Preliminary Results

RNS Number : 1446G

LungLife AI, INC

28 March 2022

 

LungLife AI, Inc.
(the "Company" or "LungLife")

Preliminary results

LungLife AI (AIM: LLAI), a developer of clinical diagnostic solutions for lung cancer, announces its maiden audited preliminary results for the year ended 31 December 2021, following admission to trading on AIM on 8 July 2021.

Summary and Highlights for the year:

· Revenues of $196k (2020: $205k) of which $88k (2020: $Nil) represented first royalty income from sales under our sub license in China

· Loss before tax of $7.43m, after charging IPO costs of $1.1m.  Adjusted EBITDA¹ loss of $5.8m

· Admission to AIM and successful £17m (gross) fundraising at an issue price of 176p on 8 July 2021

· Cash as of 31 December 2021 of $14.62m

·  The Company's clinical laboratory in Thousand Oaks, California awarded accreditation by the College of American Pathologists (CAP)

Post-period end:

·CPT® Proprietary Laboratory Analyses (PLA code), a key component towards reimbursement in the US market, awarded and scheduled to become effective on 1 April 2022

· In February 2022, enrolled first participant into multi-centre clinical validation study for those with indeterminant lung nodules. The study will be used to validate the LungLB® test performance, enrolling 425 participants from sites across the US, with the study expected to complete by Q1 2023

· Veterans Affairs (VA) sites added to validation study in March 2022, and first participant enrolled from the Bay Pines VA in Florida

· Appointment of Dr Drew Moghanaki, an internationally recognised lung cancer specialist, to the Company's Scientific Advisory Board

Commenting, Paul Pagano, Chief Executive Officer of LungLife, said : "Since IPO, we have achieved several milestones which has kept us on track with our strategic vision. During the year, we laid the groundwork towards commencing our multi-centre validation study, and post-period end we enrolled our first participants. Our clinical laboratory in Thousand Oaks also achieved CAP accreditation in November 2021, confirming that we are maintaining the highest standards of excellence in laboratory testing for patients.

"Throughout the rest of the year we will continue with our validation study which we expect to complete in Q1 2023, as well as work towards regulatory authorisation and commercial reimbursement, which we made our first step towards post-period end when we were granted a CPT® PLA code. We remain focused on bringing early detection solutions to those who need them most, which will lead to better outcomes for people with lung cancer."

For further information please contact:

LungLife AI, Inc.	www.lunglifeai.com
Paul Pagano, CEO	Via Walbrook PR
David Anderson, CFO
Investec Bank plc (Nominated Adviser & Broker)	Tel: [phone]
Daniel Adams / Virginia Bull / Cameron MacRitchie
Walbrook PR Limited	Tel: [phone] or  [e-mail]
Paul McManus / Alice Woodings / Phillip Marriage	Mob: [phone]

¹ Earnings before income tax, depreciation and amortisation, adjusted to exclude exceptional items and other operating income

About LungLife

LungLife AI is a developer of clinical diagnostic solutions designed to make a significant impact in the early detection of lung cancer, the deadliest cancer globally. Using a minimally invasive blood draw, the Company's LungLB® test is designed to deliver additional information to clinicians who are evaluating indeterminate lung nodules. For more information visit www.lunglifeai.com

Our Purpose is to be a driving force in the early detection to lung cancer.  And our Vision is to invert the 20:80 ratio such that in years to come at least 80% of lung cancer is detected early.

Chairman's Statement

I am delighted to report on the first annual results for LungLife AI, Inc. since our admission to trading on AIM in July 2021. We have continued to deliver on the Company's objectives and remain committed to creating shareholder value as we proceed with the aim of being a driving force in the early detection of lung cancer through the completion of our LungLB® test multi-centre clinical validation study.

LungLB® test

According to the World Health Organization, over 2.2 million new cases of lung cancer were diagnosed in 2020 and approximately 1.8 million deaths from lung cancer were recorded in 2020 globally. Nearly 80% of all lung cancers in the United States are diagnosed in later stages when survival rates are low because the options for curative treatment are then limited. This is in part due to the lack of effective early detection solutions and the fact that lung cancer largely develops asymptomatically.

LungLB® is a blood-based test that uses circulating tumour cells ("CTC") to stratify indeterminant lung nodules as either cancerous or benign following their identification by CT scan. Biopsy is currently part of the standard care pathway for lung nodules and the LungLB® test is designed to support the physician's decision to biopsy only when necessary, or to monitor non-invasively using additional imaging. There are estimated to be over 1.5 million indeterminant lung nodules identified each year in the United States¹ and LungLife's estimated 1 week turnaround from receipt of the blood sample to results can save a significant amount of stressful waiting time for the patient as well as unnecessary costly and often dangerous procedures. In 2021, we completed a 149 participant pilot study in subjects with indeterminate lung nodules which showed a well-balanced performance and a Positive Predictive Value of 89 per cent which we believe will support physician decision making. 

Progress

We enrolled our first participant in February 2022 in our multi-centre clinical validation study. The multi-centre clinical study will be used to validate the LungLB® test performance, looking to repeat the high performance already observed in the pilot study completed earlier in the year. The study will enrol 425 participants across multiple US sites, including MD Anderson Cancer Center, Mount Sinai Hospital in New York City and multiple medical centres of the Veterans Affairs, which we recently announced, involving participants who present with indeterminate lung nodules that would otherwise be scheduled for needle biopsy. This first participant enrolment confirms that the Company is on track to enrol participants over the next 12 months, with study completion expected in Q1 2023.

In November 2021, our clinical laboratory in Thousand Oaks, California was awarded accreditation by the College of American Pathologists (CAP), a significant further independent validation of the quality of our laboratory procedures.

The successful granting of a CPT® code marks the first step on the path for commercial reimbursement. In October 2021 we applied to the American Medical Association for a CPT® Proprietary Laboratory Analyses (PLA) code and this was granted post year end and is scheduled to become effective on 1 April 2022.

Reimbursement in the US is comprised of three components: code, price, and coverage. CPT® codes offer health care professionals a uniform language for coding medical services and procedures, and the CPT® code allows clinical laboratories to more specifically identify their tests when billing Medicare and commercial insurers.

AIM IPO

In July 2021 we successfully raised gross proceeds of £17 million as part of the Company's admission to trading on AIM. Since then we have already fulfilled several of the aims that we set out to achieve including commencement of the clinical validation study and obtaining a CPT® code for Medicare reimbursement for the LungLB® test.

We anticipate that the net proceeds of the fundraise will be sufficient to complete the multi-centre validation study and commence the utility study of the LungLB® test for indeterminate lung nodules, commence the post-surgical monitoring validation study for the LungLB® test, and take the Company to early revenues in 2023.

We are hugely grateful to the support received from new shareholders who participated in our 2021 fundraise and prior shareholders who had supported the company to that point, and I would like to thank all of our shareholders for their continued support.

People

On admission to trading on AIM, David Anderson formally joined the Company as CFO after serving as a consultant since the beginning of 2020.

Paul and David have done a great job of bringing the Company to market and delivering on the aims set out at the Company's IPO. I would like to thank them for their excellent leadership during this dynamic time for the Company.

We also made senior hires in Clinical Trials, Quality, Research and Development and Project Management in the year and post year end bringing the team up to 13 full time, and 2 part time employees. 

We also recently announced the appointment of Dr Drew Moghanaki to our Scientific Advisory Board.

On behalf of the Board, I would like to thank our employees, clinical partners, study participants, professional advisors, suppliers and shareholders for their support, and we look forward to providing further updates on progress throughout the current year.

Outlook

In addition to the continued enrolment of participants into our validation study, our focus this year is on reimbursement. The three constituent parts are code, price and coverage. We have received our code, the next stage is the pricing process and determining whether we fall under "cross-walk" or "gap fill". We have submitted our application for the New York Clinical Laboratory Evaluation Program ("CLEP") permit. We will submit our Breakthrough Device application to the FDA when our advisors indicate the timing is right. 

The next two years are incredibly exciting for LungLife and we look forward to updating shareholders on our progress during that time.

Roy Davis

Non-Executive Chairman

28 March 2022

¹ Gould MK et al. Am J Respir Crit Care Med. 2015 PMID: 26214244.

 

Financial Review

The financial performance of the Company in the year to 31 December 2021 reflects the IPO which took place on 8 July 2021 and involved the conversion of Convertible Loan Notes and existing shares prior to the Admission of the new common shares onto AIM.

Statement of Comprehensive Income

The loss for the year of $7,444,188 is after charging a portion of the expenses incurred on the share issue of $1,101,370, disclosed as exceptional, with the balance of expenses of the share issue of $1,000,354 charged directly to reserves. The loss excluding this exceptional item was $6,342,818.

The Company generated revenues of $195,566 comprising royalty income from its sub licensee in China of $88,553 and consumable sales of fluorescent in situ hybridisation (FISH) probes of $107,013 to the same sub-licensee. The royalty income represents the first such income under the sub licence calculated at 6% of underlying sales. In turn the Company pays a 6% royalty on this income to MD Anderson Cancer Center.

The largest cost incurred in the year was employee expenses ($1,760,012) followed by research and development costs ($1,343,132), being those external costs incurred in the development of our LungLB® test and AI algorithm. 

Other operating income relates to payment received under the US Government Paycheck Protection Program, akin to the UK furlough scheme. This represented a one-time loan which was subsequently forgiven in full. Finance expense of $309,327 related to interest charged on the Convertible Loan Notes, which formed part of the balance on the Notes subsequently converted into new common shares at the time of IPO. The balance of $107,601 reflects the charge for lease liabilities, being leases for certain tangible assets and the leasehold premises occupied by the Company.

Statement of Financial Position

Cash at the end of the year was $14,628,351, reflecting the net proceeds of the AIM admission of $21,342,405, payment of $1,800,000 to the Icahn School of Medicine of Mount Sinai ("Mount Sinai") under the terms of the License Agreement with Mount Sinai, and working capital for the year. The payment of $1,800,000 together with the 1,656,888 consideration shares issued to Mount Sinai at issue price of 176p constitutes the intangible asset of $5,818,359. The option fee gives the Company access in the future to the de-identified patient records held by Mount Sinai to assist in the development of future products. As this asset is therefore not currently being utilised no amortisation has been charged to date. 

Extension to the lease on the Company's premises and financing of a further microscope gave rise to movement on right of use assets and lease liabilities.

Statement of Cash Flows

The net outflow from operating activities was $7,538,876, funded in part by the gross proceeds from the AIM admission of $23,444,129 and in the period before the AIM admission $1,612,421 of new Convertible Loan Notes.  These Notes were converted in full as part of the Company's reorganisation prior to the AIM admission. The net inflow of cash in the year was $14,500,723 contributing to the closing cash balance of $14,628,351.

David Anderson

Chief Financial Officer

28 March 2022

 

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2021

		Year to	Year to
		31 December	31 December
	Note	2021	2020
		US$	US$
Revenue	4	195,566	205,180
Cost of sales		(96,269)	(188,178)
		_________	_________
Gross margin		99,297	17,002
Administrative expenses	6	(5,903,738)	(3,458,984)
Depreciation	6	(323,758)	(282,654)
Exceptional expense - costs of listing		(1,101,370)	(337,201)
		_________	_________
Loss from operations		(7,229,569)	(4,061,837)
Other operating income	6	206,164	-
Finance income	9	12,017	-
Finance expense	9	(416,928)	(777,186)
		_________	_________
Loss before tax		(7,428,316)	(4,839,023)
Tax expense	10	(15,872)	-
		_________	_________
Loss from continuing operations		(7,444,188)	(4,839,023)
Other comprehensive income		-	-
		_________	_________
Loss and total comprehensive income attributable to the owners of the Company		(7,444,188)	(4,839,023)
		_________	_________
Earnings per share attributable to the ordinary equity holders of the parent	11
Loss per share
Basic and diluted (US$ cents)		($0.469)	($0.743)
		_________	_________

The results reflected above relate to continuing operations

STATEMENT OF FINANCIAL POSITION

As at 31 December 2021

	Note	2021	2020
		US$	US$
Assets
Current assets
Trade and other receivables	14	740,865	169,801
Cash and cash equivalents		14,628,351	127,628
		_________	_________
		15,369,216	297,429
		_________	_________
Non-current assets
Property, plant and equipment	12	765,983	463,437
Intangible assets	13	5,818,359	-
Other receivables	14	13,235	13,235
		_________	_________
		6,597,577	476,672
		_________	_________
Total assets		21,966,793	774,101
		_________	_________
Liabilities
Current liabilities
Trade and other payables	15	803,738	1,225,836
Lease liabilities	17	207,280	169,955
Discontinued operations		174,057	174,057
Convertible notes	18	-	10,086,616
Borrowings and loans	16	-	206,164
		_________	_________
		1,185,075	11,862,628
Non-current liabilities
Lease liabilities	17	601,622	167,488
Provisions	19	50,000	50,000
		_________	_________
Total liabilities		1,836,697	12,080,116
		_________	_________
NET ASSETS		20,130,096	(11,306,015)
		_________	_________
Issued capital and reserves attributable to
owners of the parent
Share capital	21	2,548	8,665
Share premium reserve	22	91,264,305	52,194,390
Other equity	22	-	843,137
Share based payment reserve		960,312	550,511
Accumulated losses		(72,097,069)	(64,902,718)
		_________	_________
TOTAL EQUITY		20,130,096	(11,306,015)
		_________	_________

STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2021

		Share capital	Share premium	Share-based payment reserve	Other equity	Accumulated losses	Total attributable to equity holders of parent	Total equity
		US$	US$	US$	US$	US$	US$	US$
1 January 2020		8,483	52,104,062	324,876	828,318	(60,063,695)	(6,797,956)	(6,797,956)
Comprehensive income for the year
Loss		-	-	-	-	(4,839,023)	(4,839,023)	(4,839,023)
Other comprehensive Income		-	-	-	-	-	-	-
		_________	_________	_________	_________	_________	_________	_________
Total comprehensive Income for the year		-	-	-	-	(4,839,023)	(4,839,023)	(4,839,023)
		_________	_________	_________	_________	_________	_________	_________
Contributions by and distributions to owners
Issue of common stock		182	90,328	-	-	-	90,510	90,510
Issue of Convertible Loan Note		-	-	-	14,819	-	14,819	14,819
Share-based payment		-	-	225,635	-	-	225,635	225,635
		_________	_________	_________	_________	_________	_________	_________
Total contributions by and distributions to owners		182	90,328	225,635	14,819	-	330,964	330,964
		_________	_________	_________	_________	_________	_________	_________
31 December 2020		8,665	52,194,390	550,511	843,137	(64,902,718)	(11,306,015)	(11,306,015)
		_________	_________	_________	_________	_________	_________	_________

STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2021 (continued)

		Share capital	Share premium	Share-based payment reserve	Other equity	Accumulated losses	Total attributable to equity holders of parent	Total equity
		US$	US$	US$	US$	US$	US$	US$
1 January 2021		8,665	52,194,390	550,511	843,137	(64,902,718)	(11,306,015)	(11,306,015)
Comprehensive income for the year
Loss		-	-	-	-	(7,444,188)	(7,444,188)	(7,444,188)
Other comprehensive Income		-	-	-	-
		_________	_________	_________	_________	_________	_________	_________
Total comprehensive Income for the year		-	-	-	-	(7,444,188)	(7,444,188)	(7,444,188)
		_________	_________	_________	_________	_________	_________	_________
Contributions by and distributions to owners
Issue of Convertible Loan Notes		-	-	-	99,263	-	99,263	99,263
Reverse split		(8,184)	8,184	-	-	-	-	-
Issue of common shares on conversion of preference shares and Convertible Loan Notes		935	12,600,730	-	-	-	12,601,665	12,601,665
Issue of share capital		1,132	27,461,355	-	-	-	27,462,487	27,462,487
Transfer of balance following conversion of Convertible Loan Note		-	-	-	(942,400)	249,837	(692,563)	(692,563)
Share issue costs		-	(1,000,354)	-	-	-	(1,000,354)	(1,000,354)
Share-based payments		-	-	409,801	-	-	409,801	409,801
		_________	_________	_________	_________	_________	_________	_________
Total contributions by and distributions to owners		(6,117)	39,069,915	409,801	(843,137)	249,837	38,880,299	38,880,299
		_________	_________	_________	_________	_________	_________	_________
31 December 2021		2,548	91,264,305	960,312	-	(72,097,069)	20,130,096	20,130,096
		_________	_________	_________	_________	_________	_________	________

STATEMENT OF CASH FLOWS

For the year ended 31 December 2021

		Year to	Year to
		31 December	31 December
	Note	2021	2020
		US$	US$
Cash flows from operating activities
Loss for the year		(7,444,188)	(4,839,023)
Adjustments for:
Depreciation of property, plant and equipment		323,758	282,654
Forgiveness of Paycheck Protection Program Loan		(206,164)	-
Gain on sale of tangible assets		(35,752)	-
Finance income		(12,017)	-
Finance expense		416,928	777,186
Taxation		15,872	-
Share-based payments expense		409,801	225,635
		_________	_________
		(6,531,762)	(3,553,548)
(Increase) / decrease in trade and other receivables		(569,143)	82,127
(Decrease) / increase in trade and other payables		(422,097)	597,396
Income taxes paid		(15,872)	-
		_________	_________
Net cash outflow from operating activities		(7,538,876)	(2,874,025)
		_________	_________
Cash flows from investing activities
Purchases of tangible assets		(47,365)	(5,328)
Proceeds from sale of tangible assets		35,752	-
Landlord improvement contribution		15,588	-
Purchase of intangibles		(1,800,000)	-
		_________	_________
Net cash used in investing activities		(1,796,025)	(5,328)
		_________	_________
Cash flows from financing activities
Issue of Convertible Notes		1,612,421	2,290,899
Issue of Common Stock		23,444,129	90,510
Expenses of issue of Common Stock		(1,000,354)	-
Interest received		10,097	-
Interest paid		(107,601)	(6,297)
Paycheck Protection Program loan		-	205,822
Repayment of loans		-	(120,368)
Repayment of lease liabilities		(123,068)	(180,379)
		_________	_________
Net cash from financing activities		23,835,624	2,280,187
Net increase / (decrease) in cash and cash equivalents		14,500,723	(599,166)
Cash and cash equivalents at beginning of year		127,628	726,794
		_________	_________
Cash and cash equivalents at end of year	5	14,628,351	127,628
		_________	_________

LungLife AI, Inc.

Notes forming part of the financial statements

for the year ended 31 December 2021

1	General Information

LungLife AI, Inc, (the "Company") is a company based in Thousand Oaks, California which is developing a diagnostic test for the early detection of lung cancer. The Company was incorporated under the laws of the state of Delaware, USA on 30 December 2009.

The Company's costs associated with developing and commercialising its test include costs associated with the development of intellectual property, optimising the technology, and obtaining regulatory approval. To complete clinical trials the Company will continue to require additional operating funds. The Company has raised funds through offerings of debt, common stock and Series A Preferred Shares.

There are no restrictions on the Company's ability to access or use its assets and settle its liabilities.

2	Basis of preparation

The financial statements have been prepared in accordance with UK adopted International Accounting Standards ("UK IFRS").

These financial statements are prepared in accordance with UK IFRS under the historical cost convention, as modified by the use of fair value for financial instruments measured at fair value. The historical financial information is presented in United States Dollars ("US$") except where otherwise indicated.

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

(a)  Going concern

These financial statements have been prepared on the going concern basis.

The directors of the Company have a reasonable expectation that the Company has adequate resources,to continue in operational existence for the foreseeable future and for at least one year from the date of the financial statements. For that reason, they continue to adopt the going concern basis in preparing the Company's financial statements.

(b)  New standards, amendments and interpretations

New standards are not expected to impact the Company as they are either not relevant to the Company's activities or require accounting which is consistent with the Company's current accounting policies.

The Directors have considered those standards and interpretations which have not been applied in these financial statements but which are relevant to the Company's operations that are in issue but not yet effective and do not consider that they will have a material effect on the future results of the Company.

 

2	Basis of preparation(continued)

(c)  Revenue recognition

Sale of goods

Revenue comprises the fair value of the sale of FISH probes used to identify the properties  of blood samples under the terms of a sub license agreement with a third party, net of applicable sales taxes. Revenue is recognised on the sale of goods when the significant risks and rewards of ownership of the goods have passed to the buyer and the amount of revenue can be measured reliably. Revenue on goods delivered is recognised when the customer accepts delivery and on services when those services have been rendered.

Royalty income

Under the terms of a patent and technology sub license agreement the company is entitled to receive royalty income at 6% of the quarterly net sales invoiced by the sub licensee in the relevant quarter.  Income is recognized in the period in which the underlying net sales are generated.

Cash is received from revenues recognised according to terms of trade within the relevant  contractual relationship, usually in accordance with agreed events such as placing of order, fulfilment of order and delivery.

(d)  Intangible assets

Research expenditure is recognised as an expense when incurred. Development expenditure is recognized as an expense except those costs incurred on development projects are capitalised as long term assets to the extent that such expenditure is expected to generate future economic benefits. Development expenditure is capitalised only if it meets the criteria for capitalisation under IAS 38. Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses, if any. Development expenditure initially recognised as an expense is not recognised as an asset in future years. Capitalised development expenditure is amortised on a straight-line basis over the estimated useful life of the asset when the asset is available for use.

(e)  Property, plant and equipment

Owned assets

Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation and impairment losses. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. When parts of an item of property, plant and equipment have different useful lives, those components are accounted for as separate items of property, plant and equipment.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the income statement.

 

2	Basis of preparation(continued)

(e)  Property, plant and equipment(continued)

Depreciation

Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows:

· computer and IT equipment - 33 per cent. straight line

· leasehold improvements - shorter of lease term and useful life

· plant and machinery - 20 per cent. straight line

· laboratory equipment - 20 per cent. straight line

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within "other operating income" in the statement of income.

(f)  Impairment of non-financial assets

Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are considered at the lowest levels for which there are separately identifiable cash flows (cash- generating units).

Non-financial assets other than goodwill that suffered impairment are reviewed for possible  reversal of the impairment at each reporting date.

(g)  Financial assets

Classification

The Company classifies its financial assets as loans and receivables. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments. They are initially recognised at fair value and are subsequently stated at amortised cost using the effective interest method.

Impairment of financial assets

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay  in payment) that the Company will be unable to collect all of the amounts due under the term's receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired asset.

(h)  Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less.

 

2	Basis of preparation(continued)

(i)  Financial liabilities

Trade and other payables

Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Convertible debt

The proceeds received on issue of the Company's convertible debt are allocated into their  liability and equity components. The amount initially attributed to the debt component equals the discounted cash flows using a market rate of interest that would be payable on a similar debt instrument that does not include an option to convert. Subsequently, the debt  component is accounted for as a financial liability measured at amortised cost until  extinguished on conversion or maturity of the bond. The remainder of the proceeds is allocated to the conversion option and is recognised in the "Other equity" within shareholders' equity, net of income tax effects.

(j)  Borrowings

Borrowings are recognised initially at  fair  value, net  of  transaction  costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are de-recognised from the statement of financial position when the obligation  specified in the contract is discharged, is cancelled or expires. The difference between the  carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the income statement as other operating income or finance costs.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

(k)  Provisions

A provision is recognised in the statement of financial position when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre- tax rate that reflects current market assessments of the time value of money and, when appropriate, the risks specific to the liability. The increase in the provision due to the passage of time is recognised in finance costs.

(l)  Share capital

Ordinary shares are classified as equity. There are various classes of ordinary shares in issue, as detailed in note 21. Incremental costs directly attributable to the issue of new shares are shown in share premium as a deduction from the proceeds.

 

2	Basis of preparation(continued)

(m)  Net finance costs

Finance costs

Finance costs comprise interest payable on borrowings, direct issue costs, dividends on preference shares and foreign exchange losses, and are expensed in the period in which they are incurred.

Finance income

Finance income comprises interest receivable on funds invested, and foreign exchange gains.

Interest income is recognised in the income statement as it accrues using the effective interest method.

(n)  Leases

All leases are accounted for by recognising a right-of-use asset and a lease liability except  for:

· Leases of low value assets; and

· Leases with a duration of 12 months or less.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Company's incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.

On initial recognition, the carrying value of the lease liability also includes:

· amounts expected to be payable under any residual value guarantee

· the exercise price of any purchase option granted in favour of the Company if it is reasonably certain to assess that option

· any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.

Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

· lease payments made at or before commencement of the lease

· initial direct costs incurred; and

· the amount of any provision recognised where the Company is contractually required to dismantle, remove or restore the leased asset (typically leasehold dilapidations - see note 19).

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.

 

2	Basis of preparation(continued)

(n)  Leases(continued)

When the group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it  adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted using a revised discount rate. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised, except the discount rate remains unchanged. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease  term. If the carrying amount of the right-of-use asset is adjusted to zero, any further reduction is recognised in profit or loss.

(o)  Income tax

Income tax for the years presented comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected taxpayable on the taxable income for the year, using tax rates enacted or substantively enacted at the statement of financial position date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts.

The following temporary differences are not recognised if they arise from (a) the initial recognition of goodwill; and (b) for the initial recognition of other assets or liabilities in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. The amount of deferred tax provided is based  on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the statement of financial position date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

(p)  Foreign currency translation

i)  Function and presentational currency

  Items included in the financial statements of the Company are measured using USD, the currency of the primary economic environment in which the entity operates ('the functional currency'), which is also the Company's presentation currency.

ii)  Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates, of monetary assets and liabilities denominated in foreign currencies to USD, are recognised in the income statement.

 

3	Critical accounting judgements and estimates

The preparation of the Company's historical financial information under UK IFRS requires the directors to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

The Directors consider that the following estimates and judgements are likely to have the most significant effect on the amounts recognised in the financial information.

Carrying value of intangible assets, property, plant and equipment

In determining whether there are indicators of impairment of the Company's intangible assets, the directors take into consideration various factors including the economic viability and expected  future financial performance of the asset and when it relates to the intangible assets arising on a business combination, the expected future performance of the business acquired.

Classification of the Mount Sinai License as an intangible asset

As set out in note 13, on 18 June 2021, the Company entered into the Mount Sinai License Agreement, pursuant to which Mount Sinai granted an option to the Company to obtain a licence, on a non-exclusive basis, to use certain information held by Mount Sinai. After considering the criteria in IAS38 the directors have judged that the recognition criteria therein have been met and classified the Mount Sinai license as an intangible asset.

4	Segment analysis

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Company that are regularly reviewed by the chief operating decision maker (which takes the form of the Board of Directors) as defined in IFRS 8, in order to allocate resources to the segment and to assess its performance.

The chief operating decision maker has determined that the Company has one operating  segment, the development and commercialisation of its lung cancer early detection test. Revenues are reviewed based on the products and services provided.

The Company operates in the United States of America. Revenue by origin of geographical segment is as follows:

		Year to  31 December  2021	Year to 31 December 2020
		US$	US$
	Revenue
	People's Republic of China	195,566	205,180
		________	________
		195,566	205,180
		________	________

 

4	Segment analysis(continued)
		2021	2020
		US$	US$
	Non-current assets
	United States of America	6,597,577	476,672
		________	________
		6,597,577	476,672
		________	________
		Year to  31 December  2021	Year to 31 December  2020
		US$	US$
	Product and service revenue
	Royalty income	88,553	-
	Consumable items	107,013	205,180
		________	________
		195,566	205,180
		________	________

5	Financial instruments - Risk Management

The Company is exposed through its operations to the following financial risks:

-  Credit risk

-  Foreign exchange risk and

-  Liquidity risk

The Company is exposed to risks that arise from its use of financial instruments.  This note describes the Company's objectives, policies and processes for managing those risks and the methods used to measure them.  Further quantitative information in respect of these risks is presented throughout these financial statements.

(i) Principal financial instruments

The principal financial instruments used by the Company, from which financial instrument risk arises, are as follows:

-  Cash and cash equivalents

-  Trade and other payables

 

5	Financial instruments - Risk Management(continued)

(ii) Financial instruments by category

Financial asset

		Amortised	Amortised
		cost	cost
		2021	2020
		US$	US$
	Cash and cash equivalents	14,628,351	127,628
	Trade and other receivables	740,865	169,801
		_________	_________
	Total financial assets	15,369,216	297,429
		_________	_________

Financial liabilities

		Amortised	Amortised
		cost	cost
		2021	2020
		US$	US$
	Trade and other payables and loan	803,738	1,225,836
		_________	_________
	Total financial liabilities	803,738	1,225,836
		_________	_________

(iii) Financial instruments not measured at fair value

Financial instruments not measured at fair value includes cash and cash equivalents, trade and other receivables, and trade and other payables.

Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, and trade and other payables approximates their fair value.

 

5	Financial instruments - Risk Management (continued)

(iv) Financial instruments

General objectives, policies and processes

The Board has overall responsibility for the determination of the Company's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Company's finance function. 

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company's competitiveness and flexibility.  Further details regarding these policies are set out below:

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Due to the current low level of revenue, the Company's exposure to credit risk is on cash at bank.  The Company only deposits cash with major banks with high quality credit standing.

Cash in bank and short-term deposits

The credit quality of cash has been assessed by reference to external credit rating, based on Standard and Poor's long-term / senior issuer rating:

		2021	2021	2020	2020
			Cash		Cash
		Rating	at bank	Rating	at bank
			US$		US$
	Bank A	A+	8,140,196	A+	127,628
	Bank B	BBB+	6,425,645		-
	Bank C	A+	62,510		-
			_________		_________
			14,628,351		127,628
			_________		_________

 

5	Financial instruments - Risk Management (continued)

Foreign exchange risk

Foreign exchange risk arises when the Company enters into transactions denominated in a currency other than its functional currency. The Company's policy is, where possible, to settle liabilities denominated in its functional currency. Currently the Company's liabilities are either US dollar or UK sterling.  No forward contracts or other financial instruments are entered into to hedge foreign exchange movements, with funds raised in the UK being transferred to fund US operations using spot rates. 

As at 31 December 2021 assets held in Sterling amounted to US$6,488,154 (2020 - US$ Nil) and liabilities held in Sterling amounted to US$65,772 (2020 - US$340,371). 

The effect of a 5% strengthening of the Sterling against US dollar at the reporting date on the Sterling denominated net assets carried at that date would, all other variables held constant, have resulted in a decrease in post-tax loss for the year and increase of net assets of US$321,119.  A 5% weakening in the exchange rate would, on the same basis, have increased post-tax loss and decreased net assets by US$321,119.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting its financial obligations as they fall due.  This risk is managed by the production of annual cash flow projections.  The Company's continued future operations depend on its ability to raise sufficient working capital through the issue of share capital and generating revenue.

The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities which can all be met from the cash resources currently available:

			Between
		Up to 3	3 and 12
		months	months
	At 31 December 2021	US$	US$
	Trade and other payables	275,276	-
		_________	_________
	Total	275,276	-
		_________	_________

			Between
		Up to 3	3 and 12
		months	months
	At 31 December 2020	US$	US$
	Trade and other payables	822,758	-
	Loan	206,164	-
		_________	_________
	Total	1,028,922	-
		_________	_________

 

5	Financial instruments - Risk Management (continued)

Capital Disclosures

The Company monitors its capital which comprises all components of equity (i.e. share capital, share premium, and accumulated losses).

The Company's objectives when maintaining capital are to safeguard the entity's ability to continue as a going concern.

6	Expenses by nature
		Year to	Year to
		31 December	31 December
		2021	2020
		US$	US$
	Employee benefit expenses (see note 8)	1,760,012	1,295,786
	Share-based payments charge - non-employee and directors	86,602	83,657
	Depreciation of property, plant and equipment	323,758	282,654
	Research and development expenditure	1,343,132	647,147
	Professional costs	720,232	811,660
	Legal settlement	687,409	525,000
	Foreign exchange losses	96,690	-
	Other costs	1,209,661	179,391

Other operating income included the forgiveness of the Paycheck Protection Program Loan of US$206,164 (2020 - US$Nil)

7	Auditor's remuneration

During the year the Company obtained the following services from the Company's auditor:

		Year to	Year to
		31 December	31 December
		2021	2020
		US$	US$
	Fees payable to the Company's auditor for the audit of the Company	47,472	-
	Fees payable to the Company's auditor for other services:
	Services in connection with listing Taxation services	108,423 -	41,864 2,500
		_________	_________
	Total	155,895	44,364
		_________	_________

8	Employee benefit expenses
		Year to	Year to
		31 December	31 December
		2021	2020
		US$	US$
	Employee benefit expenses (including Directors) comprise:
	Wages and salaries	1,304,022	911,560
	Benefits	75,350	79,433
	Share-based payments expense (note xx)	323,199	141,978
	Social security contributions and similar taxes	52,601	79,158
	Pension	4,840	-
		_________	_________
		1,760,012	1,212,129
		_________	_________

Key management personnel compensation

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, including the Directors of the Company.

		Year to	Year to
		31 December	31 December
		2021	2020
		US$	US$
	Salary	599,232	299,042
	Share based payment expense	312,706	126,175
		_________	_________
		911,938	425,217
		_________	_________

The average number of employees (excluding Directors) in the Company in the year was 8 (2020 - 10).

9	Net finance costs
		Year to	Year to
		31 December	31 December
		2021	2020
		US$	US$
	Finance expense
	Interest expense on lease liabilities	107,601	23,390
	Interest expense on liabilities measured at amortised cost	309,327	747,157
	Interest expense on other loans	-	6,639
		_________	_________
	Total finance expense	416,928	777,186
		_________	_________

 

9	Net finance costs(continued)
		Year to	Year to
		31 December	31 December
		2021	2020
		US$	US$
	Finance income
	Bank interest	12,017	-
		_________	_________
	Total finance income	12,017	-
		_________	_________

10	Tax expense
		Year to	Year to
		31 December	31 December
		2021	2020
		US$	US$
	Current tax expense
	Current tax on loss for the year	-	-
	Withholding tax on royalties	15,872	-
		_________	_________
	Total current tax	15,872	-
	Deferred tax asset
	On losses generated in the year	-	-
		_________	_________
		15,872	-
		_________	_________

 

10

Tax expense(continued)

There were no charges to current corporation taxation due to the losses incurred by the Company in the year.  The reasons for the difference between the actual tax charge for the year and the US federal income tax rate of 21% and state of California income tax rate of 8.84% are as follows:

		Year to	Year to
		31 December	31 December
		2021	2020
		US$	US$
	Loss for the year	(7,428,316)	(4,839,023)
		_________	_________
	Tax using 29.84%	(2,216,610)	(1,443,964)
	Expenses not deductible for tax purposes	688,811	410,500
	Unrecognised deferred tax assets for losses carried forward	1,527,799	1,033,464
		_________	_________
	Total tax expense		-
		_________	_________

The unrecognised deferred tax is based on total taxable losses carried forward of US$49,393,180 (2020 - US$44,940,832 and a capital loss of US$4,583,333 (2020 - US$4,583,333).  No deferred tax asset is recognised for these losses due to early stage in the development of the Company's activities.  The losses do not expire but can only be used against trading profits from the same trade.

11	Loss per share
		Year to	Year to
		31 December	31 December
		2021	2020
		Total	Total
	Numerator	US$	US$
	Loss for the year used in basic EPS	(7,444,188)	(4,839,023)
	Denominator
	Weighted average number of ordinary shares used in basic EPS	15,870,143	6,515,838
	Resulting loss per share	(US$0.469)	(US$0.743)

The Company has one category of dilutive potential ordinary share, being share options (see note 23). The potential shares were not dilutive in the year as the Company made a loss per share in line with IAS 33. As described in note 21, on between 2 July 2021 and 7 July 2021the Company implemented a pre-Admission reorganisation of its capital which included the conversion of Series A and B Preferred Shares into Common Shares and a reverse share split by way of the issue of one new Common Share and Preferred Share for every 18 old Common Shares and Preferred Shares held.

As required by IAS33, the number of shares presented as the denominator in calculating loss per share has been adjusted from 1 January 2020, the beginning of the earliest period for which loss per share information is presented in order to maintain comparability.

12	Tangible assets
			Furniture	Computers
		Leasehold	and	and IT	Plant &
		improvements	equipment	equipment	machinery	Total
		US$	US$	US$	US$	US$
	Cost or valuation
	At 1 January 2020	981,613	1,102,464	49,831	-	2,133,908
	Re-classification	-	(1,045,962)	-	1,045,962	-
	Additions	-	-	-	5,328	5,328
		________	________	________	_________	_________
	At 31 December 2020	981,613	56,502	49,831	1,051,290	2,139,236
	Landlord contribution	(15,588)	-	-	-	(15,588)
	Additions	349,338	-	35,126	257,428	641,892
		________	________	________	________	________
	At 31 December 2021	1,315,363	56,502	84,957	1,308,718	2,765,540
		________	________	________	________	________
	Accumulated depreciation and impairment
	At 1 January 2020	558,051	786,784	48,310		1,393,145
	Re-classification	-	(730,282)	-	730,282	-
	Depreciation	153,126	-	1,521	128,007	282,654
		________	________	________	________	________
	At 31 December 2020	711,177	56,502	49,831	858,289	1,675,799
	Depreciation	233,253	-	3,173	87,332	323,758
		________	________	________	________	________
	At 31 December 2021	944,430	56,502	53,004	945,621	1,999,557
		________	________	________	________	________
	Net book value
	At 31 December 2021	370,933	-	31,953	363,097	765,983
		________	________	________	________	________
	At 31 December 2020	270,436	-	-	193,001	463,437
		________	________	________	________	________

Included in leasehold improvements at 31 December 2021 are right of use assets with a cost of $1,282,052 and accumulated depreciation of $898,393.

13	Intangible assets
		License	Total
		US$	US$
	Cost
	At 1 January 2020	-	-
	Additions	-	-
		_________	_________
	At 31 December 2020	-	-
	Additions	5,818,359	5,818,359
		_________	_________
	At 31 December 2021	5,818,359	5,818,359
		_________	_________
	Accumulated amortisation and impairment
	At 1 January 2020	-	-
	Amortisation charge	-	-
		_________	_________
	At 31 December 2020	-	-
	Amortisation charge
		_________	_________
	At 31 December 2021	-	-
		_________	_________
	Net book value
	At 31 December 2021	5,818,359	5,818,359
		_________	_________
	At 31 December 2020	-	-
		_________	_________

On 18 June 2021, the Company entered into the Mount Sinai License Agreement, pursuant to which the Icahn School of Medicine at Mount Sinai granted an option to the Company to obtain a licence, on a non-exclusive basis, to use certain information held by Mount Sinai. The Mount Sinai License Agreement automatically became effective on Admission. Exercise of the option contained in the Mount Sinai License Agreement is conditional on: (i) Admission; (ii) clearance by Mount Sinai's information security team; and (iii) IRB, data security and data use approvals. Mount Sinai is under an obligation to use commercially reasonable efforts to obtain such clearances and approvals (other than Admission). Pursuant to the Mount Sinai License Agreement, Mount Sinai has granted the Company an option to obtain a licence, on a non-exclusive basis, to use certain information held by Mount Sinai to be able to develop future products.

14	Trade and other receivables
		2021	2020
		US$	US$
	Amounts falling due within one year
	Prepayments and accrued income	692,274	169,801
	Other debtors	48,591	-
		_________	_________
		740,865	169,801
		_________	_________

		2021	2020
		US$	US$
	Amounts falling due after one year
	Rent deposit	13,235	13,235
		_________	_________
		13,235	13,235
		_________	_________

15	Trade and other payables
		2021	2020
		US$	US$
	Trade payables	211,718	786,018
	Accruals and other payables	570,920	439,818
		_________	_________
	Total financial liabilities classified as financial liabilities measured at amortised cost	782,638	1,225,836
	Other payables - tax and social security payments	21,100	-
		_________	_________
	Total trade and other payables	803,738	1,225,836
		_________	_________

The carrying value of trade and other payables classified as financial liabilities measured at amortised cost approximates fair value.

 

16	Borrowings and Loans
		2021	2020
		US$	US$
	Loans payable	-	206,164
		________	________
		-	206,164
		________	________

In May 2020 the Company applied for and received a loan under the US Government Paycheck Protection Program. An application for forgiveness of the entire principal balance as permitted under the Program was made subsequent to 31 December 2020 and was granted in the year to 31 December 2021.

17	Lease Liabilities
		Land and	Plant and
		buildings	machinery	Total
		US$	US$	US$
	At 1 January 2020	349,803	144,629	494,432
	Interest expense	23,390	-	23,390
	Repayments	(151,859)	(28,520)	(180,379)
		________	________	________
	At 31 December 2020	221,334	116,109	337,443
		________	________	________
	Additions	349,338	245,189	594,527
	Repayments	(156,306)	(74,363)	(230,669)
	Interest expense	89,625	17,976	107,601
		________	________	________
	At 31 December 2021	503,991	304,911	808,902
		________	________	________

The Company acquired certain tangible assets under capital lease financing arrangements.

The  Company operates from one office which is rented under a lease agreement ending on 1 July 2022 under which rent is payable monthly. During the year the Company extended this lease until 31 August 2025 commencing 1 July 2022 and with a two-month rent free period.

	2021	2020
	US$	US$
Maturity of lease liabilities
Within 3 months Between 3 - 12 months Between 1 - 2 years Between 2 - 5 years	56,727 150,553 255,070 346,552	40,951 131,045 108,346 57,101
	________	________
	808,902	337,443
	________	________

 

18	Convertible Notes
		2021	2020
		US$	US$
	Due within one year:
	Convertible Secured Promissory Notes	-	10,086,616
		_________	_________
		-	10,086,616
		_________	_________

On 26 October 2017 the Company issued a Convertible Secured Promissory Note Purchase Agreement (the "Notes") that provided for the issuance of up to a principal amount US$3m on which interest of eight per cent. Accrued. Unless converted into shares the principal and accrued  interest are payable in full at the earlier of the maturity date of 26 January 2020 or the occurrence of a defined corporate transaction.

On 31 December 2018 the total principal amount of Notes that could be issued increased to US$6m and on 20 August 2019 the total principal amounts of Notes that could be issued increased to US$7.5m. On 20 August 2019 the Company determined that the Notes issued before that date should be classified as Series A-1 Notes and those issued after that date Series A-2 Notes. The Series A-2 Notes have a different conversion term and are repayable in preference to the Series A-1 Notes.

As the conversion feature results in the conversion of a fixed amount of stated principal into a fixed number of shares, it satisfies the 'fixed for fixed' criterion and, therefore, it is classified as an equity instrument.

The value of the liability component and the equity conversion component were determined at the date the instrument was issued.

The fair value of the liability component, included above, at inception was calculated using a market interest rate for an equivalent instrument without conversion option. The discount rate applied was eight per cent.

On 15 June 2020 the Company entered into an agreement to extend the maturity date of the Notes to 30 June 2021.

On [date] all the principal and accrued interest in the Convertible Notes was converted into new Common Stock shares.

The interests of the Directors and their connected persons in the Convertible Notes was:

		2021	2020
		US$	US$
	Simon Raab (resigned 1 July 2021)	-	3,232,380
	Frederick Gluck (resigned 1 July 2021)	-	1,711,953
		_________	_________
		-	4,944,333
		_________	_________

 

19	Provisions
		Dilapidations	Total
		US$	US$
	At 1 January 2020	50,000	50,000
	Movement	-	-
		_________	_________
	At 31 December 2020	50,000	50,000
		_________	_________
	Additions	-	-
		_________	_________
	At 31 December 2021	50,000	50,000
		_________	_________

Provision is made for the anticipated cost of returning the Company's premises to their prior state  on termination of the lease.

 

20	Net cash /(debt) reconciliation
		2021	2020
		US$	US$
	Cash and cash equivalents	14,628,351	127,628
	Convertible notes	-	(10,086,616)
	Other borrowings and loans	-	(206,164)
	Lease liabilities	(808,902)	(337,443)
		_________	_________
	Net cash / (debt)	13,819,449	(10,502,595)
		_________	_________

		Cash and	Borrowings
		cash equivalents	and loans	Net Debt
		US$	US$	US$
	Net debt at 1 January 2020	726,794	(7,678,186)	(6,951,392)
	Cash flows	(599,166)	(2,376,353)	(2,975,519)
	Other non-cash movements:
		-	-	-
	Lease liabilities
		-	156,647	156,647
	Accretion of interest on convertible notes	-	(732,331)	(732,331)
		_________	_________	_________
	Net debt at 31 December 2020	127,628	(10,630,223)	(10,502,595)
		_________	_________	_________
	Cash flows	14,500,723	-	14,500,723
	Other non-cash movements:
	Conversion of Convertible Loan Notes	-	10,395,943	10,395,943
	Forgiveness of Payroll Protection Program loan	-	206,164	206,164
	Lease liabilities	-	(471,459)	(471,459)
	Accretion of interest on convertible notes	-	(309,327)	(309,327)
		_________	_________	_________
	Net debt at 31 December 2021	14,628,351	(808,902)	13,819,449
		_________	_________	_________

 

21	Share capital
		Issued and fully paid
		Number	US$
	Shares of US$0.0001 par value each
	At 1 January 2020
	Common shares	5,092,839	510
	Preference shares, Series A and B	79,738,560	7,973
	Issue of common shares in the year	1,820,407	184
		_________	_________
	Total at 31 December 2020	86,651,806	8,665
	Reverse stock split, at ratio of 1 new common share	(81,837,883)	(8,184)
	Issue of common shares on conversion of the Convertible Loan Notes and Warrants	9,350,888	935
	Issue of common shares for cash	9,659,091	966
	Issue of common shares for non-cash consideration	1,656,888	166
		_________	_________
	Total issued share capital at 31 December 2021	25,480,790	2,548
		_________	_________

Between 2 July 2021 and 7 July 2021, the Company implemented a pre-Admission reorganisation of its capital which included, inter alia, the following:

· A reverse split by way of the issue of one new Common or Preferred Share for every 18 old Common or Preferred Shares held

· Conversion of Series A-1 and Series A-2 Convertible Notes and related Warrants into Common Shares

· Conversion of Series A Preferred Shares and Series B Preferred Shares into Common Shares

22

Reserves

The following describes the nature and purpose of each reserve within equity:

	Reserve	Description and purpose
	Share premium	Amount subscribed for share capital in excess of nominal value.
	Other equity	Amount of proceeds on issue of convertible debt relating to the equity component (i.e., option to convert the debt into share capital).
	Retained earnings	All other net gains and losses and transactions with owners (e.g., dividends) not recognised elsewhere.

 

23	Share-based payment

Prior to Admission to AIM the Company operated two share option plans: the 2010 Stock Incentive Plan and approved by the Board on 1 January 2010 and the 2020 Stock Incentive Plan was approved on 14 May 2020:

(a)  options granted under the 2010 Stock Incentive Plan fall into two groups:

(i)  options granted in or before 2016 over a total of 2,183,634 shares, with exercise prices ranging from $0.10 to $0.16 per share, these options are now fully vested; and

(ii)  options granted in 2019 over a total of 6,951,463 shares, with an exercise price of $0.025 per share: these options generally vest on a monthly basis over three or four years from the date of grant. However, those granted to current employees of the Company were amended so that they became exercisable in full on Admission.

(b)  Options were granted in 2020 and 2021 under the 2020 Stock Incentive Plan over a total of 5,364,385 shares with an exercise price of $0.0044 per share. These options vest over four years from the date of grant on a monthly basis, but certain of these options accelerated immediately before Admission, and became fully exercisable at Admission.

On 14 May 2021 the Board approved the Company's 2021 Omnibus Long-Term Incentive Plan ("LTIP") and it was approved by shareholders on 27 May 2021 to become effective approximately three days prior to Admission.  The LTIP provides for the grant of both EMI Options and non-tax favoured options. Options granted under the LTIP are subject to exercise conditions as summarised below.

The LTIP has a non-employee sub-plan for the grant of Options to the Company's advisors, consultants, non-executive directors, and entities providing, through an individual, such advisory, consultancy, or office holder services and a US sub-plan for the grant of Options to eligible participants in the LTIP and the Non-Employee Sub-Plan who are US residents and US taxpayers.

With the exception of options over 384,924 shares, which vested immediately on Admission, the options issued under the LTIP vest 25% on the first anniversary of the vesting commencement date and an additional one forty-eighth of the total number of options after each subsequent calendar month for employees. For consultants options issued under the LTIP vest 25% on the first anniversary of the vesting commencement date and an additional one sixteenth of the total number of options after each subsequent quarter. If options remain unexercised after the date one day before the tenth anniversary of grant such options expire. Vesting shall accelerate in full in the event of a change of control of the Company.

As described in note 21, between 2 July 2021 and 7 July 2021the Company implemented a pre-Admission reorganisation of its capital which included a reverse share split by way of the issue of one new Common or Preferred Share for every 18 old Common or Preferred Shares held.

At the date of the reorganisation there were 14,499,482 pre-Admission options outstanding to 32 option holders comprising Directors, former Directors and employees with exercise prices between $0.0044 and $0.16 per share.  Those options were varied to reflect the reverse share split so that they were replaced with 805,492 options with exercise prices of between $0.0792 and $2.88 per share. The directors consider that this was a mechanical variation modification of the awards and not a modification for the purposes of IFRS2. Comparative figures have been adjusted to restate numbers and values of share options issued as if the reverse share split had been in effect from 1 January 2020. 

On Admission on 8 July 2021 the Board approved grants of 769,707 to Paul Pagano and 386,703 options to David Anderson and on 23 November 2021 and 27 December 2021 the Board approved further grants, of 112,500 and 5,000 options respectively, to employees and consultants.

 

23	Share-based payment(continued)
		Weighted
		average
		exercise
		price US$	Number
	Outstanding at 1 January 2020		12,230,198
	Granted during the year		2,345,845
	Cancelled		(25,000)
	Exercised during the year		(51,561)
			_________
	Outstanding at 31 December 2020 and 1 January 2021		14,499,482
	Reverse share split		(13,693,990)
			_________
	Revised balance outstanding at 31 December 2020	0.74	805,492
	Granted during the year	2.19	1,260,035
	Exercised or expired during the year	0.74	(13,913)
		_________	_________
	Outstanding at 31 December 2021	1.74	2,065,527
		_________	_________
	Vested at 31 December 2021	1.35	1,030,627
		_________	_________

The exercise price of options outstanding at 31 December 2021 ranged between US$0.08 and US$2.70 and their weighted average contractual life was 7.66 years and weighted average expected life was 1.8 years.  The fair value of each share option granted has been estimated using a Black-Scholes model. The inputs into the model are share prices of between US$0.08 and US$2.51, exercise prices of between US$0.45 and US$2.77, expected volatility of 57.9%, expected dividend yield of 0%, expected lives of between 1.25 and 3.75 years and a risk-free interest rate of 0.29%.  In the absence of historic volatility data available at the grant date the expected volatility of 57.9% was estimated based on comparable companies.

The Company recognised total expenses of US$409,801 (2020: US$225,635) within administrative expenses relating to equity-settled share-based payment transactions during the year.

24	Events after the reporting date

There have been no events subsequent to the year-end that require disclosure in these financial statements.

 

END

 

 

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