24 Nov

Financial Report for period ended 30 June 2021

Artrya Limited (Previously Artrya Pty Ltd) ACN 624 005 741 Reissued Consolidated Annual Financial Report 30 June 2021 Artrya Limited Contents For the year ended 30 June 2021 Page Directors’ report 3 Consolidated statement of financial position 8 Consolidated statement of profit or loss and other comprehensive income 9 Consolidated statement of changes in equity 10 Consolidated statement of cash flows 11 Notes to the consolidated financial statements 12 Directors’ declaration 37 Auditor's Independence Declaration 38 Auditor's report 39 Artrya Limited Reissued Directors’ report For the year ended 30 June 2021 3 The directors present their reissued report together with the reissued consolidated financial statements of the Group comprising of Artrya Limited (the Company) (previously Artrya Pty Ltd) and its subsidiary for the financial year ended 30 June 2021, and the auditor's report thereon. This reissued Directors’ Report replaces the version previously issued on the 25 August 2021. 1. Directors The directors of the Company at any time during or since the end of the financial year are: Name, qualifications and independence status Qualifications, experience and special responsibilities Mr J Barrington AM MBA, B.Bus, FAICD, FAIM Managing Director Appointed 24 January 2018 Prior to co-founding Artrya, John founded and led a management consulting practice advising boards and executives across Australia on growth strategies. He also founded and was Managing Director of a data analytics company providing predictive analytics services to online, financial services and telecommunications companies across Australia and in Asia. His first career was in the information technology industry with Unisys where he held management, marketing and sales management positions. He has previously chaired a technology platform company and is currently a director of the Harry Perkins Institute of Medical Research. He was appointed a Member of the Order of Australia in 2019 and in 2017 received the Australian Institute of Company Directors NFP Award for Excellence. John is a Fellow of the Australian Institute of Company Directors and a Life Fellow of the Australian Institute of Management WA. Mr J Konstantopoulos B.Eng Executive Director - Product Appointed 24 January 2018 John has more than 20 years of commercial and technical experience providing strategic advice to industries such as Electronics, Healthcare and Industrial globally. He has advised senior executives of some of the world’s and Australia’s largest corporations on product commercialisation, development and digital transformation and has driven growth in markets such as Asia, US and Europe. John has extensive experience in technical commercialisation, strategy development, product development, strategic marketing, and business development. Artrya Limited Reissued Directors’ report For the year ended 30 June 2021 4 Mr B Ridgeway B.Bus (Acctg), CAANZ, FAICD Independent Chair Appointed 8 February 2021 Bernie Ridgeway joined the Artrya Board as a Non-Executive Director in February 2021 and was appointed Non-Executive Chair April 2021. This appointment brings independence to the Board and to the Chair role. The company will benefit from Bernie’s 35 years of public company experience. Bernie was previously CEO of mining technology company Imdex Ltd, which developed technologies including artificial intelligence solutions for global markets. Under Bernie’s leadership, Imdex grew from a market capitalisation of under $10m to more than $600m. During this period, Imdex revenue grew from approximately $20m generated domestically to approximately $250m with sales into over 100 countries worldwide. Bernie is a member of the Chartered Accountants Australia & New Zealand and a Fellow of AICD. 2. Directors’ meetings The number of directors’ meetings (including meetings of committees of directors) and number of meetings attended by each of the directors of the Company during the financial year are: Board Meetings Director A B Mr J Barrington 6 6 Mr J Konstantopoulos 6 6 Mr B Ridgeway 3 3 Where: ? Column A is the number of meetings the Director was eligible to attend during the period ? Column B is the number of meetings the director attended 3. Principal Activities The principal activities of the Company during the course of the financial year were the development of medical technology using artificial intelligence to more accurately identify patients at risk of coronary artery disease. There were no significant changes in the nature of the activities of the Company during the year. 4. Restated Operating and financial review The Company posted a loss during the financial year ended 30 June 2021 of $4,079,767 * (2020: loss of $1,353,895). * Refer to Note 28 Reissuance of the financial report Artrya Limited Reissued Directors’ report For the year ended 30 June 2021 5 5. Significant changes in state of affairs In the opinion of the directors there were no significant changes in the state of affairs of the Company that occurred during the financial year under review. 6. Environmental regulations The Company is not subject to any significant environmental regulation under a law of the Commonwealth or of a state or territory of Australia. 7. Company secretary Mr Nathan Bartrop was appointed as Company Secretary in April 2021. Nathan is a Chartered Secretary with ASX, unlisted and private company experience in Perth and Sydney. Nathan holds a Bachelor of Laws and Bachelor of Commerce from the University of Western Australia and a Graduate Diploma of Applied Corporate Governance from the Governance Institute of Australia. Nathan is a fellow of Governance Institute and a member of the WA State Council. Nathan has been Company Secretary of several ASX listed companies and has prior experience as an ASX Listings Compliance Adviser in Perth and Sydney. 8. Dividends No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been proposed. 9. Significant events The Company changed name from Artrya Pty Ltd to Artrya Limited on 16 April 2021 when the Company changed its status from a proprietary limited company to a public company, limited by shares. The Company established a subsidiary named Artra Medical IP Pty Ltd, registered on 23 June 2021. 10. Events subsequent to reporting date On 9 July 2021, 5,500,000 share options were granted and vest subject to meeting performance milestones and continued employment with the Company. Other than the above, the directors of the Company have considered that there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company, in future financial years. 11. Likely developments The Company will continue researching and developing a technology product to more accurately identify patients at risk of coronary artery disease. Further information about likely developments in the operations of the Company and the expected results of those operations in future financial years has not been included in this report because disclosure of the information would be likely to result in unreasonable prejudice to the Company. Artrya Limited Reissued Directors’ report For the year ended 30 June 2021 6 12. Directors’ interests The relevant interest of each director in the shares, debentures, interests in registered schemes and rights or options over such instruments issued by the company, as notified by the directors to the ASX in accordance with S205G(1) of the Corporations Acts 2001, at the date of this report is as follows: Ordinary shares Options over ordinary share s 1 Rights over ordinary share s Mr J Barrington 7,340,910 5,000,000 - Mr J Konstantopoulos 7,000,000 5,000,000 - Mr B Ridgeway 1,113,637 2,000,000 - 13. Share options Unissued shares under option Options were granted in both the current and previous financial years. Options granted during the reporting period: Expiry date Exercise price Number of shares 31/12/2025 $0.056 1,300,000 31/12/2025 $0.075 1,446,752 31/12/2026 $1.000 500,000 Options granted after the reporting period: Expiry date Exercise price Number of shares 09/07/2026 $1.000 5,500,000 At the date of this report unissued shares of the Group under option are: Expiry date Exercise price Number of shares 25/03/2024 $0.001 6,000,000 31/12/2025 $0.075 1,986,752 31/12/2025 $0.056 1,300,000 31/12/2026 $1.000 500,000 09/07/2026 $1.000 5,500,000 1 Of the options held by directors, only Mr B Ridgeway’s options were granted during the year ended 30 June 2021. Subsequent to year end, 2,000,000 options were issued to both Mr J Barrington and Mr J Konstantopoulos, and 1,500,000 options were issued to Mr B Ridgeway. Artrya Limited Reissued Directors’ report For the year ended 30 June 2021 7 All unissued shares are ordinary shares of the Company. All options expire on the earlier of their expiry date or, where issued to employees, the termination of the employee’s employment. These options do not entitle the holder to participate in any share issue of the Company or any other body corporate. Shares issued on exercise of options During or since the end of the financial year, the Group did not issue ordinary shares of the Company as a result of the exercise of options. 14. Indemnification and insurance of officers and auditors Indemnification Since the end of the previous financial year, the Company has not indemnified or made a relevant agreement for indemnifying against a liability any person who is or has been an officer or auditor of the Company. Insurance premiums During the financial year, the Company has paid premiums in respect of directors’ and officers’ liability and legal expenses insurance for the year ended 30 June 2021 and since the financial year, the Company has paid or agreed to pay, premiums in respect of such insurance contracts for the year ending 30 June 2022. Such insurance contracts insure against certain liability (subject to specific exclusions), persons who are or have been directors or executive officers of the Company. The directors have not included details of the nature of the liabilities covered or the amount of the premium paid in respect of the directors’ and officers’ liability and the legal expenses’ insurance contracts because such disclosure is prohibited under terms of the contracts. 15. Lead auditor’s independence declaration The Lead auditor’s independence declaration is set out on page 38 and forms part of the directors’ report for the financial year ended 30 June 2021. This report is made with a resolution of the directors: John Barrington Managing Director Dated at Perth this day of 2021 29th September Artrya Limited Consolidated statement of financial position As at 30 June 2021 8 The accompanying notes form part of these financial statements Consolidated 2021* 2020 Restated** Note $ $ Assets Current assets Cash and cash equivalents 7 12,982,397 2,228,927 Trade and other receivables 8 1,430,915 400,162 Total current assets 14,413,312 2,629,089 Non-current assets Property, plant and equipment 9 98,217 15,366 Intangibles 10 516,635 - Right-of-use assets 11 46,195 10,782 Total non-current assets 661,047 26,148 Total assets 15,074,359 2,655,237 Liabilities Current liabilities Trade and other payables 12 952,466 114,162 Lease liabilities 13 37,423 9,787 Employee benefits 14 167,403 37,604 Total current liabilities 1,157,292 161,553 Non-current liabilities Lease liabilities 13 9,618 833 Employee benefits 14 3,468 - Total non-current liabilities 13,086 833 Total liabilities 1,170,378 162,386 Net assets 13,903,981 2,492,851 Equity Share capital 15 18,105,927 3,977,004 Accumulated losses (5,580,700) (1,500,933) Share based payments reserve 1,378,754 16,780 Total equity 13,903,981 2,492,851 *Refer to Note 1 Reporting Entity **Refer to Note 28 Reissuance of the financial report Artrya Limited Consolidated statement of profit or loss and other comprehensive income For the year ended 30 June 2021 9 The accompanying notes form part of these financial statements Consolidated 2021* 2020 Restated** Note $ $ Revenue - - Other income 4 210,424 408,035 Accounting and audit expenses (86,595) (64,726) Contractors (1,151,314) (479,963) Depreciation and amortisation (38,514) (11,544) Foreign exchange loss (23,513) - Employee expenses (936,005) (1,026,058) Website and software expenses (102,211) (43,812) Recruitment expenses (98,917) (18,776) Travel expenses (3,484) (32,340) Legal expenses (52,928) (34,273) Share based payments expenses 20 (1,361,974) (16,780) Marketing and branding expenses (264,630) (55) Other expenses (143,358) (27,004) Results from operating activities (4,053,019) (1,347,296) Finance income 5 - 4 Finance costs 5 (26,748) (6,603) Net finance loss (26,748) (6,599) Loss before income tax (4,079,767) (1,353,895) Income tax benefit 6 - - Loss for the year (4,079,767) (1,353,895) Other comprehensive income - - Total comprehensive loss for the year (4,079,767) (1,353,895) Earnings/(loss) per share (cents) Basic earnings/(loss) per share (cents) 21 (11.85) (6.06) Diluted earnings/(loss) per share (cents) 21 (11.85) (6.06) *Refer to Note 1 Reporting Entity **Refer to Note 28 Reissuance of the financial report Artrya Limited Consolidated statement of changes in equity For the year ended 30 June 2021 10 The accompanying notes form part of these financial statements Consolidated* Note Share capital Accumulated losses Share based payments reserve Total $ $ $ $ Balance at 1 July 2020 3,977,004 (1,500,933) 16,780 2,492,851 Total comprehensive loss for the year Restated loss for the year** - (4,079,767) - (4,079,767) Total restated comprehensive loss** - (4,079,767) - (4,079,767) Contributions by and distributions to owners of the Company Issue of share capital (net of share issue costs) 15 14,128,923 - - 14,128,923 Restated equity settled share-based payments** 20 - - 1,361,974 1,361,974 Total restated contributions by owners of the Company** 14,128,923 - 1,361,974 15,490,897 Restated balance at 30 June 2021** 18,105,927 (5,580,700) 1,378,754 13,903,981 Share capital Accumulated losses Share based payments reserve Total $ $ $ $ Balance at 1 July 2019 1,000,004 (147,038) - 852,966 Total comprehensive loss for the year Loss for the year - (1,353,895) - (1,353,895) Total comprehensive loss - (1,353,895) - (1,353,895) Contributions by and distributions to owners of the Company Issue of share capital 15 2,975,000 - - 2,975,000 Share options exercised 15 2,000 - - 2,000 Equity settled share-based payments 20 - - 16,780 16,780 Total contributions by owners of the Company 2,977,000 - 16,780 2,993,780 Balance at 30 June 2020 3,977,004 (1,500,933) 16,780 2,492,851 *Refer to Note 1 Reporting Entity **Refer to Note 28 Reissuance of the financial report Artrya Limited Consolidated statement of cash flows For the year ended 30 June 2021 11 The accompanying notes form part of these financial statements Consolidated 2021* 2020 Note $ $ Cash flows from operating activities Cash paid to suppliers and employees (1,974,676) (1,645,233) Cash used in operating activities (1,974,676) (1,645,233) Interest received 5 - 4 Bank fees paid 5 (24,925) (6,071) Government grants 133,186 - Research and development tax incentive 379,747 28,288 Net cash used in operating activities 18 (1,486,668) (1,623,012) Cash flows from investing activities Proceeds from sale of property, plant and equipment 617 - Acquisition of property, plant and equipment 9 (94,265) (15,483) Acquisition of intangible assets (1,969,785) - Government grants received 204,951 - Net cash used in investing activities (1,858,482) (15,483) Cash flows from financing activities Proceeds from issue of share capital (net of associated costs) 15 14,128,923 2,977,000 Repayment of lease liabilities (30,303) (9,166) Repayment of loans from related parties - (10,487) Net cash provided by financing activities 14,098,620 2,957,347 Net increase in cash held 10,753,470 1,318,852 Cash and cash equivalents at the beginning of the period 2,228,927 910,075 Cash and cash equivalents at the end of the period 7 12,982,397 2,228,927 *Refer to Note 1 Reporting Entity Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 12 The accompanying notes form part of these financial statements 1 Reporting entity Artrya Limited (previously Artrya Pty Ltd) (“the Company”) is a Company domiciled in Australia. The address of the Group’s registered office is Suite 14A Level 3, 88 Broadway, Crawley WA 6009. The Company is a for-profit entity incorporated on 24 January 2018. The company is primarily involved in the development of medical technology using artificial intelligence to more accurately identify patients at risk of coronary artery disease. These are the first year consolidated financial statements prepared by the Company, comprising the Company and its subsidiary (together referred to as the ‘Group’). The Company established the subsidiary named Artra Medical IP Pty Ltd on 23 June 2021. The comparatives disclosures relate to the Company amounts. 2 Basis of preparation (a) Statement of compliance These consolidated financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial statements comply with International Financial Reporting Standards adopted by the International Accounting Standards Board. The reissued consolidated financial statements were approved by the Board of Directors on 29 September 2021. These reissued consolidated financial statements supersede the version previously approved by the Board of Directors on 25 August 2021. (b) Functional and presentation currency These consolidated financial statements are presented in Australian dollars, which is the Group’s functional currency. (c) Use of estimates and judgements In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that affect the application of the accounting policies and the reportable amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described below: ? Note 20 - Estimates relating to share based payments Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 13 The accompanying notes form part of these financial statements 3 Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements. (a) Financial instruments (i) Recognition and initial measurement Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price. (ii) Classification and subsequent measurement Subsequent measurement and gains and losses Financial assets On initial recognition, a financial asset is classified as measured at: amortised cost; fair value through other comprehensive income (FVOCI) – debt investment; FVOCI – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model. All financial assets not classified as measured at amortised cost or FVOCI are measured at FVTPL. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise. Financial assets at amortised cost are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss. Financial liabilities Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss. Liabilities for trade and other payables are carried at amortised cost and represent liabilities for goods or services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of these goods and services. Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 14 The accompanying notes form part of these financial statements 3 Significant accounting policies (continued) (a) Financial instruments (continued) (iii) Derecognition Financial assets The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. The Group enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised. Financial liabilities The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value. On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss. (iv) Offsetting Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. (b) Share capital (i) Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects. (c) Property, plant and equipment (i) Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Any gain and loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss. Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 15 The accompanying notes form part of these financial statements 3 Significant accounting policies (continued) (c) Property, plant and equipment (continued) (ii) Subsequent costs Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the component will flow to the Group. Ongoing repairs and maintenance is expensed as incurred. Items of property, plant and equipment are depreciated on a straight-line and/or diminishing basis in profit or loss over the estimated useful lives of each component. Items of property, plant and equipment are depreciated from the date that they are installed and are ready for use. (iii) Depreciation The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows: ? Computer equipment 4 years ? Office equipment 10 years ? Office fit-out 2 years Depreciation methods, useful lives and residual values are reviewed at each financial reporting date and adjusted if appropriate. Purchases of property, plant and equipment are recognised initially at cost in the Statement of Financial Position, except for purchases costing less than $1,000, which are expensed in the year of acquisition (other than where they form part of a group of similar items which are significant in total). (d) Intangibles Research and development: Expenditure on research activities is recognised in profit or loss as incurred. Development expenditure is capitalised only if expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise it is recognised in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost less accumulated amortisation and any accumulated impairment losses. Subsequent expenditure: Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit or loss as incurred. Amortisation: Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognised in profit or loss. Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 16 The accompanying notes form part of these financial statements 3 Significant accounting policies (continued) (e) Government grants Government grants are recognised when there is a reasonable assurance that the Group will comply with the conditions to them and the grants will be received. Government grants related to assets are presented by deducting the grant in arriving at the carrying amount of the asset. (f) Employee benefits (i) Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. (ii) Long-term employee benefits The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Remeasurements are recognised in profit or loss in the period in which they arise. (g) Income tax Tax expense comprises current tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income. Current tax Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous periods. Current tax payable also includes any tax liability arising from the declaration of dividends. Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for: ? temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss ? taxable temporary differences arising on the initial recognition of goodwill. The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 17 The accompanying notes form part of these financial statements 3 Significant accounting policies (continued) (g) Income tax (continued) Deferred tax (continued) In determining the amount of current and deferred tax the Group takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. (h) Goods and services tax Expenses are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Where GST is charged receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the Australian Taxation Office (ATO) is included as a current asset or liability in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. (i) Earnings per share (i) Basic earnings per share Basic earnings per share is calculated by dividing the earnings attributable to equity holders of the Group, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year. (ii) Diluted earnings per share Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for shares held by the Group’s sponsored employee share plan trust, for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees. Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 18 The accompanying notes form part of these financial statements 3 Significant accounting policies (continued) (j) Segment reporting The Group determines and presents operating segments based on the information that internally is provided to the Board of directors (“the Board”). The Company only has one segment from which it reports. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are regularly reviewed by the Group’s Board to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. All significant operating decisions are based upon analysis of the Group as one segment. The financial results of this segment are equivalent to the consolidated financial statements of the Group as a whole. The accounting policies applied for internal reporting purposes are consistent with those applied in preparation of the consolidated financial statements. (k) Leases At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease in AASB 16. As a lessee At commencement or on modification of a contract that contains a lease component, the Group allocated the consideration in the contract of each lease component on the basis of its relative stand-alone prices. However, for the leases of property the Group has elected not to separate non- lease components and account for the lease and non-lease components as a single lease component. 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, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site of which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lese transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of- use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. 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 in the lease 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. Lease payments included in the measurement of the lease liability comprise the following: Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 19 The accompanying notes form part of these financial statements 3 Significant accounting policies (continued) (k) Leases (continued) As a lessee (continued) - fixed payments, including in-substance fixed payments; - variable lease payments that depend on an index or a rate, initially measured using the index or rate at the commencement date; - amounts expected to be payable under a residual value guarantee; and - the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early. The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in the future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the varying value of the right-of-use asset has been reduced to zero. The Group presents right-of-use assets that do not meet the definition of investment property in ‘property, plant and equipment’ and lease liabilities in ‘loans and borrowings’ in the statement of financial position. Short-term leases and leases of low-value assets The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low- value assets and short-term leases. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. At inception or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. (l) Share based payments Equity-settled and cash-settled share-based compensation benefits are provided to employees. Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price. The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions. Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 20 The accompanying notes form part of these financial statements 3 Significant accounting policies (continued) (l) Share based payments (continued) The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification. If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification. (m) Basis of consolidation Business combinations The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss. Any contingent consideration payable is measured at fair value at the acquisition date. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognised in profit or loss. Subsidiaries Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Investments in subsidiaries are carried at their cost of acquisition in the Company’s financial statements. Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 21 The accompanying notes form part of these financial statements 3 Significant accounting policies (continued) (m) Basis of consolidation (continued) Transactions eliminated on consolidation Intercompany balances and any unrealised gains and losses or income and expenses arising from intercompany transactions, are eliminated in preparing the consolidated financial statements. (n) New and amended accounting policies adopted by the Group Standards and Interpretations applicable to 30 June 2021 In the year ended 30 June 2021, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Group and effective for the current annual reporting period. As a result of this review, the Directors have determined that there is no material impact of the new and revised Standards and Interpretations on the Group and, therefore, no material change is necessary to the Group accounting policies. (o) Cash and cash equivalents Cash and cash equivalents in the Statement of Financial Position comprise cash at bank and in hand. For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. (p) Impairment of tangible and intangible assets At each reporting date, the Group reviews the carrying amount of its non-financial assets to determine whether there is any indication of impairment. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. The recoverable amount is the higher of its fair value less costs to sell and its value in use. When the carrying value of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash generating unit is considered impaired and is written down to its recoverable amount. Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 22 The accompanying notes form part of these financial statements 4 Other income Consolidated 2021 2020 $ $ Government grants 210,424 408,035 210,424 408,035 5 Finance income and finance costs Consolidated 2021 2020 $ $ Interest income - 4 Finance income - 4 Lease interest expense (1,823) (532) Bank fees (24,925) (6,071) Finance costs (26,748) (6,603) Net finance loss recognised in profit or loss (26,748) (6,599) 6 Income tax benefit Consolidated 2021 2020 Restated* $ $ A. Amounts recognised in profit or loss Current tax Current year - - - - Deferred tax Origination and reversal of temporary differences - - - - Total income tax benefit - - B. Amounts recognised in Other Comprehensive Income Effective portion of changes in fair value - - - - Reconciliation of tax Loss for the period (4,079,767) (1,353,895) Total income tax expense - - Loss excluding income tax (4,079,767) (1,353,895) Income tax using the Company's domestic tax rate of 26% (2020: 30%) (1,060,739) (406,169) Non-deductible expenses 681,930 312,689 Non-assessable income (217,272) (122,411) Unrecognised DTA on assets and liabilities 596,081 215,891 Total income tax expense/(benefit) - - *Refer to Note 28 Reissuance of the financial report Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 23 The accompanying notes form part of these financial statements 6 Income tax benefit (continued) Unrecognised deferred tax assets and liabilities Deferred tax assets (comprising temporary differences and unused tax losses) of $773,431 (2020: $240,330) have not been recognised because at the reporting date, the Group is unable to demonstrate the applicable recognition criteria. Movement in deferred tax balances Balance at 30 June 2021 (Consolidated) Net balance at 1 July Profit or loss or Equity Effect of change of tax rate Net Deferred tax assets Deferred tax liabilities Benefit/ (expense) $ $ $ $ $ $ Property, plant and equipment (4,610) (20,517) 1,557 (23,569) - (23,569) Intangible assets - (126,796) 4,877 (121,919) - (121,919) Trade creditors and accruals 7,500 52,301 (3,262) 56,539 56,539 - Section 40-880 expenditure 2,400 189,623 (7,693) 184,330 184,330 Right-of-use assets/lease liabilities (49) 262 (2) 211 211 - Employee benefits 11,281 34,649 (3,213) 42,718 42,718 - Tax losses 223,808 466,451 (55,242) 635,017 635,017 - Unrealised FX - 108 (4) 104 104 - Tax assets/(liabilities) before set-off 240,330 596,081 (62,982) 773,431 918,919 (145,488) Set-off of tax - - - - (145,488) 145,488 240,330 596,081 (62,982) 773,431 773,431 - Tax assets not brought to account (240,330) (596,081) 62,982 (773,431) (773,431) - Net deferred tax balance - - - - - - Movement in deferred tax balances Balance at 30 June 2020 Net balance at 1 July Profit or loss Net Deferred tax assets Deferred tax liabilities Benefit/ (expense) $ $ $ $ $ Property, plant and equipment (886) (3,724) (4,610) - (4,610) Trade creditors and accruals 3,000 4,500 7,500 7,500 - Section 40-880 expenditure - 2,400 2,400 2,400 - Right-of-use assets/lease liabilities - (49) (49) (49) - Employee benefits 1,667 9,614 11,281 11,281 - Tax losses 20,659 203,149 223,808 223,808 - Tax assets/(liabilities) before set-off 24,440 215,891 240,330 244,940 (4,610) Set-off of tax - - - (4,610) 4,610 24,440 215,891 240,330 240,330 - Tax assets not brought to account (24,440) (215,891) (240,330) (240,330) - Net deferred tax balance - - - - - Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 24 The accompanying notes form part of these financial statements 7 Cash and cash equivalents Consolidated 2021 2020 $ $ Cash on hand 4 4 Bank balances 12,982,393 2,228,923 Cash and cash equivalents in the statement of cash flows 12,982,397 2,228,927 8 Trade and other receivables Consolidated 2021 2020 $ $ Research and development tax incentive 835,660 379,747 Goods and services tax receivable 90,455 20,415 Government grants receivable 489,777 - Other receivables 15,000 - Loan - John Barrington - related party 23 - 1,430,915 400,162 9 Property, plant and equipment Computer equipment Office Equipment Office Fit- out Total $ $ $ $ Cost Balance at 1 July 2019 3,045 - - 3,045 Additions 15,483 - - 15,483 Balance at 30 June 2020 18,528 - - 18,528 Balance at 1 July 2020 18,528 - - 18,528 Additions 78,234 12,026 4,005 94,265 Disposals (3,452) - - (3,452) Balance at 30 June 2021 (Consolidated) 93,310 12,026 4,005 109,341 Depreciation Balance at 1 July 2019 (90) - - (90) Depreciation for the year (3,072) - - (3,072) Balance at 30 June 2020 (3,162) - - (3,162) Balance at 1 July 2020 (3,162) - - (3,162) Depreciation for the year (6,918) (1,032) (1,306) (9,256) Disposals 1,294 - - 1,294 Balance at 30 June 2021 (Consolidated) (8,786) (1,032) (1,306) (11,124) Balance at 1 July 2019 2,955 - - 2,955 Balance at 30 June 2020 15,366 - - 15,366 Balance at 1 July 2020 15,366 - - 15,366 Balance at 30 June 2021 (Consolidated) 84,524 10,994 2,699 98,217 Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 25 The accompanying notes form part of these financial statements 10 Intangibles Development costs Total $ $ Cost Balance at 1 July 2019 - - Balance at 30 June 2020 - - Balance at 1 July 2020 - - Additions 1,926,218 1,926,218 Government grants received* (1,409,583) (1,409,583) Balance at 30 June 2021 (Consolidated) 516,635 516,635 Accumulated amortisation Balance at 1 July 2019 - - Balance at 30 June 2020 - - Balance at 1 July 2020 - - Balance at 30 June 2021 - - Carrying amounts Balance at 1 July 2019 - - Balance at 30 June 2020 - - Balance at 1 July 2020 - - Balance at 30 June 2021 (Consolidated) 516,635 516,635 The Group has assessed the recoverable amount of the intangible asset based on the fair value less costs to sell of the cash generating unit. The fair value has been calculated with reference to the most recent arm’s length capital raising based on the assessment that the Group is a single cash generating unit. *Government grants relate to the Research and Development Tax Incentive and the BioMedTech Horizons (BMTH) program grant for the year ended 30 June 2021. The Research and Development Tax Incentive requires submission of the Research and Development tax incentive schedule with the 30 June 2021 annual tax return, and the BioMedTech Horizons (BMTH) program requires submission of a financial report, which was completed subsequent to year end. 11 Right-of-use assets (i) Right-of-use assets Consolidated 2021 2020 $ $ Building (office premises) Balance at 1 July 10,782 - Additions to right-of-use asset 73,912 19,254 Depreciation (29,257) (8,472) Disposal of right-of-use asset (9,242) - Balance at 30 June 46,195 10,782 Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 26 The accompanying notes form part of these financial statements 11 Right-of-use assets (continued) (ii) Amounts recognised in profit and loss Consolidated 2021 2020 $ $ Interest on lease liabilities 1,823 532 Depreciation of right-of-use assets 29,257 8,472 Expenses relating to short-term leases 889 269 31,969 9,273 12 Trade and other payables Consolidated 2021 2020 $ $ Trade payables 452,553 19,833 PAYG withholding tax payable 123,041 68,266 Other payables 355,546 26,063 Payroll tax payable 21,326 - 952,466 114,162 13 Lease liabilities Consolidated 2021 2020 $ $ Current Lease liabilities 37,423 9,787 37,423 9,787 Non-current Lease liabilities 9,618 833 9,618 833 14 Employee benefits Consolidated 2021 2020 $ $ Current Liability for annual leave 167,403 37,604 167,403 37,604 Non-current Liability for long-service leave 3,468 - 3,468 - Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 27 The accompanying notes form part of these financial statements 15 Share capital Ordinary shares Number of shares Consolidated Consolidated 2021 $ 2020 $ 2021 2020 On issue at start of the period 3,977,004 1,000,004 31,437,500 22,000,000 Issued 15,000,005 2,977,000 17,045,460 9,437,500 Share issue costs (871,082) - - - On issue at 30 June 18,105,927 3,977,004 48,482,960 31,437,500 (i) Ordinary Shares The Group does not have authorised capital or par value in respect of its issued shares. All shares are fully paid. The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Group. In the event of the winding up of the Group, ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any proceeds of liquidation. (ii) Issue of ordinary shares During the reporting period, the Directors approved the issue of 17,045,460 ordinary shares at an issue price of $0.88 per share to raise $15,000,005 (2020: issue of 7,437,500 ordinary shares at an issue price of $0.40 per share, and 2,000,000 ordinary shares at an issue price of $0.001 per share). This resulted in an increase in share capital of $14,128,922 (2020: $2,977,000) after offsetting costs relating to the issue of share capital. 16 Auditors’ remuneration Consolidated 2021 2020 $ $ Audit services KPMG Australia Audit of financial reports 20,000 15,000 Other services KPMG Australia Taxation services 22,314 8,817 Accounting services 17,507 2,156 R&D grant 16,457 - Other services 3,276 14,290 79,554 40,263 Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 28 The accompanying notes form part of these financial statements 17 Financial instruments – fair value and risk management The following table shows the carrying amounts per category of financial assets and liabilities. 30 June 2021 (Consolidated) Note Total Financial assets not measured at fair value Trade and other receivables 8 1,430,915 Cash and cash equivalents 7 12,982,397 14,413,312 Financial liabilities not measured at fair value Trade and other payables 12 952,466 952,466 30 June 2020 Note Total Financial assets not measured at fair value Trade and other receivables 8 400,162 Cash and cash equivalents 7 2,228,927 2,629,089 Financial liabilities not measured at fair value Trade and other payables 12 114,162 114,162 18 Cash flow reconciliation Consolidated 2021 2020 Restated* Note $ $ Loss for the period (4,079,767) (1,353,895) Adjustments for: Depreciation and amortisation 38,514 11,544 Unrealised foreign exchange gain 414 - Net finance loss 5 26,748 6,599 (Gain)/loss on sale of property, plant and equipment 1,541 - Rent expense 230 - Share based payments 1,361,974 16,780 Research and development tax incentive (77,238) - (2,727,584) (1,318,972) Changes in: Trade and other receivables 294,270 (398,655) Trade and other payables 838,304 68,636 Provisions and employee entitlements 133,267 32,046 Cash used in operating activities (1,461,743) (1,616,944) Interest received - 4 Bank fees paid 5 (24,925) (6,071) Net cash used in operating activities (1,486,668) (1,623,012) *Refer to Note 28 Reissuance of the financial report Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 29 The accompanying notes form part of these financial statements 19 Related party (a) Transactions with key management personnel (i) Key management personnel compensation Key management personnel compensation comprised the following. Consolidated 2021 2020 Restated* $ $ Short-term employee benefits 480,473 317,717 Post employment employee benefits 43,788 30,183 Share based payment expense 365,217 - 889,478 347,900 *Refer to Note 28 Reissuance of the financial report 20 Share-based payments Details of the Group’s option plan, under which equity settled options are issuable to employees, directors and consultants are summarised below. Details of options issued are set out below. (a) Incentive Option Plan The Group has a formal option plan for the issue of options to employees, directors and consultants. Options are granted free of charge and are exercisable at a fixed price in accordance with the terms of the grant. Options over unissued shares are issued under the terms of the Plan at the discretion of the Board. (b) Number and weighted average exercise prices of share options Consolidated Consolidated 2021 2021 2020 2020 Weighted average exercise price ( cents ) Number of options Weighted average exercise price ( cents ) Number of options Outstanding at 1 July 0.71 6,540,000 0.10 8,000,000 Granted during the period 20.98 3,246,752 7.50 540,000 Exercised during the period - - 0.10 (2,000,000) Outstanding at 30 June 7.44 9,786,752 0.71 6,540,000 Exercisable at 30 June 2,203,768 - Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 30 The accompanying notes form part of these financial statements 20 Share-based payments (continued) (b) Number and weighted average exercise prices of share options (continued) The following factors and assumptions were used in the Black-Scholes model used to determine the fair value of options issued during the year. Grant Date Option life Fair value per option Restated* Exercise price Price of shares on grant date Expected volatility Risk free interest rate Dividend yield 1,300,000 Unlisted options (i) 23 September 2020 5 years $0.382 $0.056 $0.400 128% 0.40% 0% 220,000 Unlisted options (ii) 27 November 2020 5 years $0.375 $0.075 $0.400 124% 0.29% 0% 1,226,752 Unlisted options (iii) 4 February 2021 5 years $0.375 $0.075 $0.400 126% 0.41% 0% 500,000 Unlisted options (iv) 23 April 2021 5 years $0.730 $1.000 $0.880 117% 0.72% 0% *Refer to Note 28 Reissuance of the financial report (i) 784,384 options vested on 23 September 2020. The remaining 515,616 vest on 31 December 2021 subject to the Group achieving the delivery of a beta product version developed to Minimum Viable Product level on or before 15 February 2021. Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 31 The accompanying notes form part of these financial statements 20 Share-based payments (continued) (b) Number and weighted average exercise prices of share options (continued) (ii) 55,000 options vest on 31 December 2021 subject to continued employment with the Group as at that date and completion of the Salix product version 1.1 on or before 28 February 2021. 55,000 options vest on 31 December 2022 subject to continued employment with the Group as at that date and completion of the Salix FFR product version 1.0 on or before 31 December 2021. 55,000 options vest on 31 December 2023 subject to continued employment with the Group as at that date and detection of Vulnerable Plaque biomarkers is achieved on or before 15 December 2021. 55,000 options vest on 31 December 2024 subject to continued employment with the Group as at that date and creation of a patient risk score is achieved on or before 15 December 2022. (iii) 784,384 options vested on 4 February 2021. The remaining 442,368 vest on 31 December 2021 subject to the Group achieving the delivery of a beta product version developed to Minimum Viable Product level on or before 15 February 2021. (iv) 500,000 options vested on 23 April 2021. (c) Options on issue at the balance date The number of options outstanding over unissued ordinary shares at 30 June 2021 is 9,786,752 (2020: 6,540,000). The terms of these options are as follows: Number of Options Outstanding Exercise Price Expiry Date 6,000,000 Unlisted 1,986,752 Unlisted 1,300,000 Unlisted 500,000 Unlisted 0.1 cents 7.5 cents 5.6 cents 100 cents 25 March 2024 31 December 2025 31 December 2025 31 December 2026 (d) Weighted average remaining contractual life The weighted average remaining contractual life for the share options outstanding as at 30 June 2021 is 3.47 years (2020: 3.88 years). Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 32 The accompanying notes form part of these financial statements 21 Earnings per share Consolidated 2021 2020 Restated* Cents Cents a) Basic earnings per share Loss attributable to ordinary equity holders of the company (11.85) (6.06) b) Diluted earnings per share Loss attributable to ordinary equity holders of the company (11.85) (6.06) $ $ c) Loss used in calculation of basic and diluted loss per share Loss after tax from continuing operations (4,079,767) (1,353,896) No. No. Weighted average number of shares used 34,434,504 22,338,014 *Refer to Note 28 Reissuance of the financial report Potential ordinary shares are not considered dilutive as their conversion does not show an inferior view of the earnings performance of the company. Accordingly, diluted earnings per share are the same as the basic earnings per share. Number of options so excluded from the calculation is set out in Note 20. 22 Financial instruments – risk management The Group has exposure to a variety of risks arising from its use of financial instruments. This note presents information about the Group’s exposure to the specific risks, and the policies and processes for measuring and managing those risks and the management of capital. Further quantitative disclosures are included throughout this financial report. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. The Group has exposure to the following risks from their use of financial instruments: ? Credit risk ? Liquidity risk ? Market risk (a) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from transactions with customers and investments. The carrying amounts of financial assets represent the maximum credit exposure. Cash and cash equivalents The Group has cash and cash equivalents of $12,982,397 at 30 June 2021 (2020: $2,228,927) that are held with banks that are rated AA- based on S&P Global rating. Trade and other receivables The Group has no investments and the nature of the business activity of the Group does not result in trading receivables. Receivables of the Group primarily consist of the research and development tax incentive, grant income to be received and net GST receivable. The receivables that the Group does experience through its normal course of business are short term and the risk of recovery of no recovery of receivables is considered to be negligible. Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 33 The accompanying notes form part of these financial statements 22 Financial instruments – risk management (continued) (b) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group aims to maintain the level of its cash and cash equivalents at an amount in excess of expected cash outflows on financial liabilities. The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted; and include contractual interest payments. Contractual cash flows 30 June 2021 (Consolidated) Carrying Amount Total 2 months or less 2-12 months 1-2 years Non-derivative financial liabilities Trade and other payables 952,466 952,466 952,466 - - 952,466 952,466 952,466 - - Contractual cash flows 30 June 2020 Carrying Amount Total 2 months or less 2-12 months 1-2 years Non-derivative financial liabilities Trade and other payables 114,162 114,162 114,162 - - 114,162 114,162 114,162 - - (c) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising any return. The Group had no exposure to foreign currency, interest rates or equity price risk in 2020. Exposure to currency risk The summary quantitative data about the Group’s exposure to currency risk as reported to management of the Group is as follows. 30 June 2021 USD Trade Payables 27,000 Net statement of financial position exposure 27,000 Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 34 The accompanying notes form part of these financial statements 22 Financial instruments – risk management (continued) (c) Market risk (continued) Sensitivity Analysis A reasonably possible strengthening (weakening) of the above currencies at 30 June would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes all other variables remain constant. Profit or loss Equity, net of tax Effect in AUD Strengthening Weakening Strengthening Weakening 30 June 2021 USD (10% movement) 3,048 (4,025) 3048 (4,025) Interest rate risk At 30 June 2021, the Group was not exposed to any significant interest rate risk. There is minimal exposure to the impact of adverse changes in benchmark interest rates. The Company was exposed to variable interest rate risks on cash deposits. A reasonably possible change of 50 basis points (2020: 50 basis points) in interest rates at the reporting date would have increased or decreased the loss before tax by $64,912 (2020: $11,145). 23 Controlled entities Ownership interest Country of Incorporation 2021 % 2020 % Subsidiaries: Artra Medical IP Pty Ltd Australia 100 - 24 Parent Entity Disclosure The disclosures in the consolidated financial report are consistent with those that would be disclosed for the parent entity. 25 Contingencies In the opinion of management, the Group did not have any contingencies at 30 June 2021 (2020: none). 26 Commitments In the opinion of management, the Group did not have any commitments at 30 June 2021 (2020: none). 27 Subsequent events On 9 July 2021, 5,500,000 share options were granted and vest subject to meeting performance milestones and continued employment with the Company. Other than the above, the directors of the Company have considered that there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company, in future financial years. Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 35 The accompanying notes form part of these financial statements 28 Reissuance of the financial report Subsequent to the approval of the 2021 Consolidated Annual Financial Report on 25 August 2021, an error was identified in the calculation of the fair value of the share-based payments that were issued during the financial year ended 30 June 2021. As a result of this error, the share-based payments expense for the year ended 30 June 2021 was over-stated by $129,814. This reissued Consolidated Annual Financial Report reflects the correction of this error and is summarised in the following tables: Consolidated statement of financial position As at 30 June 2021 As reported on 25 August 2021 Adjustment As corrected $ $ $ Accumulated losses (5,710,514) 129,814 (5,580,700) Share based payments reserve 1,508,568 (129,814) 1,378,754 Total equity 13,903,981 - 13,903,981 Consolidated statement of profit or loss and other comprehensive income For the year ended 30 June 2021 As reported on 25 August 2021 Adjustment As corrected $ $ $ Share based payments expenses (1,491,788) 129,814 (1,361,974) Results from operating activities (4,182,833) 129,814 (4,053,019) Loss before income tax (4,209,581) 129,814 (4,079,767) Loss for the year (4,209,581) 129,814 (4,079,767) Total comprehensive loss for the year (4,209,581) 129,814 (4,079,767) The correction of the error resulted in the following change to Note 19 Related Party: As reported on 25 August 2021 Adjustment As corrected $ $ $ Share based payment expense 439,564 (74,347) 365,217 963,825 (74,347) 889,478 Artrya Limited Notes to the consolidated financial statements For the year ended 30 June 2021 36 The accompanying notes form part of these financial statements 28 Reissuance of the financial report (continued) The correction of the error resulted in the following change to Note 21 Earnings per share: As reported on 25 August 2021 Adjustment As corrected Cents Cents Cents a) Basic earnings per share Loss attributable to ordinary equity holders of the company (12.23) 0.38 (11.85) b) Diluted earnings per share Loss attributable to ordinary equity holders of the company (12.23) 0.38 (11.85) $ $ $ c) Loss used in calculation of basic and diluted loss per share Loss after tax from continuing operations (4,209,581) 129,814 (4,079,767) Artrya Limited Directors’ declaration For the year ended 30 June 2021 37 The accompanying notes form part of these financial statements 1 In the opinion of the directors of Artrya Limited and its subsidiary, (the “Group”): a) the reissued consolidated financial statements and notes that are set out on pages 8 to 36 and are in accordance with the Corporations Act 2001; including (i) giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its performance for the financial year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001 ; and b) there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable 2 The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive officer and chief financial officer for the financial year ended 30 June 2021. 3 The directors draw attention to Note 2 to the reissued consolidated financial statements, which includes a statement of compliance with International Financial Reporting Standards. Signed in accordance with a resolution of the directors. John Barrington Managing Director Perth Dated at Perth this day of 2021 29th September KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation. Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the D irectors of Artrya Limited I declare that, to the best of my knowledge and belief, in relation to the audit of Artrya Limited for the financial year ended 30 June 2021 there have been: i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii. no contraventions of any applicable code of professional conduct in relation to the audit . KPMG Matthew Hingeley Partner Perth 29 September 2021 KPM_INI_01 PAR_SIG_01 PAR_NAM_01 PAR_POS_01 PAR_DAT_01 PAR_CIT_01 Independent Auditor’s Report To the shareholders of Artrya Limited (previously Artrya Pty Ltd) Opinion We have audited the Reissued Consolidated Annual Financial Report of Artrya Limited (previously Artrya Pty Ltd) (the Company). In our opinion, the accompanying Reissued Financial Report of the Company is in accordance with the Corporations Act 2001 , including: • giving a true and fair view of the Group ’s financial position as at 30 June 2021 and of its financial performance for the year ended on that date; and • complying with Australian Accounting Standards and the Corporations Regulations 2001 . The Reissued Consolidated Annual Financial Report comprises : • Consolidated statement of financial position as at 30 June 2021 • Consolidated statement of profit or loss and other comprehensive income, Consolidated statement of changes in equity, and Consolidated statement of cash flows for the year then ended • Notes including a summary of significant accounting policies • Directors’ Declaration. The Group consists of the Company and the entities it controlled at the year-end or from time to time during the financial year. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards . We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Reissued Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the Reissued Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code. Emphasis of matter – Reissuance of the financial report We draw attention to Note 28 which sets out that Directors have amend ed and reissue d the previously issued financial report due to the correction of an error in that financial report. As a consequence, this audit report supersedes our previous Independent Audit Report to the shareholders of Artrya Limited dated 25 August 2021 on the Financial Report for the year ended 30 June 2021, signed and approved by the Directors on 25 August 2021. Our opinion is not modified in respect of this matter. Other Information Other Information is financial and non - financial information in Artrya Limited ’s annual reporting which is provided in addition to the Reissued Financial Report and the Auditor's Report. The Directors are responsible for the Other Information. Our opinion on the Reissued Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon. In connection with our audit of the Reissued Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Reissued Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. Responsibilities of the Directors for the Reissued Financial Report The Directors are responsible for: • preparing the Reissued Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 • implementing necessary internal control to enable the preparation of a Reissued Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error • assessing the Group and Company’s ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Reissued Financial Report Our objective is: • to obtain reasonable assurance about whether the Reissued Financial Report as a whole is free from material misstatement, whether due to fraud or error; and • to issue an Auditor’s Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Reissued Financial Report. A further description of our responsibilities for the audit of the Reissued Financial Report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar3.pdf . This description forms part of our Auditor’s Report. KPMG Matthew Hingeley Partner Perth 29 September 202 1
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