REG - LungLife AI, INC - Preliminary Results
28/03/2022 07:00
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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 £17m (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® 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® 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® 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 (https://www.lunglifeai.com/)
Paul Pagano, CEO Via Walbrook PR
David Anderson, CFO
Investec Bank plc (Nominated Adviser & Broker) Tel: +44 (0)20 7597 5970
Daniel Adams / Virginia Bull / Cameron MacRitchie
Walbrook PR Limited Tel: +44 (0)20 7933 8780 or LungLifeAI@walbrookpr.com
(mailto:LungLifeAI@walbrookpr.com)
Paul McManus / Alice Woodings / Phillip Marriage Mob: 07980 541 893 / 07407 804 654 / 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® test
is designed to deliver additional information to clinicians who are evaluating
indeterminate lung nodules. For more information visit www.lunglifeai.com
(http://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® test
multi-centre clinical validation study.
LungLB® 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® 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® 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® 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® code marks the first step on the path for
commercial reimbursement. In October 2021 we applied to the American Medical
Association for a CPT® 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® codes offer health care professionals a uniform language for
coding medical services and procedures, and the CPT® 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 £17 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® code for
Medicare reimbursement for the LungLB® 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® test for indeterminate lung nodules, commence the post-surgical
monitoring validation study for the LungLB® 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® 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 11
ordinary equity holders of the parent
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
Share Share Share-based Other equity Accumulated losses Total Total
capital premium payment attributable equity
reserve to equity
holders of
parent
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 182 90,328 225,635 14,819 - 330,964 330,964
distributions to owners
_________ _________ _________ _________ _________ _________ _________
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)
Share Share Share-based Other equity Accumulated losses Total Total
capital premium payment attributable equity
reserve to equity
holders of
parent
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 935 12,600,730 - - - 12,601,665 12,601,665
Notes
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 (6,117) 39,069,915 409,801 (843,137) 249,837 38,880,299 38,880,299
distributions to owners
_________ _________ _________ _________ _________ _________ _________
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 Loan (206,164) -
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, on 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 782,638 1,225,836
amortised cost
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 9,350,888 935
Warrants
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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