TIDMLLAI
RNS Number : 1446G
LungLife AI, INC
28 March 2022
LungLife AI, Inc.
(the "Company" or "LungLife")
Preliminary results
LungLife AI (AIM: LLAI), a developer of clinical diagnostic
solutions for lung cancer, announces its maiden audited preliminary
results for the year ended 31 December 2021, following admission to
trading on AIM on 8 July 2021.
Summary and Highlights for the year:
-- Revenues of $196k (2020: $205k) of which $88k (2020: $Nil)
represented first royalty income from sales under our sub license
in China
-- Loss before tax of $7.43m, after charging IPO costs of $1.1m.
Adjusted EBITDA(1) loss of $5.8m
-- Admission to AIM and successful GBP17m (gross) fundraising at
an issue price of 176p on 8 July 2021
-- Cash as of 31 December 2021 of $14.62m
-- The Company's clinical laboratory in Thousand Oaks,
California awarded accreditation by the College of American
Pathologists (CAP)
Post-period end:
-- CPT(R) Proprietary Laboratory Analyses (PLA code), a key
component towards reimbursement in the US market, awarded and
scheduled to become effective on 1 April 2022
-- In February 2022, enrolled first participant into
multi-centre clinical validation study for those with indeterminant
lung nodules. The study will be used to validate the LungLB(R) test
performance, enrolling 425 participants from sites across the US,
with the study expected to complete by Q1 2023
-- Veterans Affairs (VA) sites added to validation study in
March 2022, and first participant enrolled from the Bay Pines VA in
Florida
-- Appointment of Dr Drew Moghanaki, an internationally
recognised lung cancer specialist, to the Company's Scientific
Advisory Board
Commenting, Paul Pagano, Chief Executive Officer of LungLife,
said : "Since IPO, we have achieved several milestones which has
kept us on track with our strategic vision. During the year, we
laid the groundwork towards commencing our multi-centre validation
study, and post-period end we enrolled our first participants. Our
clinical laboratory in Thousand Oaks also achieved CAP
accreditation in November 2021, confirming that we are maintaining
the highest standards of excellence in laboratory testing for
patients.
"Throughout the rest of the year we will continue with our
validation study which we expect to complete in Q1 2023, as well as
work towards regulatory authorisation and commercial reimbursement,
which we made our first step towards post-period end when we were
granted a CPT(R) PLA code. We remain focused on bringing early
detection solutions to those who need them most, which will lead to
better outcomes for people with lung cancer."
For further information please contact:
LungLife AI, Inc. www.lunglifeai.com
Paul Pagano, CEO Via Walbrook PR
David Anderson, CFO
Investec Bank plc (Nominated Adviser Tel: +44 (0)20 7597 5970
& Broker)
Daniel Adams / Virginia Bull / Cameron
MacRitchie
Walbrook PR Limited Tel: +44 (0)20 7933 8780 or LungLifeAI@walbrookpr.com
Paul McManus / Alice Woodings / Phillip Mob: 07980 541 893 / 07407 804 654 /
Marriage 07867 984 082
(1) Earnings before income tax, depreciation and amortisation,
adjusted to exclude exceptional items and other operating
income
About LungLife
LungLife AI is a developer of clinical diagnostic solutions
designed to make a significant impact in the early detection of
lung cancer, the deadliest cancer globally. Using a minimally
invasive blood draw, the Company's LungLB(R) test is designed to
deliver additional information to clinicians who are evaluating
indeterminate lung nodules. For more information visit
www.lunglifeai.com
Our Purpose is to be a driving force in the early detection to
lung cancer. And our Vision is to invert the 20:80 ratio such that
in years to come at least 80% of lung cancer is detected early.
Chairman's Statement
I am delighted to report on the first annual results for
LungLife AI, Inc. since our admission to trading on AIM in July
2021. We have continued to deliver on the Company's objectives and
remain committed to creating shareholder value as we proceed with
the aim of being a driving force in the early detection of lung
cancer through the completion of our LungLB(R) test multi-centre
clinical validation study.
LungLB(R) test
According to the World Health Organization, over 2.2 million new
cases of lung cancer were diagnosed in 2020 and approximately 1.8
million deaths from lung cancer were recorded in 2020 globally.
Nearly 80% of all lung cancers in the United States are diagnosed
in later stages when survival rates are low because the options for
curative treatment are then limited. This is in part due to the
lack of effective early detection solutions and the fact that lung
cancer largely develops asymptomatically.
LungLB(R) is a blood-based test that uses circulating tumour
cells ("CTC") to stratify indeterminant lung nodules as either
cancerous or benign following their identification by CT scan.
Biopsy is currently part of the standard care pathway for lung
nodules and the LungLB(R) test is designed to support the
physician's decision to biopsy only when necessary, or to monitor
non-invasively using additional imaging. There are estimated to be
over 1.5 million indeterminant lung nodules identified each year in
the United States(1) and LungLife's estimated 1 week turnaround
from receipt of the blood sample to results can save a significant
amount of stressful waiting time for the patient as well as
unnecessary costly and often dangerous procedures. In 2021, we
completed a 149 participant pilot study in subjects with
indeterminate lung nodules which showed a well-balanced performance
and a Positive Predictive Value of 89 per cent which we believe
will support physician decision making.
Progress
We enrolled our first participant in February 2022 in our
multi-centre clinical validation study. The multi-centre clinical
study will be used to validate the LungLB(R) test performance,
looking to repeat the high performance already observed in the
pilot study completed earlier in the year. The study will enrol 425
participants across multiple US sites, including MD Anderson Cancer
Center, Mount Sinai Hospital in New York City and multiple medical
centres of the Veterans Affairs, which we recently announced,
involving participants who present with indeterminate lung nodules
that would otherwise be scheduled for needle biopsy. This first
participant enrolment confirms that the Company is on track to
enrol participants over the next 12 months, with study completion
expected in Q1 2023.
In November 2021, our clinical laboratory in Thousand Oaks,
California was awarded accreditation by the College of American
Pathologists (CAP), a significant further independent validation of
the quality of our laboratory procedures.
The successful granting of a CPT(R) code marks the first step on
the path for commercial reimbursement. In October 2021 we applied
to the American Medical Association for a CPT(R) Proprietary
Laboratory Analyses (PLA) code and this was granted post year end
and is scheduled to become effective on 1 April 2022.
Reimbursement in the US is comprised of three components: code,
price, and coverage. CPT(R) codes offer health care professionals a
uniform language for coding medical services and procedures, and
the CPT(R) code allows clinical laboratories to more specifically
identify their tests when billing Medicare and commercial
insurers.
AIM IPO
In July 2021 we successfully raised gross proceeds of GBP17
million as part of the Company's admission to trading on AIM. Since
then we have already fulfilled several of the aims that we set out
to achieve including commencement of the clinical validation study
and obtaining a CPT(R) code for Medicare reimbursement for the
LungLB(R) test.
We anticipate that the net proceeds of the fundraise will be
sufficient to complete the multi-centre validation study and
commence the utility study of the LungLB(R) test for indeterminate
lung nodules, commence the post-surgical monitoring validation
study for the LungLB(R) test, and take the Company to early
revenues in 2023.
We are hugely grateful to the support received from new
shareholders who participated in our 2021 fundraise and prior
shareholders who had supported the company to that point, and I
would like to thank all of our shareholders for their continued
support.
People
On admission to trading on AIM, David Anderson formally joined
the Company as CFO after serving as a consultant since the
beginning of 2020.
Paul and David have done a great job of bringing the Company to
market and delivering on the aims set out at the Company's IPO. I
would like to thank them for their excellent leadership during this
dynamic time for the Company.
We also made senior hires in Clinical Trials, Quality, Research
and Development and Project Management in the year and post year
end bringing the team up to 13 full time, and 2 part time
employees.
We also recently announced the appointment of Dr Drew Moghanaki
to our Scientific Advisory Board.
On behalf of the Board, I would like to thank our employees,
clinical partners, study participants, professional advisors,
suppliers and shareholders for their support, and we look forward
to providing further updates on progress throughout the current
year.
Outlook
In addition to the continued enrolment of participants into our
validation study, our focus this year is on reimbursement. The
three constituent parts are code, price and coverage. We have
received our code, the next stage is the pricing process and
determining whether we fall under "cross-walk" or "gap fill". We
have submitted our application for the New York Clinical Laboratory
Evaluation Program ("CLEP") permit. We will submit our Breakthrough
Device application to the FDA when our advisors indicate the timing
is right.
The next two years are incredibly exciting for LungLife and we
look forward to updating shareholders on our progress during that
time.
Roy Davis
Non-Executive Chairman
28 March 2022
(1) Gould MK et al. Am J Respir Crit Care Med. 2015 PMID:
26214244.
Financial Review
The financial performance of the Company in the year to 31
December 2021 reflects the IPO which took place on 8 July 2021 and
involved the conversion of Convertible Loan Notes and existing
shares prior to the Admission of the new common shares onto
AIM.
Statement of Comprehensive Income
The loss for the year of $7,444,188 is after charging a portion
of the expenses incurred on the share issue of $1,101,370,
disclosed as exceptional, with the balance of expenses of the share
issue of $1,000,354 charged directly to reserves. The loss
excluding this exceptional item was $6,342,818.
The Company generated revenues of $195,566 comprising royalty
income from its sub licensee in China of $88,553 and consumable
sales of fluorescent in situ hybridisation (FISH) probes of
$107,013 to the same sub-licensee. The royalty income represents
the first such income under the sub licence calculated at 6% of
underlying sales. In turn the Company pays a 6% royalty on this
income to MD Anderson Cancer Center.
The largest cost incurred in the year was employee expenses
($1,760,012) followed by research and development costs
($1,343,132), being those external costs incurred in the
development of our LungLB(R) test and AI algorithm.
Other operating income relates to payment received under the US
Government Paycheck Protection Program, akin to the UK furlough
scheme. This represented a one-time loan which was subsequently
forgiven in full. Finance expense of $309,327 related to interest
charged on the Convertible Loan Notes, which formed part of the
balance on the Notes subsequently converted into new common shares
at the time of IPO. The balance of $107,601 reflects the charge for
lease liabilities, being leases for certain tangible assets and the
leasehold premises occupied by the Company.
Statement of Financial Position
Cash at the end of the year was $14,628,351, reflecting the net
proceeds of the AIM admission of $21,342,405, payment of $1,800,000
to the Icahn School of Medicine of Mount Sinai ("Mount Sinai")
under the terms of the License Agreement with Mount Sinai, and
working capital for the year. The payment of $1,800,000 together
with the 1,656,888 consideration shares issued to Mount Sinai at
issue price of 176p constitutes the intangible asset of $5,818,359.
The option fee gives the Company access in the future to the
de-identified patient records held by Mount Sinai to assist in the
development of future products. As this asset is therefore not
currently being utilised no amortisation has been charged to
date.
Extension to the lease on the Company's premises and financing
of a further microscope gave rise to movement on right of use
assets and lease liabilities.
Statement of Cash Flows
The net outflow from operating activities was $7,538,876, funded
in part by the gross proceeds from the AIM admission of $23,444,129
and in the period before the AIM admission $1,612,421 of new
Convertible Loan Notes. These Notes were converted in full as part
of the Company's reorganisation prior to the AIM admission. The net
inflow of cash in the year was $14,500,723 contributing to the
closing cash balance of $14,628,351.
David Anderson
Chief Financial Officer
28 March 2022
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2021
Year to Year to
31 December 31 December
Note 2021 2020
US$ US$
Revenue 4 195,566 205,180
Cost of sales (96,269) (188,178)
_________ _________
Gross margin 99,297 17,002
Administrative expenses 6 (5,903,738) (3,458,984)
Depreciation 6 (323,758) (282,654)
Exceptional expense - costs of listing (1,101,370) (337,201)
_________ _________
Loss from operations (7,229,569) (4,061,837)
Other operating income 6 206,164 -
Finance income 9 12,017 -
Finance expense 9 (416,928) (777,186)
_________ _________
Loss before tax (7,428,316) (4,839,023)
Tax expense 10 (15,872) -
_________ _________
Loss from continuing operations (7,444,188) (4,839,023)
Other comprehensive income - -
_________ _________
Loss and total comprehensive income attributable
to the owners of the Company (7,444,188) (4,839,023)
_________ _________
Earnings per share attributable to the
ordinary equity holders of the parent 11
Loss per share
Basic and diluted (US$ cents) ($0.469) ($0.743)
_________ _________
The results reflected above relate to continuing operations
STATEMENT OF FINANCIAL POSITION
As at 31 December 2021
Note 2021 2020
US$ US$
Assets
Current assets
Trade and other receivables 14 740,865 169,801
Cash and cash equivalents 14,628,351 127,628
_________ _________
15,369,216 297,429
_________ _________
Non-current assets
Property, plant and equipment 12 765,983 463,437
Intangible assets 13 5,818,359 -
Other receivables 14 13,235 13,235
_________ _________
6,597,577 476,672
_________ _________
Total assets 21,966,793 774,101
_________ _________
Liabilities
Current liabilities
Trade and other payables 15 803,738 1,225,836
Lease liabilities 17 207,280 169,955
Discontinued operations 174,057 174,057
Convertible notes 18 - 10,086,616
Borrowings and loans 16 - 206,164
_________ _________
1,185,075 11,862,628
Non-current liabilities
Lease liabilities 17 601,622 167,488
Provisions 19 50,000 50,000
_________ _________
Total liabilities 1,836,697 12,080,116
_________ _________
NET ASSETS 20,130,096 (11,306,015)
_________ _________
Issued capital and reserves attributable
to
owners of the parent
Share capital 21 2,548 8,665
Share premium reserve 22 91,264,305 52,194,390
Other equity 22 - 843,137
Share based payment reserve 960,312 550,511
Accumulated losses (72,097,069) (64,902,718)
_________ _________
TOTAL EQUITY 20,130,096 (11,306,015)
_________ _________
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
Total
attributable
Share-based to equity
Share Share payment Accumulated holders of Total
capital premium reserve Other equity losses parent equity
US$ US$ US$ US$ US$ US$ US$
1 January 2020 8,483 52,104,062 324,876 828,318 (60,063,695) (6,797,956) (6,797,956)
Comprehensive
income for
the year
Loss - - - - (4,839,023) (4,839,023) (4,839,023)
Other
comprehensive
Income - - - - - - -
_________ _________ _________ _________ _________ _________ _________
Total
comprehensive
Income
for the year - - - - (4,839,023) (4,839,023) (4,839,023)
_________ _________ _________ _________ _________ _________ _________
Contributions
by and
distributions
to owners
Issue of common
stock 182 90,328 - - - 90,510 90,510
Issue of
Convertible
Loan
Note - - - 14,819 - 14,819 14,819
Share-based
payment - - 225,635 - - 225,635 225,635
_________ _________ _________ _________ _________ _________ _________
Total
contributions
by
and
distributions
to owners 182 90,328 225,635 14,819 - 330,964 330,964
_________ _________ _________ _________ _________ _________ _________
31 December
2020 8,665 52,194,390 550,511 843,137 (64,902,718) (11,306,015) (11,306,015)
_________ _________ _________ _________ _________ _________ _________
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021 (continued)
Total
attributable
Share-based to equity
Share Share payment Accumulated holders of Total
capital premium reserve Other equity losses parent equity
US$ US$ US$ US$ US$ US$ US$
1 January 2021 8,665 52,194,390 550,511 843,137 (64,902,718) (11,306,015) (11,306,015)
Comprehensive
income for
the year
Loss - - - - (7,444,188) (7,444,188) (7,444,188)
Other
comprehensive
Income - - - -
_________ _________ _________ _________ _________ _________ _________
Total
comprehensive
Income
for the year - - - - (7,444,188) (7,444,188) (7,444,188)
_________ _________ _________ _________ _________ _________ _________
Contributions
by and
distributions
to owners
Issue of
Convertible
Loan
Notes - - - 99,263 - 99,263 99,263
Reverse split (8,184) 8,184 - - - - -
Issue of common
shares
on conversion
of preference
shares and
Convertible
Loan Notes 935 12,600,730 - - - 12,601,665 12,601,665
Issue of share
capital 1,132 27,461,355 - - - 27,462,487 27,462,487
Transfer of
balance
following
conversion of
Convertible
Loan Note - - - (942,400) 249,837 (692,563) (692,563)
Share issue
costs - (1,000,354) - - - (1,000,354) (1,000,354)
Share-based
payments - - 409,801 - - 409,801 409,801
_________ _________ _________ _________ _________ _________ _________
Total
contributions
by
and
distributions
to owners (6,117) 39,069,915 409,801 (843,137) 249,837 38,880,299 38,880,299
_________ _________ _________ _________ _________ _________ _________
31 December
2021 2,548 91,264,305 960,312 - (72,097,069) 20,130,096 20,130,096
_________ _________ _________ _________ _________ _________ ________
STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
Year to Year to
31 December 31 December
Note 2021 2020
US$ US$
Cash flows from operating activities
Loss for the year (7,444,188) (4,839,023)
Adjustments for:
Depreciation of property, plant and equipment 323,758 282,654
Forgiveness of Paycheck Protection Program (206,164) -
Loan
Gain on sale of tangible assets (35,752) -
Finance income (12,017) -
Finance expense 416,928 777,186
Taxation 15,872 -
Share-based payments expense 409,801 225,635
_________ _________
(6,531,762) (3,553,548)
(Increase) / decrease in trade and other
receivables (569,143) 82,127
(Decrease) / increase in trade and other
payables (422,097) 597,396
Income taxes paid (15,872) -
_________ _________
Net cash outflow from operating activities (7,538,876) (2,874,025)
_________ _________
Cash flows from investing activities
Purchases of tangible assets (47,365) (5,328)
Proceeds from sale of tangible assets 35,752 -
Landlord improvement contribution 15,588 -
Purchase of intangibles (1,800,000) -
_________ _________
Net cash used in investing activities (1,796,025) (5,328)
_________ _________
Cash flows from financing activities
Issue of Convertible Notes 1,612,421 2,290,899
Issue of Common Stock 23,444,129 90,510
Expenses of issue of Common Stock (1,000,354) -
Interest received 10,097 -
Interest paid (107,601) (6,297)
Paycheck Protection Program loan - 205,822
Repayment of loans - (120,368)
Repayment of lease liabilities (123,068) (180,379)
_________ _________
Net cash from financing activities 23,835,624 2,280,187
Net increase / (decrease) in cash and
cash equivalents 14,500,723 (599,166)
Cash and cash equivalents at beginning
of year 127,628 726,794
_________ _________
Cash and cash equivalents at end of year 5 14,628,351 127,628
_________ _________
LungLife AI, Inc.
Notes forming part of the financial statements
for the year ended 31 December 2021
1 General Information
LungLife AI, Inc, (the "Company") is a company based in Thousand
Oaks, California which is developing a diagnostic test for the
early detection of lung cancer. The Company was incorporated under
the laws of the state of Delaware, USA on 30 December 2009.
The Company's costs associated with developing and
commercialising its test include costs associated with the
development of intellectual property, optimising the technology,
and obtaining regulatory approval. To complete clinical trials the
Company will continue to require additional operating funds. The
Company has raised funds through offerings of debt, common stock
and Series A Preferred Shares.
There are no restrictions on the Company's ability to access or
use its assets and settle its liabilities.
2 Basis of preparation
The financial statements have been prepared in accordance with
UK adopted International Accounting Standards ("UK IFRS").
These financial statements are prepared in accordance with UK
IFRS under the historical cost convention, as modified by the use
of fair value for financial instruments measured at fair value. The
historical financial information is presented in United States
Dollars ("US$") except where otherwise indicated.
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise
stated.
(a) Going concern
These financial statements have been prepared on the going
concern basis.
The directors of the Company have a reasonable expectation that
the Company has adequate resources,to continue in operational
existence for the foreseeable future and for at least one year from
the date of the financial statements. For that reason, they
continue to adopt the going concern basis in preparing the
Company's financial statements.
(b) New standards, amendments and interpretations
New standards are not expected to impact the Company as they are
either not relevant to the Company's activities or require
accounting which is consistent with the Company's current
accounting policies.
The Directors have considered those standards and
interpretations which have not been applied in these financial
statements but which are relevant to the Company's operations that
are in issue but not yet effective and do not consider that they
will have a material effect on the future results of the
Company.
2 Basis of preparation (continued)
(c) Revenue recognition
Sale of goods
Revenue comprises the fair value of the sale of FISH probes used
to identify the properties of blood samples under the terms of a
sub license agreement with a third party, net of applicable sales
taxes. Revenue is recognised on the sale of goods when the
significant risks and rewards of ownership of the goods have passed
to the buyer and the amount of revenue can be measured reliably.
Revenue on goods delivered is recognised when the customer accepts
delivery and on services when those services have been
rendered.
Royalty income
Under the terms of a patent and technology sub license agreement
the company is entitled to receive royalty income at 6% of the
quarterly net sales invoiced by the sub licensee in the relevant
quarter. Income is recognized in the period in which the underlying
net sales are generated.
Cash is received from revenues recognised according to terms of
trade within the relevant contractual relationship, usually in
accordance with agreed events such as placing of order, fulfilment
of order and delivery.
(d) Intangible assets
Research expenditure is recognised as an expense when incurred.
Development expenditure is recognized as an expense except those
costs incurred on development projects are capitalised as long term
assets to the extent that such expenditure is expected to generate
future economic benefits. Development expenditure is capitalised
only if it meets the criteria for capitalisation under IAS 38.
Capitalised development expenditure is measured at cost less
accumulated amortisation and impairment losses, if any. Development
expenditure initially recognised as an expense is not recognised as
an asset in future years. Capitalised development expenditure is
amortised on a straight-line basis over the estimated useful life
of the asset when the asset is available for use.
(e) Property, plant and equipment
Owned assets
Items of property, plant and equipment are stated at cost or
deemed cost less accumulated depreciation and impairment losses.
Cost includes the original purchase price of the asset and the
costs attributable to bringing the asset to its working condition
for its intended use. When parts of an item of property, plant and
equipment have different useful lives, those components are
accounted for as separate items of property, plant and
equipment.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Company and the cost of the item can be measured
reliably.
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognised in the income
statement.
2 Basis of preparation (continued)
(e) Property, plant and equipment (continued)
Depreciation
Depreciation is charged to profit or loss on a straight-line
basis over the estimated useful lives of each part of an item of
property, plant and equipment. The estimated useful lives are as
follows:
-- computer and IT equipment - 33 per cent. straight line
-- leasehold improvements - shorter of lease term and useful life
-- plant and machinery - 20 per cent. straight line
-- laboratory equipment - 20 per cent. straight line
The residual values, useful lives and depreciation methods are
reviewed, and adjusted if appropriate, or if there is an indication
of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognised within "other
operating income" in the statement of income.
(f) Impairment of non-financial assets
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. The recoverable amount is the higher of an asset's fair
value less costs to sell and value in use. For the purposes of
assessing impairment, assets are considered at the lowest levels
for which there are separately identifiable cash flows (cash-
generating units).
Non-financial assets other than goodwill that suffered
impairment are reviewed for possible reversal of the impairment at
each reporting date.
(g) Financial assets
Classification
The Company classifies its financial assets as loans and
receivables. The classification depends on the purpose for which
the investments were acquired. Management determines the
classification of its investments at initial recognition.
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments. They are initially recognised at
fair value and are subsequently stated at amortised cost using the
effective interest method.
Impairment of financial assets
Impairment provisions are recognised when there is objective
evidence (such as significant financial difficulties on the part of
the counterparty or default or significant delay in payment) that
the Company will be unable to collect all of the amounts due under
the term's receivable, the amount of such a provision being the
difference between the net carrying amount and the present value of
the future expected cash flows associated with the impaired
asset.
(h) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits with an original maturity of three months or less.
2 Basis of preparation (continued)
(i) Financial liabilities
Trade and other payables
Trade and other payables are initially recognised at fair value
and subsequently measured at amortised cost. Accounts payable are
classified as current liabilities if payment is due within one year
or less. If not, they are presented as non-current liabilities.
Convertible debt
The proceeds received on issue of the Company's convertible debt
are allocated into their liability and equity components. The
amount initially attributed to the debt component equals the
discounted cash flows using a market rate of interest that would be
payable on a similar debt instrument that does not include an
option to convert. Subsequently, the debt component is accounted
for as a financial liability measured at amortised cost until
extinguished on conversion or maturity of the bond. The remainder
of the proceeds is allocated to the conversion option and is
recognised in the "Other equity" within shareholders' equity, net
of income tax effects.
(j) Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently carried at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the
income statement over the period of the borrowings using the
effective interest method.
Borrowings are de-recognised from the statement of financial
position when the obligation specified in the contract is
discharged, is cancelled or expires. The difference between the
carrying amount of a financial liability that has been extinguished
or transferred to another party and the consideration paid,
including any non-cash assets transferred or liabilities assumed,
is recognised in the income statement as other operating income or
finance costs.
Borrowings are classified as current liabilities unless the
Company has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting period.
(k) Provisions
A provision is recognised in the statement of financial position
when the Company has a present legal or constructive obligation as
a result of a past event, and it is probable that an outflow of
economic benefits will be required to settle the obligation. If the
effect is material, provisions are determined by discounting the
expected future cash flows at a pre- tax rate that reflects current
market assessments of the time value of money and, when
appropriate, the risks specific to the liability. The increase in
the provision due to the passage of time is recognised in finance
costs.
(l) Share capital
Ordinary shares are classified as equity. There are various
classes of ordinary shares in issue, as detailed in note 21.
Incremental costs directly attributable to the issue of new shares
are shown in share premium as a deduction from the proceeds.
2 Basis of preparation (continued)
(m) Net finance costs
Finance costs
Finance costs comprise interest payable on borrowings, direct
issue costs, dividends on preference shares and foreign exchange
losses, and are expensed in the period in which they are
incurred.
Finance income
Finance income comprises interest receivable on funds invested,
and foreign exchange gains.
Interest income is recognised in the income statement as it
accrues using the effective interest method.
(n) Leases
All leases are accounted for by recognising a right-of-use asset
and a lease liability except for:
-- Leases of low value assets; and
-- Leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the rate inherent in
the lease unless (as is typically the case) this is not readily
determinable, in which case the Company's incremental borrowing
rate on commencement of the lease is used. Variable lease payments
are only included in the measurement of the lease liability if they
depend on an index or rate. In such cases, the initial measurement
of the lease liability assumes the variable element will remain
unchanged throughout the lease term. Other variable lease payments
are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease
liability also includes:
-- amounts expected to be payable under any residual value guarantee
-- the exercise price of any purchase option granted in favour
of the Company if it is reasonably certain to assess that
option
-- any penalties payable for terminating the lease, if the term
of the lease has been estimated on the basis of termination option
being exercised.
Right of use assets are initially measured at the amount of the
lease liability, reduced for any lease incentives received, and
increased for:
-- lease payments made at or before commencement of the lease
-- initial direct costs incurred; and
-- the amount of any provision recognised where the Company is
contractually required to dismantle, remove or restore the leased
asset (typically leasehold dilapidations - see note 19).
Subsequent to initial measurement lease liabilities increase as
a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use
assets are amortised on a straight-line basis over the remaining
term of the lease or over the remaining economic life of the asset
if, rarely, this is judged to be shorter than the lease term.
2 Basis of preparation (continued)
(n) Leases (continued)
When the group revises its estimate of the term of any lease
(because, for example, it re-assesses the probability of a lessee
extension or termination option being exercised), it adjusts the
carrying amount of the lease liability to reflect the payments to
make over the revised term, which are discounted using a revised
discount rate. The carrying value of lease liabilities is similarly
revised when the variable element of future lease payments
dependent on a rate or index is revised, except the discount rate
remains unchanged. In both cases an equivalent adjustment is made
to the carrying value of the right-of-use asset, with the revised
carrying amount being amortised over the remaining (revised) lease
term. If the carrying amount of the right-of-use asset is adjusted
to zero, any further reduction is recognised in profit or loss.
(o) Income tax
Income tax for the years presented comprises current and
deferred tax. Income tax is recognised in the income statement
except to the extent that it relates to items recognised directly
in equity, in which case it is recognised in equity. Current tax is
the expected tax payable on the taxable income for the year, using
tax rates enacted or substantively enacted at the statement of
financial position date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is recognised on temporary differences arising
between the tax bases of assets and liabilities and their carrying
amounts.
The following temporary differences are not recognised if they
arise from (a) the initial recognition of goodwill; and (b) for the
initial recognition of other assets or liabilities in a transaction
other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss.
The amount of deferred tax provided is based on the expected manner
of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at
the statement of financial position date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced to
the extent that it is no longer probable that the related tax
benefit will be realised.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes assets
and liabilities relate to income taxes levied by the same taxation
authority on either the taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
(p) Foreign currency translation
i) Function and presentational currency
Items included in the financial statements of the Company are
measured using USD, the currency of the primary economic
environment in which the entity operates ('the functional
currency'), which is also the Company's presentation currency.
ii) Transactions and balances
Foreign currency transactions are translated into the 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
year-end exchange rates, of monetary assets and liabilities
denominated in foreign currencies to USD, are recognised in the
income statement.
3 Critical accounting judgements and estimates
The preparation of the Company's historical financial
information under UK IFRS requires the directors to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and
liabilities. Estimates and judgements are continually evaluated and
are based on historical experience and other factors including
expectations of future events that are believed to be reasonable
under the circumstances. Actual results may differ from these
estimates.
The Directors consider that the following estimates and
judgements are likely to have the most significant effect on the
amounts recognised in the financial information.
Carrying value of intangible assets, property, plant and
equipment
In determining whether there are indicators of impairment of the
Company's intangible assets, the directors take into consideration
various factors including the economic viability and expected
future financial performance of the asset and when it relates to
the intangible assets arising on a business combination, the
expected future performance of the business acquired.
Classification of the Mount Sinai License as an intangible
asset
As set out in note 13, o n 18 June 2021, the Company entered
into the Mount Sinai License Agreement, pursuant to which Mount
Sinai granted an option to the Company to obtain a licence, on a
non-exclusive basis, to use certain information held by Mount
Sinai. After considering the criteria in IAS38 the directors have
judged that the recognition criteria therein have been met and
classified the Mount Sinai license as an intangible asset.
4 Segment analysis
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Company that are
regularly reviewed by the chief operating decision maker (which
takes the form of the Board of Directors) as defined in IFRS 8, in
order to allocate resources to the segment and to assess its
performance.
The chief operating decision maker has determined that the
Company has one operating segment, the development and
commercialisation of its lung cancer early detection test. Revenues
are reviewed based on the products and services provided.
The Company operates in the United States of America. Revenue by
origin of geographical segment is as follows:
Year to Year to
31 December 31 December
2021 2020
US$ US$
Revenue
People's Republic of China 195,566 205,180
________ ________
195,566 205,180
________ ________
4 Segment analysis (continued)
2021 2020
US$ US$
Non-current assets
United States of America 6,597,577 476,672
________ ________
6,597,577 476,672
________ ________
Year to Year to
31 December 31 December
2021 2020
US$ US$
Product and service revenue
Royalty income 88,553 -
Consumable items 107,013 205,180
________ ________
195,566 205,180
________ ________
5 Financial instruments - Risk Management
The Company is exposed through its operations to the following
financial risks:
- Credit risk
- Foreign exchange risk and
- Liquidity risk
The Company is exposed to risks that arise from its use of
financial instruments. This note describes the Company's
objectives, policies and processes for managing those risks and the
methods used to measure them. Further quantitative information in
respect of these risks is presented throughout these financial
statements.
(i) Principal financial instruments
The principal financial instruments used by the Company, from
which financial instrument risk arises, are as follows:
- Cash and cash equivalents
- Trade and other payables
5 Financial instruments - Risk Management (continued)
(ii) Financial instruments by category
Financial asset
Amortised Amortised
cost cost
2021 2020
US$ US$
Cash and cash equivalents 14,628,351 127,628
Trade and other receivables 740,865 169,801
_________ _________
Total financial assets 15,369,216 297,429
_________ _________
Financial liabilities
Amortised Amortised
cost cost
2021 2020
US$ US$
Trade and other payables and loan 803,738 1,225,836
_________ _________
Total financial liabilities 803,738 1,225,836
_________ _________
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash
and cash equivalents, trade and other receivables, and trade and
other payables.
Due to their short-term nature, the carrying value of cash and
cash equivalents, trade and other receivables, and trade and other
payables approximates their fair value.
5 Financial instruments - Risk Management (continued)
(iv) Financial instruments
General objectives, policies and processes
The Board has overall responsibility for the determination of
the Company's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the
Company's finance function.
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Company's competitiveness and flexibility. Further details
regarding these policies are set out below:
Credit risk
Credit risk is the risk of financial loss to the Company if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. Due to the current low level of
revenue, the Company's exposure to credit risk is on cash at bank.
The Company only deposits cash with major banks with high quality
credit standing.
Cash in bank and short-term deposits
The credit quality of cash has been assessed by reference to
external credit rating, based on Standard and Poor's long-term /
senior issuer rating:
2021 2021 2020 2020
Cash Cash
Rating at bank Rating at bank
US$ US$
Bank A A+ 8,140,196 A+ 127,628
Bank B BBB+ 6,425,645 -
Bank C A+ 62,510 -
_________ _________
14,628,351 127,628
_________ _________
5 Financial instruments - Risk Management (continued)
Foreign exchange risk
Foreign exchange risk arises when the Company enters into
transactions denominated in a currency other than its functional
currency. The Company's policy is, where possible, to settle
liabilities denominated in its functional currency. Currently the
Company's liabilities are either US dollar or UK sterling. No
forward contracts or other financial instruments are entered into
to hedge foreign exchange movements, with funds raised in the UK
being transferred to fund US operations using spot rates.
As at 31 December 2021 assets held in Sterling amounted to
US$6,488,154 (2020 - US$ Nil) and liabilities held in Sterling
amounted to US$65,772 (2020 - US$340,371).
The effect of a 5% strengthening of the Sterling against US
dollar at the reporting date on the Sterling denominated net assets
carried at that date would, all other variables held constant, have
resulted in a decrease in post-tax loss for the year and increase
of net assets of US$321,119. A 5% weakening in the exchange rate
would, on the same basis, have increased post-tax loss and
decreased net assets by US$321,119.
Liquidity risk
Liquidity risk is the risk that the Company will encounter
difficulty in meeting its financial obligations as they fall due.
This risk is managed by the production of annual cash flow
projections. The Company's continued future operations depend on
its ability to raise sufficient working capital through the issue
of share capital and generating revenue.
The following table sets out the contractual maturities
(representing undiscounted contractual cash-flows) of financial
liabilities which can all be met from the cash resources currently
available:
Between
Up to 3 3 and 12
months months
At 31 December 2021 US$ US$
Trade and other payables 275,276 -
_________ _________
Total 275,276 -
_________ _________
Between
Up to 3 3 and 12
months months
At 31 December 2020 US$ US$
Trade and other payables 822,758 -
Loan 206,164 -
_________ _________
Total 1,028,922 -
_________ _________
5 Financial instruments - Risk Management (continued)
Capital Disclosures
The Company monitors its capital which comprises all components
of equity (i.e. share capital, share premium, and accumulated
losses).
The Company's objectives when maintaining capital are to
safeguard the entity's ability to continue as a going concern.
6 Expenses by nature
Year to Year to
31 December 31 December
2021 2020
US$ US$
Employee benefit expenses (see note 8) 1,760,012 1,295,786
Share-based payments charge - non-employee
and directors 86,602 83,657
Depreciation of property, plant and equipment 323,758 282,654
Research and development expenditure 1,343,132 647,147
Professional costs 720,232 811,660
Legal settlement 687,409 525,000
Foreign exchange losses 96,690 -
Other costs 1,209,661 179,391
Other operating income included the forgiveness of the Paycheck
Protection Program Loan of US$206,164 (2020 - US$Nil)
7 Auditor's remuneration
During the year the Company obtained the following services from
the Company's auditor:
Year to Year to
31 December 31 December
2021 2020
US$ US$
Fees payable to the Company's auditor
for the audit of the Company 47,472 -
Fees payable to the Company's auditor
for other services:
Services in connection with listing 108,423 41,864
Taxation services - 2,500
_________ _________
Total 155,895 44,364
_________ _________
8 Employee benefit expenses
Year to Year to
31 December 31 December
2021 2020
US$ US$
Employee benefit expenses (including Directors)
comprise:
Wages and salaries 1,304,022 911,560
Benefits 75,350 79,433
Share-based payments expense (note xx ) 323,199 141,978
Social security contributions and similar
taxes 52,601 79,158
Pension 4,840 -
_________ _________
1,760,012 1,212,129
_________ _________
Key management personnel compensation
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling the
activities of the Company, including the Directors of the
Company.
Year to Year to
31 December 31 December
2021 2020
US$ US$
Salary 599,232 299,042
Share based payment expense 312,706 126,175
_________ _________
911,938 425,217
_________ _________
The average number of employees (excluding Directors) in the
Company in the year was 8 (2020 - 10).
9 Net finance costs
Year to Year to
31 December 31 December
2021 2020
US$ US$
Finance expense
Interest expense on lease liabilities 107,601 23,390
Interest expense on liabilities measured
at amortised cost 309,327 747,157
Interest expense on other loans - 6,639
_________ _________
Total finance expense 416,928 777,186
_________ _________
9 Net finance costs (continued)
Year to Year to
31 December 31 December
2021 2020
US$ US$
Finance income
Bank interest 12,017 -
_________ _________
Total finance income 12,017 -
_________ _________
10 Tax expense
Year to Year to
31 December 31 December
2021 2020
US$ US$
Current tax expense
Current tax on loss for the year - -
Withholding tax on royalties 15,872 -
_________ _________
Total current tax 15,872 -
Deferred tax asset
On losses generated in the year - -
_________ _________
15,872 -
_________ _________
10 Tax expense (continued)
There were no charges to current corporation taxation due to the
losses incurred by the Company in the year. The reasons for the
difference between the actual tax charge for the year and the US
federal income tax rate of 21% and state of California income tax
rate of 8.84% are as follows:
Year to Year to
31 December 31 December
2021 2020
US$ US$
Loss for the year (7,428,316) (4,839,023)
_________ _________
Tax using 29.84% (2,216,610) (1,443,964)
Expenses not deductible for tax purposes 688,811 410,500
Unrecognised deferred tax assets for losses
carried forward 1,527,799 1,033,464
_________ _________
Total tax expense -
_________ _________
The unrecognised deferred tax is based on total taxable losses
carried forward of US$49,393,180 (2020 - US$44,940,832 and a
capital loss of US$4,583,333 (2020 - US$4,583,333). No deferred tax
asset is recognised for these losses due to early stage in the
development of the Company's activities. The losses do not expire
but can only be used against trading profits from the same
trade.
11 Loss per share
Year to Year to
31 December 31 December
2021 2020
Total Total
Numerator US$ US$
Loss for the year used in basic EPS (7,444,188) (4,839,023)
Denominator
Weighted average number of ordinary shares
used in basic EPS 15,870,143 6,515,838
Resulting loss per share (US$0.469) (US$0.743)
The Company has one category of dilutive potential ordinary
share, being share options (see note 23). The potential shares were
not dilutive in the year as the Company made a loss per share in
line with IAS 33. As described in note 21, on between 2 July 2021
and 7 July 2021the Company implemented a pre-Admission
reorganisation of its capital which included the conversion of
Series A and B Preferred Shares into Common Shares and a reverse
share split by way of the issue of one new Common Share and
Preferred Share for every 18 old Common Shares and Preferred Shares
held.
As required by IAS33, the number of shares presented as the
denominator in calculating loss per share has been adjusted from 1
January 2020, the beginning of the earliest period for which loss
per share information is presented in order to maintain
comparability.
12 Tangible assets
Furniture Computers
Leasehold and and IT Plant &
improvements equipment equipment machinery Total
US$ US$ US$ US$ US$
Cost or valuation
At 1 January
2020 981,613 1,102,464 49,831 - 2,133,908
Re-classification - (1,045,962) - 1,045,962 -
Additions - - - 5,328 5,328
________ ________ ________ _________ _________
At 31 December
2020 981,613 56,502 49,831 1,051,290 2,139,236
Landlord contribution (15,588) - - - (15,588)
Additions 349,338 - 35,126 257,428 641,892
________ ________ ________ ________ ________
At 31 December
2021 1,315,363 56,502 84,957 1,308,718 2,765,540
________ ________ ________ ________ ________
Accumulated
depreciation
and impairment
At 1 January
2020 558,051 786,784 48,310 1,393,145
Re-classification - (730,282) - 730,282 -
Depreciation 153,126 - 1,521 128,007 282,654
________ ________ ________ ________ ________
At 31 December
2020 711,177 56,502 49,831 858,289 1,675,799
Depreciation 233,253 - 3,173 87,332 323,758
________ ________ ________ ________ ________
At 31 December
2021 944,430 56,502 53,004 945,621 1,999,557
________ ________ ________ ________ ________
Net book value
At 31 December
2021 370,933 - 31,953 363,097 765,983
________ ________ ________ ________ ________
At 31 December
2020 270,436 - - 193,001 463,437
________ ________ ________ ________ ________
Included in leasehold improvements at 31 December 2021 are right
of use assets with a cost of $1,282,052 and accumulated
depreciation of $898,393.
13 Intangible assets
License Total
US$ US$
Cost
At 1 January 2020 - -
Additions - -
_________ _________
At 31 December 2020 - -
Additions 5,818,359 5,818,359
_________ _________
At 31 December 2021 5,818,359 5,818,359
_________ _________
Accumulated amortisation and impairment
At 1 January 2020 - -
Amortisation charge - -
_________ _________
At 31 December 2020 - -
Amortisation charge
_________ _________
At 31 December 2021 - -
_________ _________
Net book value
At 31 December 2021 5,818,359 5,818,359
_________ _________
At 31 December 2020 - -
_________ _________
On 18 June 2021, the Company entered into the Mount Sinai
License Agreement, pursuant to which the Icahn School of Medicine
at Mount Sinai granted an option to the Company to obtain a
licence, on a non-exclusive basis, to use certain information held
by Mount Sinai. The Mount Sinai License Agreement automatically
became effective on Admission. Exercise of the option contained in
the Mount Sinai License Agreement is conditional on: (i) Admission;
(ii) clearance by Mount Sinai's information security team; and
(iii) IRB, data security and data use approvals. Mount Sinai is
under an obligation to use commercially reasonable efforts to
obtain such clearances and approvals (other than Admission).
Pursuant to the Mount Sinai License Agreement, Mount Sinai has
granted the Company an option to obtain a licence, on a
non-exclusive basis, to use certain information held by Mount Sinai
to be able to develop future products.
14 Trade and other receivables
2021 2020
US$ US$
Amounts falling due within one year
Prepayments and accrued income 692,274 169,801
Other debtors 48,591 -
_________ _________
740,865 169,801
_________ _________
2021 2020
US$ US$
Amounts falling due after one year
Rent deposit 13,235 13,235
_________ _________
13,235 13,235
_________ _________
15 Trade and other payables
2021 2020
US$ US$
Trade payables 211,718 786,018
Accruals and other payables 570,920 439,818
_________ _________
Total financial liabilities classified as financial
liabilities measured at amortised cost 782,638 1,225,836
Other payables - tax and social security payments 21,100 -
_________ _________
Total trade and other payables 803,738 1,225,836
_________ _________
The carrying value of trade and other payables classified as
financial liabilities measured at amortised cost approximates fair
value.
16 Borrowings and Loans
2021 2020
US$ US$
Loans payable - 206,164
________ ________
- 206,164
________ ________
In May 2020 the Company applied for and received a loan under
the US Government Paycheck Protection Program. An application for
forgiveness of the entire principal balance as permitted under the
Program was made subsequent to 31 December 2020 and was granted in
the year to 31 December 2021.
17 Lease Liabilities
Land and Plant and
buildings machinery Total
US$ US$ US$
At 1 January 2020 349,803 144,629 494,432
Interest expense 23,390 - 23,390
Repayments (151,859) (28,520) (180,379)
________ ________ ________
At 31 December 2020 221,334 116,109 337,443
________ ________ ________
Additions 349,338 245,189 594,527
Repayments (156,306) (74,363) (230,669)
Interest expense 89,625 17,976 107,601
________ ________ ________
At 31 December 2021 503,991 304,911 808,902
________ ________ ________
The Company acquired certain tangible assets under capital lease
financing arrangements.
The Company operates from one office which is rented under a
lease agreement ending on 1 July 2022 under which rent is payable
monthly. During the year the Company extended this lease until 31
August 2025 commencing 1 July 2022 and with a two-month rent free
period.
2021 2020
US$ US$
Maturity of lease liabilities
Within 3 months 56,727 40,951
Between 3 - 12 months 150,553 131,045
Between 1 - 2 years 255,070 108,346
Between 2 - 5 years 346,552 57,101
________ ________
808,902 337,443
________ ________
18 Convertible Notes
2021 2020
US$ US$
Due within one year:
Convertible Secured Promissory Notes - 10,086,616
_________ _________
- 10,086,616
_________ _________
On 26 October 2017 the Company issued a Convertible Secured
Promissory Note Purchase Agreement (the "Notes") that provided for
the issuance of up to a principal amount US$3m on which interest of
eight per cent. Accrued. Unless converted into shares the principal
and accrued interest are payable in full at the earlier of the
maturity date of 26 January 2020 or the occurrence of a defined
corporate transaction.
On 31 December 2018 the total principal amount of Notes that
could be issued increased to US$6m and on 20 August 2019 the total
principal amounts of Notes that could be issued increased to
US$7.5m. On 20 August 2019 the Company determined that the Notes
issued before that date should be classified as Series A-1 Notes
and those issued after that date Series A-2 Notes. The Series A-2
Notes have a different conversion term and are repayable in
preference to the Series A-1 Notes.
As the conversion feature results in the conversion of a fixed
amount of stated principal into a fixed number of shares, it
satisfies the 'fixed for fixed' criterion and, therefore, it is
classified as an equity instrument.
The value of the liability component and the equity conversion
component were determined at the date the instrument was
issued.
The fair value of the liability component, included above, at
inception was calculated using a market interest rate for an
equivalent instrument without conversion option. The discount rate
applied was eight per cent.
On 15 June 2020 the Company entered into an agreement to extend
the maturity date of the Notes to 30 June 2021.
On [date] all the principal and accrued interest in the
Convertible Notes was converted into new Common Stock shares.
The interests of the Directors and their connected persons in
the Convertible Notes was:
2021 2020
US$ US$
Simon Raab (resigned 1 July 2021) - 3,232,380
Frederick Gluck (resigned 1 July 2021) - 1,711,953
_________ _________
- 4,944,333
_________ _________
19 Provisions
Dilapidations Total
US$ US$
At 1 January 2020 50,000 50,000
Movement - -
_________ _________
At 31 December 2020 50,000 50,000
_________ _________
Additions - -
_________ _________
At 31 December 2021 50,000 50,000
_________ _________
Provision is made for the anticipated cost of returning the
Company's premises to their prior state on termination of the
lease.
20 Net cash /(debt) reconciliation
2021 2020
US$ US$
Cash and cash equivalents 14,628,351 127,628
Convertible notes - (10,086,616)
Other borrowings and loans - (206,164)
Lease liabilities (808,902) (337,443)
_________ _________
Net cash / (debt) 13,819,449 (10,502,595)
_________ _________
Cash and Borrowings
cash equivalents and loans Net Debt
US$ US$ US$
Net debt at 1 January 2020 726,794 (7,678,186) (6,951,392)
Cash flows (599,166) (2,376,353) (2,975,519)
Other non-cash movements:
- - -
Lease liabilities
- 156,647 156,647
Accretion of interest on convertible
notes - (732,331) (732,331)
_________ _________ _________
Net debt at 31 December 2020 127,628 (10,630,223) (10,502,595)
_________ _________ _________
Cash flows 14,500,723 - 14,500,723
Other non-cash movements:
Conversion of Convertible Loan Notes - 10,395,943 10,395,943
Forgiveness of Payroll Protection
Program loan - 206,164 206,164
Lease liabilities - (471,459) (471,459)
Accretion of interest on convertible
notes - (309,327) (309,327)
_________ _________ _________
Net debt at 31 December 2021 14,628,351 (808,902) 13,819,449
_________ _________ _________
21 Share capital
Issued and fully paid
Number US$
Shares of US$0.0001 par value each
At 1 January 2020
Common shares 5,092,839 510
Preference shares, Series A and B 79,738,560 7,973
Issue of common shares in the year 1,820,407 184
_________ _________
Total at 31 December 2020 86,651,806 8,665
Reverse stock split, at ratio of 1 new common
share (81,837,883) (8,184)
Issue of common shares on conversion of the
Convertible Loan Notes and Warrants 9,350,888 935
Issue of common shares for cash 9,659,091 966
Issue of common shares for non-cash consideration 1,656,888 166
_________ _________
Total issued share capital at 31 December
2021 25,480,790 2,548
_________ _________
Between 2 July 2021 and 7 July 2021, the Company implemented a
pre-Admission reorganisation of its capital which included, inter
alia, the following:
-- A reverse split by way of the issue of one new Common or
Preferred Share for every 18 old Common or Preferred Shares
held
-- Conversion of Series A-1 and Series A-2 Convertible Notes and
related Warrants into Common Shares
-- Conversion of Series A Preferred Shares and Series B Preferred Shares into Common Shares
22 Reserves
The following describes the nature and purpose of each reserve
within equity:
Reserve Description and purpose
Share premium Amount subscribed for share capital in
excess of nominal value.
Other equity Amount of proceeds on issue of convertible
debt relating to the equity component
(i.e., option to convert the debt into
share capital).
Retained earnings All other net gains and losses and transactions
with owners (e.g., dividends) not recognised
elsewhere.
23 Share-based payment
Prior to Admission to AIM the Company operated two share option
plans: the 2010 Stock Incentive Plan and approved by the Board on 1
January 2010 and the 2020 Stock Incentive Plan was approved on 14
May 2020:
(a) options granted under the 2010 Stock Incentive Plan fall into two groups:
(i) options granted in or before 2016 over a total of 2,183,634
shares, with exercise prices ranging from $0.10 to $0.16 per share,
these options are now fully vested; and
(ii) options granted in 2019 over a total of 6,951,463 shares,
with an exercise price of $0.025 per share: these options generally
vest on a monthly basis over three or four years from the date of
grant. However, those granted to current employees of the Company
were amended so that they became exercisable in full on
Admission.
(b) Options were granted in 2020 and 2021 under the 2020 Stock
Incentive Plan over a total of 5,364,385 shares with an exercise
price of $0.0044 per share. These options vest over four years from
the date of grant on a monthly basis, but certain of these options
accelerated immediately before Admission, and became fully
exercisable at Admission.
On 14 May 2021 the Board approved the Company's 2021 Omnibus
Long-Term Incentive Plan ("LTIP") and it was approved by
shareholders on 27 May 2021 to become effective approximately three
days prior to Admission. The LTIP provides for the grant of both
EMI Options and non-tax favoured options. Options granted under the
LTIP are subject to exercise conditions as summarised below.
The LTIP has a non-employee sub-plan for the grant of Options to
the Company's advisors, consultants, non-executive directors, and
entities providing, through an individual, such advisory,
consultancy, or office holder services and a US sub-plan for the
grant of Options to eligible participants in the LTIP and the
Non-Employee Sub-Plan who are US residents and US taxpayers.
With the exception of options over 384,924 shares, which vested
immediately on Admission, the options issued under the LTIP vest
25% on the first anniversary of the vesting commencement date and
an additional one forty-eighth of the total number of options after
each subsequent calendar month for employees. For consultants
options issued under the LTIP vest 25% on the first anniversary of
the vesting commencement date and an additional one sixteenth of
the total number of options after each subsequent quarter. If
options remain unexercised after the date one day before the tenth
anniversary of grant such options expire. Vesting shall accelerate
in full in the event of a change of control of the Company.
As described in note 21, between 2 July 2021 and 7 July 2021the
Company implemented a pre-Admission reorganisation of its capital
which included a reverse share split by way of the issue of one new
Common or Preferred Share for every 18 old Common or Preferred
Shares held.
At the date of the reorganisation there were 14,499,482
pre-Admission options outstanding to 32 option holders comprising
Directors, former Directors and employees with exercise prices
between $0.0044 and $0.16 per share. Those options were varied to
reflect the reverse share split so that they were replaced with
805,492 options with exercise prices of between $0.0792 and $2.88
per share. The directors consider that this was a mechanical
variation modification of the awards and not a modification for the
purposes of IFRS2. Comparative figures have been adjusted to
restate numbers and values of share options issued as if the
reverse share split had been in effect from 1 January 2020.
On Admission on 8 July 2021 the Board approved grants of 769,707
to Paul Pagano and 386,703 options to David Anderson and on 23
November 2021 and 27 December 2021 the Board approved further
grants, of 112,500 and 5,000 options respectively, to employees and
consultants.
23 Share-based payment (continued)
Weighted
average
exercise
price US$ Number
Outstanding at 1 January 2020 12,230,198
Granted during the year 2,345,845
Cancelled (25,000)
Exercised during the year (51,561)
_________
Outstanding at 31 December 2020 and 1 January
2021 14,499,482
Reverse share split (13,693,990)
_________
Revised balance outstanding at 31 December
2020 0.74 805,492
Granted during the year 2.19 1,260,035
Exercised or expired during the year 0.74 (13,913)
_________ _________
Outstanding at 31 December 2021 1.74 2,065,527
_________ _________
Vested at 31 December 2021 1.35 1,030,627
_________ _________
The exercise price of options outstanding at 31 December 2021
ranged between US$0.08 and US$2.70 and their weighted average
contractual life was 7.66 years and weighted average expected life
was 1.8 years. The fair value of each share option granted has been
estimated using a Black-Scholes model. The inputs into the model
are share prices of between US$0.08 and US$2.51, exercise prices of
between US$0.45 and US$2.77, expected volatility of 57.9%, expected
dividend yield of 0%, expected lives of between 1.25 and 3.75 years
and a risk-free interest rate of 0.29%. In the absence of historic
volatility data available at the grant date the expected volatility
of 57.9% was estimated based on comparable companies.
The Company recognised total expenses of US$409,801 (2020:
US$225,635) within administrative expenses relating to
equity-settled share-based payment transactions during the
year.
24 Events after the reporting date
There have been no events subsequent to the year-end that
require disclosure in these financial statements.
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END
FR VELFLLXLZBBD
(END) Dow Jones Newswires
March 28, 2022 02:00 ET (06:00 GMT)
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