TIDMPOLX
RNS Number : 2996Q
Polarean Imaging PLC
18 June 2020
Polarean Imaging Plc
("Polarean" or the "Company")
Final Results
Polarean Imaging plc (AIM: POLX), a clinical stage medical
imaging technology company developing a proprietary magnetic
resonance imaging (MRI) drug-device combination, announces its
audited final results for the year ended 31 December 2019 .
In addition, Polarean confirms that the Annual Report and
Accounts for the year ended 31 December 2019, the Notice of the
Annual General Meeting ("AGM") and a Form of Proxy are now
available on the Company's website (
http://www.polarean-ir.com/content/investors/annual-reports.asp )
and will be posted to shareholders shortly.
Polarean's AGM will be held at 2 p.m. BST on 13 July 2019.
Highlights
-- Raised GBP2.1 million (gross) via a placing of 11,666,667
ordinary shares at a placing price of 18p per share in July
2019
-- Third trial site added at University of Cincinnati, in
addition to Duke University and the University of Virginia, to
improve enrolment rates for its two pivotal Phase III Clinical
Trials (the "Clinical Trials")
-- Completion of patient enrolment for the Clinical Trials in November 2019
-- Sale and Installation of three new Polarean 9820 Xenon
Polariser systems to the University of British Columbia, The
Hospital for Sick Children in Toronto and the University of Iowa
Hospitals and Clinics. Receipt of an order for a new Polarean 9820
Xenon Polariser system from the University of Kansas
-- Third tranche of US$1m confirmed from US$3m Small Business Innovation Research grant
-- Net cash of US$2.0 million at 31 December 2019
Post-period end
-- Positive top-line results from the Clinical Trials using
hyperpolarised (129) Xenon gas, where both trials met their primary
endpoint
-- Raised GBP8.4 million (gross), including the GBP2.2 million
subscription from new strategic investor Bracco Imaging S.p.A.
-- Appointment of Jonathan Allis as Chairman
-- Appointment of Cyrille Petit as Non-Executive Director
-- Completion of a pre-New Drug Application meeting ("pre-NDA
meeting") with the United States Food and Drug Administration
("FDA")
Richard Hullihen, CEO of Polarean, commented: "2019 has been a
year of great accomplishment for Polarean. Our critical goal of
executing and managing our pivotal Phase III Clinical Trials was
rewarded with a successful readout in January 2020, which is a
major milestone for us. Following this we raised a further GBP8.4
million which will enable us focus on preparing our NDA submission
to the FDA in Q3 2020. We remain hopeful that this will lead to
regulatory approval in H2 2021.
"We also welcome our new strategic investor, Bracco I maging
S.p.A and look forward to growing this mutually beneficial
relationship. We are confident and excited for the future of
Polarean and are grateful to our shareholders and stakeholders for
their continued support. "
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
Contacts:
Polarean Imaging plc www.polarean.com / www.polarean-ir.com
Richard Hullihen, Chief Executive Via Walbrook PR
Officer
Jonathan Allis, Chairman
SP Angel Corporate Finance LLP Nomad Tel: +44 (0)20 3470
and Broker 0470
David Hignell / Soltan Tagiev (Corporate
Finance)
Vadim Alexandre / Rob Rees (Corporate
Broking)
Walbrook PR Tel: +44 (0)20 7933 8780 or polarean@walbrookpr.com
Paul McManus / Anna Dunphy Mob: +44 (0)7980 541 893 / +44
(0)7879 741 001
About Polarean ( www.polarean.com )
The Company and its wholly owned subsidiary, Polarean, Inc.
(together the "Group") are revenue generating, medical drug-device
combination companies operating in the high resolution functional
magnetic resonance imaging market.
The Group develops equipment that enables existing MRI systems
to achieve an improved level of pulmonary function imaging and
specialises in the use of hyperpolarised Xenon gas ((129) Xe) as an
imaging agent to visualise ventilation and gas exchange regionally
in the smallest airways of the lungs, the tissue barrier between
the lung and the bloodstream and in the pulmonary vasculature.
Xenon gas exhibits solubility and signal properties that enable it
to be imaged within other tissues and organs.
The Group operates in an area of significant unmet medical need
and the Group's technology provides a novel diagnostic approach,
offering a non-invasive and radiation-free functional imaging
platform which is more accurate than current methods. The annual
burden of pulmonary disease in the US is estimated to be over
US$150 billion.
Chairman's Statement
I am excited to have become Chairman of Polarean earlier in
2020. While I have been a Board member for some time, the
opportunity to assume the Chairmanship has been the best
combination of timing and opportunity having just come from the
sale of my former company Blue Earth Diagnostics to Bracco Imaging
S.p.A. ("Bracco"). I have a direct background in the history of
hyperpolarised noble gas imaging and with the founder of Polarean,
it has made for an easy transition.
The critical achievements for the Company for 2019 are the
successful completion of its Phase III Clinical Trials and the
positive top line readout, which was subsequently announced on 29
January 2020. The Company is now moving towards the submission of
its New Drug Application ("NDA") to the US Food and Drug
Administration ("FDA") and simultaneously beginning the process of
preparing for commercial launch. In the meanwhile, current events
resulting from the COVID-19 pandemic have made clear that medicine
is still not fully equipped to analyse and understand the many ways
that pulmonary function can be affected by disease. Polarean has
the unique ability to visualise and quantify the function of the
lungs at the alveolar and capillary level. In this era of COVID-19,
we believe that Polarean's technology will become increasingly
important in understanding this disease and in managing post-COVID
patients.
The Company looks forward to working with its growing installed
base of luminary researchers to help understand the diagnosis,
methods of action and therapies for all pulmonary disease.
Polarean's Directors have begun to engage with the Pharma
industry. Our initial expectations of synergies and clinical trials
are now in the early stages of development, leveraging our
expanding installed base of top tier institutions and researchers,
and we look forward to more fully exploring these potential
relationships and perhaps capturing some early movers of those
during 2020, based simply on the compelling ability of Polarean's
technology to contribute to their processes.
Our primary focus for the coming year will be the planning and
preparation for commercial launch, post anticipated FDA approval.
This is an important phase in the Company's development, and we
have resource coupled with some skilled service providers engaged
in this effort. We look forward to the unique combination of
technology and opportunity that defines the future for
hyperpolarised noble gas imaging of pulmonary function.
The Company has been fortunate in its ability to attract and
retain long term professional and institutional investors who I
thank for their continued support. I would also like to welcome
Bracco to the Company as an investor and Board member. I am aware
of their specific insight into the global market for the
technologies that so dramatically enhance the contributions of
medical imaging equipment to medicine and patient care.
On behalf of the Board, I would like to thank the employees,
stakeholders, and shareholders for their support, without which
none of this would have been possible.
Jonathan Allis
Non-Executive Chairman
17 June 2020
Chief Executive Officer's Statement
2019 - Year of Accomplishment of Critical Goals
The Group spent the majority of the year focused on the
execution and management of its critical Phase III Clinical Trials.
Once launched, discovery of key issues in enrolment required
adapting and adjusting to the conditions and environments at each
site versus original plans. We added a third site at the University
of Cincinnati to accelerate completion of one pathway in the trial.
Ultimately, we successfully completed our Trials which had a
positive top line readout, and this is a major milestone towards
our submission of our New Drug Application to the FDA and towards
approval and commercialisation of hyperpolarised noble gas imaging
for the assessment of pulmonary function.
The Opportunity
The US Healthcare system's annual burden of pulmonary disease
continues unabated costing approximately US$150 billion and your
Directors still see a tremendous opportunity to bring our
technology's quantitative, reproducible, non-invasive method for
diagnostic and therapeutic guidance to medicine. If anything, the
events of the global COVID-19 pandemic seem likely to create
additional demand for managing post infection patients through
extended recovery and therapeutic regimes. We have refined and
extended our development of the healthcare economic analyses to
support the adoption by providers of our technology, working with
experts in the field. Over the planning horizon of the first 48
months post commercial launch, the Group maintains its intent to
address the high end of the US academic and teaching hospital
market segment, which comprises approximately the top 1,000
institutions nationally having multiple Centers of Excellence in
Pulmonary Medicine and Radiology. The combined addressable market
there for our products approaches US$500m in equipment sales
alone.
While working to achieve FDA approval for clinical use, Polarean
continues to serve the medical imaging research market by providing
xenon polarisers to enable functional MRI of the pulmonary system.
This brings dynamic, high-resolution, regional, image-based
information to pulmonary physicians and researchers whose best
alternative tool is spirometry, with its weaknesses in use for
measurement of expired breath. Current imaging technologies using
ionizing radiation are not widely used for assessing pulmonary
function, despite their revolutionary use in other medical
applications. During 2019, our additional new developments in the
assessment of pulmonary vascular disease indicate early promise of
the extension of our technology into Cardiology via the assessment
of microvascular hemodynamics. We expanded our installed base of
systems at luminary academic research centers at SickKids Hospital,
Toronto, BC Children's Hospital in Vancouver, and at University of
Iowa Hospitals and Clinics.
Our Organisation
The Group encountered material changes in its shareholder base
during the year and as a result its Board composition and
Chairmanship changed. Jonathan Allis, PhD - an existing Board
member and CEO of Blue Earth Diagnostics, a PET tracer contrast
agent company recently acquired by Bracco - became Chairman in
February 2020. Dr. Allis, who has direct experience in
hyperpolarised noble gas imaging, and whose experience in the
commercialisation and launch of medical imaging contrast agents
will be invaluable to Polarean in the next phases of development in
submission, FDA approval, and commercialisation. In addition,
following Bracco's participation in the Company's recent GBP8.4m
fundraise (before expenses), we welcomed Mr. Cyrille Petit to the
Company's Board as a Non-Executive Director and representative of
Bracco. Mr. Cyrille Petit is also on the Audit Committee.
Our Operations
In 2019, we built and shipped three of our 9820 polariser
systems. As we have previously explained, our production tracks the
award of grants to major institutions and is historically 3-5 units
per year. We see that pattern continuing and welcome the expansion
of our installed base in top tier institutions. We made planned
advances in our quality systems and engineering infrastructure as
we move toward maturing in our new regulated environment.
R&D
We continued to invest in our intellectual property portfolio
during the year. Key new patent filings involving gas exchange and
pulmonary vascular disease were added, and an expanded and enhanced
license agreement with Duke was finalised including all of the most
recent developments in pulmonary vascular disease assessment and
data and image analysis software. Our group has continued to push
the design of the systems forward, with key advances in ease of use
and manufacturability making progress in accordance with our plan.
We made valuable progress on our performance and ease of use
projects, which will come into play in the future.
2019 Financial results
Broadly speaking, our 2019 results are consistent with market
expectations, with revenues slightly below expectations but with
expenses diligently managed to also be lower than expectations. In
addition, we raised US$2.62m (before expenses) in July 2019 in a
placing designed to provide additional support for the Company's
Clinical Trials as patient enrolment neared completion. We
benefitted from the Year 3 proceeds of the NIH SBIR Grant which we
have jointly with the Cincinnati Children's Hospital Medical
Center. We have maintained our pricing and margins throughout the
year on equipment, albeit timing of grant receipts slightly diluted
overall margins. It is still the case that the majority of our
research systems are procured via grant mechanisms and while the
outcomes are typically known as their process unfolds, the ultimate
fiscal timing of these projects is difficult to predict with
certainty as many involve public procurement cycles.
2020 and Beyond
On 4 May 2020 we had our Pre-NDA meeting with the FDA. In that
meeting we discussed many items relating to our submission. We have
now received the minutes of that meeting from them and confirm that
the market expectation we have previously set with regard to the
timing of submission and the expected times for review of the
submission and Hatch Waxman request are as previously stated. We
plan to file our New Drug Application with the FDA in Q3 2020 and
continue to cautiously plan to receive regulatory approval twelve
months after filing the NDA. In the meantime, we continue to
collaborate with researchers in the US and abroad and look to
expand our installed base of research systems, and have a pipeline
supporting that plan. The exciting new developments in cardiology
and pulmonary vascular disease are deepening, and our knowledge
base about these conditions is expanding.
We are also excited by and grateful for the investment we
received from Bracco in our most recent financing announced in
March 2020. We welcome Bracco, who bring a wealth of direct
experience in medical imaging contrast agents to the Board of
Polarean and we have already benefitted from that relationship even
in this short time.
The " (129) Xe MRI Clinical Trials Consortium" is studying the
application of our technology to the case of post infection
COVID-19 patients to assess the long-term effects and case
management of these patients. As this process unfolds, we will make
future announcements.
We continue to explore opportunities with potential strategic
partners in Pharma and in other geographic markets that could lead
to important developments in new applications and uses for our
technology, expansion into new territories, and which may bring
economic benefits to the group going forward.
Polarean is fortunate to have an outstanding collection of
world-class research collaborators and research customers in both
the US and Europe. Additionally, we support the " (129) Xe MRI
Clinical Trials Consortium" and the crucial work they do in
collaborative research, training investigators, providing
infrastructure for evaluating new techniques, and multi-institution
sharing of magnetic resonance (MR) techniques and image analysis
methods. We would like to thank the National Heart Lung and Blood
Institute for their continued support of our Small Business
Innovation Research Program grant with Cincinnati Children's
Hospital Medical Center. In addition, we have developed solid
working relationships with MRI systems manufacturers and exclusive
relationships with global industrial gas suppliers, all key to our
future as we scale the business.
Polarean has a dedicated team of professionals without whose
efforts these accomplishments would not be possible. On behalf of
the entire staff of Polarean Imaging, I would like to thank our
shareholders for their support of the Group and we look forward to
continuing to develop and deliver this critical life-saving and
life-improving technology to physicians and patients
everywhere.
Richard Hullihen
Chief Executive Officer
17 June 2020
Consolidated Statement of Comprehensive Income
2019 2018
Notes US$ US$
Revenue 4 2,301,093 2,439,139
Cost of sales (925,612) (633,463)
Gross profit 1,375,481 1,805,676
Administrative expenses (6,010,119) (6,161,916)
Depreciation 11 (63,121) (10,140)
Amortisation 6 (683,873) (616,852)
Selling and distribution expenses (324,791) (31,766)
Share-based payment expense 19 (305,747) (251,790)
Total administrative expenses (7,387,651) (7,072,464)
Operating loss 6 (6,012,170) (5,266,788)
Finance income 7 508 184
Finance expense 7 (91,678) (188,055)
Loss before tax (6,103,340) (5,454,659)
Taxation 10 - -
Loss for the year and total other comprehensive
expense (6,103,340) (5,454,659)
Loss per share
------------------------- -------- --------
Basic and diluted (US$) 9 (0.057) (0.078)
------------------------- -------- --------
The results reflected above relate to continuing activities.
There is no recognised income or expense for the year other than
the loss above and therefore no separate statement of other
comprehensive income has been presented.
Consolidated Statement of Financial
Position
Notes 2019 2018
US$ US$
ASSETS
Non-current assets
Property, plant and equipment 11 355,958 17,752
Intangible assets 12 3,427,547 4,044,398
Right-of-use asset 24 98,263 -
Trade and other receivables 14 5,539 12,539
3,887,307 4,074,689
------------------------------------- ------ ------------- -------------
Current assets
Inventories 15 554,211 651,781
Trade and other receivables 14 636,783 4,226,585
Cash and cash equivalents 16 1,961,869 875,601
-------------
3,152,863 5,753,967
------------------------------------- ------ ------------- -------------
TOTAL ASSETS 7,040,170 9,828,656
------------------------------------- ------ ------------- -------------
EQUITY AND LIABILITIES
Equity attributable to holders
of the parent
Share capital 17 55,776 49,427
Share premium 18 13,659,912 11,063,075
Group re-organisation reserve 18 7,813,337 7,813,337
Share-based payment reserve 19 1,370,734 1,078,335
Accumulated losses 18 (18,309,681) (12,212,767)
------------------------------------- ------ ------------- -------------
4,590,078 7,791,407
------------------------------------- ------ ------------- -------------
Non-current liabilities
Deferred income 21 192,817 70,726
Lease liability 24 50,455 -
Contingent consideration 20 316,000 316,000
559,272 386,726
------------------------------------- ------ ------------- -------------
Current liabilities
Trade and other payables 22 1,773,582 1,590,482
Lease liability 24 70,914 -
Borrowings 23 - 5,213
Deferred income 21 46,324 54,828
1,890,820 1,650,523
------------------------------------- ------ ------------- -------------
TOTAL EQUITY AND LIABILITIES 7,040,170 9,828,656
------------------------------------- ------ ------------- -------------
Company Statement of Financial
Position
Notes 2019 2018
US$ US$
ASSETS
Non-current assets
Investment in subsidiary 13 4,342,848 4,342,848
4,342,848 4,342,848
-------------------------------- ------ ------------ ------------
Current assets
Trade and other receivables 14 11,543,854 9,370,611
Cash and cash equivalents 16 56,765 235,766
------------
11,600,619 9,606,377
-------------------------------- ------ ------------ ------------
TOTAL ASSETS 15,943,467 13,949,225
-------------------------------- ------ ------------ ------------
EQUITY AND LIABILITIES
Equity attributable to holders
of the parent
Share capital 17 55,776 49,427
Share premium 18 13,659,912 11,063,075
Merger reserve 18 4,322,527 4,322,527
Share-based payment reserve 19 1,065,703 773,304
Accumulated losses 18 (3,213,450) (2,287,282)
-------------------------------- ------ ------------ ------------
15,890,468 13,921,051
-------------------------------- ------ ------------ ------------
Current liabilities
Trade and other payables 22 52,999 28,174
52,999 28,174
-------------------------------- ------ ------------ ------------
TOTAL EQUITY AND LIABILITIES 15,943,467 13,949,225
-------------------------------- ------ ------------ ------------
As permitted by section 408 of the Companies Act 2006, no
separate statement of Comprehensive Income is presented in respect
of the parent Company. The loss for the financial year dealt with
in the financial statements of the parent Company was US$ 939,516
(2018: US$1,330,568).
Consolidated
Statement of
Changes in
Equity
Share-based Group
Share Share payment re-org Accumulated
capital premium Other equity reserve reserve losses Total equity
US$ US$ US$ US$ US$ US$ US$
--------------- ------------- ------------- ------------- ------------ ------------ ------------- -------------
As at 1
January 2018 23,291 1,448,037 87,305 826,545 7,813,337 (6,758,108) 3,440,407
--------------- ------------- ------------- ------------- ------------ ------------ ------------- -------------
Comprehensive
income
Loss for the
year - - - - - (5,454,659) (5,454,659)
Transactions
with owners
Issue of
shares 26,136 10,161,474 (87,305) - - - 10,100,305
Share issue
costs - (546,436) - - - - (546,436)
Share-based
payment
expense - - - 251,790 - - 251,790
As at 31
December 2018 49,427 11,063,075 - 1,078,335 7,813,337 (12,212,767) 7,791,407
--------------- ------------- ------------- ------------- ------------ ------------ ------------- -------------
Change in
accounting
policy - - - - - (6,922) (6,922)
Restated total
equity at 1
January 2019 49,427 11,063,075 - 1,078,335 7,813,337 (12,219,689) 7,784,485
--------------- ------------- ------------- ------------- ------------ ------------ ------------- -------------
Comprehensive
income
Share based
payment -
lapsed share
options - - - (13,348) - 13,348 -
Loss for the
year - - - - - (6,103,340) (6,103,340)
Transactions
with owners
Issue of
shares 6,349 2,756,289 - - - - 2,762,638
Share issue
costs - (159,452) - - - - (159,452)
Share-based
payment
expense - - - 305,747 - - 305,747
As at 31
December 2019 55,776 13,659,912 - 1,370,734 7,813,337 (18,309,681) 4,590,078
--------------- ------------- ------------- ------------- ------------ ------------ ------------- -------------
Company Share-based
Statement of Share Share payment Merger Accumulated
Changes in capital premium Other equity reserve reserve losses Total equity
Equity US$ US$ US$ US$ US$ US$ US$
--------------- ------------- ------------- ------------- ------------ ------------- ------------ -------------
As at 1
January 2018 23,291 1,448,037 87,305 521,514 4,322,527 (956,714) 5,445,960
--------------- ------------- ------------- ------------- ------------ ------------- ------------ -------------
Comprehensive
income
Loss for the
year - - - - - (1,330,568) (1,330,568)
Transactions
with owners
Issue of
shares 26,136 10,161,474 (87,305) - - - 10,100,305
Share issue
costs - (546,436) - - - - (546,436)
Share-based
payment
expense - - - 251,790 - - 251,790
--------------- ------------- ------------- ------------- ------------ ------------- ------------ -------------
As at 31
December 2018 49,427 11,063,075 - 773,304 4,322,527 (2,287,282) 13,921,051
--------------- ------------- ------------- ------------- ------------ ------------- ------------ -------------
Comprehensive
income
Share based
payment -
lapsed share
options - - - (13,348) - 13,348 -
Loss for the
year - - - - - (939,516) (939,516)
Transactions
with owners
Issue of
shares 6,349 2,756,289 - - - - 2,762,638
Share issue
costs - (159,452) - - - - (159,452)
Share-based
payment
expense - - - 305,747 - - 305,747
As at 31
December 2019 55,776 13,659,912 - 1,065,703 4,322,527 (3,213,450) 15,890,468
--------------- ------------- ------------- ------------- ------------ ------------- ------------ -------------
Consolidated Statement of Cash Flows
Year ended
Year ended 31 December
31 December 2018
2019 US$ US$
----------------------------------------------------- ------------ --------------------------
Cash flows from operating activities
Loss before tax (6,103,340) (5,454,659)
Adjustments for non-cash/non-operating items:
Depreciation of plant and equipment 63,121 10,140
Amortisation of intangible assets and right-of
use-asset 683,873 616,852
Share-based payment expense 305,747 251,790
Interest paid 91,678 188,055
Interest received (508) (184)
Operating cash flows before movements in working
capital (4,959,429) (4,388,006)
----------------------------------------------------- ------------ ----------------------------
Increase/(decrease) in inventories 97,570 (1,921)
Increase in trade and other receivables (14,737) (69,517)
Decrease in trade and other payables (285,074) (315,894)
Increase in deferred income 595,961 98,992
----------------------------------------------------- ------------ ----------------------------
Net cash used in operations (4,565,709) (4,676,346)
----------------------------------------------------- ------------ ----------------------------
Cash flows from investing activities
Purchase of plant and equipment (401,327) (6,551)
Interest received - 184
Net cash used in investing activities (401,327) (6,367)
----------------------------------------------------- ------------ ----------------------------
Cash flows from financing activities
Issue of shares 6,373,919 5,640,211
Cost of issue (159,452) (546,436)
Interest paid - (188,055)
Interest paid on lease liabilities (91,678) -
Interest received 508 5,213
Principal elements of lease payments (69,993) (312,836)
Net cash generated by financing activities 6,053,304 4,598,097
----------------------------------------------------- ------------ ----------------------------
Net (decrease)/increase in cash and cash equivalents 1,086,268 (84,616)
----------------------------------------------------- ------------ ----------------------------
Cash and cash equivalents at the beginning of
year 875,601 960,217
----------------------------------------------------- ------------ ----------------------------
Cash and cash equivalents at end of year 1,961,869 875,601
----------------------------------------------------- ------------ ----------------------------
Company Statement of Cash Flows
Year ended Year ended
31 December 31 December
2019 2018
US$ US$
----------------------------------------------- ------------- -------------
Cash flows from operating activities
Loss before tax (939,516) (1,330,568)
Adjustments for non-cash/non-operating items:
Share-based payment expense 305,747 251,790
Interest received (508) -
----------------------------------------------- ------------- -------------
Operating cash flows before movements in
working capital (634,277) (1,078,778)
----------------------------------------------- ------------- -------------
Decrease in trade and other receivables (6,275) -
Increase in trade and other payables 24,824 2,433
----------------------------------------------- ------------- -------------
Net cash used by operations (615,728) (1,076,345)
----------------------------------------------- ------------- -------------
Cash flows from financing activities
Issue of shares 6,373,918 5,646,350
Cost of issue (159,452) (546,436)
Interest received 508 -
Loans to intercompany (5,778,247) (3,810,909)
----------------------------------------------- ------------- -------------
Net cash generated by financing activities 436,727 1,289,005
Decrease in cash and cash equivalents (179,001) 212,660
----------------------------------------------- ------------- -------------
Cash and cash equivalents at the beginning
of period 235,766 23,106
----------------------------------------------- ------------- -------------
Cash and cash equivalents at end of period 56,765 235,766
----------------------------------------------- ------------- -------------
Notes of the financial statements
1 General information
The Company is incorporated in England and Wales under the
Companies Act 2006. The registered number is 10442853 and its
registered office is at 27-28 Eastcastle Street, London, W1W 8DH.
The Company is listed on AIM of the London Stock Exchange.
The Company is the parent company of Polarean, Inc (the
"Subsidiary", together the "Group"). The principal activity of the
Group is developing next generation medical imaging technology. The
Subsidiary is incorporated in the United States of America and has
a registered office of 2500 Meridian Parkway #175, Durham, NC
27713, USA.
2 Adoption of new and revised International Financial Reporting Standards
Standards and interpretations adopted during the year
Information on new standards, amendments and interpretations
that are relevant to the Group's annual report and accounts is
provided below.
IFRS 16 'Leases', effective 1 January 2019
The Group has initially adopted IFRS 16 Leases from 1 January
2019. IFRS 16 introduced a single, on-balance sheet accounting
model for leases. As a result, the Group, as a lessee, has
recognised right-of-use assets to all existing operating leases,
representing its rights to use the underlying assets and lease
liabilities representing its obligation to make lease payments.
The Group has applied IFRS 16 using the modified retrospective
approach, and as such, the Group is not required to present a third
statement of financial position as at the date of transition. The
cumulative effect of initial application is recognised in retained
earnings at 1 January 2019. Accordingly, the comparative
information presented for 2018 has not been restated - i.e. it is
presented, as previously reported, under IAS 17 and related
interpretations, with the prior period adjustments going through
retained earnings, as shown within note 24.
The Group used the following practical expedients when applying
IFRS 16 to leases previously classified as operating leases under
IAS 17:
-- Applied the exemption not to recognise right-of-use assets
and liabilities for leases with less than 12 months of lease
term;
-- Excluded the initial direct costs from measuring the
right-of-use asset at the date of initial application; and
-- Used hindsight when determining the lease term if the
contract contains options to extend or terminate the lease.
Standards, amendments and interpretations that are not yet
effective
There are several standards, amendments to standards, and
interpretations which have been issued by the IASB that are
effective in future accounting periods that the group has decided
not to adopt early. The most significant of these are as follows,
which are all effective for the period beginning 1 January
2020:
-- IAS 1 Presentation of Financial Statements and IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors
(Amendment - Definition of Material)
-- IFRS 3 Business Combinations (Amendment - Definition of Business)
-- Revised Conceptual Framework for Financial Reporting
-- Interest Rate Benchmark Reform (IBOR) reform Phase 1
(Amendments to IFRS 9, IAS 39 and IFRS 7)
The Group is currently assessing the impact of these new
accounting standards and amendments.
3 Significant accounting policies
Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the
European Union ("IFRS") and under the historical cost convention,
as modified by the use of fair value for financial instruments
measured at fair value. The financial statements are presented in
United States Dollars ("US$") except where otherwise indicated.
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise
stated.
Going concern
The Directors consider the going concern basis of preparation to
be appropriate in preparing the financial statements.
The Group is in its development stage and has not yet moved to
full commercial exploitation of its IP. During the year ended 31
December 2019 the Group recorded a loss after tax of US$6,103,340
(2018: loss of US$5,454,659) and a net cash outflow from operating
activities of US$4,565,709 (2018: US$4,676,346).
On 13 March 2020 the Group announced that it had conditionally
raised proceeds of US$10.4 million (excluding expenses) from
investors by the issue of shares. The net proceeds of this
fundraising were received shortly after the Group's General Meeting
on 1 April 2020.
In considering the appropriateness of this basis of preparation,
the Directors have reviewed the Group's working capital forecasts
for a minimum of 12 months from the date of the approval of this
financial information. Based on their consideration the Directors
have reasonable expectation that the Group has adequate resources
to continue for the foreseeable future and that carrying values of
intangible assets are supported. Thus, they continue to adopt the
going concern basis of accounting in preparing this financial
information.
In the current business climate, management acknowledge the
COVID-19 pandemic and have implemented logistical and
organisational changes to underpin the Group's resilience to
COVID-19, with the key focus being protecting all personnel,
minimising the impact on critical work streams and ensuring
business continuity. COVID-19 may impact the Group in varying ways,
which could lead to a direct bearing on the Group's ability to
generate future cash flows for working capital purposes. Management
are closely monitoring commercial and technical aspects of the
Group's operations to mitigate the impact from the COVID-19
pandemic. The inability to gauge the length of such disruption
further adds to this uncertainty. For these reasons the generation
of sufficient operating cash flows remain a risk. Management
believes the Group will generate sufficient working capital and
cash flows to continue in operational existence and will have the
ongoing support of its shareholders, if required, for the
foreseeable future.
Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown in share
premium as a deduction from the proceeds.
Government and other grants
Grants are not recognised until there is a reasonable assurance
that the Group will comply with the conditions attaching to them
and that the grants will be received. Grants are treated as
deferred income and released to the income statement on the
achievement of the relevant performance criteria.
Inventory
Inventories are measured at the lower of cost and net realisable
value. The cost of inventories is based on the weighted average
cost principle and includes expenditure incurred in inventories,
adjusted for rebates, and other costs incurred in bringing them to
their existing location.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits with an original maturity of three months or less.
Functional and presentation currency
Items included in the financial statements of the Group are
measured using the currency of the primary economic environment in
which the Group operates ("the functional currency"). The financial
statements are presented in United States Dollars (US$) which is
also the Group's functional currency.
3 Significant accounting policies continued
Foreign currencies
Transactions in foreign currencies are initially recorded by the
Group's entities at their respective functional currency spot rates
at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency spot rates of
exchange at the reporting date.
Differences arising on settlement or translation of monetary
items are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rates at
the dates of the initial transactions. Non-monetary items measured
at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value is determined. The
gain or loss arising on translation of non-monetary items measured
at fair value is treated in line with the recognition of the gain
or loss on the change in fair value of the item (i.e., translation
differences on items whose fair value gain or loss is recognised in
OCI or profit or loss are also recognised in OCI or profit or loss,
respectively).
Basis of consolidation
The consolidated financial statements are for the year ended 31
December 2019. They have been prepared in accordance with the
requirements of International Financial Reporting Standards (IFRS)
as adopted by the European Union (EU) and with those parts of the
Companies Act 2006 applicable to companies reporting under
IFRS.
The measurement bases and principal accounting policies of the
Group are set out below. On 30 May 2017 Polarean Merger-Sub, Inc.,
a Subsidiary of the Subsidiary, completed a merger process under
which it acquired substantially all of the assets of m2m Imaging
Corp ("m2m"), a portfolio company of Amphion Innovations plc
engaged in the development of high-performance MRI RF coils for the
global research market, primarily in micro-imaging. By 2016 m2m had
been inactive for several years due to an inability to raise funds.
At the date of the merger the assets of m2m were its technology and
patents. The merger was effected by way of court sanction in the
process of which the Subsidiary acquired, through a special purpose
entity, Polarean Merger Sub, Inc. the assets of another special
purpose entity, m2m Merger Sub, Inc., with m2m Merger Sub, Inc.
being the surviving entity. After the reporting date, on 1
September 2017, m2m Merger Sub, Inc. was merged into the Subsidiary
with the Subsidiary being the surviving entity, the effect being
that m2m Merger Sub, Inc. was collapsed, and the Subsidiary had
acquired the m2m assets.
As part of the arrangements for the merger 576,430 shares in the
Subsidiary were issued to the former shareholders in m2m with the
intention that all parties would exchange their stock in Polarean,
Inc. for shares in the Group on a pro rata basis as soon as
practicable.
The Directors consider the merger between the Subsidiary and m2m
Acquisition, Inc. as a consequence of which the group acquired the
exclusive worldwide rights to m2m's technology and patents does not
meet the definition of an acquisition of a business as set out in
IFRS3 and has therefore been accounted for as the acquisition of an
asset or a group of assets that does not constitute a business.
IFRS 3 requires that in such cases the acquirer shall identify
and recognise the individual identifiable assets acquired
(including those assets that meet the definition of, and
recognition criteria for, intangible assets in IAS 38 Intangible
assets) and to allocate the cost of the individual identifiable
assets and liabilities on the basis of their relative fair values
at the date of purchase. Such a transaction or event does not give
rise to goodwill.
The provisional estimate of the fair value of the assets
acquired under the merger arrangement of US$4,999,996 represents
the aggregate estimated value of the financial obligations of the
former m2m shareholders which were converted into equity in m2m
prior to the merger agreement.
The Directors consider the acquisition of the entire issued
common stock of the Subsidiary by the Company in exchange for
equivalent equity participation in the Company to be a group
re-organisation and not a business combination and to fall outside
the scope of IFRS 3. Having considered the requirements of IAS 8
and the relevant UK and US guidance, the transaction has been
accounted for on a merger or pooling of interest basis as if both
entities had always been combined, using book values, with no fair
value adjustments made nor goodwill recognised.
3 Significant accounting policies continued
Revenue recognition
Revenue comprises the fair value of the sale of goods and
rendering of services to external customers, net of applicable
sales tax, rebates, promotions and returns.
Contracts and obligation
The majority of customer contracts have three main elements that
the Group provides to the customer:
- Sale of polarisers;
- Sale of parts and upgrades; and
- Provision of service.
The sale of polarisers is seen as a distinct performance
obligation and revenue is recognised at a point in time. The
customer can benefit from the use of the polarisers when supplied
and is not reliant on the Group to provide the parts and upgrades
or service, and therefore revenue from the sale of polarisers is
recognised in full when supplied to the customer.
The second performance obligation is the sale of parts and
upgrades. The customer can benefit from the use of the parts and
upgrade when supplied and is not reliant on the Group to provide
the service, and therefore revenue from the sale of parts and
upgrades is recognised in full when supplied to the customer.
The third performance obligation is the provision of preventive
maintenance service. Revenue from the provision of preventive
maintenance service is recognised in the period in which the
services are provided over the life of the contract.
Determining the transaction price
The transaction price is determined as the fair value of the
Group expects to receive over the course of the contract.
There are no incentives given to customers that would have a
material effect on the financial statements.
Allocate the transaction price to the performance obligations in
the contract
The allocation of the transaction price to the performance
obligations in the contract is non-complex for the Group. There is
a fixed unit price for each product or service sold. Therefore,
there is limited judgement involved in allocating the contract
price to each unit ordered.
Recognise revenue when or as the entity satisfies its
performance obligations
The overarching terms are consistent in each contract.
The sale of polarisers is seen as a distinct performance
obligation and revenue is recognised at a point in time, when
supplied to the customer, as the customer can benefit from the use
of the polarisers when supplied.
The sale of parts and upgrades is seen as a distinct performance
obligation and revenue is recognised at a point in time, when
supplied to the customer, as the customer can benefit from the use
of the parts and upgrade when supplied.
The provision of service is seen as a distinct performance
obligation and revenue is recognised as the Group provides these
services for the duration of the contract, i.e. over time. Any
unexpired portion of a service contract or payment received in
advance in respect of service contracts either partially completed
or not started, are included in deferred income and released over
their remaining term.
3 Significant accounting policies continued
Property, plant and equipment
Owned assets
Items of property, plant and equipment are stated at cost or
deemed cost less accumulated depreciation and impairment losses.
Cost includes the original purchase price of the asset and the
costs attributable to bringing the asset to its working condition
for its intended use. When parts of an item of property, plant and
equipment have different useful lives, those components are
accounted for as separate items of property, plant and
equipment.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably.
Depreciation
Depreciation is charged to profit or loss on a straight-line
basis over the estimated useful lives of each part of an item of
property, plant and equipment. The estimated useful lives are as
follows:
-- Computer and IT equipment - 33% straight line
-- Leasehold improvements - 20% straight line
-- Laboratory equipment - 20% straight line
The residual values, useful lives and depreciation methods are
reviewed, and adjusted if appropriate, or if there is an indication
of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognised within "other
operating income" in the statement of comprehensive income.
Intangible Assets
Patents and related rights which are acquired through a business
combination, are assessed by reviewing their net present value of
future cash flows. Patents are currently amortised over their
useful life, not exceeding 10 years.
Internally generated intangible assets - research costs are
costs incurred in research activities and are recognised as an
expense in the period in which they are incurred. An internally
generated intangible asset arising from the development of
commercial technologies is recognised only if all of the following
conditions are met:
-- it is probable that the asset will create future economic benefits;
-- the development costs can be measured reliably;
-- technical feasibility of completing the intangible asset can be demonstrated;
-- there is the intention to complete the asset and use or sell it;
-- there is the ability to use or sell the asset; and
-- adequate technical, financial and other resources to complete
the development and to use or sell the asset are available.
At this time the Directors consider that the Group does not meet
all of those conditions and development costs are therefore
recorded as expense in the period in which the cost is
incurred.
Impairment of non-financial assets
Non-financial assets are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised for the amount
by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset's fair
value less costs to sell and value in use. For the purposes of
assessing impairment, assets are reviewed at the lowest levels for
which there are separately identifiable cash flows (cash-generating
units).
Non-financial assets other than goodwill that suffered
impairment are reviewed for possible reversal of the impairment at
each reporting date.
Provisions
A provision is recognised in the statement of financial position
when the Group has a present legal or constructive obligation as a
result of a past event, and it is probable that an outflow of
economic benefits will be required to settle the obligation. If the
effect is material, provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and, when
appropriate, the risks specific to the liability. The increase in
the provision due to the passage of time is recognised in finance
costs.
3 Significant accounting policies continued
Financial assets
The Group classifies all of its financial assets at amortised
cost. Financial assets do not comprise prepayments. Management
determines the classification of its financial assets at initial
recognition.
These assets arise principally from the provision of goods and
services to customers (e.g. trade receivables), but also
incorporate other types of financial assets where the objective is
to hold their assets in order to collect contractual cash flows and
the contractual cash flows are solely payments of the principal and
interest. They are initially recognised at fair value plus
transaction costs that are directly attributable to their
acquisition or issue and are subsequently carried at amortised cost
using the effective interest rate method, less provision for
impairment.
Amortised Cost
The Group's financial assets held at amortised cost comprise
trade and other receivables and cash and cash equivalents in the
consolidated statement of financial position.
Impairment provisions for trade receivables are recognised based
on the simplified approach within IFRS 9 using the lifetime
expected credit losses. During this process the probability of the
non-payment of the trade receivables is assessed. This probability
is then multiplied by the amount of the expected loss arising from
default to determine the lifetime expected credit loss for the
trade receivables. For trade receivables, which are reported net;
such provisions are recorded in a separate provision account with
the loss being recognised within administrative expenses in the
consolidated statement of comprehensive income. On confirmation
that the trade receivable will not be collectable, the gross
carrying value of the asset is written off against the associated
provision.
Impairment provisions for other receivables are recognised based
on the general impairment model within IFRS 9. In doing so, the
Company follows the 3-stage approach to expected credit losses.
Step 1 is to estimate the probability that the debtor will default
over the next 12 months. Step 2 considers if the credit risk has
increased significantly since initial recognition of the debtor.
Finally, Step 3 considers if the debtor is credit impaired,
following the criteria under IAS 39.
Financial liabilities
The Group classifies its financial liabilities in the category
of financial liabilities at amortised cost. All financial
liabilities are recognised in the statement of financial position
when the Group becomes a party to the contractual provision of the
instrument.
Financial liabilities measured at amortised cost include:
-- Trade payables and other short-dated monetary liabilities,
which are initially recognised at fair value and subsequently
carried at amortised cost using the effective interest rate
method.
-- Bank and other borrowings are initially recognised at fair
value net of any transaction costs directly attributable to the
issue of the instrument. Such interest-bearing liabilities are
subsequently measured at amortised cost using the effective
interest rate method, which ensures that any interest expense over
the period to repayment is at a constant rate on the balance of the
liability carried in the consolidated statement of financial
position. For the purposes of each financial liability, interest
expense includes initial transaction costs and any premium payable
on redemption, as well as any interest or coupon payable while the
liability is outstanding.
Unless otherwise indicated, the carrying values of the Group's
financial liabilities measured at amortised cost represents a
reasonable approximation of their fair values.
Employee benefits: pension obligations
The Group operates a defined contribution plan. A defined
contribution plan is a pension plan under which the Group pays
fixed contributions into a separate entity. The Group has no legal
or constructive obligations to pay further contributions if the
fund does not hold sufficient assets to pay all employees the
benefits relating to employee service in the current and prior
periods.
The Group has no further payment obligations once the
contributions have been paid. The contributions are recognised as
employee benefit expense when they are due. Prepaid contributions
are recognised as an asset to the extent that a cash refund or a
reduction in the future payments is available.
3 Significant accounting policies continued
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.
Leases
Definition of a lease
Previously, the Group determined at contract inception whether
the arrangement was or contained a lease under IFRIC 4: Determining
Whether an Arrangement contains a Lease. The Group now assesses
whether a contract is or contains a lease based on the new
definition of a lease. Under IFRS 16, a contract is, or contains a
lease if the contract conveys a right to control the use of an
identified asset for a period of time in exchange for
consideration.
On transition to IFRS 16, the Group elected to apply the
practical expedient to grandfather the assessment of which
transactions are leases. It applied IFRS 16 only to contracts that
were previously identified as leases. Contracts that were not
identified as leases under IAS 17 and IFRIC 4 were not
reassessed.
The Group recognises a right-of-use asset and a lease liability
at the lease commencement date. The right-of-use asset is initially
measured at cost, and subsequently at cost less any accumulated
amortisation and impairment losses, and adjusted for certain
measurements of the lease liability. Right-of-use assets are
amortised on a straight-line basis over the remaining term of the
lease or over the remaining economic life of the asset if, rarely,
this is judged to be shorter than the lease term.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit or, if that rate cannot
be readily determined, the Group's incremental borrowing rate.
Generally, the Group uses its incremental borrowing rate as the
discount rate.
The lease liability is subsequently increased by the interest
cost on the lease liability and decreased by lease payments made.
It is remeasured when there is a change in future lease payments
arising from a change in an index or rate, a change in estimate of
the amount expected to be payable under a residual value guarantee,
or as appropriate, changes in the assessment of whether a purchase
or extension option is reasonably certain to be exercised or a
termination option is reasonably certain not to be exercised.
The Group has applied judgement to determine the lease term for
some lease contracts in which it is a lease that include renewal
options. The assessment of whether the Group is reasonably certain
to exercise such options impacts the lease term, which
significantly affects the amount of lease liabilities ad
right-of-use assets recognised.
Income tax
Income tax for the years presented comprises current and
deferred tax. Income tax is recognised in the income statement
except to the extent that it relates to items recognised directly
in equity, in which case it is recognised in equity. Current tax is
the expected tax payable on the taxable income for the year, using
tax rates enacted or substantively enacted at the statement of
financial position date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is recognised on temporary differences arsing
between the tax bases of assets and liabilities and their carrying
amounts.
The following temporary differences are not recognised if they
arise from a) the initial recognition of goodwill, and b) for the
initial recognition of other assets or liabilities in a transaction
other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss.
Deferred tax is determined using tax rates and laws that have been
enacted or substantially enacted by the balance sheet date and are
expected to apply when the related deferred tax asset is realised
or the deferred income tax liability is settled.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced to
the extent that it is no longer probable that the related tax
benefit will be realised.
3 Significant accounting policies continued
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes assets
and liabilities relate to income taxes levied by the same taxation
authority on either the taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
Critical accounting estimates and judgements
The preparation of the Group's financial statements under IFRS
as endorsed by the EU 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 statements.
Carrying value of intangible assets
In determining whether there are indicators of impairment of the
Group's intangible assets, the directors take into consideration
various factors including the economic viability and expected
future financial performance of the asset and when it relates to
the intangible assets arising on a business combination, the
expected future performance of the business acquired.
4 Segmental Information
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the chief operating decision maker (which
takes the form of the Board of Directors) as defined in IFRS 8, in
order to allocate resources to the segment and to assess its
performance.
The chief operating decision maker has determined that the Group
has one operating segment, the development and commercialisation of
gas polariser devices and ancillary instruments. Revenues are
reviewed based on the products and services provided: Polarisers,
Parts and Upgrades, Service and Other revenue.
The Group operates in Canada, Germany, the United Kingdom and
the United States of America. Revenue by origin of geographical
segment for all entities in the Group is as follows:
Revenue
2019 2018
US$ US$
-------------------------- ---------- ----------
Canada 897,716 163,677
Germany - 15,117
United Kingdom 33,883 38,661
United States of America 1,369,494 2,221,684
-------------------------- ---------- ----------
Total 2,301,093 2,439,139
-------------------------- ---------- ----------
Non-current assets
2019 2018
US$ US$
-------------------------- ---------- ----------
United States of America 3,887,307 4,074,689
Total 3,887,307 4,074,689
-------------------------- ---------- ----------
Product and services revenue analysis
Revenue
2019 2018
US$ US$
-------------------- ---------- ----------
Polarisers 1,367,543 1,056,728
Parts and Upgrades 125,921 56,610
Service 55,117 117,220
Grants 752,512 1,208,581
-------------------- ---------- ----------
Total 2,301,093 2,439,139
-------------------- ---------- ----------
Management measures revenues by reference to the Group's core
services and products and related services, which underpin such
income.
5 Employees and Directors
Staff costs for the Group and the Company during the year:
2019 2018
US$ US$
---------------------- ---------- ---------
Wages and salaries 2,030, 730 1,667,233
Healthcare benefits 107,149 102,430
Social Security costs 122,392 94,104
2,260,271 1,863,767
---------------------- ---------- ---------
Average monthly number of people (including directors) employed
by activity:
2019 2018
No. No.
Senior management including directors 11 9
R&D and clinical trial 6 7
Administration 2 1
---------------------------------------------------------- ---- ------
Total 19 17
---------------------------------------------------------- ---- ------
Key management compensation:
The following table details the aggregate compensation paid to
key management personnel.
2019 2018
US$ US$
---------------------- --------- -------
Salaries and fees 1,292,135 873,229
Healthcare benefits 44,597 41,909
Social security costs 69,915 49,548
1,406,647 964,686
----------------------- --------- -------
Key management personnel include all directors who together have
authority and responsibility for planning, directing, and
controlling the activities of the Group and senior divisional
managers.
6 Operating loss
2019 2018
US$ US$
-------------------------------------------------- ---------- ----------
Depreciation
* Owned property, plant and equipment 63,121 9,601
* Leased property, plant and equipment - 539
Amortisation of right-of-use assets 67,021 -
Amortisation of intangible assets 616,852 616,852
Subtotal Amortisation 683,873 616,852
Research expenses 155,346 672,633
Operating lease costs - 77,971
Auditors remuneration (note 8) 39,688 42,938
Clinical trial costs 1,892,592 1,781,217
Regulatory consulting costs 356.362 212.363
Legal and professional fees 348,972 111,181
--------------------------------------------------- ---------- ----------
7 Net finance expense
2019 2018
US$ US$
Interest income 508 184
------------------------ ------- --------
Total finance income 508 184
------------------------ ------- --------
Finance expense 91,678 188,055
------------------------ ------- --------
Total finance expense 91,678 188,055
------------------------ ------- --------
8 Auditor remuneration
2019 2018
US$ US$
------------------------------------- ------- -------
Auditors remuneration
Fees payable to the Group's auditor
for audit of Parent Company and
Consolidated Financial Statements 39,688 42,938
-------------------------------------- ------- -------
9 Loss per share
The loss per share has been calculated using the loss for the
year and the weighted average number of ordinary shares outstanding
during the year, as follows:
2019 2018
US$ US$
------------------------------------ ------------------ -----------
Loss for the year attributable to
shareholders of the Group (US$) (6,103,340) (5,454,659)
Weighted average number of ordinary
shares 107,043,107 69,940,338
------------------------------------ ------------------ -----------
Basic and diluted loss per share (0.057) (0.078)
------------------------------------ ------------------ -----------
For diluted loss per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all
potential dilutive warrants, options and convertible loans over
ordinary shares. Potential ordinary shares resulting from the
exercise of warrants, options and the conversion of convertible
loans have an anti-dilutive effect due to the Group being in a loss
position. As a result, diluted loss per share is disclosed as the
same value as basic loss per share.
10 Taxation
There were no charges to current corporate taxation due to the
losses incurred by the Group in the period. No deferred tax assets
have been recognised due to the uncertainty of reversal being
dependant on future taxable profits.
Income taxes computed at the statutory federal income tax of 21%
(2018: 21%) and the state income tax of 2.50% (2018: 3.30%) UK
corporation tax is calculated at 19% of the estimated assessable
profits for the year.
2019 2018
US$ US$
---------------------------------------- ------------ ------------
Loss on ordinary activities before tax (6,103,340) (5,454,659)
---------------------------------------- ------------ ------------
Loss on ordinary activities multiplied
by the rate of corporation tax in the
US as above (1,281,701) (1,145,478)
Effects of:
Adjustments for rate of tax in other
jurisdictions 26,611 26,611
Unrelieved tax losses carried forward 1,255,090 1,118,867
Total taxation charge - -
---------------------------------------- ------------ ------------
The tax reform act of 1986 contains provisions which limit the
ability to utilise the net operating loss carryforwards in the case
of certain events including significant changes in ownership
interests. If the Group's net operating loss carryforward, the
Group would incur a federal income tax liability even though net
operating loss carryforwards would be available in future
years.
11 Property, plant and equipment
Leasehold Furniture Computers
improvements and equipment and IT equipment Total
US$ US$ US$ US$
--------------------------
Cost
At 1 January 2018 2,695 27,671 25,066 55,432
Additions - 4,952 1,599 6,551
At 31 December 2018 2,695 32,623 26,665 61,983
-------------------------- -------------- --------------- ------------------ --------
Additions - 401,327 - 401,327
At 31 December 2019 2,695 433,950 26,665 463,310
-------------------------- -------------- --------------- ------------------ --------
Accumulated depreciation
At 1 January 2018 899 22,291 10,901 34,091
Depreciation expense 539 3,380 6,221 10,140
At 31 December 2018 1,438 25,671 17,122 44,231
-------------------------- -------------- --------------- ------------------ --------
Depreciation expense 539 56,438 6,144 63,121
At 31 December 2019 1,977 82,109 23,266 107,352
-------------------------- -------------- --------------- ------------------ --------
Carrying amount
At 31 December 2018 1,257 6,952 9,543 17,752
-------------------------- -------------- --------------- ------------------ --------
At 31 December 2019 718 351,841 3,399 355,958
-------------------------- -------------- --------------- ------------------ --------
12 Intangible assets
Patents Total
US$ US$
-------------------------- ---------- ----------
Cost
At 1 January 2018 5,045,996 5,045,996
Additions - -
At 31 December 2018 5,045,996 5,045,996
-------------------------- ---------- ----------
Additions - -
-------------------------- ---------- ----------
At 31 December 2019 5,045,996 5,045,996
-------------------------- ---------- ----------
Accumulated amortisation
At 1 January 2018 384,746 384,746
Amortisation expense 616,852 616,852
At 31 December 2018 1,001,598 1,001,598
-------------------------- ---------- ----------
Amortisation expense 616,851 616,851
At 31 December 2019 1,618,449 1,618,449
-------------------------- ---------- ----------
Carrying amount
At 31 December 2018 4,044,398 4,044,398
-------------------------- ---------- ----------
At 31 December 2019 3,427,547 3,427,547
-------------------------- ---------- ----------
13 Investment in subsidiary undertakings
Subsidiary Undertakings
Company US$
--------------------- ------------------------
Cost
At 31 December 2018 4,342,848
Additions -
At 31 December 2019 4,342,848
--------------------- ------------------------
Carrying amount
At 31 December 2018 4,342,848
At 31 December 2019 4,342,848
--------------------- ------------------------
The Directors annually assess the carrying value of the
investment in the Subsidiary and in their opinion no impairment
provision is currently necessary.
The net carrying amounts noted above relates to the Subsidiary.
The subsidiary undertakings during the year were as follows:
Interest
Country of held
Registered office address incorporation %
Polarean 2500 Meridian Parkway #175, Durham,
Inc. NC 27713, USA USA 100
---------- ------------------------------------- ---------------- ---------
14 Trade and other receivables
Group Company
Amounts falling due 2019 2018 2019 2018
after one year US$ US$ US$ US$
--------------------- ----------- ----------- ------------ ------------
Rental deposit 5,539 12,539 - -
---------------------- ----------- ----------- ------------ ------------
Group Company
Amounts falling due within 2019 2018 2019 2018
one year US$ US$ US$ US$
---------------------------------- -------- ---------- ----------- ----------
Trade receivables 453,827 166,277 - -
Other receivables 97,401 3,972,321 97,402 3,708,681
Prepayments 84,935 87,367 6,275 -
Due from Subsidiary undertakings - - 11,440,177 5,661,930
Called up share capital
not fully paid 620 620 - -
636,783 4,226,585 11,543,854 9,370,611
---------------------------------- -------- ---------- ----------- ----------
The Company's 2018 other receivable of US$3.7 million relates to
the funds outstanding from the share issue on 28 December 2018.
Analysis of trade receivables based on age of invoices
< 30 > 90 Total Gross ECL Total Net
31 - 60 61 -90
$'000 $'000 $'000 $'000 $'000 $'000 $'000
----- ------- -------- ------- ------ ----------- ------ ---------
2019 453,827 - - - 453,827 - 453,827
2018 163,677 2,600 (950) 950 166,277 - 166,277
----- ------- -------- ------- ------ ----------- ------ ---------
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses (ECL) which uses a lifetime expected loss
allowance for all trade receivables. The ECL balance has been
determined based on historical data available to management in
addition to forward looking information utilising management
knowledge. Based on the analyses performed there is no material
impact on the transition to ECL. The Company applies a similar
approach to measuring ECL for the amounts due from group
undertakings.
Trade receivables are amounts due from customers for goods sold
or services performed in the ordinary course of business. They are
generally due for settlement within 30 days and therefore are all
classified as current. The majority of trade and other receivables
are non-interest bearing. Where the effect is material, trade and
other receivables are discounted using discount rates which reflect
the relevant costs of financing. The carrying amount of trade and
other receivables approximates fair value.
The group trade receivables include governments grants amounted
to US$ 23,672 in which there are no unfulfilled conditions or
contingencies attached to these grants as of 31 December 2019.
15 Inventory
Group
2019 2018
US$ US$
Component parts 554,211 651,781
------------------ --------- --------
16 Cash and cash equivalents
Group Company
2019 2018 2019 2018
US$ US$ US$ US$
Cash at bank and in hand 1,961,869 875,601 56,765 235,766
--------------------------- ---------- -------- ------- --------
17 Share capital
The issued share capital of the Company was as follows:
Allotted and called up
- Ordinary shares of 0.037p 2019 2019 2018 2018
each No. US$ No. US$
--------------------------------- ------------ ------- ------------ -------
At beginning of period 100,730,893 49,427 48,470,142 23,291
Issue of shares upon warrant
exercise 2,041,040 958 - -
Issue of shares to investors 11,666,667 5,391 47,321,448 23,540
Issue of shares upon converting
loans 4,939,303 2,596
--------------------------------- ------------ ------- ------------ -------
At end of year 114,438,600 55,776 100,730,893 49,427
--------------------------------- ------------ ------- ------------ -------
On 28 March 2018 the Company issued 20,000,000 new ordinary
shares at a price of GBP0.15 each.
On 16 July 2018 the Company issued 5,000,000 new ordinary shares
at a price of GBP0.16 each.
On 28 December 2018, the Company issued 22,321,448 new ordinary
shares at a price of GBP0.14 each.
On 2 April 2019, the Company issued 705,040 new ordinary shares
upon the exercise of share warrants with an exercise price of
GBP0.15 each.
On 22 July 2019, the Company issued 11,666,667 new ordinary
shares at a price of GBP0.18 each.
On 24 July 2019, the Company issued 1,336,000 new ordinary
shares upon the exercise of share warrants with an exercise price
of GBP0.0003 each.
18 Reserves
Share premium
Share premium represents the excess of subscription amounts for
the issue of shares over nominal value of shares issued, less any
attributable share issue costs.
Group re-organisation reserve
The group re-organisation reserve arose on the transaction under
which the Group acquired the Subsidiary by way of a group
re-organisation.
Other equity
Includes the value of conversion rights on convertible
loans.
Share based payment reserve
Cumulative fair value of options charged to the consolidated
income statement net of transfers to the profit or loss reserve on
exercised and cancelled/lapsed options.
Accumulated losses
Includes all current and prior year retained profits and
losses.
Merger reserve
The balance on the merger reserve represents the fair value of
the consideration given in excess of the nominal value of the
ordinary shares issued in an acquisition made by the issue of
shares where the transaction qualifies for merger relief under the
Companies Act 2006.
19 Share-based payments
Share options
The Company grants share options at its discretion to Directors,
management and employees. These are accounted for as equity settled
transactions. Should the options remain unexercised after a period
of ten years from the date of grant the options will expire unless
an extension is agreed to by the board. Options are exercisable at
a price equal to the Company's quoted market price on the date of
grant or an exercise price to be determined by the board.
Details of share options granted, exercised, lapsed and
outstanding at the year-end are as follows:
Number
of share
Weighted average Weighted average
exercise price exercise price
(US$) options (US$)
Number of share
options 2019 2019 2018 2018
----------------------- ------------------------------- ---------------------- ----------- -----------------------
Outstanding at
beginning
of year 15,560,560 0.13 5,156,960 0.02
Granted during the
year 2,610,750 0.25 10,403,600 0.20
Forfeited/lapsed
during
the year (734,588) 0.20 - -
Outstanding at end of
the year 17,436,722 0.15 15,560,560 0.13
----------------------- ------------------------------- ---------------------- ----------- -----------------------
Exercisable at end of
the year 7,366,946 0.07 6,590,282 0.07
----------------------- ------------------------------- ---------------------- ----------- -----------------------
During the year ended 31 December 2019, 2,610,750 options were
granted (2018: 10,403,600). The 2019 options will vest 25% on the
first anniversary of the vesting commencement date and 1/36 at the
end of every subsequent month for 36 months. The 2018 options will
vest in equal portions on an annual basis on the anniversary of
Admission, over the four-year period from the date of Admission.
The options outstanding as at 31 December 2018 have an exercise
price in the range of US$0.0041 to US$0.30 (2018: US$ 0.0041 to
US$0.20).
The fair value of options granted has been calculated using the
Black Scholes model which has given rise to fair values per share
of US$0.09. This is based on risk-free rates of 1.41% and
volatility of 40.84%
The Black Scholes calculations for the options resulted in a
charge of US$305,747 (2018: US$211,015) which has been expensed in
the year.
The weighted average remaining contractual life of the share
options is 7.26 years (2018: 7.91 years).
All share options are equity settled on exercise.
On 23 May 2019, the Company granted 1.2 million share options
with an exercise price of 15 pence per share. 25% of the options
shall vest on 29 April 2020 with the remaining 75% vesting in equal
portions on the last day of each calendar month over the period of
36 months, starting on 31 May 2021.
On 6 November 2019, the Company granted 1,410,750 million share
options with an exercise price of 23 pence per share. For 210,750
of these share options, 25% shall vest on 3 June 2020 with the
remaining 75% vesting in equal portions on the last day of each
calendar month over the period of 36 months, starting on 31 July
2021. For 1.2 million of these share options, 25% of the options
shall vest on 23 October 2020 with the remaining 75% vesting in
equal portions on the last day of each calendar month over the
period of 36 months, starting on 30 November 2021.
Share warrants
The Company grants share warrants at its discretion to
Directors, management, employees, advisors and lenders. These are
accounted for as equity settled transactions. Terms of warrants
very from agreement to agreement.
19 Share based payments continued
Details for the warrants granted, exercised, lapsed and
outstanding at the year-end are as follows:
Weighted average Weighted
exercise price Number of average exercise
(US$) share warrants price (US$)
Number of
share warrants
2019 2019 2018 2018
-------------------------- ---------------- ------------------ ---------------- ------------------
Outstanding at beginning
of year 7,023,539 0.09 9,065,428 0.15
(Exercised) / Granted
during the year (2,041,040) 0.07 866,236 0.20
Forfeited/lapsed during
the year (157,796) 0.20 (2,908,125) 0.30
Outstanding at end of
the year 4,824,703 0.09 7,023,539 0.09
-------------------------- ---------------- ------------------ ---------------- ------------------
Exercisable at end of
the year 4,824,703 0.09 7,023,539 0.09
-------------------------- ---------------- ------------------ ---------------- ------------------
On 11 January 2018 the Company granted 866,236 warrants to
subscribers with an exercise price of 15 pence per share which
vested immediately and expiry on 31 March 2019.
On 16 February 2018 the Company sub-divided its share capital on
the basis of 26.71999:1. The warrants above reflect this event.
The fair value of options granted during 2018 have been
calculated using the Black Scholes model which has given rise to
fair values per share of US$0.04. This is based on risk-free rates
of 1.41% and volatility of 40.84%.
The Black Scholes calculations for warrants resulted in a charge
of US$40,775 for 2018 which has been expensed in that year.
On 2 April 2019 the Company issued 705,040 new ordinary shares
of GBP0.00037 each in the capital of the Company at the exercise
price of 15 pence per share, following the exercise of warrants
from certain investors that subscribed in January 2018. The total
consideration received by the Company pursuant to the warrant
exercise will be GBP105,756. The remaining 157,796 warrants issued
in January 2018 lapsed on 1 April 2019.
On 24 July 2019 the Company issued 1,336,000 new ordinary shares
of GBP0.00037 each in the capital of the Company at the exercise
price of GBP0.0003 per share, following the exercise of warrants.
The total consideration received by the Company pursuant to the
warrant exercise was GBP400.
The weighted average remaining contractual life of the share
warrants is 3.5 years (2018: 4.1 years).
20 Provision for contingent consideration
Group Company
2019 2018 2019 2018
US$ US$ US$ US$
Provision for contingent
consideration 316,000 316,000 - -
-------------------------- -------- -------- ----- -----
On 19 December 2011, the Subsidiary entered into an agreement
with a third party to purchase various assets, including patents,
trademarks, a license agreement and physical inventory. As
consideration for this transaction, the Subsidiary agreed to pay 5
per cent. of gross revenue on clinical sales of products that are
sold related to the patents purchased, for seven years from the
date of the commercial sale. As of 31 December 2019, the fair value
of this contingent consideration was US$316,000 (2018: US$316,000).
This liability is valued based on a probability weighted expected
return method using projected future cash flows. There were no
significant events in the year ended 31 December 2019 necessitating
revision of the probability weighted expected value of the
contingent consideration.
There was therefore no profit or loss arising on revaluation of
contingent consideration during the year ended 31 December 2019
(2018: nil).
21 Deferred income
Group Company
2019 2018 2019 2018
US$ US$ US$ US$
---------------------- -------- -------- ----- -----
Arising from service
contracts
Current 46,324 54,828 - -
Non-current 192,817 70,726 - -
---------------------- -------- -------- ----- -----
239,141 125,554 - -
---------------------- -------- -------- ----- -----
22 Trade and other payables
Group Company
2019 2018 2019 2018
US$ US$ US$ US$
----------------------------- ---------- ---------- ------- -------
Trade payables 660,249 417,356 14,681 -
Accruals and other payables 863,333 923,126 38,318 28,174
Royalties 250,000 250,000 - -
----------------------------- ---------- ---------- ------- -------
1,773,582 1,590,482 52,999 28,174
----------------------------- ---------- ---------- ------- -------
Trade payables and accruals principally comprise amounts
outstanding for trade purchases and ongoing costs and are payable
within 1 year.
Royalties comprise a fixed payment of US$250,000 in relation to
an agreement entered into by the Subsidiary for the use of patents,
see note 24 - Royalty commitments.
The Directors consider the carrying value of all financial
liabilities to be equivalent to their fair value.
23 Borrowings and loans
Group Company
2019 2018 2019 2018
US$ US$ US$ US$
---------- ----- ------ ----- -----
Overdraft - 5,213 - -
---------- ----- ------ ----- -----
- 5,213 - -
---------- ----- ------ ----- -----
In June 2013, an unsecured subordinated promissory note was
issued to a related party for a principal amount of US$8,000 per
month for 18 months for a total of US$144,000. The note bears
interest at 3 per cent. per annum. All principal and outstanding
interest on the note is was repaid in December 2018.
In April 2017, an unsecured loan note was issued for a principal
amount of US250,000. The note bears interest at 6.75 per cent. per
annum. All principal and outstanding interest on the note was
repaid in April 2018.
An unsecured promissory note that was issued in June 2017 for a
principal amount of US$150,000, with an interest rate of 6 per cent
per annum, was settled in full including all outstanding interest
in April 2018.
In December 2017, an unsecured convertible loan note was issued
for a principal amount of US$903,000 (GBP647,147) was converted
with accrued interest, into 4,939,303 ordinary shares in the
Company at a conversion price equal to 90 per cent of the issue
price of the ordinary shares upon admission.
Net debt reconciliation
2019 2018
US$ US$
Cash and cash equivalents 1,961,869 875,601
Current borrowings - (5,213)
---------------------------- ------------------ ------------ --------------
Net debt 1,961,869 870,388
------------------------------- ------------------ ------------ --------------
Cash and Current
cash equivalents borrowings Total
US$ US$ US$
--------------------------- ------------------ ------------ --------------
Net debt at 1 January
2018 960,217 (1,104,723) (144,506)
Cash flows (84,616) 307,623 23,007
Other non-cash movements - 791,887 791,887
Net debt at 31 December
2018 875,601 (5,213) 870,388
----------------------------- ------------------ ------------ --------------
Cash flows 1,086,268 5,213 1,091,481
Other non-cash movements - - -
Net debt at 31 December
2019 1,961,869 - 1,961,869
----------------------------- ------------------ ------------ --------------
24 Commitments
Royalty commitments
The Subsidiary has entered into three agreements requiring
royalty payments. One agreement is conditional and requires a
payment of 5 per cent. of gross revenue on clinical sales during
the payment period beginning on the date a product is first
commercially sold, contingent on receiving FDA approval, and ending
seven years from that date. A separate agreement requires payments
of 0.25 per cent of net sales of machines, and 20 per cent of any
sublicensing income for a specific method of use of patent
beginning in 2016. Additionally, beginning five years after the
effective date of 1 February 2021, there are minimum yearly
royalties of US$5,000. The third agreement requires a fixed payment
of US$250,000 for use of patents.
Operating lease commitments
Transition
Previously, the Group classified property leases as operating
lease under IAS 17. At transition, for leases classified as
operating leases under IAS 17, lease liabilities were re-measured
at the present value of the remaining lease payments, discounted at
the Group's incremental borrowing rate as at 1 January 2019.
Right-of-use assets are measured at their carrying value as if IFRS
16 has been applied since the commencement date, discounted using
the lessee's incremental borrowing rate at the date of initial
application.
Impact on transition
The impact on the statement of financial position as at 1
January 2019 as a result of adopting IFRS 16 is as follows:
US$
-------------------------- ---------
Right-of-use assets 165,284
Accumulated losses (6,922)
Lease liability 191,361
Trade and other payables (19,155)
-------------------------- ---------
When measuring lease liabilities for leases that were classified
as operating leases, the Group discounted the lease payment using
its incremental borrowing rate at 1 January 2019. The
weighted-average rate applied is 10%.
US$
------------------------------------------------------------- --------
Operating lease commitment at 31 December 2018 as disclosed
in the Group's consolidated financial statements 183,421
Plus additional lease payments 34,814
------------------------------------------------------------- --------
Operating lease commitment 218,235
The discounted lease liability recognised at 1 January
2019 after using the incremental borrowing rate 191,361
------------------------------------------------------------- --------
Impact for the period
As a of result of initially applying IFRS 16, in relation to the
leases that were previously classified as operating leases, the
Group recognised amortisation and interest costs, instead of
operating lease expense. During the twelve months ended 31 December
2019, the Group recognised US$67,021 of amortisation charges and
US$16,001 of interest costs from these leases.
25 Financial instruments
The Group has exposure to the following key risks related to
financial instruments:
i. Market risk
ii. Credit risk
iii. Liquidity risk
This note presents information about the Group's exposure to
each of the above risks, the Group's objectives, policies and
processes for measuring and managing risk, and the Group's
management of capital. Further quantitative disclosures are
included throughout these consolidated Financial Statements.
The Group uses financial instruments including cash, loans, as
well as trade receivables and payables that arise directly from
operations.
Due to the simple nature of these financial instruments, there
is no material difference between book and fair values, discounting
would not give a material difference to the results of the Group
and the Directors believe that there are no material sensitivities
that require additional disclosure.
(a) Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Subsidiary. In order to minimise the risk, the Subsidiary
endeavours only to deal with companies which are demonstrably
creditworthy and this, together with the aggregate financial
exposure, is continuously monitored. The maximum exposure to credit
risk is the value of the outstanding amount.
The Directors do not consider that there is any concentration of
risk within either trade or other receivables. There are no
impairments to trade or other receivables in each of the years
presented.
The Company has made unsecured interest-free loan to its
Subsidiary and is repayable on demand and is expected to be repaid
in the future as the Subsidiary is revenue generative.
Categories of financial instruments
Group Company
2019 2018 2019 2018
US$ US$ US$ US$
-------------------------------- ---------- ---------- ----------- ----------
Financial Assets measured
at
amortised cost
Cash and cash equivalents 1,961,869 875,601 56,765 235,766
Loans and receivables
Trade and other receivables
- current 551,849 4,226,585 11,537,579 9,370,611
Trade and other receivables
- non-current 5,539 12,539 - -
-------------------------------- ---------- ---------- ----------- ----------
Financial Liabilities measured
at amortised cost
Trade and other payables 1,773,581 1,590,482 52,998 28,17
Borrowings - current - 5,213 - -
-------------------------------- ---------- ---------- ----------- ----------
Borrowings
Group Company
2019 2018 2019 2018
Financial Instruments US$ US$ US$ US$
---------------------- ----- ------ ----- -----
Overdraft - 5,213 - -
---------------------- ----- ------ ----- -----
Total - 5,213 - -
---------------------- ----- ------ ----- -----
25 Financial instruments continued
Capital risk management
The Group manages its capital to ensure that it will be able to
continue as a going concern while maximising returns to
shareholders through the optimisation of debt and equity balances.
The Group is both equity and debt funded, and these two elements
combine to make up the capital structure of the business. Equity
comprises share capital, share premium and retained losses and is
equal to the amount shown as 'Equity' in the statement of financial
position. Debt comprises various items which are set out in further
detail above and in note 23.
The Group manages the capital structure and adjusts in light of
changes to economic conditions and risks.
(b) Market risk
The interest rate profile of the Subsidiary's borrowings is
shown below:
Interest rate sensitivity analysis
As the interest rates on shareholders loans are fixed, interest
rate risk is considered to be very low.
(c) Liquidity risk
A maturity analysis of the Group's borrowings is shown
below:
2019 2018
US$ US$
------------------------------- ---------- ----------
Less than one year 1,890,820 1,650,523
One to two years 50,455 70,726
Two to five years 192,817 -
------------------------------- ---------- ----------
Total including interest cash
flows 2,134,092 1,721,249
Less: interest cash flows - -
------------------------------- ---------- ----------
Total principal cash flows 2,134,092 1,721,249
-------------------------------- ---------- ----------
Derivatives
The Group and Company have no derivative financial
instruments.
26 Contingent liabilities
The Directors are not aware of any material contingent
liabilities, except for the contingent consideration detailed in
note 20.
27 Related party transactions
In June 2013, an unsecured subordinated promissory note was
issued to Technology Commercialization Group, for whom Ken West was
a retained consultant, for a principal amount of US$8,000 per month
for 18 months for a total of US$144,000. The note bears interest at
3 per cent per annum. All principal and outstanding interest on the
note was due 3 June 2016. This was repaid in full in December
2018.
28 Events after the reporting period
On 3 February 2020, Richard Morgan, Non-Executive Chairman and
Robert Bertoldi, Non-Executive Director resigned from the Polarean
Board. The unvested portion of their March 2018 stock option grants
were fully vested. The exercise date for these options, 534,400
option each for Mr. Morgan and Mr. Bertoldi was extended until 31
December 2020. Jonathan Allis, Non-Executive Director, was
appointed Non-Executive Chairman.
On 2 March 2020, Amphion Innovations, plc exercised 232,010
warrants at a price of GBP0.15 per share.
On 10 March 2020, the Subsidiary entered into a revised lease
for its North Carolina offices. Under the revised terms of the
lease, the Company acquired an additional 2,717 square feet of
space for approximately $52,000 per year. In addition to the
expansion, the expiration date of the original lease was extended
until 30 June 2022.
On 1 April 2020, the Company issued 46,624,997 new ordinary
shares at a price of GBP0.18 each, resulting in GBP8.4 million
gross proceeds (before expenses).
On 25 April 2020, the Subsidiary received loan proceeds in the
amount of approximately US$286,535 under the Paycheck Protection
Program ("PPP"). The PPP, established as part of the Coronavirus
Aid, Relief and Economic Security Act ("CARES Act"), provides for
loans to qualifying businesses for amounts up to 2.5 times of the
average monthly payroll expenses of the qualifying business. The
loans and accrued interest are forgivable after eight weeks as long
as the borrower uses the loan proceeds for eligible purposes,
including payroll, benefits, rent and utilities, and maintains its
payroll levels. The amount of loan forgiveness will be reduced if
the borrower terminates employees or reduces salaries during the
eight-week period.
The unforgiven portion of the PPP loan is payable over two years
at an interest rate of 1%, with a deferral of payments for the
first six months. The Subsidiary intends to use the proceeds for
purposes consistent with the PPP. While the Subsidiary currently
believes that its use of the loan proceeds will meet the conditions
for forgiveness of the loan, we cannot assure you that we will not
take actions that could cause the Subsidiary to be ineligible for
forgiveness of the loan, in whole or in part
On 1 June 2020, the Company issued 534,400 new ordinary shares
of GBP0.00037 each in the capital of the Company at the exercise
price of 0.003 pence per share, following the exercise of
warrants.
COVID-19
The outbreak of COVID-19 creates a new and highly unpredictable
challenge. We have tested our business continuity plans which have
been successfully activated.
The investment in technology over recent years has resulted in
the business being well placed to continue delivering services to
our clients without disruption and with no increase in operational
risk.
Management do not consider it possible to quantify the true
impact of COVID-19 on the business at this time but remain
confident that the business can adjust to the challenges it
presents.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SFLESWESSEEM
(END) Dow Jones Newswires
June 18, 2020 02:00 ET (06:00 GMT)
Polarean Imaging (LSE:POLX)
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Polarean Imaging (LSE:POLX)
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