Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - Vyant Bio, Inc. | exh992vivopharmproforma.htm |
| EX-23.1 - EXHIBIT 23.1 - Vyant Bio, Inc. | exh231connectconsent.htm |
| 8-K/A - 8-K/A - Vyant Bio, Inc. | a8-kvivopharmproforma.htm |
INDEPENDENT AUDITOR'S REPORT
Level 6,
488 Bourke Street,
Melbourne.
VIC 3000
Tel : +613 8080 1525
Web: www.connectaudit.com.au
TO THE MEMBERS OF VIVOPHARM PTY LTD & CONTROLLED ENTITIES
Opinion
We have audited the financial report of VivoPharm Pty Ltd & Controlled Entities (the Group), which
comprises the statement of financial position as at 30 June 2017, the statement of profit or loss and
other comprehensive income, the statement of cash flows and the statement of changes in equity for
the year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and the directors ' declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
a) giving a true and fair view of the Group's financial position as at 30 June 2017, 30 June 2016 and 1
July 2015 and of its financial performance for the years ended 30 June 2017 and 30 June 2016; and
b) complying with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB).
Basis for opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States
of America (GAAS). Our responsibilities under those standards are further described in the Auditor's
Responsibilities for the Audit of the Financial Report section of our report. We are independent of the
Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the
ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of
Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Group, would be in the same terms if given to the directors as at the time
of this auditor's report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion .
Responsibilities of the directors for the financial report
The directors of the Group are responsible for the preparation of the financial report that gives a true
and fair view in accordance with International Financial Reporting Standards. The directors'
responsibility also includes such internal control as the directors determine is necessary to enable the
preparation of a 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.
CH AR TERED ACCO U NTANTS
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 auditing standards generally accepted in the United States of America
(GAAS) 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.
An audit involves performing procedures to obtain audit evidence about the amounts and the
disclosures in the financial statements. The procedures selected depend on the auditor's judgement,
including the assessment of the risks of material misstatement of the financial statements, whether due
to fraud or error. In making those risk assessments, the auditor considers internal control relevant to
the entity's preparation and fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation
of the financial statement.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
reasonable basis for our audit opinion
George Georgiou FCA
ASIC Reg No 10310
27th October 2017
Melbourne Victoria
· V/VOPHARM PTY LTD
and controlled entities
ABN 97 106 101 615
V/VOPHARM PTY LTD
ABN 97 106 101 615
ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2017
- 1 -
V/VOPHARM PTY LTD
ABN 97 106 101 615
Statement of Profit or Loss and Other
Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2017
Revenues from services
Administration and corporate costs
Employee benefits and directors' fees
Lab consumables and movements in cell bank
inventories
Occupancy Costs
Profit before depreciation and amortisation,
finance costs and income tax expense
Depreciation and amortisation expense
Finance costs
Loss before income tax
Income tax expense
Profit/{Loss) for the year
Foreign currency gains/(losses) arising on
translation of foreign operation that may be
subsequently credited/(charged) to profit or loss
Total comprehensive loss attributable to
members of the Company
Note
4
The accompanying notes form part of these statements
2017
$
6,696,488
{1,831,194)
(3,782,964)
{256,013)
{402,246)
424,071
{172,324)
{559,037)
{307,290)
(307,290)
{2,680)
(309,970)
2016*
$
5,714,199
(1,530,320)
(3,352,839)
26,345
(383,295)
474,090
(172,480)
(444,117)
(142,507)
(142,507)
7,194
(135,313)
* Previously reported under a Special Purpose Financial Reporting Framework and now under IFRS. Refer note 17
-2 -
V/VOPHARM PTY LTD
ABN 97 106 101 615
Statement of Financial Position
AS AT 30 JUNE 2017
Note 2017 2016* 1 July 2015*
$ $ $
ASSETS
CURRENT ASSETS
Cash and cash equivalents 1,391,856 254,134 162,329
Trade receivables and other assets 6 521,887 727,095 591,998
Cell bank stock 1,573,041 1,420,762 969,408
TOTAL CURRENT ASSETS 3,486,784 2,401,991 1,723,735
NON-CURRENT ASSETS
Rental bond deposits 36,655 34,014 33,469
Plant and equipment 7 1,244,559 1,410,586 1,394,506
Goodwill 8 289,405 289,405 289,405
Patents and intellectual property 2(m) 15,710 17,367 19,022
TOTAL NON-CURRENT ASSETS 1,586,329 1,751,372 1,736,402
TOTAL ASSETS 5,073,113 4,153,363 3,460,137
LIABILITIES
CURRENT LIABILITIES
Bank overdraft 24,330 38,532
Unsecured trade and other payables 647,652 444,774 415,782
Revenues received in-advance 1,358,288 635,043 341,369
Provisions for employee benefits 123,523 110,578 108,056
Finance leases 71,514 66,894 8,198
Lease incentive liability 9 179,282 185,597 168,219
Redeemable preference shares 10 3,669,550 3,155,862 2,752,931
Puttable ordinary shares 11 787,500 787,500 787,500
TOTAL CURRENT LIABILITIES 6,837,309 5,410,578 4,620,587
NON-CURRENT LIABILITIES
Finance leases 85,734 164,387 18,290
Lease incentive liability 9 593,905 763,266 906,540
TOTAL NON-CURRENT LIABILITIES 679,639 927,653 924,830
TOTAL LIABILITIES 7,516,948 6,338,231 5,545,417
NET (DEFICIENCY OF) ASSETS (2,443,835) (2,184,868) (2,085,280)
EQUITY
Ordinary share capital 11 100 100 100
Employee share option reserve 120,376 69,373 33,648
Foreign currency translation reserve 18,000 20,680 13,486
(Accumulated losses)/ retained earnings (2,582,311) (2,275,021) (2,132,514)
TOTAL DEFICIENCY OF EQUITY (2,443,835) (2,184,868) (2,085,280)
The accompanying notes form part of these statements
*Previously reported under a Special Purpose Financial Reporting Framework and now under IFRS. Refer note 17
- 3 -
V/VOPHARM PTY LTD
ABN 97 106 101 615
Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2017
Ordinary Foreign Employee Retained
and currency share earnings Total
preference translation option (accumulated equity
shares reserve reserve losses)
$ $ $ $ $
Balance at 1 July 2015* 1,647,985 13,486 29,899 162,498 1,853,868
Adjustments to equity
balances upon
adoption of IFRS in-
accordance with IAS 1
(refer note 17) (1,647,885) 3,749 (2,295,012) (3,939,148)
Restated ba la nee at 1
July 2015 100 13,486 33,648 (2,132,514) (2,085,280)
Comprehensive loss for
the year ended 30 June
2016* 7,194 (142,507) (135,313)
Transactions with
owners in their
capcacity as owners
Vesting of employee
share options 35,725 35,725
Balance at 30 June
2016* 100 20,680 69,373 (2,275,021) (2,184,868)
Comprehensive loss for
the year ended 30 June
2017 (2,680) (307,290) (309,970)
Transactions with
owners in their
capcacity as owners
Vesting of employee
share options 51,003 51,003
Balance at 30 June
2017 100 18,000 120,376 (2,582,311) (2,443,835)
The accompanying notes form part of these statements
*Previously reported under a Special Purpose Financial Reporting Framework and now under IFRS. Refer note 17
- 4 -
Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Payments of interest expense
Note
Net cash flows provided by operating activities 14
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of plant and equipment
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of leases and lease incentive
provisions
Loans from/ (advances to) related parties
Net cash flows provided by financing activities
Net increase in cash held
Currency fluctuations on cash and cash
equivalents
Cash and cash equivalents at the beginning of the
financial year
Cash and cash equivalents at the end of the
financial year net of bank overdrafts
The accompanying notes form part of these statements
2017
$
7,836,538
{6,369,467)
(45,349)
1,421,722
{28,087)
(28,087)
{227,572)
(227,572)
1,166,063
{4,011)
229,804
1,391,856
V/VOPHARM PTY LTD
ABN 97 106 101 615
2016*
$
6,068,174
(5,812,793)
(41,186)
214,195
(14,831)
(14,831)
(94,832)
(6,829)
(101,661)
106,007
8,304
123,797
229,804
*Previously reported under a Special Purpose Financial Reporting Framework and now under IFRS. Refer note 17
- 5 -
Notes to the financial statements
V/VOPHARM PTY LTD
ABN 97 106 101 615
Throughout these notes to the financial statements, the application of an asterix (*) means that the results are
previously reported under a Special Purpose Financial Reporting Framework, as discussed in note 17.
1. CORPORATE INFORMATION
These are the financial statements of vivoPharm Pty Ltd (the company) and its 100% owned subsidiaries, including
RDDT, a vivoPharm Company Pty Ltd (incorporated and domiciled in Victoria, Australia), vivoPharm Europe Limited
(incorporated and domiciled in Munich, Germany) and vivoPharm LLC (incorporated in Delaware and domiciled in
Hummelstown, Pennsylvania, USA) (together, the group) . Unless otherwise stated, all amounts are presented in
$AUD. These financial statements were authorised for issue by the directors on 18'h October 2017.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of accounting
The directors have prepared these financial statements in compliance with the International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board ('IASB') .
This is the first time that these financial statements have been applied under IFRS. The directors have applied a
transition date on the statement of financial position effective 30 June 2015. All adjustments applied to this
transition date statement of financial position are discussed and set out in note 17, applying the accounting policies
set out below.
These financial statements, except for the cash flow information, have been prepared on an accruals basis and are
based on historical costs unless otherwise stated in the notes. The amounts presented in the financial statements
have been rounded to the nearest dollar.
{b) Principles of Consolidation
These consolidated financial statements comprise the financial statements of the company and its controlled
entities throughout reporting period . The group controls an entity when it 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.
The financial statements of the controlled entities used in the preparation of the consolidated financial statements
are prepared for the same reporting date as the company. Consistent accounting policies are applied to like
transactions and events in similar circumstances.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group
transactions and dividends are eliminated in full.
- 6 -
Notes to the financial statements
(c) Revenue recognition
Revenue from the provision of services under contract
V/VOPHARM PTY LTD
ABN 97 106 101 615
Revenue is measured at the fair value of the consideration received or receivable after taking into account any
trade discounts and volume rebates allowed. Revenue from the rendering of services under contract is recognised
according to the completion of performance milestones, as agreed under contract, with reference to surveys of
work performed in completing each performance milestone. Broadly (with some exceptions), these performance
milestones comprise the following for each contract:
Project initiation
Planning
Scientific experimentation procedures
Analysis of procedures
Final reporting and engagement completion
% completion of contract
5%
5%-20%
20%- 55%
55%- 85%
85%-100%
At each reporting period, management compares revenue recognised under contract (above) against revenue
billed to the customer. Where billings are less than revenue earned, they are recognised as an accrued debtor in
the statement of financial position; where billing are more than revenue earned, they are recognised as revenues
in-advance in the statement of financial position.
All revenue is stated net of the amount of goods and services tax or value-added tax charges.
Previous accounting policy
Revenue is measured at the fair value of the consideration received or receivable after taking into account any
trade discounts and volume rebates allowed. Revenue from the rendering of services is recognised at the point of
delivery of those services as they are earned under contractual agreement, which is considered to be the date of
invoice to the customer under agreed payment milestones.
(d) Cash and cash equivalents
Cash in the statement of financial position comprise cash at bank and in hand . For the purposes of the statement
of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding
bank overdrafts.
(e) Goods and Services Tax (GST) and Sales Tax/ Value-Added Tax (VAT)
Revenues, expenses and assets are recognised net of the amount of GST or VAT, except where the amount of GST
or VAT incurred is not recoverable from the relevant government authority.
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 ATO is included with other receivables or 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 ATO are presented as operating cash flows included in
receipts from customers or payments to suppliers.
- 7 -
Notes to the financial statements
(f) Cell Bank Stock
V/VOPHARM PTY LTD
ABN 97 106 101 615
Cell bank stock is held at the lower of cost or net realisable value . The cost of cell bank stock is determined based
upon estimations of the total cost of generating the cell bank line up until the point that is ready and available to
be ensembled into the models which are the base for delivering services to customers, and includes an estimation
for accrued labour.
(g) Trade and other payables
Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services
provided to the group prior to the end of the financial year that are unpaid and arise when the group becomes
obliged to make future payments in respect of the purchase of these goods and services.
(h) Trade and other receivables
Trade and other receivables include amounts due from customers for goods sold and services performed in the
ordinary course of business. Receivables expected to be collected within 12 months of the end of the reporting
period are classified as current assets. All other receivables are classified as non-current assets.
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost
using the effective interest method, less any provision for impairment.
(i) Financial Instruments
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual
provisions of the instrument. For financial assets, this is equivalent to the date that the group commits itself to
either purchase or sell the asset (ie trade date accounting is adopted) .
Classification and subsequent measurement
Financial instruments are subsequently measured at amortised cost using the effective interest method, or cost.
Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial
recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative
amortisation of the difference between that initial amount and the maturity amount calculated using the
effective interest method .
The effective interest method is used to allocate interest income or interest expense over the relevant period
and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees,
transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably
predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or
financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying
amount with a consequential recognition of an income or expense item in profit or loss.
Redeemable preference shares
Redeemable preference shares and puttable ordinary shares, which feature an obligation to repay the shareholder
cash consideration for the original share investment, including any accrued interest or other fixed entitlements of
those shares are recognised as financial liabilities in the statement of financial position .
Previous accounting policy far redeemable preference shares and puttab/e ordinary shares
When a financial liability, including redeemable preference shares and puttable ordinary shares, feature an equity
conversion feature, upon initial recognition it is measured at cost and accounted for as equity in the statement of
financial position . Subsequent to initial recognition, this instrument is carried at cost. When such a liability is
redeemed for cash consideration, the difference between the cash paid for the redemption of the liability and its
historical cost is adjusted for in the profit and loss. When such a liability is converted into ordinary shares, the
-8-
Notes to the financial statements
V/VOPHARM PTY LTD
ABN 97 106 101 615
difference between the fair value of the shares granted and issued and its historical cost is also adjusted in the
profit and loss.
(j) Plant and Equipment
Each class of plant and equipment is carried at cost less any accumulated depreciation and impairment losses.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash
flows that will be received from the asset's employment and subsequent disposal. The expected net cash flows
have been discounted to their present values in determining recoverable amounts.
The cost of fixed assets constructed within the group includes the cost of materials, direct labour, borrowing costs
and an appropriate proportion of fixed and variable overheads.
Depreciation
The depreciable amount of all fixed assets including capitalised lease assets is depreciated on a diminishing value
basis over the asset's useful life to the group commencing from the time the asset is held ready for use.
Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the
estimated useful lives of the improvements.
The depreciation rates used for each class of assets were between 10% and 30%. The assets' residual values and
useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period . Gains and losses on
disposal are determined by comparing proceeds with the carrying amount. These gains and losses are included in
the Statement of Profit or Loss and Other Comprehensive Income.
(m) Intangible assets
Intangible assets are recorded at cost less accumulated impairment losses and amortisation charges. Intangible
assets consist of goodwill, which has an indefinite useful life, and patents, which have useful lives between 3 and
20 years. Goodwill is assessed annually for impairment using either discounted cashflow techniques or estimations
of the selling value (less costs) of the group's cash-generating unit, which is defined in note 5.
(n) Impairment of Assets
At each reporting date, the group's directors review the carrying values of the group's tangible and intangible
assets to determine whether there is any indication that those assets have been impaired. If such an indication
exists, the recoverable amount of the asset, being the higher of the asset's fair value less cost to sell and value in
use, is compared to the assets carrying value. Any excess of the asset's carrying value over its recoverable amount
is expensed to the income statement.
(o) Equity-settled employee share plan options
Equity-settled share-based compensation benefits are provided to employees. Equity-settled transactions are
awards of shares, or options over sh.ares, that are provided to employees in exchange for the rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently
determined using the Binomial 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 .
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over
the service vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value
- 9-
Notes to the financial statements
V/VOPHARM PTY LTD
ABN 97 106 101 615
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.
{p) New Accounting Standards
During the year the group adopted for the first time International Financial Reporting Standards as issued by the
International Accounting Standards Board {'IASB') including those that became mandatory during the year. In
addition, the group adopted IFRS 15 Revenue from Contracts with Customers, which is only mandatory from
financial periods commencing on or after 1 January 2018. The effects of the adoption of those standards are set
out in note 17.
With the exception of IFRS 15, the group has not yet adopted IFRS and Interpretations that are yet to become
mandatory. The standard yet to be adopted which is expected to materially impact these financial statements
includes the following:
IFRS 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces
IAS 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to
exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present
value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short
term leases of 12 months or less and leases of low-value assets (such as personal computers and small office
furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease
payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be
recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate
of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be
replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on
the recognised lease liability (included in finance costs) . In the earlier periods of the lease, the expenses associated
with the lease under IFRS 16 will be higher when compared to lease expenses under IAS 117. However EBITDA
(Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense
is replaced by interest expense and depreciation in profit or loss under IFRS 16. For classification within the
statement of cash flows, the lease payments will be separated into both a principal (financing activities) and
interest (either operating or financing activities) component. A preliminary assessment of this standard has been
undertaken by the group and based upon the significant leasing activities impacting the group, it is anticipated
that adoption of this standard will materially impact the measurement of transactions and balances.
(q) Critical Accounting Estimates and Judgments
The directors evaluate estimates and judgments incorporated into the financial statements based on historical
knowledge and best available current information. Estimates assume reasonable expectation of future events and
are based on current trends and economic data, obtained both externally and within the entity.
Assessment of revenues earned under contract by reference to surveys of work performed
Revenue is earned according to references to surveys of work performed. This involves a degree of subjectivity
relating to the progress of the project and the completion of performance milestones which drive the revenue
recognised under contract.
Assessment of preference shares and puttable ordinary shares as equity
The group's redeemable preference shares and puttable ordinary shares are classified as equity in the statement
of financial position and measured at their historical cost plus any accrued fixed entitlements .
Assessment of standard costs for the valuation of the cell bank inventory
The group's cell bank has been assessed based on the costs incurred by the group to generate the cell bank, which
is used by group in rendering services to customers. The standard costs were assessed by Dr. Michael Terence
- 10-
Notes to the financial statements
V/VOPHARM PTY LTD
ABN 97 106 101 615
O'Reilly, an independent consultant specialising in Pharma Research from the Swiss-based company, Novartis
Pharma AG. The directors have assessed that this valuation is appropriate for the valuation of the cell bank as at
30 June 2017.
Accounting for lease incentives
The group has received lease incentives as part of its lease with the Hershey Centre for Applied Research . These
lease incentives are recognised as liabilities in the statement of financial position, which will be repaid over the
duration of the entire lease term of 10 years. For further information refer to note 9.
Goodwill
The group tests annually, whether or not goodwill have suffered any impairment. Goodwill is assessed annually
for impairment using either discounted cashflow techniques or estimations of the selling value of the group's cash
generating unit, being the toxicology and bioanalytical services which are open and utilized by the global market.
Non-recognition of deferred tax assets
As set out in Note 4, the group has not recognised deferred tax assets arising from its carry-forward tax losses in
all of its taxable jurisdictions.
Assumptions used in the employee share plan option model
As stated above, a Binomial model has been used for valuing the group's employee share plan options. The
following significant judgments were made in the model for options granted in the year ended 30 June 2017:
a) Share price: for option tranch packages granted in the last 3 years, the share price of $2.47 used in
the model is based upon due diligence arising from proposed sale transactions for the entire group,
discounted by approximately 10% for the uncertainty of whether or not those sale transactions
would successfully complete;
b) Risk-free rate : determined at 1.99%, based upon prevailing government bond rates in Australia;
c) Dividend yield : nil% based upon historical performance and likelihood of future dividend payments;
and
d) Volatility: set at 60%, which comparable to other like-for-like non-listed Australian enterprises
servicing the Biotechnology sector.
- 11-
Notes to the financial statements
3. SPECIFIC ITEMS CHARGED TO THE PROFIT OR LOSS
Superannuation expense from defined superannuation
contribution plans
Remuneration of the auditor, William Buck
Audit services
Non-audit services (taxation compliance, assistance
with financial reporting)
Key management personnel remuneration
Short-term employee benefits
Post-employment benefits
Share-based payments
4. INCOME TAX EXPENSE
2017
$
108,709
39,800
20,040
548,728
10,028
4,256
563,012
V/VOPHARM PTY LTD
ABN 97 106 101 615
2016*
$
90,813
14,000
17,390
462,900
9,840
244
472,984
At the end of the reporting period, the group has tax losses of approximately $3,260,000 (2016: $3,450,000) that
are available for offset against future taxable profits of the companies in which the losses arose, for which no
deferred tax asset is recognised due to uncertainty of its recoverability. The use of these tax losses is subject to
the agreement of the tax authorities and compliance with certain provision of the tax legislation of respective
countries in which the companies operate.
5. SEGMENT NOTE
Management has determined, based upon the reports reviewed by the chief executive officer that vivoPharm
operates in one operating and geographical segment, being the development and commercialisation of a
portfolio of molecular diagnostic test technologies in the Pan-Pacific region.
6. TRADE RECEIVABLES AND OTHER ASSETS
Current
Trade receivables
Current income tax receivable
Other current assets
Unsecured advances to related parties
361,050 555,869
1,002
102,963 112,350
57,874 57,874
521,887 727,095
As at 30 June 2017 there were no significant debtors greater than 60 days old, which is when debtors are
considered due and receivable that had not otherwise been previously written off and impaired (2016: nil) .
Based upon this analysis, no provision for impairment of trade receivables was considered necessary as at 30
June 2017 (2016: nil).
Amounts advanced to related parties, which relate to directors and their close family members of the company
are receivable at call and non-interest bearing.
- 12 -
Notes to the financial statements
7. PLANT AND EQUIPMENT
Cost$
Laboratory Leasehold Other Plant and
Equipment Improvements Equipment
Opening Balance 1,871,713 1,007,670 280,526
Additions 19,043 9,044
Foreign Exchange
Difference (7,592) (23,570) (3,643)
Closing Balance 1,883,164 984,100 285,927
Accumulated Depreciation $
Opening Balance (1,296,278) {218,466) (234,579)
Depreciation (103,675) (52,571) {14,421)
Foreign Exchange
Difference 2,478 7,694 1,186
Closing Balance (1,397,475) (263,343) (247,814)
Written Down Values$
As at 30 June 2016 575,435 789,204 45,947
As at 30 June 2017 485,689 720,757 38,113
8. GOODWILL
TOTAL
V/VOPHARM PTY LTD
ABN 97 106 101 615
3,159,909
28,087
(34,805)
3,153,191
(1,749,323)
(170,667)
11,358
(1,908,632)
1,410,586
1,244,559
At the end of the reporting period, the Directors assessed the value of goodwill for impairment by examining the
recoverable value of goodwill by examining the fair value (less costs to sell) of the entire cash-generating unit to
which it belongs, which is the same as that reported in the segment note above. As at 30 June 2017, the
directors assessed this fair value on the basis of ongoing due diligence taking place concerning the proposed sale
of the group. Subsequent to year end on 15 August 2017, the entire group was sold to NASDAQ-listed Cancer
Genetics Incorporated (CGIX) for total consideration of $USO 10.7m . At this date, the redeemable preference
shares (including accrued interest) and puttable ordinary shares (notes 10 and 11) and employee share options
(note 12) were converted or exercised into ordinary shares and acquired by the purchaser.
- 13 -
Notes to the financial statements
9. LEASE INCENTIVE LIABILITY
Current
Lease incentive liability - leasehold improvements
Lease incentive - cash
Non-Current
Lease incentive liability - leasehold improvements
Lease incentive - cash
2017
$
119,882
59,400
179,282
384,994
208,911
593,905
773,187
V/VOPHARM PTY LTD
ABN 97 106 101 615
2016
$
125,135
60,462
185,597
486,550
276,716
763,266
948,863
The above lease incentive liabilities represent the straight-lining of the following leasing arrangements:
Cash Portion
In December 2010 the group began a contractual relationship with the Hershey Centre for Applied Research . As
an incentive for signing up to a rental arrangement at the Hershey Centre, the Centre agreed to pay USO
$450,000 in instalments to vivoPharm LLC. In return, vivoPharm LLC agreed to enter into a ten year lease. The
cash sum total has been deferred on the statement of financial position and is offset against payments made
under the lease for the 10 year period .
Leasehold Improvements
In addition to the cash portion, $USD750,000 in leasehold improvements were provided as an incentive and
were completed by the commencement of the rental agreement. The total lease term is 10 years with a further
two 5-year options attached to the lease agreement, which, if exercised, will extend the initial 10 year lease by a
further 10 years.
10. REDEEMABLE PREFERENCE SHARES
As at 30 June 2017 the group had on issue 900,000 (2016: 900,000) redeemable shares, arising from a first
tranche issued to Terra Rossa Capital (now MH Carnegie) in 2008. As at 30 June 2017 a second tranche to invest
a further maximum amount of $1,000,000, subject to an option subscription price calculated accor°ding to
formula of 1.7 * (the average audited sales, excluding grants and other income)/ (the aggregate number of
ordinary+ preference shares on issue), remained unissued and unsubscribed . The option agreement, exercisable
in the hands of MH Carnegie, is exercisable and expires January 2018. In addition to a calculation of the
subscription price, in order to activate the second tranche, the following is required :
A business plan to be adopted by the board pursuant to the shareholders' agreement,
The board to be reconstituted in accordance with the shareholders' agreement,
The company to complete a review of pricing and service provision costs, and
A remuneration committee to be established.
The preference shares have voting rights commensurate with voting rights of ordinary shareholders (on a 1:1
basis), however they rank above the ordinary shareholders on winding up and they do not have any dividend
entitlements. The preference shares have been redeemable in the hands of the shareholder since January 2013
but subject to the following limitations, as required in the Corporations Act s.254K:
The group must accrue sufficient retained profits to repay the preference shares and accrued interest; or
The group has accumulated proceeds from the issue of new shares specifically made for the purposes of
the redemption.
- 14 -
Notes to the financial statements
V/VOPHARM PTY LTD
ABN 97 106 101 615
As at 30 June 2017 neither of these conditions has been triggered . In the event that preference shares are
redeemed, the shareholders will be entitled to interest which is calculated at 15% per annum, compounded
monthly. MH Carnegie has also entered into a put option agreement which further restricts its entitlement to
redeem these shares (refer note 11). The preference shares may be with the group converted to ordinary shares,
at the option of the holder at any time, on a basis of 1:1. If the shares are converted through IPO, sale or equity
trigger event, the number of shares decreases proportionately from the amount of funds arising from the
transaction applied against redemptions made to the preference shares.
11. ORDINARY SHARES AND PUT OPTIONS AGREEMENTS OVER ORDINARY AND PREFERENCE SHARES
The group has on issue 3,037,500 ordinary fully paid shares (2016: 3,037,500), including 787,500 shares issued to
the Royal Melbourne Institute of Technology ("RMIT") and 2,250,000 held by the Brandt Family Trust.
Ordinary shares participate in dividends and the proceeds on winding up of the company in proportion to the
number of shares held. At shareholders' meetings each ordinary share is entitled to one vote when a poll is
called, otherwise each shareholder has one vote on a show of hands.
The group is also a contracting party to put option agreements that it holds with RMIT and MH Carnegie. These
put option agreements confer the following benefits upon RMIT and MH Carnegie:
Between 11 April 2017 and 10 April 2020 MH Carnegie can require the company to acquire of 50% of its
preference shares;
Between 11 April 2018 and 10 April 2020 RMIT can require the company to acquire of 50% of its ordinary
shares;
Between 11 April 2018 and 10 April 2020 MH Carnegie can require the company to acquire of 100% of its
ordinary shares;
Between 11 April 2019 and 10 April 2020 RMIT can require the company to acquire of 100% of its ordinary
shares; and
The exercise price of the put option is to be determined through mutual agreement of the value of the
shares between the contracting parties, or failing this, through a determination of fair value by an
independent auditor, investment bank or valuer, as selected mutually by both contracting parties.
During the exercise period of the contract, the redemption rights privileges attached to the preference shares
held by MH Carnegie (note 10) are waived. Furthermore, the exercise of the put option is restricted by share
buyback conditions set out in s.254 of the Corporations Act, which include the following requirements:
That the exercise of the put option does not materially prejudice the ability of the company or group to pay
its creditors;
That the company observes the shareholder approval requirements for performing share buybacks, as set
out in its Constitution; and
Upon their repurchase, the shares are cancelled.
In-addition to this, MH Carnegie holds a put option in respect of the group's key man insurance exposures . The
put option is exercised in the event that the company receipts an insurance claim for key man insurance - the
amount of its shares held are repaid from those insurance proceeds according to the same exercise price
conditions as set out above.
-15 -
12.
Notes to the financial statements
EMPLOYEE SHARE PLAN OPTIONS
V/VOPHARM PTY LTD
ABN 97 106 101 615
An employee share option scheme was set up in 2009, which entitles select employees to equity-settled options,
all with an exercise price of $1 each (exercisable to ordinary shares 1:1), which vest in 5 graded tranches
commencing from the grant date of each package of graded tranches (the "grant date") . The only vesting condition
is a service condition . From the date each tranche vests the option agreement is exercisable for a period of 5 years.
In the history of the scheme no option has been either exercised or has failed to meet the service vesting condition .
Details of the option tranch packages that have been granted, all of which had at least one outstanding tranche
still vesting, had a ended 30 June 2017 is as follows:
Grant date Exercise date Exercise date # on issue as at # granted # on issue as at (first tranche) (last tranche) 30 June 2016 during the year 30 June 2017
24-0ct-12 24-0ct-17 24-0ct-22 11,500 11,500
12-0ct-12 12-0ct-17 12-0ct-22 39,063 39,063
29-0ct-12 29-0ct-17 29-0ct-22 39,063 39,063
12-Dec-12 12-Dec-17 12-Dec-22 35,000 35,000
24-0ct-12 24-0ct-17 24-0ct-22 10,000 10,000
19-0ct-12 19-0ct-17 19-0ct-22 7,500 7,500
1-Apr-14 1-Apr-19 1-Apr-24 4,000 4,000
1-Apr-14 1-Apr-19 1-Apr-24 4,000 4,000
16-Apr-14 16-Apr-19 16-Apr-24 2,500 2,500
16-Apr-14 16-Apr-19 16-Apr-24 5,000 5,000
30-Jan-15 30-Jan-20 30-Jan-25 2,500 2,500
1-Feb-15 1-Feb-20 1-Feb-25 5,000 5,000
1-Feb-15 1-Feb-20 1-Feb-25 4,000 4,000
1-Feb-15 1-Feb-20 1-Feb-25 4,000 4,000
1-Feb-16 1-Feb-21 31-Jan-26 30,000 30,000
1-Apr-16 1-Apr-21 1-Apr-26 4,000 4,000
1-Apr-16 1-Apr-21 1-Apr-26 4,000 4,000
1-Apr-17 1-Apr-22 1-Apr-27 5,000 5,000
1-Apr-17 1-Apr-22 1-Apr-27 10,000 10,000
1-Apr-17 1-Apr-22 1-Apr-27 4,000 4,000
1-Apr-17 1-Apr-22 1-Apr-27 4,000 4,000
1-Apr-17 1-Apr-22 1-Apr-27 30,000 30,000
Total 211,126 53,000 264,126
The vesting charge of all of these options is recorded in the employee share option reserve . During the year, vesting
share options granted to key management personnel increased by 15,000 from 89,063 to 104,063.
- 16 -
Notes to the financial statements
13. RELATED PARTIES
V/VOPHARM PTY LTD
ABN 97 106 101 615
During the year ended 30 June 2017 the group's related parties were its key management personnel and
their associated entities and close family members, which were its directors Ralf Brandt, Brenton Wright, Ian
Nisbet.The following members of key management personnel ceded their directorships of vivoPharm Pty
Ltd upon the sale of the group on 15 August 2017 :
Ralf Brandt
Brenton Wright
On the same date the following directors were appointed to vivoPharm Pty Ltd :
John Roberts
Panna Sharma
With the exception of key management personnel remuneration (note 3}, the loans to related parties (note
6} and the share options granted to key management personnel (note 12} there were no other noted
transactions with related parties for the year.
14. CASH FLOW INFORMATION
Reconciliation of net loss after tax to net cash flows
from operations
Profit/ (Loss) for the year
Non-cash flows in profit
Depreciation and amortisation
Vesting of employee share options
Interest accrued on redeemable preference shares
Movements in working capital
Decrease/ (Increase) in trade receivables and other
assets
Decrease/ (Increase) in cell bank inventories
Increase in trade and other payables
Increase in revenue received in advance
Increase in provisions
Net cash outflows from operating activities
Reconciliation of cash and cash equivalents to
statement of cash flows
Cash and cash equivalents
Bank overdrafts
Per statement of cash flows
- 17 -
2017
$
(307,290)
172,324
51,003
513,688
205,208
(152,279)
202,878
723,245
12,945
1,421,722
1,391,856
1,391,856
2016
$
(142,507)
172,480
35,725
402,931
(128,268)
(451,354)
28,992
2,522
293,674
214,195
254,134
(24,330)
229,804
Notes to the financial statements
15. FINANCIAL INSTRUMENTS
V/VOPHARM PTY LTD
ABN 97 106 101 615
The group's activities expose it to a variety of financial risks. Management have established risk management
policies to identify and analyse the risks faced by the group, to set appropriate risk limits and controls, and
to monitor risk and adherence to limits. 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 consolidated entity. Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the consolidated entity's activities.
The board is responsible for overseeing the establishment and implementation of the risk management
system, and reviews and assesses the effectiveness of the group's implementation of that system on a regular
basis. The financial risks considered material to these financial statements are foreign currency and liquidity
risk.
Foreign exchange risk
The group trades principally in Australia and the US. Its US operations trade in a US functional currency
environment and any intercompany loan arrangements are eliminated on consolidation, with exchange
differences arising on translation to the $AJD presentation currency taken to the foreign currency translation
reserve. As such, the principal foreign exchange sensitivity arises on standing contractual arrangements with
customers and suppliers, which existed at year end as follows :
USO-denominated financial instruments 2017 2016
$ $
Cash and cash equivalents 440,295 177,467
Trade receivables and other assets 119,181 300,145
Unsecured trade and other payables (72,321) (123,815)
Finance leases (153,847) (212,992)
Lease incentive liability {773,187) (948,863)
Net USO exposure: {439,879) (808,058)
Were the USD:AUD exchange rate to move by 5% as at year-end date, this would impact the foreign currency
translation reserve by $21,994 (2016: $40,403) .
Liquidity risk
Vigilant liquidity risk management requires the group to maintain sufficient liquid assets to be able to pay
debts as and when they become due and payable. The group manages liquidity risk by maintaining adequate
cash reserves, continuously monitoring actual and forecast cash flows and matching the maturity profiles of
financial assets and liabilities.
The following contractual maturities apply to the group's financial liabilities:
Trade payables are payable between 0-60 days;
Finance leases - between 0-5 years as set out on the statement of financial position
Operating leases - per note 16
Redeemable preference shares and puttable ordinary shares - refer to commentary in notes 10 and 11
-18 -
Notes to the financial statements
Fair values
V/VOPHARM PTY LTD
ABN 97 106 101 615
The directors are of the view that the fair values of all financial instruments as at year-end approximate their
carrying value, with the exception of the following:
2017 Fair value Carrying value
$ $
Redeemable preference shares 5,319,818 3,669,550
Puttable ordinary shares 2,196,821 787,500
7,516,639 4,457,050
The fair values of the above financial liabilities have been determined after considering the due diligence
activities taking place for the sale of the group as at 30 June 2017 and the likely consideration that would be
received on the sale and the distribution of that consideration to these financial statements. The directors
consider this a Tier 3 valuation. For further information refer to note 8.
16. COMMITMENTS AND CONTINGENCIES
The consolidated entity has non-cancellable property leases in Hershey, Pennsylvania and Munich . Its lease
at Hershy includes two 5-year options that can be extended at the completion of the initial lease term in
2020 through to 2030. The lease agreements provide for regular increases based either on fixed% increases,
inflation-linked increases or market reviews upon each anniversary. Details of minimum payments under the
leases is as follows:
2017 2016
$ $
Less than 1 year 315,060 421,245
Between 1 and 5 years 672,836 987,896
Greater than 5 yea rs
987,896 1,409,141
The directors have examined the group's ongoing legal matters and banking and financing relationships and
contractual matters and have concluded that no material contingent liabilities existed at 30 June 2017 (2016: nil) .
-19 -
Notes to the financial statements
17. ADOPTION OF IFRS
V/VOPHARM PTY LTD
ABN 97 106 101 615
The following adjustments occurred upon the first-time adoption of IFRS in this financial report at the
transition date of 30 June 2015:
Included in Net Assets
Cell bank stock
Revenues received in -advance
Redeemable preference shares
Puttable ordinary shares
Equity
Redeemable preference shares
Ordinary share capital
Employee share option reserve
(Accumulated losses)/ retained earnings
Note
a)
b)
c)
d)
c)
d)
e)
f)
2015*
$
1,026,756
860,385
787,600
29,899
162,498
Adjustment
(57,348)
(341,369)
(2,752,931)
(787,500)
(860,385)
(787,500)
3,749
(2,295,012)
2015
$
969,408
(341,369)
(2,752,931)
(787,500)
100
33,648
(2,132,514)
This also required a restatement of the statement of the results as at 30 June 2016 (previously authorised
for issue under a special purpose financial reporting framework in December 2016) :
Note 2016* Adjustment 2016
Included in Net Assets $ $
Cell bank stock a) 1,483,724 (62,962) 1,420,762
Revenues received in -advance b) (635,043) (635,043)
Redeemable preference shares c) (3,155,862) (3,155,862)
Puttable ordinary shares d) (787,500) (787,500)
Equity
Redeemable preference shares c) 860,385 (860,385)
Ordinary share capital d) 787,600 (787,500) 100
Employee share option reserve e) 33,231 36,142 69,373
(Accumulated losses)/ retained earnings f) 754,603 (3,029,624) (2,275,021)
The accounting policies driving these adjustments are described in full in note 2.
a) Adjustment to cell bank stock
This immaterial adjustment is an adjustment for standard costs applied in the capitalisation of the cell bank
in line with IAS 102.
b} Recognition of revenue according to surveys of work performed
Previously revenue was recognised upon invoice. Upon transition, management have assessed the
recognition of revenue with referen ce to surveys of work performed. This complies with IFRS 15.
c) Classification of redeemable preference shares as liabilities, including accrued interest charges
- 20-
Notes to the financial statements
V/VOPHARM PTY LTD
ABN 97 106 101 615
Under IAS 132 redeemable preference shares meet the definition of a liability. This adjustment is to reclassify
the balance formerly recorded in equity at cost (less transaction costs) to its value, including an accrued
interest charge .
d) Classification of puttable ordinary shares as liabilities
Under IAS 132 puttable ordinary shares meet the definition of a liability. This adjustment is to reclassify the
balance formerly recorded in equity.
e) Valuation of employee share option reserve
This immaterial adjustment records the valuation of the employee share option reserve using a Binomial
model. Previously the reserve was recorded using a Black-Scholes valuation model.
f) Adjustment to retained earnings
This adjustment reflects the impacts of the following adjustments tabled above:
Retained earnings per previous special purpose financial reporting framework
Less
Adjustment to standard costs on capitalisation of cell bank stock (a)
Deferral of revenue (b)
Accrual of interest on redeemable preference shares (c)
Valuation of employee share option reserve (e)
Accumulated losses per IFRS
Retained earnings per previous special purpose financial reporting framework
Less
Adjustment to standard costs on capitalisation of cell bank stock (a)
Deferral of revenue (b)
Accrual of interest on redeemable preference shares (c)
Valuation of employee share option reserve (e)
Accumulated losses per IFRS
Impact on 2016 Statement of Comprehensive Income
2015
$
162,498
(57,348)
(341,369)
(1,892,546)
(3,749)
(2,132,514)
2016
$
754,603
(62,962)
(635,043)
(2,295,477)
(36,142)
(2,275,021)
The directors have reviewed the Statement of Comprehensive Income for the year ended 30 June 2016 and
have determined the following results were impacted by the adoption of IFRS:
Total comprehensive income under special purpose financial reporting framework
Less
Adjustment to standard costs on capitalisation of cell bank stock (a)
Deferral of revenue (b)
Accrual of interest on redeemable preference shares (c)
Valuation of employee share option reserve (e)
Total comprehensive loss under IFRS
- 21-
2016
$
599,299
(5,614)
(293,674)
(402,931)
(32,393)
(135,313)