondermind
Inc. transaction. This includes an impairment to intangible
assets of $7,581,129.
This area is a key audit matter, given the material value of
the adjustments recorded and the significant disclosures
required in the financial statements.
Our procedures included, amongst others:
•
Assessing the appropriateness of the classification
of the assets and liabilities held for sale in the
context of AASB 5;
•
Agreeing the expected sales consideration
included in the fair value less costs to sell
calculation to appropriate supporting
documentation;
•
Testing the mathematical accuracy of the fair
value less costs to sell calculation upon which the
measurement of assets and liabilities are based;
and
•
Assessing whether the disclosures within the
financial report are reasonable in light of the
requirements of Australian Accounting Standards.
Information other than the financial report and auditor’s report thereon
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 2022 but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and 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 Group’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1_2020.pdf.This
description forms part of our auditor’s report.
© 2022 Grant Thornton Australia Limited.
Report on the remuneration report
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.
Grant Thornton Audit Pty Ltd
Chartered Accountants
CDJ Smith
Partner – Audit & Assurance
Brisbane, 30 September 2022
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 9 to 15 of the Directors’ report for the year
ended 30 June 2022.
In our opinion, the Remuneration Report of Total Brain Limited, for the year ended 30 June 2022 complies
with section 300A of the Corporations Act 2001.
Total Brain Limited
Shareholder information
30 June 2022
69
The shareholder information set out below was applicable as at 19 September 2022.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Ordinary shares
% of total
number of
Number
shares
shares
of holders
issued
issued
1 to 1,000
135
0.05
68,666
1,001 to 5,000
312
0.67
886,768
5,001 to 10,000
161
0.93
1,241,811
10,001 to 100,000
330
9.07
12,132,180
100,001 and over
110
89.28
119,391,706
1,048
100.00
133,721,131
Holding less than a marketable parcel
-
-
-
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
% of total
shares
Number held
issued
CITICORP NOMINEES PTY LIMITED
39,642,967
29.65
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
13,876,848
10.38
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
7,426,071
5.55
STUTTGART PTY LTD
4,978,562
3.72
BNP PARIBAS NOMINEES PTY LTD
3,841,589
2.87
STANDARD INVESTMENTS PTY LTD
3,000,000
2.24
INVIA CUSTODIAN PTY LIMITED
2,922,642
2.19
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
2,597,225
1.94
MR DAVID A DAGLIO
1,453,349
1.09
LIMITLESS VENTURES
1,442,307
1.08
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
1,131,715
0.85
DR EVIAN GORDON
1,124,025
0.84
BAXTER MANOR PTY LTD
1,107,692
0.83
MRS NUN SOL JANG
1,098,328
0.82
DBPC GROUP FINANCE PTY LTD
1,025,000
0.77
CEYX HOLDINGS PTY LTD
1,000,000
0.75
ARCH 2000 MANAGEMENT PTY LTD
1,000,000
0.75
CEYX INVESTMENTS PTY LTD
1,000,000
0.75
ROSHERVILLE PTY LTD
950,000
0.71
MRS DIANE COLMAN
900,000
0.67
91,518,320
68.45
Total Brain Limited
Shareholder information
30 June 2022
70
Unquoted equity securities
Number
Number
on issue
of holders
Options over ordinary shares issued
23,490,269
47
The following persons hold 20% or more of unquoted equity securities:
Name
Class
Number held
MR MATT MUND
Unlisted options
5,037,304
MR ROBERT DOMINIC TORESCO
Unlisted options
5,000,000
Substantial holders
Substantial holders in the Company are set out below:
Ordinary shares
% of total
shares
Number held
issued
ZOLTAN VARGA
21,842,679
16.33
MR DAVID A DAGLIO
8,403,529
6.28
MR DAVID TORRIBLE
7,370,793
5.51
SUN HUNG KAI GROUP
6,992,500
5.23
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
There are no other classes of equity securities.
Total Brain Limited
Back cover
30 June 2022
71
Annual Report
Year Ended 30 June 2022
ir@totalbrain.com
ASX: TTB
ABN. 24. 094. 069. 682