REG - Polarean Imaging PLC - Final Results
26/05/2023 07:00
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RNS Number : 7366A Polarean Imaging PLC 26 May 2023
Polarean Imaging Plc
("Polarean" or the "Company")
Final results for the year ended 31 December 2022
Notice of Annual General Meeting
Polarean Imaging plc (AIM: POLX), the medical imaging company announces its
audited final results for the year ended 31 December 2022.
In addition, Polarean confirms that the Annual Report and Accounts for the
year ended 31 December 2022, the Notice of the Annual General Meeting ("AGM")
and a Form of Proxy are now available on the Company's website
(http://www.polarean-ir.com/content/investors/annual-reports.asp
(http://www.polarean-ir.com/content/investors/annual-reports.asp) ) and will
be posted to shareholders shortly.
The AGM will be held at 2500 Meridian Parkway, Suite 175, Durham, NC 27713,
USA at 2 p.m. BST / 9 a.m. EST on 28 June 2023.
Highlights
- United States Food and Drug Administration ("FDA") approval received
for the Company's drug device combination product, XENOVIEW (xenon Xe 129
hyperpolarised), a hyperpolarised contrast agent indicated for use with
magnetic resonance imaging ("MRI") for evaluation of lung ventilation in
adults and pediatric patients aged 12 years and older
- Simultaneously with the approval of the XENOVIEW NDA, two 510(k)
devices were cleared by the FDA; XENOVIEW VDP is image processing software
that analyses a pulmonary hyperpolarised 129-Xe MR image and a proton chest MR
image to provide visualisation and evaluation of lung ventilation and the
Polarean XENOVIEW 3.0T Chest Coil
- Research system placements at McMaster University in Ontario, Canada
and Cincinnati Children's Hospital Medical Center ("CCHMC")
- Appointment of Frank Schulkes, Dan Brague and Marcella Ruddy, MD to
the Board as independent Non-Executive Directors
- Appointment of Ken West as Non-Executive Chairman, following the
retirement of Jonathan Allis
- Research collaboration with Oxford University Hospitals NHS Trust
for long-COVID
- Net cash of US$16.4 million as of 31 December 2022
Post-period end
- First order for a XENOVIEW gas blend cylinder for the production of
XENOVIEW received from CCHMC, representing key milestone and execution of
commercial plan
- First clinical scan utilising XENOVIEW technology in the United
States conducted at CCHMC, marking key milestone for imaging of lung
ventilation
- Selected as one of the featured companies as a poster presenter at
the American Thoracic Society's ("ATS") 2023 Respiratory Innovation Summit
Richard Hullihen, CEO of Polarean, said: "We ended the year with a tremendous
positive in receiving our FDA approval for XENOVIEW. This was a long road
culminating with the decision we were looking for, and an extraordinary amount
of work went into this process from the entire team. We have now begun to roll
out XENOVIEW for clinical use and expect to see further hospitals adopt doing
clinical XENOVIEW scans in the coming months. We also continue to explore
potential future applications for our technology and remain positive for the
year ahead. Separately, we have been shortlisted for Breakthrough of the Year
and Best Technology at the 2023 European Mediscience Awards, which celebrates
private and listed healthcare, biotech and life sciences companies; we are
delighted by this validation of our technology and our achievement in securing
FDA approval, and are excited to see the outcome.
"On behalf of the Board and the whole Polarean team, I would like to extend my
thanks to our shareholders for all their support and we look forward to
further updating the market in due course."
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) 596/2014.
Inquiries:
Polarean Imaging plc www.polarean.com / www.polarean-ir.com
Richard Hullihen, Chief Executive Officer Via Walbrook PR
Kenneth West, Chairman
Stifel Nicolaus Europe Limited (NOMAD and Sole Corporate Broker) +44 (0)20 7710 7600
Nicholas Moore / Samira Essebiyea / Kate Hanshaw (Healthcare Investment
Banking)
Nick Adams / Nick Harland (Corporate Broking)
Walbrook PR Tel: +44 (0)20 7933 8780 or polarean@walbrookpr.com
Anna Dunphy / Phillip Marriage Mob: +44 (0)7876 741 001 / +44 (0) 7867 984 082
RLF Communications (US media enquiries) mrash@rlfcommunications.com
Michelle Rash (001) 336-823-5501
About Polarean (www.polarean.com)
The Company and its wholly owned subsidiary, Polarean, Inc. (together the
"Group") are revenue-generating, medical imaging technology companies
operating in the high-resolution medical imaging space. Polarean aspires to
revolutionise pulmonary medicine by bringing the power and safety of MRI to
the respiratory healthcare community in need of new solutions to evaluate lung
ventilation, diagnose disease, characterise disease progression, and monitor
response to treatment. By researching, developing, and commercialising novel
imaging solutions with a non-invasive and radiation-free functional imaging
platform. Polarean's vision is to help address the global unmet medical needs
of more than 500 million patients worldwide suffering with chronic respiratory
disease. Polarean is a leader in the field of hyperpolarisation science and
has successfully developed the first and only hyperpolarised MRI contrast
agent to be approved in the United States. On Dec. 23, 2022, the FDA granted
approval for Polarean's first drug device combination product, XENOVIEW(TM)
(Xenon Xe(129) hyperpolarised). Xe(129) MRI is also currently being studied
for visualisation and quantification of gas exchange regionally in the
smallest airways of the lungs, across the alveolar tissue membrane, and into
the pulmonary bloodstream for future clinical indications.
XENOVIEW IMPORTANT SAFETY INFORMATION
Warnings and Precautions
Risk of Decreased Image Quality from Supplemental Oxygen: Supplemental oxygen
administered simultaneously with XENOVIEW(TM) inhalation can cause degradation
of image quality. For patients on supplemental oxygen, withhold oxygen
inhalation for two breaths prior to XENOVIEW(TM) inhalation, and resume oxygen
inhalation immediately following the imaging breath hold.
Risk of Transient Hypoxia: Inhalation of an anoxic gas such as XENOVIEW(TM)
may cause transient hypoxemia in susceptible patients. Monitor all patients
for oxygen desaturation and symptoms of hypoxemia and treat as clinically
indicated.
Adverse Reactions
Adverse Reactions in Adult Patients: The adverse reactions (> one patient)
in efficacy trials were oropharyngeal pain, headache, and dizziness. Adverse
Reactions in Pediatric and Adolescent Patients: In published literature in
pediatric patients aged 6 to 18, transient adverse reactions were reported:
blood oxygen desaturation, heart rate elevation, numbness, tingling,
dizziness, and euphoria. In at least one published study of pediatric patients
aged 6 to 18 years, transient decrease in SpO2% and transient increase in
heart rate was reported following hyperpolarized xenon Xe 129 administration.
XENOVIEW(TM) is not approved for use in pediatric patients less than 12 years
of age.
Please see full prescribing information at www.xenoview.net
(http://www.xenoview.net)
Chairman's Statement
I am pleased to be able to write this letter with the very important milestone
of United States Food & Drug Administration ("FDA") approval of the
Company's drug device combination product, XENOVIEW, having been accomplished.
The broad label of "evaluation of lung ventilation in adults and pediatric
patients aged 12 years and older" allows the company to execute its commercial
strategy of selling its polarizer and approved gas for clinical scans of
patients suffering from a number of lung diseases where the accurate
measurement of lung ventilation provides the physician with actionable
diagnostic information. In addition, researchers using Polarean's technology
continue to conduct clinical research that supports the broad future potential
applications of our technology in areas of gas exchange and cardiopulmonary
diagnostics. We are excited to bring Polarean's technology to clinical
medicine, with the potential to be an important part of pulmonary and
cardiopulmonary diagnostics, monitoring of severity of disease and patient
response to treatments.
During 2022, we strengthened our Board with the addition of three independent
Non-Executive Board members who bring extensive industry and medical
experience to the Board to assist the company's successful transition into the
commercialization stage. Frank Schulkes brings substantial financing
experience in the medical imaging industry and Dan Brague brings experience
successfully commercializing diagnostic imaging products. In addition, Dr.
Marcella Ruddy brings important pulmonary medical expertise, both in clinical
practice and in pharmaceutical development. With these additions to our Board,
we believe that we have a world-class Board that can lead the company to
successful commercialization of Xenoview.
Having achieved FDA approval, our efforts are now focused on gaining
commercial traction and engaging with potential corporate partners to further
accelerate our commercial success. Once we have achieved some of these
near-term milestones, we will explore the options for additional financing to
more aggressively pursue the development of the next indications and advance
the continued development of our polarizer system and software. The Company is
exploring a broad range of options for future financing, including equity
raises and corporate partnering.
On behalf of the Board, I want to thank our employees, stakeholders and
shareholders and assure them that we are committed to making Xenoview a
commercial and financial success.
Kenneth West
Non-Executive Chairman
25 May 2023
Chief Executive Officer's Statement
2022 - Year of Obtaining FDA Approval
We spent much of 2022 working on obtaining FDA approval of our New Drug
Application ("NDA") for XENOVIEW and were please received our approval on 23
December 2022. After receiving a Complete Response Letter ("CRL") from the FDA
in October 2021, we spend the subsequent six months addressing the issues
raised in the CRL. On 30 March 2022, the Company refiled the NDA with the FDA.
The resubmission addressed the items identified in the CRL. On 22 September
the Company announced that the FDA had requested additional information
related to the cGMP (Current Good Manufacturing Practice) pre-approval
inspection at the partner's production facility. The Company and its partner
addressed the FDA's request and the Company received FDA approval on 23
December 2022. We were very pleased to receive the broad label of evaluation
of lung function in adults and pediatric patients twelve and older. In
addition, the FDA indicated that they would allow us to submit a non-clinical
plan to obtain approval in pediatric patients six and older. The FDA has
granted New Chemical Entity ("NCE") designation for Xenoview. NCE designation
provides the important first mover protection envisioned under the Hatch
Waxman legislation.
Commercialization
With FDA approval, the Company is focused on successful commercialization of
XENOVIEW for the evaluation of lung function. The Company has an enthusiastic
base of US institutions who have been using our technology for research
purposes for years. We are leveraging this knowledge and enthusiasm by
converting its US research sites to FDA approved configuration and clinical
use, which will allow these sites to purchase Xenoview and perform clinical
scans. In parallel, we are pursuing various reimbursement codes that could
enable the hospitals to be reimbursed for Xenoview, the polarization process,
the MRI procedure and the analysis of the pulmonary function imaging. If
obtained, we believe that this reimbursement would enable a very compelling
return on investment for hospitals to purchase our polarizer systems. We are
aggressively pursuing our early commercialization targets of the sale of 15 to
20 polariser systems and 75 to 100 cylinders of Xenoview by the end of 2024.
We are focusing initially on addressing the high end of the US academic and
teaching hospital market segment, which comprises approximately the top 1000
institutions nationally having coincident multiple Centres of Excellence in
Pulmonary Medicine and Radiology. We believe our strategy of selling the
capital equipment and the Xenoview drug on a per cylinder basis could provide
a capital equipment and recurring drug sales model that supports rapidly
growing revenue.
Financials
Sales for 2022 were below our original expectations, as we did not receive FDA
approval in October 2022 as anticipated in the plan. We adjusted our spending
plans commensurate with the delayed approval, which allowed us to finish 2022
with a higher than anticipated cash balance of US$16.4 million. We continued
to sell our polariser systems into the research market and completed two
installations during 2022. The current cash balance is expected to fund the
company into late Q2-2024.
Corporate Partnering
We continue to believe that corporate partnering could be an important part of
the Company's business plan. We see the opportunity to help the pharmaceutical
industry reduce by significant amounts the size, time required to conduct and
costs of their pulmonary drug clinical trials by providing quantitative,
reproducible image-based data. We also see the opportunity to partner with MRI
manufacturers to open up the MRI applications space to include pulmonary
diagnostics, driving the demand for more MRI systems. In addition, we will
explore the opportunity to partner with pulmonary disease organizations and
foundations to incorporate the use of Xenoview in the diagnosis and treatment
of disease.
Future Indications
Researchers are currently conducting clinical trials and pharmaceutical
company sponsored investigations in multiple areas of pulmonary disease using
our technology. These studies are highlighting the exciting opportunities in
the areas of long COVID and cardiopulmonary vascular disease. We believe that
these areas could greatly expand the total addressable markets and use of the
Company's technology in the future.
2023 and Beyond
As discussed above, we are focused on achieving early commercial traction with
our broad lung function evaluation label granted by the FDA in late 2022. In
parallel, we are exploring a variety of partnering opportunities. Once we have
achieved some of these near-term milestones, we will explore the appropriate
timing and structure to finance the continued commercial efforts, clinical
trials to seek approval for the high-value gas exchange and pulmonary vascular
disease indications and continue to improve our polariser system and imaging
software.
This important milestone of FDA approval would not have been possible without
the dedicated team of employees, consultants and advisers working to bring our
much needed technology to clinicians, their patients and the institutions
enabling their care. I thank everyone for their hard work in accomplishing
this significant achievement.
Richard Hullihen
Chief Executive Officer
25 May 2023
Strategic Report
1. Introduction
The Group comprises medical drug-device combination companies operating in the
high-resolution medical imaging market. The Group develops equipment that
enables existing MRI systems to achieve an improved level of pulmonary
functional imaging and specialises in the use of polarised xenon gas (129Xe )
as an imaging agent to visualise ventilation (the ability of air to reach the
alveoli) and gas exchange (the ability of oxygen to diffuse through the
alveolar membrane into the pulmonary vasculature) regionally down to the
smallest airways of the lungs, the tissue barrier between the lung and the
bloodstream and in the pulmonary vasculature; and now also microvascular
haemodynamics within the lung, a novel diagnostic approach. The Group will
also register and sell the high-performance MRI radiofrequency (RF) coils
which are a required component for imaging 129Xe in the MRI system. Providing
access to these coils facilitates the adoption of the Xenon technology by
providing application-specific RF coils which optimise the imaging of 129Xe in
MRI equipment.
The Group was formed on 31 May 2017 when the Company acquired Polarean, Inc
(the "Subsidiary"). The Subsidiary was formed as a result of two mergers: the
first between Polarean Merger-Sub Inc. and m2m, a company that the Subsidiary
had developed a relationship with during the course of previous research and
commercialisation programmes in the US and the second between m2m and the
Subsidiary. m2m was previously a portfolio company of Amphion Innovations plc
("Amphion"), a developer of medical, life science, and technology businesses,
which is itself currently listed on AIM.
Investment Case
Pulmonary disease currently affects hundreds of millions of people globally,
including approximately 174 million people who suffer from Chronic Obstructive
Pulmonary Disease ("COPD"), which is responsible for approximately 6% of such
deaths globally each year. In the US more than 30 million people suffer from a
chronic lung disease such as COPD, which includes emphysema, chronic
bronchitis and asthma. In addition to its significant human toll, pulmonary
disease also represents an economic burden in excess of US$150 billion
annually in the US alone.
Every type of pulmonary disease involves some combination of ventilation
and/or gas exchange impairment, yet the successful and cost-effective
treatment of lung disease is hampered by sub-optimal methods for quantifying
pulmonary ventilation and gas exchange. Current diagnostic techniques are
either imprecise (such as spirometry) and/or expose the patient to potentially
dangerous radiation (such as x-rays, CT scans and nuclear scintigraphy). While
spirometry has benefits as a screening tool, none of these current methods can
visualise ventilation or gas exchange regionally in the smallest airways,
where lung disease typically begins and where improvements from new
pharmaceutical therapies can first be detected.
As such, the Group operates in an area of significant unmet medical need and
is pursuing approval by the US Food & Drug Administration ("FDA") for the
Group's drug-device combination product using hyperpolarised xenon-129 gas to
enhance MRI in pulmonary medicine. The Company submitted a new drug
application ("NDA") to the FDA on 5 October 2020 after the successful
completion of the FDA Phase III clinical trials in the US for the Group's
technology. The 80-patient equivalence clinical trials were conducted at Duke
University Medical Center, the University of Virginia and The University of
Cincinnati - three leading US research hospitals. Enrolment of the clinical
trials was completed in November 2019. In January 2020, the Company announced
that both clinical trials met their primary endpoints, within the
prospectively defined equivalence margin (+/-14.7%) when compared to the
FDA-approved reference standard, 133Xenon scintigraphy imaging. On 5 October
2021, the Company received a Complete Response Letter ("CRL") from the FDA
requesting that the Company to address approvability issues identified by the
FDA ahead of NDA resubmission. On 30 March 2022, the Company filed the
resubmission of the NDA with the FDA. On 20 April 2022, the Company announced
that the FDA had accepted the resubmission of the NDA and established a user
fee goal date of 30 September 2022. On 30 September 2022, the Company
announced that the FDA had granted the Company a 90 day extension to the NDA
review timeline. On 28 December 2022, the Company announced that the FDA had
granted approval for its drug device combination product, XENOVIEW. XENOVIEW,
prepared from the Xenon Xe 129 Gas Blend, is a hyperpolarised contrast agent
indicated for use with magnetic resonance imaging ("MRI") for evaluation of
lung ventilation in adults and pediatric patients aged 12 years and older. On
28 December 2022, the Company also announced that, simultaneously with the
approval of the XENOVIEW NDA, two 510(k) devices were cleared by the FDA that
will further support a successful launch of the technology into the clinical
marketplace: XENOVIEW VDP software and the XENOVIEW 3.0T Chest Coil. XENOVIEW
VDP is image processing software that analyzes a pulmonary hyperpolarised
129-Xe MR image and a proton chest MR image to provide visualization and
evaluation of lung ventilation in adults and pediatric patients aged 12 years
and older. This image analysis platform quantifies normalized xenon intensity
of a ventilated space using a pulmonary hyperpolarised 129-Xe ventilation MR
image and accompanying proton chest MR image. The software will be used by
clinicians to assist in the interpretation and numerical classification of
hyperpolarized 129-Xe ventilation MR images. The Polarean XENOVIEW 3.0T Chest
Coil is a flexible, single channel, transmit-receive (T/R) RF coil tuned to
129Xe frequency on a 3.0T MRI magnetic field of a compatible MRI scanner. The
Polarean XENOVIEW 3.0T Chest Coil is indicated to be used in conjunction with
compatible 3.0T MRI scanners and approved xenon Xe 129 hyperpolarised for oral
inhalation for evaluation of lung ventilation in adults and pediatric patients
aged 12 years and older. The Chest Coil is intended to be worn by a patient
who inhales hyperpolarised 129Xe gas (XENOVIEW) to obtain an MR image of the
regional distribution of hyperpolarised 129Xe in the lungs.
The Group's technology overcomes important limitations of current lung
diagnostic methods, providing the ability to visualise, quantify and monitor
both the structure and function of the smallest airways and alveolar spaces
with enhanced sensitivity and without harmful radiation. This provides a
unique, valuable and more precise tool to help diagnose disease earlier,
identify the type of intervention likely to benefit a patient, monitor the
efficacy of treatment and facilitate developing new therapies for pulmonary
diseases.
Group Structure and History
The Company was incorporated in England and Wales on 24 October 2016 with
company registration number 10442853. The Company's registered office is 27-28
Eastcastle Street, London, W1W 8DH.
On 31 May 2017, m2m, a company formed in the US State of Delaware on 18
February 1999, was merged into the Company.
On 29 March 2018, the Company's shares were admitted to trading on the AIM
market of the London Stock Exchange.
Information on Polarean, m2m and Strategy of Group
4.1 Polarean, Inc. - Background
The Subsidiary was co-founded by Dr Bastiaan Driehuys, a current Director of
the Company, and John Sudol, a former director of the Subsidiary, in 2011.
Prior to co-founding the Subsidiary, Dr Driehuys was a member of a research
team at Princeton University in the early 1990s which was amongst the first
research teams to focus on hyperpolarised gas MRI technology; in particular
isotopically enriched helium (3He). The team developed and held key patents
relating to the technology. The technology was acquired in 1999 by Amersham,
Inc. ("Amersham"), with the goal of commercialising hyperpolarised helium
products to be marketed and distributed alongside Amersham's full line of
contrast agent products. Dr Driehuys led the development efforts for Amersham,
which continued the development of these hyperpolarised helium products
throughout the early 2000s until GE Healthcare ("GE") acquired Amersham in
2004.
GE continued the research and development of hyperpolarised gas MRI after the
acquisition of Amersham, focusing on 129Xe as a more effective substitute for
3 He in visualising ventilation. GE also began to explore ways in which 129Xe
could be used to image gas exchange within the lung in addition to
ventilation. These work programmes culminated in the conduct of a Phase I/II
clinical trial at Duke University in 2008-2009. GE also filed Investigational
New Drug Applications ('INDs") with the FDA for both 3He and 129Xe. By 2010,
after an investment of approximately US$40 million in the technology and with
the regulatory path for hyperpolarised gas remaining unclear, GE decided to
out-license the hyperpolarised gas technology and the related patent families
that it had developed and/or maintained to the Subsidiary, due to the scale at
the time and the early-stage nature of the technology's development.
In December 2011, the Subsidiary negotiated the acquisition of all of GE's
assets related to the hyperpolarised MRI project, including an inventory of
polarisers and parts and the licenses (or outright ownership) of the related
patent families.
Following the acquisition of GE's hyperpolarisation assets, the Subsidiary
focused on three key objectives:
· building and selling polarisers to research users to generate
operating revenue and to disseminate the technology to academic research
institutions that generate clinical data in order to build additional interest
in the technology;
· further developing the xenon hyperpolarisation technology in order to
meet clinical use specification requirements; and
· liaising with the FDA in order to clarify the FDA regulatory path
under which the product could achieve clearance to market for clinical use.
In July 2012, the US Congress passed the FDA Safety and Innovation Act and the
Medical Gas Act, which clarified and simplified the path under which
hyperpolarised gas MRI technology could be approved for clinical use by the
FDA.
As a result of discussions between the Group and the FDA, the Directors
believed that a clearer path towards regulatory approval existed. As such,
following listing our shares on the AIM market the Group began conducting the
clinical studies required for FDA approval to market. On 28 December 2022, the
Company announced that the FDA had granted approval for its drug device
combination product, XENOVIEW. XENOVIEW, prepared from the Xenon Xe 129 Gas
Blend, is a hyperpolarised contrast agent indicated for use with MRI for
evaluation of lung ventilation in adults and pediatric patients aged 12 years
and older.
Between January 2012 and May 2017, the Subsidiary generated over US$3.7
million of revenue from selling polarisers to customers in Canada, Germany,
the UK and the US for research use, relating to both clinical (human) and
pre-clinical (animal) applications. In addition, the Subsidiary received
additional funding of approximately US$2.5 million from Nukem and other Series
A investors. Prior to the m2m merger, the Subsidiary was also successful in
receiving grant funding, including a US$3 million grant awarded in April 2017
by the US National Heart, Lung and Blood Institute (NHLBI) following a
competitive application process (for which the research will be conducted with
its clinical collaborator, the Cincinnati Children's Hospital) and a
US$250,000 small business research loan from the North Carolina Biotech Center
in March 2017, which was also awarded following a competitive application
process.
4.2 The Group's Technology and Products
The Subsidiary's lead product has been designated as a drug-device combination
by the FDA. The Subsidiary's product enables the visualisation of
hyperpolarised (129)Xe ("HPX") through MRI technology to help diagnose lung
disease earlier, identify the type of intervention likely to benefit a patient
and to monitor the efficacy of treatment. As a result of the FDA's drug-device
designation, the Subsidiary's products will be approved and sold only for use
with each other. The products are currently being used at a number of research
sites on a pre-FDA clearance basis to facilitate the research and evaluation
of lung function, to assist in making improved disease progression assessment
and to clearly visualise the effectiveness of several therapeutics which are
under development. The Group currently generates revenue from the sale of
products within its (129)Xe gas hyperpolarisation platform.
Implementing the Group's technology in a clinical setting is straightforward:
prior to the MRI scan a patient breathes in a small amount of inert HPX to
provide an extremely strong MRI signal. This transforms the MRI from a
technology that is not applicable to the lungs into one that is able to
provide multiple images of the lung structure and function in one 10-20 second
breath-hold. HPX MRI overcomes the limitations of traditional pulmonary
function testing as HPX MRI:
· is more accurate and reproducible than spirometry and other
traditional pulmonary function tests, enabling the detection and mapping of
small and localised changes in lung ventilation and gas exchange over time;
· provides regional information about lung disease without exposure to
ionising radiation or radioactivity; and
· assesses ventilation and gas exchange in the smallest airways, where
disease often begins.
The Group's technology works in conjunction with traditional MRI, transforming
it into a powerful diagnostic modality for the lung. The Group's approach is
to take (129)Xe, an inert gas, and hyperpolarise the nucleus to create an MRI
signal which is approximately 100,000 times stronger than a conventional MRI
signal. When the MRI scan is undertaken, the HPX resonates at different
frequencies: (i) in the bronchioles and alveoli of the lung; (ii) in the
barrier tissue of the lung; and (iii) when dissolved in arterial blood in the
pulmonary vasculature, thus providing information on ventilation (the ability
of air to reach the alveoli) and gas exchange (the ability of air to diffuse
through the alveolar membrane into the pulmonary vasculature). As all
pulmonary diseases result from impairments to the free flow of air through
bronchioles, or from abnormal gas exchange between the lung alveoli and the
pulmonary vasculature, the images that result from HPX MRI scans which have
been executed using the Group's technology can aid diagnosis, by enhancing the
physician's ability to clearly identify issues with ventilation and gas
exchange on a regional basis, down to the smallest of airways.
Hyperpolarisation of the (129)Xe is accomplished by placing a non-radioactive
isotope of Xenon ((129)Xe) into a beam of circularly polarised laser light in
the presence of very small concentration of the alkali metal Rubidium, which
acts as a physical catalyst in the hyperpolarisation process. The result is
(129)Xe whose nuclear magnetic spin is highly aligned but not chemically or
biologically different than unpolarised (129)Xe, an inert gas. This
hyperpolarised state persists for around 2 hours allowing ample time to
administer the HPX to the patient.
The Group's products include:
· the (129)Xe gas, blended and made under GMP at high purity, to be
polarised within the polariser;
· the polariser itself, of which the latest model, the Polarean 9820
Xenon Hyperpolariser, has been designed to deliver up to 3 litres of HPX per
hour (approximately 5-10 doses) of which each dose is to be used within 30
minutes of its production in order to retain sufficient polarisation to create
a strong image;
· the dose delivery inhalation bag, made of HPX-compatible impermeable
plastic materials and a mouthpiece for ease of inhalation; and
· the Polarean 2881 Polarisation Measurement Station, which provides a
calibrated measurement of the polarisation of hyperpolarised gas within the
dose delivery inhalation bag.
The Group currently designs and builds the polariser equipment at a contract
manufacturer and has relationships with GMP gas producers to supply the Group
with high purity (129)Xe according to the Group's specifications.
In order to take advantage of the Group's current products, an MRI machine is
required to be outfitted with hardware and software capable of operating at
(129)Xe frequency to detect the HPX signal. In addition, the patient will need
to wear a (129)Xe RF chest coil to allow for detecting the HPX MR signal in
the lungs. Approximately 35,000 MRI machines are currently in use worldwide
and technically many of these can be easily adapted to be used with (129)Xe
frequency. The Group's products can be placed near the MRI scanner for ease of
radiology workflow and, following the m2m merger, the Group has continued to
explore ways to further integrate the Group's existing technology with the
coils which had previously been the focus of m2m.
4.3 Location
The Group is based at the Meridian Corporate Center, located in the Research
Triangle Park area of North Carolina, which provides a favourable location at
which to further develop the core technology and product range. The Group's
facilities consist of more than 6,900 square feet of combined offices,
laboratory space, inventory warehouse and assembly and testing areas. The
Group benefits from facilities that were originally purpose-built by GE for
the design and manufacture of hyperpolarisation equipment and components,
pursuant to FDA-mandated guidelines.
Within these facilities are a dedicated research and development laboratory
equipped with 3-phase power, central compressed air, specialty gas handling
and distribution and separate heating, ventilation and air conditioning. The
laboratory area also includes optical cell production equipment capable of
simultaneous processing of four optical cells for Xenon applications. The
laboratory is designed for safe operation of class 4 lasers and is equipped
with laser power and spectral testing apparatus.
The Group also maintains a dedicated polariser test bed that is used for
product development and a dedicated Nuclear Magnetic Resonance ("NMR") system
capable of delivering available electromagnetic field strength, utilised for
calibrating absolute polarisation measurements of hyperpolarised gas samples.
4.4 The Regulatory Environment
Prior to the receipt of any approvals for clinical use, the Group sold its
polarisers and disposables for research use only to academic medical centres
with their research being subject to oversight by their respective
institutional review boards and conducted under IND from the FDA or equivalent
regulatory body.
On 28 December 2022, the Company announced that the FDA had granted approval
for its drug device combination product, XENOVIEW. XENOVIEW, prepared from the
Xenon Xe 129 Gas Blend, is a hyperpolarised contrast agent indicated for use
with MRI for evaluation of lung ventilation in adults and pediatric patients
aged 12 years and older.
4.5 The Group's Customers
The Group's existing customer base already comprises some of the world's
luminary medical imaging research institutions. Indeed, there are numerous
research institutions worldwide utilising the Group's system and products,
including Cincinnati Children's Hospital, the University of Virginia,
University of Wisconsin - Madison, Duke University, University of Kansas, the
University of Iowa and the University of Texas MD Anderson Cancer Center in
the US, Robarts Research Institute and Hospital for Sick Children (SickKids)
in Canada, the University of Oxford and the University of Nottingham in the UK
and the Fraunhofer Institute for Toxicology and Experimental Medicine in
Germany.
4.6 The Group's Suppliers
The Group has entered into Master Service Agreements with two CROs in relation
to the Phase III trial. Pharma Start LLC, doing business as Firma Clinical
Research, managed the trials and oversaw the recruitment of patients for the
trial. In addition, Icon Clinical Research Limited assisted with the medical
imaging aspects of the trial.
The Group has a long-standing relationship with its strategic investor Nukem
Isotopes GmbH ("Nukem"), a leading global supplier of (129)Xe, the isotope of
xenon which is provided to the various gas blenders that in turn supply gas to
the Group. It has a supply agreement with Nukem for (129)Xe.
In June 2020 the Group signed an agreement with Linde Gas North America LLC
("Linde"), in relation to the supply of the Group's drug product, a (129)Xenon
gas blend. This agreement contains provision for the supply of bulk (129)Xe to
be manufactured into the Active Pharmaceutical Product (API), (129)Xe, and for
the blending, packaging, and distribution of its drug product under GMP. On 28
December 2022, the Group signed an amended agreement with Linde, which
modified some commercial terms and limited the agreement to the blending
packaging and distribution of it drug product under GMP.
The Group has an arrangement with the Blur Product Development ("Blur") to
build its polariser systems in Blur's GMP facilities.
4.7 Current Trading and Prospects
Trading of the Group since the Company's IPO continues to be in line with the
Directors' expectations. The potential of the Group's technology enables the
Directors to view the future with confidence as the Company focuses on
commercialisation of XENOVIEW.
4.8 Growth Strategy
With the recent FDA approval, the Group is adopting a traditional market entry
strategy of building market awareness for its technology through key opinion
leaders and a direct sales force to reach the key decision makers within its
initial target market of large academic medical centres. In implementing this
strategy, the Group benefits from approximately 1,000 journal articles on the
use of hyperpolarised gas MRI that are currently published in peer-reviewed
journals. Over time, as more research centres purchase the Group's equipment
and begin clinical studies, an increasing number of peer reviewed scientific
articles are likely to be published, further enhancing the Group's credibility
and raising awareness of the Group's technology. The Directors believe that
the market for polarisers will grow as the technology gains wider acceptance
as a tool for studying lung disease and for monitoring the effectiveness of
therapeutics. The Group also intends to continue patenting and in-licensing
hyperpolarised gas technology IP to protect its current position.
The Group's initial sales targets will be the radiology and pulmonary medicine
departments of top academic hospital organisations in the US, who are opinion
leaders in the use of new diagnostic technologies and their application in a
clinical setting.
The Group is expanding its sales and marketing teams. Because of the specialty
nature of the Group's products in the pulmonary specialist market, which is
concentrated in approximately 1,000 medical centres, the Directors believe
that a small specialty sales force can be deployed effectively at reasonable
cost.
The Group may also choose to partner with companies that offer complementary
products.
Furthermore, the Directors believe that the Group's products will benefit a
number of clinical applications. While the Group's HPX MRI technology provides
more specific information than currently available from existing lung
diagnostic procedures (especially spirometry), the Group will focus its use on
specific clinical conditions where the high accuracy of HPX MRI and greater
cost are justified. The Directors do not believe that HPX MRI will replace
low-cost spirometry as a general screening tool but believe that it should add
value in more demanding clinical applications where HPX MRI addresses unmet
diagnostic needs. These applications could include, but are not limited to,
the following:
· the monitoring of COPD therapy, especially for the most severe cases;
· the management of cystic fibrosis;
· determining the optimal use of biologic therapy in chronic asthma;
· a more efficient diagnosis of dyspnoea and the chronic cough;
· providing guidance for radiation therapy planning of lung cancer
treatment;
· providing guidance for interventional pulmonology procedures
including ablation and the placement of valves and stents;
· surgical procedure planning for lung transplant and volume reduction
surgery;
· diagnosis of ILD and monitoring of ILD therapy;
· diagnosis of pulmonary vascular disease (PVD) including pulmonary
arterial hypertension (PAH) and monitoring of therapy; and
· diagnosis and monitoring of long COVID patients.
The Directors have begun to develop relationships with a range of strategic
partners and will evaluate opportunities which will enable the Group to
address its target markets globally, either alone or in collaboration with a
partner.
Intellectual Property ("IP")
The Group's technology has been developed in four areas: (i) hyperpolarising
gas; (ii) assuring the quality of the hyperpolarised gas; (iii) using the
polarised gas in MRI applications; and (iv) developing and producing
specialised RF coils to improve signal-to-noise ratios ("SNR"). GE had put a
comprehensive patent policy in place to protect its technology from potential
competitors. The Group is now the sole owner of this IP portfolio, which is
based on 10 patent families, and when combined with the 7 patents that were
previously owned by m2m, that were transferred to the Group following the m2m
Merger, the Group's portfolio covers four broad types of patents:
· imaging methods - these cover the imaging of a subject, or patient,
who has inhaled a hyperpolarised noble gas and the functionality of the gas as
a contrast agent. Newly licensed technology from Duke University extends the
protection over these patents through to the early 2030s;
· hyperpolarisation methods - these are polarimetry patents covering
the methods by which noble gases are polarised and the methods by which the
resulting polarised gas is isolated and delivered to patients. The latest of
these patents expire in the early 2020s;
· hyperpolarisation equipment - these patents cover the multiple
preferred mechanical design and automation elements of hyperpolarised
equipment; and
· RF coil patents - these patents cover the use of cryogenics to
improve RF coils SNR and image quality and may play an important part in the
next generation of applications such as neurological, cardiac and oncology
imaging.
Polarean is committed to proactively developing further IP, both internally
and through licensing arrangements with third parties, as part of the Group's
overall growth strategy. The third parties are likely to include the Group's
key collaborative academic sites, such as Duke University, that are seeking to
develop emerging applications and technologies. Because of the Group's
extensive patent portfolio and leading market position, the Directors believe
the Group is an attractive licensing partner for academic research
institutions that are interested in out-licensing such IP. One such patent
application (US15/120013), which is currently pending, relates to improving
the overall efficiency of the hyperpolarisation process. This patent has also
been exclusively licensed to the Group by Duke University. The Directors
believe that this patent, now having been prosecuted successfully to issuance
in a number of geographic jurisdictions worldwide, would enable the Group to
protect methods for increasing the level of hyperpolarisation significantly,
which could improve the competitive economics of the Group's products.
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Group are detailed below:
Early stage of operations
The Group's operations are at an early stage of development and there can be
no guarantee that the Group will be able to, or that it will be commercially
advantageous for the Group to, develop its proprietary technology. Further,
the Group currently has no positive operating cash flow and its ultimate
success will depend on the Directors' ability to implement the Group's
strategy, generate cash flow and access capital markets.
Principal mitigation
The Group has successfully advanced the (129)Xe technology for several years,
including selling polarisers for the research market. The Group has been able
to access capital required to continue to advance the technology.
Regulatory approvals and compliance
The Group will need to obtain various regulatory approvals (including FDA and
European Medicines Agency ("EMA") approvals) and otherwise comply with
extensive regulations regarding safety, quality and efficacy standards in
order to market its future products. These regulations, including the time
required for regulatory review, vary from country to country and can be
lengthy, expensive and uncertain.
Principal mitigation
The Group utilises external specialists in regulatory affairs who consult with
other experts to ensure that internal control processes and clinical trial
designs meet current regulatory requirements. The Group also engages directly
with regulatory authorities when appropriate.
Future funding requirements
The Group will need to raise additional funding or enter into a strategic
partnership with industry partners to undertake work beyond that being funded
by the £27 million (before expenses) 2021 fundraising. There is no certainty
that this will be possible at all or on acceptable terms.
Principal mitigation
The Group successfully engaged with investors to generate significant cash
resources to date, including the 2021 financing that raised £27 million,
before expenses. The Group's management team expects that continued access to
capital markets, or other access to capital, will be required to support the
Group through regulatory approval and initial commercialisation efforts in the
US. See Going Concern discussion below.
Dependence on key personnel
The success of the Group, in common with other businesses of a similar size,
will be highly dependent on the expertise and experience of the Directors and
key employees. However, the retention of such key personnel cannot be
guaranteed. Should key personnel leave the Group's business, prospects,
financial condition or results of operations may be materially adversely
affected.
Principal mitigation
The Group's recruitment processes are designed to identify and attract the
best candidates for specific roles. The Group aims to provide competitive
rewards and incentives to staff and directors.
Intellectual property and proprietary technology
No assurance can be given that any current or future patent applications will
result in granted patents, that the scope of any patent protection will
exclude competitors or provide competitive advantages to the Group, that any
of the Group's patents will be held valid if challenged or that third parties
will not claim rights in or ownership of the patents and other proprietary
rights held by the Group.
Principal mitigation
The Group has a long-standing track record of IP generation and successful
applications and has a long-standing relationship with our patent attorney who
has a deep understanding of our technology. The Group actively manages its IP,
engaging with specialists to apply for and defend IP rights in appropriate
territories.
Technology and products
The Group is a developer and service provider for noble gas (129)Xe devices
and ancillary instruments with a special focus on pulmonary imaging. The
development and commercialisation of its proprietary technology and future
products, which are in early stages of development, will require multiple
series of clinical trials and there is a risk that safety and efficacy issues
may arise when the products are tested. There is also a risk that there will
be delays to the development of the products or that unforeseen technical
problems arise as the Group's technology becomes increasingly automated. These
risks are common to all new medical products and there is also a risk that the
clinical trials may not be successful.
Principal mitigation
The Group has a depth of knowledge and experience in the area of medical
devices development for the high-resolution medical imaging market. The Group
also utilises external experts to supplement their knowledge in critical areas
such as safety, manufacturing and software development.
Research and development risk
The Group will be operating in the life sciences and medical device
development sector and will look to exploit opportunities within that sector.
The Group will therefore be involved in complex scientific research and
industry experience indicates that there may be a very high incidence of delay
or failure to produce results. The Group may not be able to develop new
products or to identify specific market needs that can be addressed by
technology solutions developed by the Group.
Principal mitigation
The Group has a depth of knowledge and experience in the area of medical
devices development for the high-resolution medical imaging market. The Group
also utilises external experts to supplement their knowledge in critical areas
such as conducting clinical trials and regulatory affairs.
Competition
The Group notes that several start-ups operating in the CT software space have
begun efforts to commercialise products which represent to characterise lung
ventilation. These technologies use ionising radiation, whereas the Group's
technology does not. In addition, these technologies are unable to further
assess gas exchange, red blood cell transport, nor microvascular
haemodynamics.
Principal mitigation
The Group believes that these emerging technologies validate the unmet need
for the use of imaging in assessing pulmonary function. However, their use of
ionising radiation, combined with their inability to assess comprehensive
pulmonary function will render their utility limited and the Directors see no
effect on the current market expectations of Polarean.
Reliance on third parties
The business model for the Group anticipates that it will have limited
internal resources over the next few years and that it will use third party
providers wherever possible to conduct the research, development,
registration, manufacture, marketing and sales of its proposed products. The
commercial success of the Group's products will depend upon the performance of
these third parties.
Principal mitigation
The Group seeks experts in the areas where it utilises outsourcing. Wherever
possible, the Group seeks to have duplicate suppliers to lessen the reliance
on a particular vendor.
Manufacturing
There can be no assurance that the Group's proposed products will be capable
of being manufactured in commercial quantities, in compliance with regulatory
requirements and at an acceptable cost. The Group outsources the manufacture
of the raw materials and finished products required in connection with the
research, development and commercial manufacture of its proposed products and,
as such, is wholly dependent upon third parties for the provision of adequate
facilities and raw material supplies. (129)Xe, the specific isotope of xenon
which is the active ingredient in the Group's drug-device product, is
available from a limited number of suppliers and there can be no assurance
that adequate supplies of this material at acceptable cost can be obtained. In
addition, where the Group is dependent upon third parties for manufacture, its
ability to procure the manufacture of the drug-device in a manner which
complies with regulatory requirements may be constrained, and its ability to
develop and deliver such products on a timely and competitive basis may be
adversely affected.
Principal mitigation
The Group has designed the manufacturing process to be scalable and has
internal experts who train the outside vendors. The Group has established
relationships with two (129)Xe suppliers to mitigate the risk that (129)Xe
supply will be a limitation to the development and commercialisation of its
products. In addition, the Group has established a relationship with a GMP
outside polariser manufacturer.
Product development timelines
Product development timelines are at risk of delay, particularly since it is
not always possible to predict what the FDA will require for approval of
future NDA's. There is a risk therefore that product development could take
longer than presently expected by the Directors. If such delays occur the
Group may require further working capital. The Directors shall seek to
minimise the risk of delays by careful management of projects.
Principal mitigation
The Group utilises consultants who are experts in preparing and filing future
NDAs in the US.
General legal and regulatory issues
The Group's operations are subject to laws, regulatory restrictions and
certain governmental directives, recommendations and guidelines relating to,
amongst other things, occupational safety, laboratory practice, the use and
handling of hazardous materials, prevention of illness and injury,
environmental protection and animal and human testing. There can be no
assurance that future legislation will not impose further government
regulation, which may adversely affect the business or financial condition of
the Group.
Principal mitigation
The Group consults experts for advice in areas such as occupational safety,
laboratory practice and human testing.
Healthcare pricing environment
In common with other healthcare products companies, the ability of the Group
and any of its licensees or collaborators to market its products successfully
depends in part on the extent to which reimbursement for the cost of such
products and related treatment will be available from government health
administration authorities, private health coverage insurers and other
organisations.
Principal mitigation
The Group is consulting with several experts in the field of reimbursement for
healthcare products in the US to determine the best strategy for accessing
adequate reimbursement for its products.
Section 172 statement
As required by section 172 of the Companies Act 2006 (the "Act"), a director
of a company must act in the way he or she considers, in good faith, would
likely promote the success of the company for the benefit of the shareholders.
In doing so, the director must have regard, amongst other matters, to the
following issues:
• the likely consequences of any decisions in the long term;
• the interests of the company's employees;
• the need to foster the company's business relationships with
suppliers/customers and others;
• the impact of the company's operations on the community and environment;
• the company's reputation for high standards of business conduct; and
• the need to act fairly between members of the company.
The information required by section 172 of the Act is included in the full
Annual Report.
Kenneth West
Non-Executive Chairman
25 May 2023
Consolidated Statement of Comprehensive Income
2022 2021
Notes US$ US$
Revenue 4 1,033,008 1,185,427
Cost of sales (684,732) (677,402)
Gross profit 348,276 508,025
Administrative expenses (8,464,766) (6,517,396)
Depreciation 11 (277,461) (177,349)
Amortisation 6 (760,780) (757,016)
Selling and distribution expenses (3,310,592) (5,557,829)
Share-based payment expense 19 (1,205,247) (1,814,882)
Total operating costs (14,018,846) (14,824,472)
Operating loss 6 (13,670,570) (14,316,447)
Finance income 7 35,045 2,587
Finance expense 7 (23,762) (21,101)
Other gains/(losses) - net 7 (246,309) 318,957
Loss before tax (13,905,596) (14,016,004)
Taxation 10 - -
Loss for the year and total other comprehensive expense (13,905,596) (14,016,004)
Loss per share
Basic and diluted (US$) 9 (0.066) (0.071)
The results reflected above relate to continuing activities.
There are no items of Other Comprehensive Income ("OCI") for the year other
than the loss above and therefore no separate statement of other comprehensive
income has been presented.
Consolidated Statement of Financial Position
Notes 2022 2021
US$ US$
ASSETS
Non-current assets
Property, plant and equipment 11 418,498 634,779
Intangible assets 12 1,581,591 2,193,843
Right-of-use assets 24 274,288 422,816
Trade and other receivables 14 437,539 5,539
2,711,916 3,256,977
Current assets
Inventories 15 1,711,419 1,426,810
Trade and other receivables 14 1,659,649 970,968
Cash and cash equivalents 16 16,454,241 28,874,908
19,825,309 31,272,686
TOTAL ASSETS 22,537,225 34,529,663
EQUITY AND LIABILITIES
Equity attributable to holders of the parent
Share capital 17 103,463 101,642
Share premium 18 59,288,383 59,022,919
Group re-organisation reserve 18 7,813,337 7,813,337
Share-based payment reserve 19 4,865,579 3,660,332
Accumulated losses 18 (52,765,804) (38,860,208)
19,304,958 31,738,022
Non-current liabilities
Deferred income 21 128,704 145,747
Trade and other payables 22 360,000 -
Lease liability 24 216,691 358,837
Contingent consideration 20 316,000 316,000
1,021,395 820,584
Current liabilities
Trade and other payables 22 1,979,001 1,731,114
Lease liability 24 142,146 130,949
Deferred income 21 89,725 108,994
2,210,872 1,971,057
TOTAL EQUITY AND LIABILITIES 22,537,225 34,529,663
These Financial Statements were approved and authorised for issue by the Board
of Directors on 25 May 2023 and were signed on its behalf by:
Kenneth West
Non-Executive Chairman
Company number: 10442853
Consolidated Statement of Changes in Equity
Share-based payment reserve Group Accumulated losses
US$
Share premium re-organisation reserve US$
US$
US$
Share capital Total equity
US$
US$
As at 1 January 2021 78,200 23,840,571 1,845,450 7,813,337 (24,844,204) 8,733,354
Comprehensive income
Loss for the year - - - - (14,016,004) (14,016,004)
Transactions with owners
Issue of shares 23,442 37,284,454 - - - 37,307,896
Share issue costs - (2,102,106) - - - (2,102,106)
Share-based payment expense - - 1,814,882 - - 1,814,882
As at 31 December 2021 (audited) 101,642 59,022,919 3,660,332 7,813,337 (38,860,208) 31,738,022
Comprehensive income
Loss for the year - - - - (13,905,596) (13,905,596)
Transactions with owners
Issue of shares 1,821 265,464 - - - 267,285
Share-based payment expense - - 1,205,247 - - 1,205,247
As at 31 December 2022 103,463 59,288,383 4,865,579 7,813,337 (52,765,804) 19,304,958
Consolidated Statement of Cash Flows
2021
US$
2022 US$
Cash flows from operating activities
Loss before tax (13,905,596) (14,016,004)
Adjustments for non-cash/non-operating items:
Depreciation of property, plant and equipment 277,461 177,349
Amortisation of intangible assets and right-of use-assets 760,780 757,015
Loss on disposal of property, plant and equipment 2,766 590
Loss on remeasurement of right-of-use assets - 11,660
Share-based payment expense 1,205,247 1,814,882
Net foreign exchange losses/(gains) 246,309 (318,957)
Finance expense 23,762 21,101
Finance income (35,045) (2,587)
Operating cash outflows before movements in working capital (11,424,316) (11,554,951)
Increase in inventories (284,609) (448,886)
Increase in trade and other receivables (1,120,681) (622,901)
Increase in trade and other payables 607,887 382,247
Decrease in deferred income (36,312) (5,976)
Net cash used in operations (12,258,031) (12,250,467)
Cash flows from investing activities
Purchase of property, plant and equipment (63,946) (541,454)
Net cash used in investing activities (63,946) (541,454)
Cash flows from financing activities
Issue of shares 267,285 37,307,896
Cost of issue - (2,102,106)
Interest paid on lease liabilities (23,762) (21,101)
Interest received 35,045 2,587
Principal elements of lease payments (130,949) (122,069)
Net cash generated by financing activities 147,619 35,065,207
Net (decrease)/increase in cash and cash equivalents (12,174,358) 22,273,286
Cash and cash equivalents at the beginning of year 28,874,908 6,282,665
Effect of foreign exchange rate changes on cash and cash equivalents (246,309) 318,957
Cash and cash equivalents at end of year 16,454,241 28,874,908
Notes to the Financial Statements
General information
The Company is incorporated in England and Wales under the Companies Act 2006.
The registered number is 10442853 and its registered office is at 27-28
Eastcastle Street, London, W1W 8DH. The Company is listed on the AIM market of
the London Stock Exchange.
The Company is the parent company of Polarean, Inc (the "Subsidiary", together
the "Group"). The principal activity of the Group is developing next
generation medical imaging technology. The Subsidiary is incorporated in the
United States of America and has a registered office of 2500 Meridian Parkway
#175, Durham, NC 27713, USA.
Adoption of new and revised International Financial Reporting Standards
Standards and interpretations adopted during the year
Information on new standards, amendments and interpretations that are relevant
to the Group's annual report and accounts is provided below:
· Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS
37);
· Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16);
· Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS
1, IFRS 9, IFRS 16 and IAS 41); and
· References to Conceptual Framework (Amendments to IFRS 3).
These standards have no material impact on the Group.
Standards, amendments and interpretations that are not yet effective
There are a number of standards, amendments to standards, and interpretations
which have been issued by the United Kingdom Endorsement Board (UKEB) that are
effective in future accounting periods that the Company has decided not to
adopt early. These standards, amendments or interpretations are not expected
to have a material impact on the Group.
Significant accounting policies
Basis of preparation
These financial statements have been prepared in accordance with UK adopted
International Accounting Standards ("IFRS") and under the historical cost
convention. The financial statements are 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.
Going concern
The Group is moving from the development stage to full commercial exploitation
of its IP. During the year ended 31 December 2022 the Group recorded a loss
after tax of US$13,905,596 (2021: loss of US$14,016,004) and a net cash
outflow from operating activities of US$12,258,031 (2021: US$12,250,467).
The Directors have prepared financial projections and plans for a period of at
least 12 months from the date of approval of these financial statements. Based
on the current management plan, management believes that these funds are
sufficient for the expenditure to date as well as the planned forecast
expenditure for the forthcoming 12 months.
It is anticipated that additional capital will need to be raised by the end of
the second quarter of 2024 in order to continue to fund the Group's activities
at their planned levels beyond this date. This represents a material
uncertainty that may cast significant doubt about the Group's and Company's
ability to continue as a going concern. However, the Directors have a
reasonable expectation that this uncertainty can be managed to a successful
outcome, and based on that assessment, the Group and Company will have
adequate resources to continue in operational existence for the foreseeable
future. Accordingly, these financial statements have been prepared on the
going concern basis.
The financial statements do not reflect any adjustments that would be required
to be made if they were to be prepared on a basis other than the going concern
basis.
Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares are shown in share premium as a
deduction from the proceeds.
Inventory
Inventories are measured at the lower of cost and net realisable value. The
cost of inventories is based on the weighted average cost principle and
includes expenditure incurred in inventories, adjusted for rebates, and other
costs incurred in bringing them to their existing location.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an
original maturity of three months or less.
Functional and presentation currency
Items included in the financial statements of the Group are measured using the
currency of the primary economic environment in which the Group operates ("the
functional currency"). The financial statements are presented in United States
Dollars (US$) which is also the Group's functional currency.
Foreign currencies
Transactions in foreign currencies are initially recorded by the Group's
entities at their respective functional currency spot rates at the date the
transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are
translated at the functional currency spot rates of exchange at the reporting
date.
Differences arising on settlement or translation of monetary items are
recognised in profit or loss.
For the purpose of presenting the consolidated financial statements, the
assets and liabilities of the Group's foreign operations are translated at
exchange rates prevailing on the reporting date. Income and expense items are
translated at the average exchange rates for each period, unless exchange
rates fluctuate significantly during that period, in which case the exchange
rates at the date of transaction are used. All resulting exchange differences
are recognised in "other comprehensive income" and accumulated in equity.
Basis of consolidation
The consolidated financial statements are for the year ended 31 December 2022.
The measurement bases and principal accounting policies of the Group are set
out below.
On 30 May 2017 Polarean Merger-Sub, Inc., a Subsidiary of the Subsidiary,
completed a merger process under which it acquired substantially all of the
assets of m2m Imaging Corp ("m2m"), a portfolio company of Amphion Innovations
plc engaged in the development of high-performance MRI RF coils for the global
research market, primarily in micro-imaging. By 2016 m2m had been inactive for
several years due to an inability to raise funds. At the date of the merger
the assets of m2m were its technology and patents. The merger was affected by
way of court sanction in the process of which the Subsidiary acquired, through
a special purpose entity, Polarean Merger Sub, Inc. the assets of another
special purpose entity, m2m Merger Sub, Inc., with m2m Merger Sub, Inc. being
the surviving entity. After the reporting date, on 1 September 2017, m2m
Merger Sub, Inc. was merged into the Subsidiary with the Subsidiary being the
surviving entity, the effect being that m2m Merger Sub, Inc. was collapsed,
and the Subsidiary had acquired the m2m assets.
As part of the arrangements for the merger 576,430 shares in the Subsidiary
were issued to the former shareholders in m2m with the intention that all
parties would exchange their stock in Polarean, Inc. for shares in the Group
on a pro rata basis as soon as practicable.
The Directors consider the merger between the Subsidiary and m2m Acquisition,
Inc. as a consequence of which the group acquired the exclusive worldwide
rights to m2m's technology and patents does not meet the definition of an
acquisition of a business as set out in IFRS3 and has therefore been accounted
for as the acquisition of an asset or a group of assets that does not
constitute a business.
IFRS 3 requires that in such cases the acquirer shall identify and recognise
the individual identifiable assets acquired (including those assets that meet
the definition of, and recognition criteria for, intangible assets in IAS 38
Intangible assets) and to allocate the cost of the individual identifiable
assets and liabilities on the basis of their relative fair values at the date
of purchase. Such a transaction or event does not give rise to goodwill.
The fair value of the assets acquired under the merger arrangement of
US$4,999,996 represents the aggregate estimated value of the financial
obligations of the former m2m shareholders which were converted into equity in
m2m prior to the merger agreement.
The Directors consider the acquisition of the entire issued common stock of
the Subsidiary by the Company in exchange for equivalent equity participation
in the Company to be a group re-organisation and not a business combination
and to fall outside the scope of IFRS 3. Having considered the requirements of
IAS 8 and the relevant UK and US guidance, the transaction has been accounted
for on a merger or pooling of interest basis as if both entities had always
been combined, using book values, with no fair value adjustments made nor
goodwill recognised.
Revenue recognition
Revenue comprises the fair value of the sale of goods and rendering of
services to external customers, net of applicable sales tax, rebates,
promotions and returns.
Contracts and obligation
The majority of customer contracts have three main elements that the Group
provides to the customer:
- Sale of polarisers;
- Sale of parts and upgrades; and
- Provision of service.
The sale of polarisers is seen as a distinct performance obligation and
revenue is recognised at a point in time. The customer can benefit from the
use of the polarisers when supplied and is not reliant on the Group to provide
the parts and upgrades or service, and therefore revenue from the sale of
polarisers is recognised in full when the goods are delivered to the customer.
The second performance obligation is the sale of parts and upgrades. The
customer can benefit from the use of the parts and upgrade when supplied and
is not reliant on the Group to provide the service, and therefore revenue from
the sale of parts and upgrades is recognised in full when the goods are
delivered to the customer.
The third performance obligation is the provision of preventive maintenance
service. Revenue from the provision of preventive maintenance service is
recognised over the period when the services are rendered. A contract
liability represents the obligation of the Group to render services to a
customer for which consideration has been received (or the amount is due) from
the customer.
Determining the transaction price
The transaction price is determined as the fair value of the Group expects to
receive over the course of the contract.
There are no incentives given to customers that would have a material effect
on the financial statements.
Allocate the transaction price to the performance obligations in the contract
The allocation of the transaction price to the performance obligations in the
contract is non-complex for the Group. There is a fixed unit price for each
product or service sold. Therefore, there is limited judgement involved in
allocating the contract price to each unit ordered.
Recognise revenue when or as the entity satisfies its performance obligations
The overarching terms are consistent in each contract.
The sale of polarisers is seen as a distinct performance obligation and
revenue is recognised at a point in time, when title of the goods transferred
to the customer, as the customer can benefit from the use of the polarisers
when supplied.
The sale of parts and upgrades is seen as a distinct performance obligation
and revenue is recognised at a point in time, when supplied to the customer,
as the customer can benefit from the use of the parts and upgrade when
supplied.
The provision of service is seen as a distinct performance obligation and
revenue is recognised as the Group provides these services for the duration of
the contract, i.e. over time. Any unexpired portion of a service contract or
payment received in advance in respect of service contracts either partially
completed or not started, are included in deferred income and released over
their remaining term.
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 Group and the cost
of the item can be measured reliably.
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% straight line
● Leasehold improvements - 20% straight line
● Laboratory equipment - 20% 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 administrative expenses in the
statement of comprehensive income.
Intangible Assets
Patents and related rights are assessed by reviewing their net present value
of future cash flows. Patents are currently amortised over their useful life,
not exceeding 10 years.
Internally generated intangible assets - research costs are costs incurred in
research activities and are recognised as an expense in the period in which
they are incurred. An internally generated intangible asset arising from the
development of commercial technologies is recognised only if all of the
following conditions are met:
· it is probable that the asset will create future economic benefits;
· the development costs can be measured reliably;
· technical feasibility of completing the intangible asset can be
demonstrated;
· there is the intention to complete the asset and use or sell it;
· there is the ability to use or sell the asset; and
· adequate technical, financial and other resources to complete the
development and to use or sell the asset are available.
At this time the Directors consider that the Group does not meet all of those
conditions and development costs are therefore recorded as expense in the
period in which the cost is incurred.
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 reviewed 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.
Provisions
A provision is recognised in the statement of financial position when the
Group 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.
Financial assets
The Group classifies all of its financial assets at amortised cost. Financial
assets do not comprise prepayments. Management determines the classification
of its financial assets at initial recognition.
These assets arise principally from the provision of goods and services to
customers (e.g. trade receivables), but also incorporate other types of
financial assets where the objective is to hold their assets in order to
collect contractual cash flows and the contractual cash flows are solely
payments of the principal and interest. They are initially recognised at fair
value plus transaction costs that are directly attributable to their
acquisition or issue and are subsequently carried at amortised cost using the
effective interest rate method, less provision for impairment.
Amortised Cost
The Group's financial assets held at amortised cost comprise trade and other
receivables and cash and cash equivalents in the consolidated statement of
financial position.
Impairment provisions for trade receivables are recognised based on the
simplified approach within IFRS 9 using the lifetime expected credit losses.
During this process the probability of the non-payment of the trade
receivables is assessed. This probability is then multiplied by the amount of
the expected loss arising from default to determine the lifetime expected
credit loss for the trade receivables. For trade receivables, which are
reported net; such provisions are recorded in a separate provision account
with the loss being recognised within administrative expenses in the
consolidated statement of comprehensive income. On confirmation that the trade
receivable will not be collectable, the gross carrying value of the asset is
written off against the associated provision.
Impairment provisions for other receivables are recognised based on the
general impairment model within IFRS 9. In doing so, the Company follows the
3-stage approach to expected credit losses. Step 1 is to estimate the
probability that the debtor will default over the next 12 months. Step 2
considers if the credit risk has increased significantly since initial
recognition of the debtor. Finally, Step 3 considers if the debtor is credit
impaired, following the criteria under IAS 39.
Financial liabilities
The Group classifies its financial liabilities in the category of financial
liabilities at amortised cost. All financial liabilities are recognised in the
statement of financial position when the Group becomes a party to the
contractual provision of the instrument.
Financial liabilities measured at amortised cost comprise trade payables and
other short-dated monetary liabilities, which are initially recognised at fair
value and subsequently carried at amortised cost using the effective interest
rate method.
Unless otherwise indicated, the carrying values of the Group's financial
liabilities measured at amortised cost represents a reasonable approximation
of their fair values.
Employee benefits: pension obligations
The Group operates a defined contribution plan. A defined contribution plan is
a pension plan under which the Group pays fixed contributions into a separate
entity. The Group has no legal or constructive obligations to pay further
contributions if the fund does not hold sufficient assets to pay all employees
the benefits relating to employee service in the current and prior periods.
The Group has no further payment obligations once the contributions have been
paid. The contributions are recognised as employee benefit expense when they
are due. Prepaid contributions are recognised as an asset to the extent that a
cash refund or a reduction in the future payments is available.
Finance costs
Finance costs comprise interest on lease liabilities; and are expensed using
the effective interest method in the period in which they are incurred.
Finance income
Finance income comprises interest income and dividend income.
Interest income is recognised in the income statement as it accrues using the
effective interest method.
Other gains and losses - net
Other gains and losses comprise foreign exchange gains and losses on cash and
cash equivalents.
Leases
Definition of a lease
The Group assesses whether a contract is or contains a lease. A contract is or
contains a lease if the contract conveys a right to control the use of an
identified asset for a period of time in exchange for consideration.
The Group recognises a right-of-use asset and a lease liability at the lease
commencement date. The right-of-use asset is initially measured at cost, and
subsequently at cost less any accumulated amortisation and impairment losses
and adjusted for certain measurements of the lease liability. 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.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted using the
interest rate implicit or, if that rate cannot be readily determined, the
Group's incremental borrowing rate. Generally, the Group uses its incremental
borrowing rate as the discount rate.
The lease liability is subsequently increased by the interest cost on the
lease liability and decreased by lease payments made. It is remeasured when
there is a change in future lease payments arising from a change in an index
or rate, a change in estimate of the amount expected to be payable under a
residual value guarantee, or as appropriate, changes in the assessment of
whether a purchase or extension option is reasonably certain to be exercised
or a termination option is reasonably certain not to be exercised.
The Group has applied judgement to determine the lease term for some lease
contracts in which it is a lease that include renewal options. The assessment
of whether the Group is reasonably certain to exercise such options impacts
the lease term, which significantly affects the amount of lease liabilities ad
right-of-use assets recognised.
As at 31 December 2022, potential future cash outflows of $479,477
(undiscounted) have not been included in the lease liability because it is not
reasonably certain that the leases will be extended (2021: $421,142).
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. Deferred tax is determined using tax rates and laws that have
been enacted or substantially enacted by the balance sheet date and are
expected to apply when the related deferred tax asset is realised, or the
deferred income tax liability is settled.
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.
Critical accounting estimates and judgements
The preparation of the Group's financial statements under 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 judgements are likely to have the
most significant effect on the amounts recognised in the financial statements.
Carrying value of intangible assets - Group
In determining whether there are indicators of impairment of the Group'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.
Carrying value of investments in and amounts receivable from subsidiaries -
Company
In determining whether there are indicators of impairment of the Company's
investments in, and amounts receivable from, its subsidiary undertakings, the
directors take into consideration various factors including the economic
viability and expected future financial performance of the business of the
subsidiary undertakings.
4. Segmental information
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group 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 Group has one
operating segment, the development and commercialisation of gas polariser
devices and ancillary instruments. Revenues are reviewed based on the products
and services provided: Polarisers, Parts and Upgrades, Service and Other
revenue.
The Group trades in Canada, Germany, the United Kingdom and the United States
of America. Revenue by origin of geographical segment for all entities in the
Group is as follows:
Revenue
2022 2021
US$ US$
Canada 446,396 529,824
Germany - 6,750
United Kingdom 17,800 25,183
United States of America 568,812 623,670
Total 1,033,008 1,185,427
Non-current assets
2022 2021
US$ US$
United States of America 2,711,916 3,256,977
Total 2,711,916 3,256,977
Product and services revenue analysis
Revenue
2022 2021
US$ US$
Polarisers 759,099 826,059
Parts and Upgrades 155,787 275,789
Service 118,122 83,579
Total 1,033,008 1,185,427
Management measures revenues by reference to the Group's core services and
products and related services, which underpin such income.
5. Employees and Directors
Staff costs for the Group and the Company during the year:
2022 2021
US$ US$
Wages and salaries 4,207,833 3,604,758
Healthcare benefits 248,927 220,476
Social Security costs 290,531 248,063
4,747,341 4,073,297
Average monthly number of people (including directors) employed by activity:
2022 2021
No. No.
Senior management including directors 11 10
R&D and clinical trial 10 11
Administration 7 7
Total 28 28
Key management compensation:
The following table details the aggregate compensation paid to key management
personnel.
2022 2021
US$ US$
Salaries and fees 1,527,810 1,394,235
Healthcare benefits 85,025 85,830
Social security costs 70,311 69,465
1,683,146 1,549,530
Key management personnel include all directors who together have authority and
responsibility for planning, directing, and controlling the activities of the
Group and senior divisional managers.
6. Operating loss
2022 2021
US$ US$
Depreciation
- Owned property, plant and equipment 277,461 177,349
Amortisation of right-of-use assets 148,528 140,164
Amortisation of intangible assets 612,252 616,851
Subtotal Amortisation 760,780 757,015
Research expenses 619,007 649,695
Auditors' remuneration (note 8) 66,000 55,664
Clinical trial costs 1,070,004 (52,599)
Regulatory consulting costs 1,964,040 1,126,675
Legal and professional fees 493,290 494,688
Brand development and market research 134,645 2,091,921
Medical affairs and congress/symposia 353,066 916,238
7. Other income and expense items
2022 2021
US$
US$
Finance income
Sundry income 35,045 2,587
Total finance income 35,045 2,587
Finance expense
Interest on lease liabilities 23,762 21,101
Total finance expense 23,762 21,101
Other gains and losses - net 2022 2021
US$
US$
Foreign exchange gains/(losses) (246,309) 318,957
(246,309) 318,957
8. Auditor remuneration
2022 2021
US$ US$
Auditors' remuneration
Fees payable to the Group's auditor for audit of Parent Company and 66,000 55,664
Consolidated Financial Statements
9. Loss per share
The loss per share has been calculated using the loss for the year and the
weighted average number of ordinary shares outstanding during the year, as
follows:
2022 2021
US$
US$
Loss for the year attributable to shareholders of the Group (US$) (13,905,596) (14,016,004)
Weighted average number of ordinary shares 211,948,868 196,961,274
Basic and diluted loss per share (0.066) (0.071)
For diluted loss per share, the weighted average number of ordinary shares in
issue is adjusted to assume conversion of all potential dilutive warrants,
options and convertible loans over ordinary shares. Potential ordinary shares
resulting from the exercise of warrants, options and the conversion of
convertible loans have an anti-dilutive effect due to the Group being in a
loss position. As a result, diluted loss per share is disclosed as the same
value as basic loss per share.
10. Taxation
There were no charges to income tax due to the losses incurred by the Group in
the period.
Income taxes computed at the statutory federal income tax of 21% (2021: 21%)
and the state income tax of 2.5% (2021: 2.50%) UK corporation tax is
calculated at 19% of the estimated assessable profits for the year.
2022 2021
US$
US$
Loss on ordinary activities before tax (13,905,596) (14,016,004)
Taxable permanent differences (254,993) (49,828)
Taxable loss on ordinary activities (14,160,589) (14,065,832)
Taxable loss on ordinary activities multiplied by the rate of corporation tax (2,973,724) (2,953,825)
in the US as above
Effects of:
Adjustments for rate of tax in other jurisdictions 40,752 42,577
Unrelieved tax losses carried forward 2,932,971 2,911,248
Total taxation charge - -
The tax reform act of 1986 contains provisions which limit the ability to
utilise the net operating loss carry forwards in the case of certain events
including significant changes in ownership interests. If the Group's net
operating loss carried forward, the Group would incur a federal income tax
liability even though net operating loss carry forwards would be available in
future years.
The Group has tax losses carried forward of US$47,297,438 (2021:
US$33,391,842). The unutilised tax losses have not been recognised as a
deferred tax asset due to uncertainty over the timing of future profits and
gains. In addition, there are approximately US$726,000 (2021: US$531,000) of
unrecognised deferred tax assets in respect of the share-based payment.
11. Property, plant and equipment
Leasehold improvements Furniture and equipment Computers and IT equipment Total
US$
US$
US$
US$
Cost
At 1 January 2021 13,658 440,790 59,273 513,721
Additions 17,050 464,585 59,819 541,454
Disposals - - (1,328) (1,328)
At 31 December 2021 30,708 905,375 117,764 1,053,847
Additions 3,500 52,470 7,976 63,946
Disposals - - (5,298) (5,298)
At 31 December 2022 34,208 957,845 120,442 1,112,495
Accumulated depreciation
At 1 January 2021 6,068 213,012 23,377 242,457
Depreciation expense 7,934 146,656 22,759 177,349
Disposals - - (738) (738)
At 31 December 2021 14,002 359,668 45,398 419,068
Depreciation expense 5,864 237,778 33,819 277,461
Disposals - - (2,532) (2,532)
At 31 December 2022 19,866 597,446 76,685 693,997
Carrying amount
At 31 December 2021 16,706 545,707 72,366 634,779
At 31 December 2022 14,342 360,399 43,757 418,498
12. Intangible assets
Patents Total
US$ US$
Cost
At 1 January 2021 5,045,996 5,045,996
Additions - -
At 31 December 2021 5,045,996 5,045,996
Additions - -
At 31 December 2022 5,045,996 5,045,996
Accumulated amortisation
At 1 January 2021 2,235,302 2,235,302
Amortisation expense 616,851 616,851
At 31 December 2021 2,852,153 2,852,153
Amortisation expense 612,252 612,252
At 31 December 2022 3,464,405 3,464,405
Carrying amount
At 31 December 2021 2,193,843 2,193,843
At 31 December 2022 1,581,591 1,581,591
13. Investment in subsidiary undertaking
Company Investment in subsidiary Amount due from subsidiary undertaking
undertaking US$
US$
Total
US$
Cost
At 31 December 2021 4,342,848 53,837,466 58,180,314
At 31 December 2022 4,342,848 54,019,443 58,362,291
Carrying amount
At 31 December 2021 4,342,848 53,837,466 58,180,314
At 31 December 2022 4,342,848 54,019,443 58,362,291
The investment in subsidiary undertaking is stated at cost less provision for
impairment. The amount due from subsidiary undertaking are regarded as net
investment which is subject to the impairment assessment whenever events or
changes in circumstance indicate that the carrying value of the investment and
the amount due from subsidiary undertakings may not be recoverable. For the
year under review, there is no such indicator for impairment.
The net carrying amounts noted above relates to the Subsidiary. The subsidiary
undertaking during the year were as follows:
Registered office address Country of incorporation Interest held
%
Polarean Inc. 2500 Meridian Parkway #175, USA 100
Durham, NC 27713, USA
14. Trade and other receivables
Group Company
Amounts falling due after one year 2022 2021 2022 2021
US$
US$
US$
US$
Rental deposit 5,539 5,539 - -
Prepayments 432,000 - - -
437,539 5,539 - -
Group Company
Amounts falling due within one year 2022 2021 2022 2021
US$
US$
US$
US$
Trade receivables 109,397 119,096 - -
Prepayments 1,550,252 851,872 68,258 22,410
1,659,649 970,968 68,258 22,410
Analysis of trade receivables based on age of invoices
< 30 31 - 60 $'000 61 -90 $'000 > 90 Total Gross ECL Total Net
$'000 $'000 $'000 $'000 $'000
2022 65,558 - - 43,839 109,397 - 109,397
2021 73,500 - 45,097 499 119,096 - 119,096
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses (ECL) which uses a lifetime expected loss allowance for all trade
receivables. The ECL balance has been determined based on historical data
available to management in addition to forward looking information utilising
management knowledge. The Company applies a similar approach to measuring ECL
for the amounts due from group undertakings.
Trade receivables are amounts due from customers for goods sold or services
performed in the ordinary course of business. They are generally due for
settlement within 30 days and therefore are all classified as current. The
majority of trade and other receivables are non-interest bearing. Where the
effect is material, trade and other receivables are discounted using discount
rates which reflect the relevant costs of financing. The carrying amount of
trade and other receivables approximates fair value.
15. Inventory
Group
2022 2021
US$
US$
Finished Goods and Component parts 1,711,419 1,426,810
During the year ended 31 December 2022, a total of US$597,736 of inventories
was included in the statement of comprehensive income as an expense (2021:
US$624,507).
16. Cash and cash equivalents
Group Company
2022 2021 2022 2021
US$
US$
US$
US$
Cash at bank and in hand 16,454,241 28,874,908 1,716,189 2,454,491
17. Share capital
The issued share capital of the Company was as follows:
Allotted and called up - Ordinary shares of 0.037p each 2022 2022 2021 2021
No. US$ No. US$
At beginning of period 209,249,966 101,642 163,212,935 78,200
Issue of shares upon warrant exercise - - 928,089 474
Issue of shares to investors - - 44,932,142 22,881
Issue of shares upon option exercise 3,797,543 1,821 176,800 87
At end of year 213,047,509 103,463 209,249,966 101,642
On 24 February 2021, the Company issued 61,563 new ordinary shares upon the
exercise of share warrants with an exercise price of £0.15 each.
On 25 March 2021, the Company issued 358,713 new ordinary shares upon the
exercise of share warrants with an exercise price of £0.00037 each.
On 31 March 2021, 7 April 2021 and 8 April 2021 the Company issued a total of
44,932,142 new ordinary shares of £0.00037 each in the capital of the Company
at the issue price of 60 pence per share in a Placing, Subscription and Open
Offer for total proceeds of £27 million (before expenses).
On 16 April 2021, the Company issued 467,733 new ordinary shares upon the
exercise of share warrants with an exercise price of £0.00037 each.
On 17 May 2021, the Company issued 40,080 new ordinary shares upon the
exercise of share warrants with an exercise price of £0.00037 each.
On 23 November 2021, the Company issued 66,800 new ordinary shares upon the
exercise of share options with an exercise price of £0.025358 each.
On 9 December 2021, the Company issued 110,000 new ordinary shares upon the
exercise of share options with an exercise price of £0.15 each.
On 11 January 2022, the Company issued a total of 133,600 new ordinary shares
upon the exercise of share options with an exercise price of £0.02478 each.
On 11 January 2022, the Company issued a total of 132,630 new ordinary shares
upon the exercise of share options with an exercise price of £0.15 each.
On 01 February 2022, the Company issued a total of 109,356 new ordinary shares
upon the exercise of share options with an exercise price of £0.15 each.
On 05 April 2022, the Company issued a total of 2,057,440 new ordinary shares
upon the exercise of share options with an exercise price of £0.00313 each.
On 05 April 2022, the Company issued a total of 93,520 new ordinary shares
upon the exercise of share options with an exercise price of £0.02571 each.
On 06 April 2022, the Company issued a total of 267,200 new ordinary shares
upon the exercise of share options with an exercise price of £0.00314 each.
On 20 April 2022, the Company issued a total of 260,169 new ordinary shares
upon the exercise of share options with an exercise price of £0.15 each.
On 20 April 2022, the Company issued a total of 136,109 new ordinary shares
upon the exercise of share options with an exercise price of £0.23 each.
On 22 July 2022, the Company issued a total of 534,400 new ordinary shares
upon the exercise of share options with an exercise price of £0.15 each.
On 27 July 2022, the Company issued a total of 73,119 new ordinary shares upon
the exercise of share options with an exercise price of £0.15 each.
18. Reserves
Share premium
Share premium represents the excess of subscription amounts for the issue of
shares over nominal value of shares issued, less any attributable share issue
costs.
Group re-organisation reserve
The group re-organisation reserve arose on the transaction under which the
Group acquired the Subsidiary by way of a group re-organisation.
Share based payment reserve
Cumulative fair value of options charged to the consolidated income statement
net of transfers to the profit or loss reserve on exercised.
Accumulated losses
Includes all current and prior year retained profits and losses.
Merger reserve
The balance on the merger reserve represents the fair value of the
consideration given in excess of the nominal value of the ordinary shares
issued in an acquisition made by the issue of shares where the transaction
qualifies for merger relief under the Companies Act 2006.
19. Share-based payments
Share options
The Company grants share options at its discretion to Directors, management
and employees. These are accounted for as equity settled transactions. Should
the options remain unexercised after a period of ten years from the date of
grant the options will expire unless an extension is agreed to by the board.
Options are exercisable at a price equal to the Company's quoted market price
on the date of grant or an exercise price to be determined by the board.
Details of share options granted, exercised, lapsed and outstanding at the
year-end are as follows:
Weighted average exercise price (US$) Weighted average exercise price (US$)
2022 Number 2021
of share
Number of share options 2022
options
2021
Outstanding at beginning of year 24,443,312 0.50 16,884,322 0.19
Granted during the year 1,941,000 0.71 8,580,000 1.11
Exercised during the year (3,797,543) 0.07 (176,800) 0.14
Forfeited/lapsed during the year (3,202,198) 0.99 (844,210) 1.01
Outstanding at end of the year 19,384,571 0.51 24,443,312 0.50
Exercisable at end of the year 13,751,273 0.34 13,055,517 0.14
Date Granted No. of options Exercise price Vesting conditions
08 March 2022 70,000 52 pence Time-based(1)
13 April 2022 500,000 55 pence Time-based(1)
04 May 2022 500,000 52 pence Time-based(1)
23 June 2022 246,000 48 pence Time-based(1)
25 August 2022 573,000 61 pence Time-based(1)
20 October 2022 52,000 49 pence Time-based(1)
1,941,000
(1) 25% of the options shall vest on the one-year anniversary of the
employee's date of hire with the remaining 75% vesting in equal portions over
the 36 months following the one-year anniversary of the employee's date of
hire.
The options outstanding as at 31 December 2022 have an exercise price in the
range of US$0.0041 to US$1.19 (2021: US$0.0041 to US$1.19).
The fair value of options granted during the year has been calculated using
the Black Scholes model which has given rise to fair values per share of
between US$0.23 and US$0.47. This is based on risk-free rates of between 1.8%
and 3.9%, volatility of between 58% and 80% and expected life of 4 years.
The Black Scholes calculations for the options resulted in a charge of
US$1,205,247 (2021: US$1,814,882) which has been expensed in the year. The
weighted average remaining contractual life of the share options is 6.37 years
(2021: 6.85 years). The weighted average share price at the date of exercise
for all share options exercised during the period was US$0.75 (2021: $0.58).
All share options are equity settled on exercise.
Share warrants
The Company grants share warrants at its discretion to Directors, management,
employees, advisors and lenders. These are accounted for as equity settled
transactions. Terms of warrants vary from agreement to agreement.
Details for the warrants granted, exercised, lapsed and outstanding at the
year-end are as follows:
Weighted average exercise price (US$) Weighted average exercise price (US$)
2022 Number 2021
of share
Number of share options 2022
options
2021
Outstanding at beginning of year 3,054,129 0.01 3,994,165 0.09
Exercised during the year - - (928,089) 0.34
Forfeited/lapsed during the year - - (11,947) 0.34
Outstanding at end of the year 3,054,129 0.01 3,054,129 0.01
Exercisable at end of the year 3,054,129 0.01 3.054,129 0.01
The weighted average remaining contractual life of the share warrants is 1.55
years (2021: 2.55 years). The weighted average share price at the date of
exercise for all share warrants exercised during the period was US$nil (2021:
US$0.68).
20. Provision for contingent consideration
Group Company
2022 2021 2022 2021
US$
US$
US$
US$
Provision for contingent consideration 316,000 316,000 - -
On 19 December 2011, the Subsidiary entered into an agreement with a third
party to purchase various assets, including patents, trademarks, a license
agreement and physical inventory. As consideration for this transaction, the
Subsidiary agreed to pay 5 per cent. of gross revenue on clinical sales of
products that are sold related to the patents purchased, for seven years from
the date of the commercial sale. As of 31 December 2022, the fair value of
this contingent consideration was US$316,000 (2021: US$316,000). This
liability is valued based on a probability weighted expected return method
using projected future cash flows. There were no significant events in the
year ended 31 December 2022 necessitating revision of the probability weighted
expected value of the contingent consideration.
There was therefore US$Nil profit or loss arising on revaluation of contingent
consideration during the year ended 31 December 2022 (2021: US$Nil).
21. Deferred income
Group Company
2022 2021 2022 2021
US$
US$
US$
US$
Arising from service contracts
Balance brought forward 254,741 260,717 - -
Additions 69,809 77,603
Revenue taken in year (106,121) (83,579) - -
Balance carried forward 218,429 254,741 - -
Current 89,725 108,994 - -
Non-current 128,704 145,747 - -
218,429 254,741 - -
22. Trade and other payables
Group Company
Amounts falling due within one year 2022 2021 2022 2021
US$
US$
US$
US$
Trade payables 597,363 405,953 45,861 40,887
Accruals and other payables 1,381,638 1,325,161 114,767 65,129
1,979,001 1,731,114 160,628 106,016
Group Company
Amounts falling due after one year 2022 2021 2022 2021
US$
US$
US$
US$
Accruals and other payables 360,000 - - -
Trade payables principally comprise amounts outstanding for trade purchases
and ongoing costs and are payable within 1 year.
The Directors consider the carrying value of all financial liabilities to be
equivalent to their fair value.
23. Changes in liabilities from financing activities
Group
1 January Cash flows Non-cash changes 31 December
2021 US$ US$ 2021
US$ US$
Lease liability 221,428 (143,170) 411,528 489,786
Total liabilities from financing activities 221,428 (143,170) 411,528 489,786
1 January Cash flows Non-cash changes 31 December
2022 US$ US$ 2022
US$ US$
Lease liability 489,786 (154,710) 23,761 358,837
Total liabilities from financing activities 489,786 (154,710) 23,761 358,837
24. Leases
Nature of leasing activities
The group leases properties in the jurisdiction in which it operates with all
lease payments fixed over the lease term.
2022 2021
No. No.
Number of active leases 2 2
The Group discounts the lease payments using its incremental borrowing rate at
the commencement date of the lease. The weighted-average rate applied is 10%.
Right-of-use assets
Land and Buildings
US$
At 1 January 2021 184,213
Additions 378,767
Amortisation expense (140,164)
At 31 December 2021 422,816
At 1 January 2022 422,816
Amortisation expense (148,528)
At 31 December 2022 274,288
Lease Liabilities
Land and Buildings
US$
At 1 January 2021 221,428
Additions 390,427
Interest expense 21,101
Lease payments (143,170)
At 31 December 2021 489,786
At 1 January 2022 489,786
Interest expense 23,761
Lease payments (154,710)
At 31 December 2022 358,837
Analysis of lease liabilities
Maturity of the lease liabilities is analysed as follows:
2022 2021
US$ US$
Within 1 year 142,146 130,949
Later than 1 year and less than 5 years 216,691 358,837
358,837 489,786
25. Commitments
Royalty commitments
The Subsidiary has entered into three agreements requiring royalty payments.
One agreement is conditional and requires a payment of 5 per cent. of gross
revenue on clinical sales during the payment period beginning on the date a
product is first commercially sold, contingent on receiving FDA approval, and
ending seven years from that date. A separate agreement requires payments of
0.25 per cent of net sales of machines, and 20 per cent of any sublicensing
income for a specific method of use of patent beginning in 2016. Additionally,
beginning five years after the effective date of 1 February 2021, there are
minimum yearly royalties of US$5,000. The third agreement requires a fixed
payment of US$250,000 for use of patents.
26. Financial instruments
The Group has exposure to the following key risks related to financial
instruments:
I. Market risk
II. Credit risk
III. Liquidity risk
This note presents information about the Group's exposure to each of the above
risks, the Group's objectives, policies and processes for measuring and
managing risk, and the Group's management of capital. Further quantitative
disclosures are included throughout these consolidated Financial Statements.
The Group uses financial instruments including cash, loans, as well as trade
receivables and payables that arise directly from operations.
Due to the simple nature of these financial instruments, there is no material
difference between book and fair values, discounting would not give a material
difference to the results of the Group and the Directors believe that there
are no material sensitivities that require additional disclosure.
(a) Credit risk
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Subsidiary. In
order to minimise the risk, the Subsidiary endeavours only to deal with
companies which are demonstrably creditworthy and this, together with the
aggregate financial exposure, is continuously monitored. The maximum exposure
to credit risk is the value of the outstanding amount. The Group considers the
banks and financial institutions have low credit risks. Therefore, the Group
is of the view that the loss allowance is immaterial and hence no provision is
required.
The Directors do not consider that there is any concentration of risk within
either trade or other receivables. There are no impairments to trade or other
receivables in each of the years presented.
Categories of financial instruments
Group Company
Financial assets at measured at amortised cost 2022 2021 2022 2021
US$
US$
US$
US$
Cash and cash equivalents 16,454,241 28,874,908 1,716,189 2,454,491
Trade and other receivables - current 109,397 119,096 - -
Other receivables - non-current 5,539 5,539 - -
Financial liabilities at measured at amortised cost
Trade and other payables- current 360,000 - - -
Other payables - non-current 1,979,001 1,731,114 160,629 106,016
Capital risk management
The Group manages its capital to ensure that it will be able to continue as a
going concern while maximising returns to shareholders through the
optimisation of capital structure. The Group is funded by equity. Equity
comprises share capital, share premium, share-based payment reserves, group
re-org reserves and accumulated losses and is presented in the statement of
financial position. In order to maintain or adjust the capital structure, the
Group may adjust the amount of dividends paid to shareholders, return capital
to shareholders or issue new shares.
The Group manages the capital structure and makes adjustments to it in the
light of changes to economic conditions and risks.
(b) Market risk
There is no interest risk exposure to the group or the company. The Company
made unsecured interest-free loans to its subsidiary and are expected to be
repaid in the future as the subsidiary is revenue generative.
(c) Liquidity risk
A maturity analysis of the Group's financial liabilities is shown below:
2022 Carrying amounts Undiscounted cash flow Less than a year 1-2 years 2-5 years
Trade and other payables 2,339,001 2,339,001 1,979,001 240,000 120,000
Lease liabilities 358,837 384,435 158,135 150,248 76,052
2,697,838 2,723,436 2,137,136 510,248 76,052
2021
Trade and other payables 1,731,114 1,731,114 1,731,114 - -
Lease liabilities 489,786 539,145 154,710 158,135 226,300
2,220,900 2,270,259 1,885,824 158,135 226,300
Capital risk management
As highlighted earlier in these financial statements, the presentation
currency of the Group is the US dollar. The Group has foreign currency
denominated assets and liabilities. Exposure to exchange rate fluctuations
therefore arises. The Group pays for invoices denominated in a foreign
currency in the same currency as the invoice and therefore suffers from a
level of foreign currency risk, but this is immaterial. The Group did not
enter into any derivative financial instruments to manage its exposure to
foreign currency risk in the year.
The carrying amount of the Group's foreign currency denominated monetary
assets and liabilities at 31 December 2022 is as follows:
2022 2021
USD $ USD $
British pound sterling
Cash balances 1,716,189 2,454,491
1,716,189 2,454,491
At 31 December 2022, if all foreign currencies in which the Group transacts
had strengthened or weakened by 10% against the US dollar with all other
variables held constant, post-tax loss for the would have been
increased/(decreased) by:
2022 2021
US$ US$
Strengthened by 10% - increase in post-tax loss 171,619 245,449
Weakened by 10% - decrease in post-tax loss (171,619) (245,449)
The rate of 10% is the sensitivity rate used when reporting foreign currency
risk internally to key management personnel and represents management's
assessment of the reasonable possible change in foreign exchange rates. The
sensitivity analysis includes only outstanding foreign currency denominated
monetary items and adjusts their translation at year-end for a 10% change in
foreign currency rates. A positive number above indicates an increase in loss
(increase in profit) or other equity where the US$ strengthens by 10% against
the relevant currency. For a 10% weakening of the US$ against the relevant
currency, there would be an equal and opposite impact on the profit or loss
and other equity.
27. Contingent liabilities
The Directors are not aware of any material contingent liabilities, except for
the contingent consideration detailed in note 20.
28. Related party transactions
Remuneration of the key management personnel has been disclosed in Note 5.
29. Events after the reporting period
Between 1 January 2023 and 20 April 2023, the Company granted options over a
total of 325,000 ordinary shares of £0.00037 each in the capital of the
Company to three new employees. The options vest over a four-year period and
have an exercise price equal to the closing price on the date of grant.
On 17 April 2023, the Company announced the appointment of Daniel Brague, a
Non-Executive Director of the Company, as a consultant to the Company to
provide strategic advice to the Company's commercial team. Under the terms of
the consultancy contract, the Company will pay Mr. Brague an hourly fee of
$300. The fee is capped at $100,000 in total.
Notice of the Annual General Meeting
POLAREAN IMAGING PLC
(Incorporated in England and Wales under the Companies Act 2006 with company
number 10442853)
NOTICE OF ANNUAL GENERAL MEETING
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
If you are in any doubt as to what action you should take, you are recommended
to seek your own financial advice from your stockbroker or other independent
adviser authorised under the Financial Services and Markets Act 2000.
If you have recently sold or transferred all of your shares in Polarean
Imaging plc, please forward this document, together with the accompanying
documents, as soon as possible either to the purchaser or transferee or to the
person who arranged the sale or transfer so they can pass these documents to
the person who now holds the shares.
It is intended that the Annual General Meeting (the "AGM") of Polarean Imaging
plc (the "Company") will be held at the Company's office at 2500 Meridian
Parkway, Suite 175, Durham, NC 27713 USA at 2:00 p.m. BST (9:00 a.m. EST) on
28 June 2023. The Company understand and recognises the importance of the AGM
and the Board greatly values the opportunity to meet shareholders in person.
However, we understand that this may not be possible or desirable for all whom
wish to attend, therefore, the Company will offer shareholders the option to
participate in the AGM remotely via a Zoom conference call. If you wish to use
this facility, please contact the Company' investors relations firm, Walbrook
Public Relations, by emailing polarean@walbrookpr.com who will provide further
information. However, shareholders will not be able to vote at the meeting
when joining via the Zoom conference call. Shareholders are therefore asked,
whether or not they propose to attend the AGM, to exercise their votes and
appoint the Chairman of the AGM as their proxy by completing the form of proxy
sent to them with this document and return it to the Company's registrars as
soon as possible. They must receive it by 2:00 p.m. BST (9:00 a.m. EST) on 26
June 2023 (or, in circumstances where the AGM is adjourned to a date later
than 48 hours after the time specified for the Meeting, 48 hours before the
time of the adjourned meeting, excluding any UK non-working days).
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Polarean Imaging plc
(the "Company") will be held at the Company's office at 2500 Meridian Parkway,
Suite 175, Durham, NC 27713 USA at 2:00 p.m. BST (9:00 a.m. EST) on 28 June
2023 for the purpose of considering and, if thought fit, transacting the
following business:
ORDINARY BUSINESS
To consider and, if thought fit, pass the following resolutions which will be
proposed as ordinary resolutions:
1. To receive and consider the Company's audited accounts for the year
ended 31 December 2022 and the Directors' of the Company (the "Director(s)")
and auditors' reports thereon.
2. To consider and approve the remuneration report as detailed in the
Company's annual report and accounts.
3. To re-appoint Crowe UK LLP as auditor of the Company (the
"Auditor") to hold office until the conclusion of the next general meeting at
which accounts are laid and to authorise the Directors to fix the Auditor's
remuneration.
4. To re-elect Marcella Ruddy as a Director, who retires in accordance
with article 78 of the Articles, and who, being eligible, offers herself for
re-election.
5. To re-elect Juergen Laucht as a Director, who retires in accordance
with article 78 of the Articles, and who, being eligible, offers himself for
re-election.
6. To re-elect Cyrille Petit as a Director, who retires in accordance
with article 83 of the Articles, and who, being eligible, offers himself for
re-election.
7. To approve the amendments to the rules of the Polarean Imaging plc
Share Option Plan (the "Plan") as further described on page 19 of the Annual
Report and to authorise the Directors to do all such other acts and things
they may consider appropriate to implement the amended plan.
8. To generally and unconditionally authorise the Directors for the
purpose of section 551 of the Companies Act 2006 (the "Act"), in substitution
for all existing authorities to the extent unused, to exercise all the powers
of the Company to allot or grant rights to subscribe for or to convert any
security into shares in the Company:
a) up to 10,000,000 ordinary shares of £0.00037 each ("Ordinary Shares") in
respect of the Plan; and
b) otherwise than pursuant to paragraph (a) above, up to 31,957,126 Ordinary
Shares (being 15 per cent. of the total number of Ordinary Shares in issue as
at the date of this notice),
provided that this authority shall expire on the earlier of 15 months after
the date of passing of this resolution or the conclusion of the annual general
meeting of the Company next following the passing of this resolution, save
that the Company may, before such expiry, make an offer or agreement which
would or might require shares or equity securities, as the case may be, to be
allotted or such rights granted after such expiry and the Directors may allot
shares or equity securities or grant such rights, as the case may be, in
pursuance of such offer or agreement notwithstanding that the authority
conferred by this resolution has expired.
SPECIAL BUSINESS
To consider and, if thought fit, pass the following resolution as a special
resolution:
9. Subject to the passing of resolution 8 above, to empower the
Directors, pursuant to the general authority conferred on them and section 570
of the Act, to allot equity securities (within the meaning of section 560 of
the Act) for cash as if section 561 of the Act did not apply to any such
allotment, provided that this power shall be limited to the allotment of
equity securities:
a) made in connection with an offer of securities, open for acceptance for a
fixed period, to holders of Ordinary Shares of the Company on the register on
a fixed record date in proportion (as nearly as may be) to their then holdings
of such Ordinary Shares (but subject to such exclusions or other arrangements
as the Directors may deem necessary or expedient to deal with any legal or
practical problems under the laws or requirements of any recognised regulatory
body or any stock exchange in any overseas territory or in connection with
fractional entitlements); and/or
b) wholly for cash (otherwise than pursuant to paragraph 9(a) above) up to an
aggregate number of 31,957,126 Ordinary Shares.
This authority shall expire on the earlier of 15 months after the date of
passing of this resolution and the conclusion of the annual general meeting of
the Company next following the passing of this resolution but the Company may,
before such expiry, make an offer or agreement which would or might require
shares or equity securities, as the case may be, to be allotted or such rights
granted after such expiry and the Directors may allot shares or equity
securities or grant such rights, as the case may be, in pursuance of such an
offer or agreement notwithstanding that the power conferred by this resolution
has expired.
By Order of the Board
Registered Office:
Stephen Austin 27-28 Eastcastle Street
Company Secretary London
25 May 2023 W1Q 8DH
NOTES
A shareholder entitled to attend and vote at the meeting convened by this
notice is entitled to appoint one or more proxies to exercise all or any of
their rights to attend, speak and vote on their behalf at the AGM. A proxy
need not be a shareholder.
(1) Arrangements for the meeting
Shareholders who wish to attend the AGM in person should arrive at the venue
in good time to allow their attendance to be registered. Shareholders who wish
to participate in the meeting remotely via the Zoom conference call should
contact the Company's investor relations firm, Walbrook Public Relations, by
emailing polarean@walbrookpr.com who will provide further information.
However, Shareholders will not be able to vote at the meeting when joining via
the Zoom conference call. The Board:
· encourages Shareholders to submit their votes by proxy as early as
possible, and Shareholders are encouraged to appoint the Chairman of the
meeting as their proxy. All proxy appointments should be received by no later
than 2:00 p.m. BST on 26 June 2023;
· strongly recommends CREST members to vote electronically through
the CREST electronic proxy appointment service as your vote will automatically
be counted. In addition, the Company has also decided that proxy appointments
can also be submitted by Shareholders electronically (even outside CREST) by
logging on to www.shareregistrars.uk.com, clicking on the "Proxy Vote" button
and then following the on-screen instructions (you can locate your log-in
details on the top of the proxy form). Please contact Share Registrars Limited
contact number on +44 (0) 1252 821390 for any further guidance. Dealing with
paper proxies requires physical interaction such as post sorting and delivery,
evaluation and manual input.
· proposes that voting at the meeting will be conducted by means of a
poll on all resolutions, with each Shareholder having one vote for each share
held, thereby allowing all those proxy votes submitted and received prior to
the meeting to be counted; and
· encourages you to submit any question that you would like to be
answered at the meeting by sending it, together with your name as shown on the
Company's register of members and the number of shares held, to the following
email address: polarean@walbrookpr.com so that it is received by no later than
2:00 p.m. BST on 26 June 2023. Please insert "AGM - Shareholder Questions" in
the subject header box of your email. The Company will endeavour to respond to
all questions received from Shareholders at the AGM or within seven days
following the AGM.
(2) To appoint a proxy, shareholders should use the form of
proxy enclosed with this notice of AGM. Please carefully read the instructions
on how to complete the form of proxy. For a proxy to be effective, the
instrument appointing a proxy together with the power of attorney or such
other authority (if any) under which it is signed or a notarised certified
copy of the same must be deposited with the Company's registrars, Share
Registrars Limited of 3 The Millennium Centre, Crosby Way, Farnham, Surrey,
GU9 7XX, United Kingdom (the "Registrars") or shareholders can submit their
vote(s) by logging on to www.shareregistrars.uk.com, clicking on the "Proxy
Vote" button and then following the on-screen instructions (you can locate
your log-in details on the top of the proxy form) by 2:00 p.m. BST on 26 June
2023, or, if the AGM is adjourned, 48 hours before the time fixed for the
adjourned meeting (excluding any part of a day that is not a business day).
The completion and return of a form of proxy does not preclude a shareholder
from subsequently attending and voting at the AGM in person if he or she so
wishes. If a shareholder has appointed a proxy and attends the AGM in person,
such proxy appointment will automatically be terminated.
(3) Pursuant to Regulation 41 of Uncertificated Securities
Regulations 2001, the Company specifies that only those shareholders on the
register of members at 2:00 p.m. BST on 26 June 2023 or, if the meeting is
adjourned, 48 hours before the time of the adjourned meeting (excluding any
part of a day that is not a business day), shall be entitled to attend or vote
at the AGM in respect of the number of ordinary shares of £0.00037 each (the
"Ordinary Shares") registered in their name at that time. Changes to the
register of members after that time shall be disregarded in determining the
rights of any person to attend or vote at the AGM.
(4) Any Shareholder may insert the full name of a proxy or
the full names of two alternative proxies of the Shareholder's choice in the
space provided with or without deleting 'the Chairman of the meeting.' A proxy
need not be a Shareholder but must attend the meeting to represent the
relevant Shareholder. The person whose name appears first on the Form of Proxy
and has not been deleted will be entitled to act as proxy to the exclusion of
those whose names follow. If this proxy form is signed and returned with no
name inserted in the space provided for that purpose, the Chairman of the
meeting will be deemed to be the appointed proxy. Where a Shareholder appoints
as his/her proxy someone other than the Chairman, the relevant Shareholder is
responsible for ensuring that the proxy attends the meeting and is aware of
the Shareholder's voting intentions. Any alteration, deletion or correction
made in the Form of Proxy must be initialled by the signatory/ies.
(5) A shareholder may appoint more than one proxy provided
that each proxy is appointed to exercise the rights attached to a different
Ordinary Share or Ordinary Shares held by that shareholder. A shareholder may
not appoint more than one proxy to exercise rights attached to any one
Ordinary Share. If a shareholder wishes to appoint more than one proxy, they
should contact the Registrars on 01252 821390, +44 1252 821390 from overseas.
Lines are open from 9.00 a.m. to 5.00 p.m. Monday to Friday, excluding public
holidays. Alternatively, you may write to the Registrars at Share Registrars
Limited, 3 The Millennium Centre, Crosby Way, Farnham, Surrey, GU9 7XX, United
Kingdom for additional proxy forms and for assistance.
(6) Any corporation which is a shareholder can appoint one or more
corporate representatives who may exercise on its behalf all of its powers as
a shareholder provided that they do not do so in relation to the same Ordinary
Share.
(7) As at the close of business on the date immediately
preceding this notice, the Company's issued share capital comprised
213,047,509 Ordinary Shares. Each Ordinary Share carries the right to vote at
the AGM and, therefore, the total number of voting rights in the Company as at
close of business on the date immediately preceding this notice is
213,047,509.
(8) A shareholder's instructions to the proxy must be
indicated in the appropriate space provided. To abstain from voting on a
resolution, select the relevant 'Vote withheld' box. A vote withheld is not a
vote in law, which means that the vote will not be counted in the calculation
of votes for or against the resolution. If no voting indication is given, your
proxy will vote or abstain from voting at his or her discretion. Your proxy
will vote (or abstain from voting) as he or she thinks fit in relation to any
other matter which is put before the meeting.
(9) This form of proxy must be signed by the appointor, or
his attorney duly authorised in writing. The power of attorney or other
authority (if any) under which the form of proxy is signed, or a notarised
certified copy of the power or authority, must be received by the Registrars
with the form of proxy. If the appointor is a corporation, the form of proxy
should be signed on its behalf by an attorney or duly authorised officer or
executed as a deed or executed under common seal. In the case of joint
holders, the signature of any one of them will suffice, but the names of all
joint holders should be stated.
(10) CREST members who wish to appoint a proxy or proxies through
the CREST Electronic Proxy Appointment Service may do so for the AGM to be
held at 2:00 p.m. BST on 28 June 2023 and any adjournment(s) thereof by
following the procedures described in the CREST manual. All messages relating
to the appointment of a proxy or an instruction to a previously appointed
proxy, which are to be transmitted through CREST, must be received by the
Registrars (ID 7RA36) no later than 2:00 p.m. BST on 26 June 2023, or, if the
AGM is adjourned, 48 hours before the time fixed for the adjourned meeting
(excluding any part of a day that is not a business day).
(11) In order to revoke a proxy instruction, you will need to
inform the Company by sending a signed hard copy notice clearly stating your
intention to revoke your proxy appointment to the Registrars. In the case of a
shareholder which is a company, the revocation notice must be executed in
accordance with note 12 below. Any power of attorney or any other authority
under which the revocation notice is signed (or a duly certified copy of such
power or authority) must be included with the revocation notice and must be
received by the Registrars not less than 48 hours (excluding any part of a day
that is not a business day) before the time fixed for the holding of the AGM
or any adjourned meeting (or in the case of a poll before the time appointed
for taking the poll) at which the proxy is to attend, speak and to vote. If
you attempt to revoke your proxy appointment but the revocation is received
after the time specified then, subject to the paragraph directly below, your
proxy appointment will remain valid.
(12) A corporation's form of proxy must be executed under
either its common seal, if any, or under the hand of a duly authorised officer
or attorney, in each case as required under the laws of its relevant
jurisdiction.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
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