UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from ________ to ________
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
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Universal Biosensors, Inc. |
Not Applicable |
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(Address of principal executive offices) |
(Zip Code) |
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Telephone: +61 |
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(Registrant’s telephone number, including area code) |
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Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
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Large accelerated filer |
☐ |
Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
UNIVERSAL BIOSENSORS, INC.
TABLE OF CONTENTS
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Page |
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PART I |
FINANCIAL INFORMATION |
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Item 1 |
Financial Statements (unaudited) |
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1) |
Consolidated condensed balance sheets at June 30, 2022 and December 31, 2021 |
1 |
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2) |
Consolidated condensed statements of comprehensive income/(loss) for the three and six months ended June 30, 2022 and 2021 |
2 |
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3) |
Consolidated condensed statements of changes in stockholders’ equity and comprehensive income/(loss) for the three and six months ended June 30, 2022 and 2021 |
3 |
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4) |
Consolidated condensed statements of cash flows for the six months ended June 30, 2022 and 2021 |
5 |
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5) |
Notes to consolidated condensed financial statements |
6 |
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Item 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
20 |
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Item 3 |
Quantitative and Qualitative Disclosures About Market Risk |
27 |
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Item 4 |
Controls and Procedures |
27 |
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PART II |
OTHER INFORMATION |
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Item 1 |
Legal Proceedings |
28 |
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Item 1A |
Risk Factors |
28 |
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Item 2 |
Unregistered Sales of Equity Securities and Use of Proceeds |
28 |
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Item 3 |
Defaults Upon Senior Securities |
28 |
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Item 4 |
Mine Safety Disclosures |
28 |
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Item 5 |
Other Information |
28 |
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Item 6 |
Exhibits |
28 |
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Exhibit 10.18 |
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Exhibit 31.1 |
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Exhibit 31.2 |
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Exhibit 32 |
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| Exhibit 101 | |||
| Exhibit 104 | |||
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SIGNATURES |
29 |
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Unless otherwise noted, references in this Form 10-Q to “Universal Biosensors”, the “Company,” “Group,” “we,” “our” or “us” means Universal Biosensors, Inc. (“UBI”) a Delaware corporation and, when applicable, its wholly owned Australian operating subsidiary, Universal Biosensors Pty Ltd (“UBS”), its wholly owned US operating subsidiary, Universal Biosensors LLC (“UBS LLC”) and UBS’ wholly owned Canadian operating subsidiary, Hemostasis Reference Laboratory Inc. (“HRL”) and wholly owned Dutch operating subsidiary, Universal Biosensors B.V. (“UBS BV”). Unless otherwise noted, all references in this Form 10-Q to “$”, “A$” or “dollars” and dollar amounts are references to Australian dollars. References to “US$”, “CAD$” and “€” are references to United States dollars, Canadian dollars and Euros respectively.
Item 1 Financial Statements
Consolidated Condensed Balance Sheets (Unaudited)
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June 30, 2022 |
December 31, 2021 |
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A$ |
A$ |
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| ASSETS | ||||||||
| Current assets: | ||||||||
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Cash and cash equivalents |
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Inventories |
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Accounts receivable |
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Prepayments |
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Restricted cash |
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Other current assets |
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Total current assets |
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| Non-current assets: | ||||||||
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Property, plant and equipment |
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Less accumulated depreciation |
( |
) | ( |
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Property, plant and equipment - net |
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Intangible assets |
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Less amortization of intangible assets |
( |
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Intangible assets - net |
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Right-of-use asset - operating leases |
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Right-of-use asset - finance leases |
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Restricted cash |
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Other non-current assets |
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Total non-current assets |
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Total assets |
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
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Accounts payable |
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Accrued expenses |
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Contingent consideration |
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Other liabilities |
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Contract liabilities |
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Lease liability - operating leases |
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Lease liability - finance leases |
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Employee entitlements liabilities |
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Short-term loan - secured |
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Short-term loan - unsecured |
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Total current liabilities |
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| Non-current liabilities: | ||||||||
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Asset retirement obligations |
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Employee entitlements liabilities |
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Deferred income tax liability |
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Lease liability - operating leases |
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Lease liability - finance leases |
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Long-term loan - unsecured |
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Total non-current liabilities |
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Total liabilities |
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Commitments and contingencies |
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| Stockholders’ equity: | ||||||||
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Preferred stock, US$ |
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Common stock, US$ |
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Additional paid-in capital |
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Accumulated deficit |
( |
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Current year loss |
( |
) | ( |
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Accumulated other comprehensive loss |
( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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See accompanying Notes to Consolidated Condensed Financial Statements.
Consolidated Condensed Statements of Comprehensive Income/(Loss) (Unaudited)
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2022 |
2021 |
2022 |
2021 |
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A$ |
A$ |
A$ |
A$ |
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| Revenue | ||||||||||||||||
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Revenue from products |
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Revenue from services |
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Total revenue |
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| Operating costs and expenses | ||||||||||||||||
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Cost of goods sold |
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Cost of services |
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Total cost of goods sold and services |
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Gross profit/(loss) |
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| Other operating costs and expenses | ||||||||||||||||
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Product support |
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Depreciation and amortization |
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Research and development |
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Selling, general and administrative |
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Total other operating costs and expenses |
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Loss from operations |
( |
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| Other income/(expense) | ||||||||||||||||
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Interest income |
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Interest expense |
( |
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Financing costs |
( |
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Research and development tax incentive income |
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Exchange gain/(loss) |
( |
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Other income |
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Total other income |
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Net loss before tax |
( |
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Income tax benefit/(expense) |
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Net loss |
( |
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| Loss per share | ||||||||||||||||
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Net loss per share - basic and diluted |
( |
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Average weighted number of shares - basic and diluted |
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| Other comprehensive loss, net of tax: | ||||||||||||||||
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Foreign currency translation reserve |
( |
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Other comprehensive loss |
( |
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Comprehensive loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
See accompanying Notes to Consolidated Condensed Financial Statements.
Consolidated Condensed Statements of Changes in Stockholders’ Equity and Comprehensive Income/(Loss) (Unaudited)
Three Months Ended June 30, 2022
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Ordinary shares |
Additional Paid-in Capital |
Accumulated Deficit |
Other comprehensive Loss |
Total Stockholders’ Equity |
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Shares |
Amount |
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A$ |
A$ |
A$ |
A$ |
A$ |
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Balances at April 1, 2022 |
( |
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Net loss |
0 | ( |
) | ( |
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Issuance of common stock at A per share, net of issuance costs |
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Other comprehensive loss |
0 | ( |
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Exercise of stock options issued to employees |
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Stock-based compensation expense |
0 | 0 | ||||||||||||||||||||||
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Capitalized stock-based compensation |
0 | |||||||||||||||||||||||
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Balances at June 30, 2022 |
( |
) | ( |
) | ||||||||||||||||||||
Six Months Ended June 30, 2022
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Ordinary shares |
Additional Paid-in Capital |
Accumulated Deficit |
Other comprehensive Income/(Loss) |
Total Stockholders’ Equity |
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Shares |
Amount |
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A$ |
A$ |
A$ |
A$ |
A$ |
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Balances at January 1, 2022 |
( |
) | ( |
) | ||||||||||||||||||||
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Net loss |
0 | ( |
) | ( |
) | |||||||||||||||||||
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Issuance of common stock at A per share, net of issuance costs |
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Other comprehensive income |
0 | ( |
) | ( |
) | |||||||||||||||||||
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Performance awards and exercise of stock options issued to employees |
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Stock-based compensation expense |
0 | 0 | ||||||||||||||||||||||
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Capitalized stock-based compensation |
0 | |||||||||||||||||||||||
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Balances at June 30, 2022 |
( |
) | ( |
) | ||||||||||||||||||||
See accompanying Notes to Consolidated Condensed Financial Statements.
Consolidated Condensed Statements of Changes in Stockholders’ Equity and Comprehensive Income/(Loss) (Unaudited)
Three Months Ended June 30, 2021
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Ordinary shares |
Additional Paid-in Capital |
Accumulated Deficit |
Other comprehensive Loss |
Total Stockholders’ Equity |
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Shares |
Amount |
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A$ |
A$ |
A$ |
A$ |
A$ |
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Balances at April 1, 2021 |
( |
) | ( |
) | ||||||||||||||||||||
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Net loss |
( |
) | ( |
) | ||||||||||||||||||||
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Other comprehensive loss |
0 | ( |
) | ( |
) | |||||||||||||||||||
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Exercise of stock options issued to employees |
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Stock-based compensation expense |
0 | |||||||||||||||||||||||
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Balances at June 30, 2021 |
( |
) | ( |
) | ||||||||||||||||||||
Six Months Ended June 30, 2021
|
Ordinary shares |
Additional Paid-in Capital |
Accumulated Deficit |
Other comprehensive Income/(Loss) |
Total Stockholders’ Equity |
||||||||||||||||||||
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Shares |
Amount |
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A$ |
A$ |
A$ |
A$ |
A$ |
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Balances at January 1, 2021 |
( |
) | ( |
) | ||||||||||||||||||||
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Net loss |
0 | ( |
) | ( |
) | |||||||||||||||||||
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Other comprehensive income |
0 | ( |
) | ( |
) | |||||||||||||||||||
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Exercise of stock options issued to employees |
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Stock-based compensation expense |
0 | |||||||||||||||||||||||
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Balances at June 30, 2021 |
( |
) | ( |
) | ||||||||||||||||||||
See accompanying Notes to Consolidated Condensed Financial Statements.
Consolidated Condensed Statements of Cash Flows (Unaudited)
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Six Months Ended June, |
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2022 |
2021 |
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A$ |
A$ |
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| Cash flows from operating activities: | ||||||||
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Net loss |
( |
) | ( |
) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
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Depreciation and amortization |
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Stock-based compensation expense |
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Non-cash lease expense |
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Unrealized foreign exchange gains |
( |
) | ( |
) | ||||
| Change in assets and liabilities: | ||||||||
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Inventories |
( |
) | ||||||
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Accounts receivable |
( |
) | ( |
) | ||||
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Prepayments and other assets |
( |
) | ( |
) | ||||
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Other non-current assets |
( |
) | ||||||
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Contract liabilities |
( |
) | ( |
) | ||||
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Employee entitlements |
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Accounts payable and accrued expenses |
( |
) | ||||||
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Net cash used in operating activities |
( |
) | ( |
) | ||||
| Cash flows from investing activities: | ||||||||
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Purchases of property, plant and equipment |
( |
) | ( |
) | ||||
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Net cash used in investing activities |
( |
) | ( |
) | ||||
| Cash flows from financing activities: | ||||||||
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Proceeds from borrowings |
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Repayment of borrowings |
( |
) | ||||||
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Proceeds from exercise of stock options issued to employees |
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Proceeds from the issuance of common stock, net of issuance costs |
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Repayment of finance lease liability |
( |
) | ||||||
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Net cash provided by financing activities |
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Net increase/(decrease) in cash, cash equivalents and restricted cash |
( |
) | ||||||
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Cash, cash equivalents and restricted cash at beginning of period |
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Effect of exchange rate fluctuations on the balances of cash held in foreign currencies |
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Cash, cash equivalents and restricted cash at end of period |
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See accompanying Notes to Consolidated Condensed Financial Statements.
1. Our Business
We are a specialist biosensors company focused on commercializing a range of biosensors in oenology (wine industry), human health including oncology, coagulation, COVID-19, women’s health and fertility, non-human and environmental testing using our patented platform technology and hand-held point of use devices.
Key developments during the first half of 2022 include:
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A$ million raised pursuant to a A$ |
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Sentia quarter on quarter direct sales increased |
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Overall sales of Sentia for H1 2022 were in line with H1 2021; |
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Xprecia Prime received regulatory approval to sell in 32 countries in Europe; |
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281 patients have been enrolled in the Xprecia Prime clinical trial in the USA (360 patients required in total); |
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UBI established an Ecommerce website for the sale of our suite of Sentia products in the USA; |
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UBI appointed a Business Development Manager for Sentia Europe; |
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UBI entered into new distribution agreements with Vivelys USA and Vivelys Chile and Vintner Vault (USA) for the sale of Sentia’s wine testing platform device; |
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Our first Sentia sales order placed in the United Kingdom; |
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The finalization of Sentia’s Glucose product; |
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Ongoing development of Sentia wine testing products; |
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The establishment of a distribution centre in the USA to support the global expansion of the Company’s wine testing product sales. This is in addition to the distribution centres we have in Australia and Europe; |
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The continuing successful development and use of aptamer sensing technology on our hand-held platform device; |
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The progression of an Investigational Clinical Study (300 patient/+) for our Tn Antigen biosensor used for the detection, staging and monitoring of cancer; |
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The continued development of our blood glucose monitoring product for dogs and cats with diabetes; |
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The appointment of a Business Development Director for our Petrackr Blood Glucose Monitor in the USA; |
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● |
The company invested A$ |
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o |
A$ |
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o |
A$ |
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o |
A$ |
|
o |
A$ |
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● |
The investment into our manufacturing scale-up project which will add an approximate annual 35 million strip; and |
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● |
Investments in sales and marketing included A$ |
2. Certain Uncertainties
Depending on the duration of the COVID-19 crisis and continued negative impacts on the macroeconomic environment, the Company may experience negative impacts in 2022 which cannot be predicted.
3. Summary of Significant Accounting Policies
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● |
assets and liabilities for each balance sheet item reported are translated at the closing rate at the date of that balance sheet; |
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● |
income and expenses for each income statement item reported are translated at average exchange rates (unless this is not a reasonable approximation of the effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and |
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● |
all resulting exchange differences are recognized as a separate component of equity. |
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Market approach – based on market prices and other information from market transactions involving identical or comparable assets or liabilities. |
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● |
Cost approach – based on the cost to acquire or construct comparable assets less an allowance for functional and/or economic obsolescence. |
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● |
Income approach – based on the present value of a future stream of net cash flows. |
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● |
Quoted prices for identical assets or liabilities in active markets (Level 1 inputs). |
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● |
Quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active or are directly or indirectly observable (Level 2 inputs). |
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● |
Unobservable inputs that reflect estimates and assumptions (Level 3 inputs). |
|
● |
periods covered by an option to extend the lease if the Company is reasonably certain to exercise the extension option; and |
|
● |
periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise the termination option. |
|
a) |
Identifying the contract with a customer; |
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b) |
Identifying the performance obligations within the customer contract; |
|
c) |
Determining the transaction price; |
|
d) |
Allocating the transaction price to the performance obligation; and |
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e) |
Recognizing revenue when/as performance obligations are satisfied. |
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Products and services |
Nature, timing of satisfaction of performance obligations and significant payment terms |
|
Coagulation testing products |
Our point-of-care coagulation testing products use electrochemical cell to measure Prothrombin Time (PT/INR), a test used to monitor the effect of the anticoagulant therapy warfarin.
The performance obligation for the sale of these products is satisfied at a point-in-time when the Company transfers control of the products to its customer. The point of transfer of control of the products is dictated by individual terms contained within a customer agreement, as are the payment terms. The transaction price is fixed.
|
|
Laboratory testing services |
HRL provides non-diagnostic laboratory services and performs these services on behalf of customers.
The performance obligation for the services is satisfied when the testing has been finalized and results have been reported to the customer. In some cases, the performance obligations will be satisfied as predetermined milestones have been achieved by the Company.
Standard payment terms are generally 30-60 days upon invoice date. The transaction price is fixed. |
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Wine testing products |
Our Sentia wine analyzer is used to measure free SO₂ and Malic Acid levels in wine.
The performance obligation for the sale of this product is satisfied at a point-in-time when the Company transfers control of the products to its customer. The point of transfer of control of the products is dictated by the individual terms contained within a customer agreement, as are the individual payment terms. The transaction price is fixed. |
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(1) |
as a |
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(2) |
as a |
4. Cash, cash equivalents and restricted cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated condensed balance sheets that sum to the total of the same such amounts shown in the consolidated condensed statements of cash flows.
|
June 30, 2022 |
December 31, 2021 |
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A$ |
A$ |
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Cash and cash equivalents |
||||||||
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Restricted cash – current assets |
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Restricted cash – non-current assets |
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Restricted cash maintained by the Company in the form of term deposits is as follows:
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June 30, 2022 |
December 31, 2021 |
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A$ |
A$ |
|||||||
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Performance guarantee (a) - current assets |
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Collateral for facilities (b) - non-current assets |
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Performance guarantee (a) - non-current assets |
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(a) |
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(b) |
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Interest earned on the restricted cash for the three months ended June 30, 2022 and 2021 was A$
5. Inventories
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June 30, 2022 |
December 31, 2021 |
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A$ |
A$ |
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Raw materials |
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Work in progress |
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Finished goods |
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6. Receivables
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June 30, 2022 |
December 31, 2021 |
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A$ |
A$ |
|||||||
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Accounts receivable |
||||||||
|
Allowance for credit losses |
||||||||
7. Leases
The Company’s lease portfolio consists primarily of operating leases for office space and equipment with contractual terms expiring from December 2022 to February 2032. Lease contracts may include one or more renewal options that allow the Company to extend the lease. The exercise of lease options is generally at the discretion of the Company. None of the Company’s leases contain residual value guarantees, substantial restrictions, or covenants. The Company’s leases are substantially within Australia and Canada.
(a) Operating Leases
On January 1, 2021, the lease for 1 Corporate Avenue was terminated and a new lease entered into simultaneously. The lease expires on December 31, 2025 with an option to renew the lease for two further terms of years each. The renewal option periods have not been included in the lease term as the Company is not reasonably certain that they will be exercised.
On June 28, 2021, HRL entered into a premises lease, which commenced in January 2022, with a contractual period. The lease does not include an option to renew the lease for a further term.
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June 30, 2022 |
December 31, 2021 |
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|
A$ |
A$ |
|||||||
|
Operating lease right-of-use assets: |
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Non-current |
||||||||
|
Operating lease liabilities: |
||||||||
|
Current |
||||||||
|
Non-current |
||||||||
|
Weighted average remaining lease terms (in years) |
||||||||
|
Weighted average discount rate |
% | % | ||||||
The components of lease income/expense were as follows:
|
Six Months ended June 30, |
||||||||
|
2022 |
2021 |
|||||||
|
A$ |
A$ |
|||||||
|
Fixed payment operating lease expense |
||||||||
|
Short-term lease expense |
||||||||
|
Sub-lease income |
||||||||
The sub-lease income is deemed an operating lease.
The components of the fixed payment operating and short-term lease expense as classified in the consolidated condensed statements of comprehensive income/(loss) are as follows:
|
Six Months ended June 30, |
||||||||
|
2022 |
2021 |
|||||||
|
A$ |
A$ |
|||||||
|
Cost of goods sold |
||||||||
|
Cost of services |
||||||||
|
Research and development |
||||||||
|
Selling, general and administrative |
||||||||
Supplemental cash flow information related to the Company’s leases was as follows:
|
Six Months ended June 30, |
||||||||
|
2022 |
2021 |
|||||||
|
A$ |
A$ |
|||||||
|
Operating cash outflows from operating leases |
||||||||
Supplemental noncash information related to the Company’s leases was as follows:
|
Six Months ended June 30, |
||||||||
|
2022 |
2021 |
|||||||
|
A$ |
A$ |
|||||||
|
Right of use assets obtained in exchange for lease liabilities |
||||||||
|
Right of use asset modifications |
( |
) | ||||||
Future lease payments are as follows:
|
As at June 30, 2022 |
||||
|
A$ |
||||
|
1 year |
||||
|
2 years |
||||
|
3 years |
||||
|
4 years |
||||
|
5 years |
||||
|
Thereafter |
||||
|
Total future lease payments |
||||
|
Less: imputed interest |
( |
) | ||
|
Total operating lease liabilities |
||||
|
Current |
||||
|
Non-current |
||||
(b) Finance Leases
On October 22, 2021, UBS entered into a lease arrangement to install solar panels and inverters ("panels"). The lease commenced in January 2022 upon installation of the panels. The lease has a term of years and an option to acquire at the end of the term.
|
June 30, 2022 |
December 31, 2021 |
|||||||
|
A$ |
A$ |
|||||||
| Finance lease right-of-use assets: | ||||||||
|
Non-current |
||||||||
| Finance lease liabilities: | ||||||||
|
Current |
||||||||
|
Non-current |
||||||||
|
Weighted average remaining lease terms (in years) |
- | |||||||
|
Weighted average discount rate |
% | - | ||||||
The components of lease income/expense were as follows:
|
Six Months ended June 30, |
||||||||
|
2022 |
2021 |
|||||||
|
A$ |
A$ |
|||||||
|
Fixed payment finance lease expense – Amortization |
||||||||
|
Fixed payment finance lease expense – Interest expense |
||||||||
The components of the fixed payment finance lease expense as classified in the consolidated condensed statements of comprehensive income/(loss) are as follows:
|
Six Months ended June 30, |
||||||||
|
2022 |
2021 |
|||||||
|
A$ |
A$ |
|||||||
|
Selling, general and administrative |
||||||||
|
Interest expense |
||||||||
Supplemental cash flow information related to the Company’s leases was as follows:
|
Six Months ended June 30, |
||||||||
|
2022 |
2021 |
|||||||
|
A$ |
A$ |
|||||||
|
Operating cash outflows from finance leases |
||||||||
|
Financing cash outflows from finance leases |
||||||||
Supplemental noncash information related to the Company’s leases was as follows:
|
Six Months ended June 30, |
||||||||
|
2022 |
2021 |
|||||||
|
A$ |
A$ |
|||||||
|
Right of use assets obtained in exchange for lease liabilities |
||||||||
Future lease payments are as follows:
|
As at June 30, 2022 |
||||
|
A$ |
||||
|
1 year |
||||
|
2 years |
||||
|
3 years |
||||
|
4 years |
||||
|
5 years |
||||
|
Thereafter |
||||
|
Total future lease payments |
||||
|
Less: imputed interest |
( |
) | ||
|
Total operating lease liabilities |
||||
|
Current |
||||
|
Non-current |
||||
As of June 30, 2022, the Company has not entered into any operating or finance lease agreements that have not yet commenced.
8. Contingent Consideration
Pursuant to the Siemens Acquisition and the agreement dated September 2019, the Company has agreed to pay US$
9. Other Liabilities
Other liabilities represents a marketing support payment due to one of our partners and is payable in US dollars. The balance will be paid once supporting documentation has been provided to the Company.
10. Borrowings
The unsecured loan is a government guaranteed loan called Canada Emergency Business Account (CEBA) of CAD$
|
● |
the loan is interest-free and no principal repayment is required before December 31, 2023; |
|
● |
if the Company chooses to repay at least CAD$ |
|
● |
if the loan is not repaid by the above mentioned date, it will be converted into a 2-year term loan and will be charged an interest rate of 5% per annum. Interest-only payments are required each month; and |
|
● |
at the end of the 2-year term, the entire balance of the loan is due for repayment by December 31, 2025. |
The secured loan is a short-term loan facility the Company entered into to finance its 2022 insurance premium. The total amount financed was A$
|
● |
the facility is repayable in |
|
● |
interest is being charged at an effective annual interest rate of |
|
● |
The short-term borrowing is secured by proceeds of or payable under any insurance including proceeds or refunds from the cancellation or termination of any insurance. |
11. Revenue
Disaggregation of Revenue
In the following table, revenue is disaggregated by major product and service lines and timing of revenue recognition.
|
Three Months ended June 30, |
Six Months ended June 30, |
|||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
|||||||||||||
|
A$ |
A$ |
A$ |
A$ |
|||||||||||||
| Major product/service lines | ||||||||||||||||
|
Coagulation testing products |
||||||||||||||||
|
Laboratory testing services |
||||||||||||||||
|
Wine testing products |
||||||||||||||||
| Timing of revenue recognition | ||||||||||||||||
|
Products and services transferred at a point in time |
||||||||||||||||
Contract Balances
The following table provides information about receivables and contract liabilities from contracts with customers.
|
June 30, |
||||||||
|
2022 |
2021 |
|||||||
|
A$ |
A$ |
|||||||
|
Receivables |
||||||||
|
Contract liabilities |
||||||||
The Company’s contract liabilities represent the Company’s obligation to transfer products to customers for which the Company has received consideration from customers, but the transfer has not yet been completed.
Significant changes in the contract assets and the contract liabilities balances during the period are as follows:
|
Six Months ended June 30, |
||||||||
|
2022 |
2021 |
|||||||
|
A$ |
A$ |
|||||||
|
Contract Liabilities - Current |
||||||||
|
Opening balance |
||||||||
|
Closing balance |
||||||||
|
Net decrease |
( |
) | ( |
) | ||||
The Company expects all of the Company’s contract liabilities to be realized by December 31, 2022.
12. Other Income
Other income is recognized when there is reasonable assurance that the income will be received and the consideration can be reliably measured.
Other income is as follows for the relevant periods:
|
Three Months ended June 30, |
Six Months ended June 30, |
|||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
|||||||||||||
|
A$ |
A$ |
A$ |
A$ |
|||||||||||||
|
Federal and state government subsidies |
||||||||||||||||
|
Rental income |
||||||||||||||||
|
Other income |
||||||||||||||||
Federal and state government subsidies primarily includes the Canadian Emergency Wage Subsidy which represents assistance provided by government authorities as a stimulus during COVID-19.
13. Total Comprehensive Income/(Loss)
The Company follows ASC 220 – Comprehensive Income. Comprehensive income/(loss) is defined as the total change in shareholders’ equity during the period other than from transactions with shareholders and for the Company, includes net income/(loss).
The tax effect allocated to each component of other comprehensive income/(loss) is as follows:
|
Before-Tax Amount |
Tax (Expense)/ Benefit |
Net-of-Tax Amount |
||||||||||
|
A$ |
A$ |
A$ |
||||||||||
| Six Months Ended June 30, 2022 | ||||||||||||
|
Foreign currency translation reserve |
( |
) | ( |
) | ||||||||
|
Other comprehensive income |
( |
) | ( |
) | ||||||||
|
Six Months Ended June 30, 2021 |
||||||||||||
|
Foreign currency translation reserve |
( |
) | ( |
) | ||||||||
| Other comprehensive loss | ( |
) | ( |
) | ||||||||
14. Related Party Transactions
Details of related party transactions material to the operations of the Group other than compensation arrangements, expense allowances and other similar items in the ordinary course of business, are set out below:
Mr. Coleman is a Non-Executive Chairman of the Company and an Executive Chairman and Associate of Viburnum Funds Pty Ltd (“Viburnum”). Viburnum, as an investment manager for its associated funds, holds a beneficial interest and voting power over approximately
On April 20, 2022, the Company announced a fully underwritten non-renounceable rights issue of new CHESS depositary interests over fully paid ordinary shares in UBI (“New CDIs”) to raise approximately A$
In connection with the Entitlement Offer, on April 19, 2022, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Viburnum (the “Underwriter”). Pursuant to the terms of the Underwriting Agreement, the Underwriter agreed to take up its full entitlement under the Entitlement Offer and fully underwrite the Entitlement Offer, which meant that the Underwriter agreed to subscribe for or procure others to subscribe for all securities (if any) not subscribed for by the Company’s eligible securityholders under the Entitlement Offer. Following the close of the Entitlement Offer,
The Company also agreed, subject to the approval of the stockholders of the Company, to issue to the Underwriter (or its nominee) unlisted options to purchase up to
In accordance with ASC 718, the fair value of the Underwriter Options granted were estimated at the date of the grant using the Trinomial Lattice mode. The key assumptions for the grant were:
|
Tranche 1 |
Tranche 2 |
|||||||
|
Exercise Price ($A) |
||||||||
|
Share Price at Grant Date (A$) |
||||||||
|
Volatility |
% | % | ||||||
|
Maximum Life (years) |
||||||||
|
Risk-Free Interest rate |
% | % | ||||||
|
Fair Value (A$) |
||||||||
Each of the inputs to the Trinomial Lattice model is discussed below.
Share Price and Exercise Price at Valuation Date
The value of the options granted has been determined using the closing price of our common stock trading in the form of CDIs on ASX at the time of grant of the options. The ASX is the only exchange upon which our securities are quoted.
Volatility
We applied volatility having regard to the historical price change of our shares in the form of CDIs available from the ASX.
Risk free rate
The risk free rate which we applied is equivalent to the yield on an Australian government bond with a time to expiry approximately equal to the expected time to expiry on the options being valued.
On May 27, 2022, Viburnum acquired from a member of management, unlisted options to purchase up to
There were no material related party transactions or balances as at June 30, 2022 other than as disclosed above.
15. Commitments and Contingencies
Liabilities for loss contingencies, arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. These were as at June 30, 2022 and December 31, 2021. Purchase commitments are entered into with various parties to purchase products and services such as equipment, technology and consumables used in R&D and commercial activities. Purchase commitments contracted for as at June 30, 2022 and December 31, 2021 were A$
Refer to note 8 for details of the Company’s Contingent Consideration.
16. Segment Information
We operate in one segment. We are a specialist biosensors Company focused on the development, manufacture and commercialization of a range of point of use devices for measuring different analytes across different industries.
We operate predominantly in one geographical area, being Australia.
The Company’s material long-lived assets are predominantly based in Australia.
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our results of operations and financial condition. You should read this analysis in conjunction with our audited consolidated financial statements and related footnotes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our most recent Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (“SEC”). This Form 10-Q contains, including this discussion and analysis, certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) which are intended to be covered by the safe harbors created by such acts. For this purpose, any statements that are not statements of historical fact may be deemed to be forward-looking statements, including statements relating to future events and our future financial performance. Those statements in this Form 10-Q containing the words “anticipates”, “assumes”, “believes”, “can”, “could”, “estimates”, “expects”, “future”, “illustration”, “intends”, “may”, “plans”, “predicts”, “will”, “would” and similar expressions constitute forward-looking statements, although not all forward-looking statements contain such identifying words.
The forward-looking statements contained in this Form 10-Q are based on our current expectations, assumptions, estimates and projections about the Company and its businesses. All such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results to be materially different from those results expressed or implied by these forward-looking statements, including those set forth in this Quarterly Report on Form 10-Q. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
Results of Operations
Analysis of Consolidated Revenue
Our total revenue decreased by 9% during the six months ended June 30, 2022, compared to the same period in the previous financial year.
Revenue from Products
The financial results of the coagulation and wine testing products we sold during the respective periods are as follows:
|
Three Months ended June 30, |
Six Months ended June 30, |
|||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
|||||||||||||
|
A$ |
A$ |
A$ |
A$ |
|||||||||||||
|
Revenue from products |
1,078,117 | 1,407,358 | 2,358,442 | 2,571,048 | ||||||||||||
|
Cost of goods sold |
(383,027 | ) | (864,340 | ) | (1,046,888 | ) | (1,406,377 | ) | ||||||||
|
Gross profit |
695,090 | 543,018 | 1,311,554 | 1,164,671 | ||||||||||||
Our wine testing product sales increased 9% during the three months ended June 30, 2022 and remained consistent during the six months ended June 30, 2022, compared to the same period in the previous financial year. The mix of Sentia sales has moved away from large stocking orders to distributors towards more direct sales to wineries and repeat orders for the consumable test strips.
With regards to our coagulation testing products, we have successfully acquired over 50% of the distributors from the old Siemens distribution network which are now buying directly from us. The decline in coagulation testing product revenue during the three and six months ended June 30, 2022, compared to the same periods in the previous financial year has largely been the result of the time it takes to transition customers to our network and a reduction in sales to Siemens during these periods. Our newly acquired distribution network will also champion the sales of Xprecia Prime, our next generation coagulation testing product.
Revenue from Services
The financial results of the laboratory testing services we provided during the respective periods are as follows:
|
Three Months ended June 30, |
Six Months ended June 30, |
|||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
|||||||||||||
|
A$ |
A$ |
A$ |
A$ |
|||||||||||||
|
Laboratory testing services |
282,457 | 434,921 | 725,345 | 820,840 | ||||||||||||
|
Cost of services |
(151,964 | ) | (323,040 | ) | (792,469 | ) | (620,109 | ) | ||||||||
|
Gross profit |
130,493 | 111,881 | (67,124 | ) | 200,731 | |||||||||||
Revenue from laboratory testing declined during the three and six months ended June 30, 2022, compared to the same periods in the previous financial year due to the timing of completion of a major project for one of HRL’s largest customers. The first half of 2022 has been a transitional period for HRL as they moved the laboratory into a new location, which involved almost 6 weeks of shutdown. Alongside the move to the new location, HRL has invested and expanded its specialist services into inflammatory disease, cytokines and multiplex immunoassay platform. The increase in cost of services between the six months ended June 30, 2022, compared to the prior period was primarily driven by increased rent and on-costs following the relocation and increased salaries and wages due to HRL’s increased headcount.
Adjusted EBITDA
We use Adjusted EBITDA to evaluate our financial performance. Adjusted EBITDA are financial measures that are not presented in accordance with U.S. GAAP. Adjusted EBITDA is net loss before interest, taxes, depreciation, amortization, accretion of asset retirement obligations and stock-based compensation expense. Management believes the presentation of Adjusted EBITDA provides useful information to investors to make informed investment decisions, including our ability to generate earnings sufficient to service our debt and enhances understanding of our financial performance and operational trends. These measures are not in accordance with, or an alternative for, U.S. GAAP. The most comparable U.S. GAAP measure is net loss. Consolidated Adjusted EBITDA should not be considered in isolation or as a substitution for analysis of our results as reported under U.S. GAAP. Additionally, they may not be comparable to other similarly titled measures of other companies.
Adjusted EBITDA for the respective periods and a reconciliation of net loss to Adjusted EBITDA is as follows:
|
Three Months ended June 30, |
Six Months ended June 30, |
|||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
|||||||||||||
|
A$ |
A$ |
A$ |
A$ |
|||||||||||||
|
Net loss |
(4,648,382 | ) | (1,779,804 | ) | (9,178,939 | ) | (3,210,113 | ) | ||||||||
|
Interest income |
(34,012 | ) | (14,384 | ) | (38,615 | ) | (31,744 | ) | ||||||||
|
Interest expense |
5,800 | 0 | 13,262 | 0 | ||||||||||||
|
Depreciation and amortization |
873,518 | 649,081 | 1,525,098 | 1,236,975 | ||||||||||||
|
Accretion expense |
31,906 | 32,492 | 63,813 | 64,984 | ||||||||||||
|
Stock-based compensation expense |
69,585 | 23,229 | 144,224 | 29,611 | ||||||||||||
|
Adjusted EBITDA |
(3,701,585 | ) | (1,089,386 | ) | (7,471,157 | ) | (1,910,287 | ) | ||||||||
The decline in Adjusted EBITDA during the three and six months ended June 30, 2022, compared to the same periods in the previous financial year is primarily a result of increased investment in R&D. The company invested an additional A$1,361,116 and A$3,510,724 in the three and six month periods ended June 30, 2022 (compared to prior periods) of which A$771,544 and A$2,467,583 in the three and six months respectively, was invested into the development of the veterinarian blood glucose product. Additionally, $141,083 and $320,040 was spent on our FDA clinical trial for Xprecia Prime in the three and six month periods ended June 30, 2022. Our veterinarian blood glucose product and Xprecia Prime are in final development stages. Selling, general and administrative expenditure increased as a result of investment into our sales and marketing activities for our Sentia and Xprecia Prime products as we expand into new markets.
Product Support
Product support relates to post-market technical support provided by us for the Xprecia Stride and Wine testing devices.
Depreciation and Amortization Expenses
|
Three Months ended June 30, |
Six Months ended June 30, |
|||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
|||||||||||||
|
A$ |
A$ |
A$ |
A$ |
|||||||||||||
| Depreciation | 463,226 | 241,126 | 708,997 | 425,548 | ||||||||||||
|
Amortization |
410,292 | 407,955 | 816,101 | 811,427 | ||||||||||||
|
Depreciation and amortization |
873,518 | 649,081 | 1,525,098 | 1,236,975 | ||||||||||||
Depreciation of fixed assets is calculated on a straight-line basis over the useful life of property, plant and equipment. Depreciation is allocated to cost of goods sold and R&D based on output. The increase in depreciation during the three and six months ended June 30, 2022, compared to the same periods in the previous financial year is due to certain plant and equipment being fully written off.
Amortization expense predominantly represents intangible assets amortized over their estimated useful lives. These intangible assets were acquired in September 2019 pursuant to the Siemens Acquisition and are being amortized on a straight-line basis over ten years. Amortization expense also includes the amortization expense calculated on the Company’s finance lease liabilities.
Research and Development Expenses
R&D expenditure principally reflects the effort required in product development of the tests we are developing.
The primary focus of the R&D activities during the three and six months ended June 30, 2022 were developing the Company's:
|
● |
additional tests on our wine testing platform; |
|
● |
next generation PT-INR Coagulation platform including FDA clinical trial programs; |
|
● |
Tn Antigen biosensor used for the detection, staging and monitoring of cancer; |
|
● |
biosensor strip and meter to be used for the detection and monitoring of diabetes in non-humans; and |
|
● |
aptamer based sensing platform including a COVID-19 test. |
R&D expenditure increased during the three and six months ended June 30, 2022, compared to the same periods in the previous financial year because of the increased development activities noted above.
The timing and cost of any development program is dependent upon a number of factors including achieving technical objectives, which are inherently uncertain and subsequent regulatory approvals. We have project plans in place for all our development programs which we use to plan, manage and assess our projects. As part of this procedure, we also undertake commercial assessments of such projects to optimize outcomes and decision making.
Additionally, R&D expenses are related to the development of new technologies and products based on the electrochemical cell platform.
The Company conducts R&D activities to build an expanding portfolio of product-based revenues and cash flows and increase the value of the Company’s core technology assets. Research is focused on demonstrating technical feasibility of new technology applications. Development activity is focused on turning these technology platforms into commercial-ready products and represents the majority of the Company’s R&D expenses.
R&D expenses consist of costs associated with research activities, as well as costs associated with our product development efforts, including pilot manufacturing costs. R&D expenses include:
|
● |
consultant and employee related expenses, which include consulting fees, salaries and benefits; |
|
● |
materials and consumables acquired for the research and development activities; |
|
● |
verification and validation work on the various R&D projects including clinical trials; |
|
● |
external research and development expenses incurred under agreements with third party organizations and universities; and |
|
● |
facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities, depreciation of leasehold improvements and equipment and laboratory and other supplies. |
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist principally of salaries and related costs, including stock-based compensation expense for certain personnel. Other selling, general and administrative expenses include sales and marketing costs to support our products in the market, shipping and handling costs incurred when fulfilling customer orders, repairs and maintenance, insurance, facility costs not otherwise included in R&D expenses, consultancy fees and professional fees including legal services and maintenance fees incurred for patent applications, audit and accounting services.
General and administrative expenses increased by 107% and 85% during the three and six months ended June 30, 2022, compared to the same periods in the previous financial year primarily due to an investment in the Company’s sales and marketing strategy. The Company’s direct sales force in the USA and Europe for our wine and coagulation testing products commenced in the first quarter of 2022.
Interest Income
Interest income increased moderately during the three and six months ended June 30, 2022, compared to the same periods in the previous financial year. The increase in interest income is attributable to the higher amount of funds available for investment following the issuance of common stock and higher interest rates.
Financing Costs
Disclosed in this account is accretion expense which is associated with the Company’s asset retirement obligations (“ARO”).
Interest Expense
Interest expense relates to interest being charged on the secured short-term borrowing initiated by the Company for the 2022 financial year and the interest expense on finance lease liabilities.
Research and Development Tax Incentive Income
As at June 30, 2022 there is reasonable assurance that the aggregate turnover of the Company for the year ending December 31, 2022 will be less than A$20,000,000 and accordingly an estimated A$865,422 and A$1,982,614 has been recorded as research and development tax incentive income for the three and six months ended June 30, 2022. The increase year on year is driven by the increase in eligible research and development expenditure incurred in the three and six months ended June 30, 2022 as compared to the same periods in 2021.
Research and development tax incentive income for the 2021 financial year has not yet been received and as such is recorded in “Other current assets” in the consolidated condensed balance sheet.
Exchange Gain/(Loss)
Foreign exchange gains and losses arise from the settlement of foreign currency transactions that are translated into the functional currency using the exchange rates prevailing at the dates of the transactions and from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies.
Other Income
Other income is as follows for the relevant periods:
|
Three Months ended June 30, |
Six Months ended June 30, |
|||||||||||||||
|
2022 |
2021 |
2022 |
2021 |
|||||||||||||
|
A$ |
A$ |
A$ |
A$ |
|||||||||||||
|
Federal and state government subsidies |
0 | 70,009 | 0 | 153,001 | ||||||||||||
|
Rental income |
34,708 | 46,676 | 70,269 | 92,276 | ||||||||||||
|
Other income |
34,602 | 1,087 | 34,783 | 137,712 | ||||||||||||
| 69,310 | 117,772 | 105,052 | 382,989 | |||||||||||||
Federal and state government subsidies primarily includes the Canadian Emergency Wage Subsidy which represents assistance provided by government authorities as a stimulus during COVID-19.
Certain Uncertainties
Depending on the duration of the COVID-19 crisis and continued negative impacts on economic activity, the Company may experience negative impacts in 2022 which cannot be predicted.
Critical Accounting Estimates and Judgments
The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Significant items subject to such estimates and assumptions include deferred income taxes, research and development tax incentive income and stock-based compensation expenses:
Deferred Income Taxes
We compute our deferred income taxes based on the statutory tax rates, future forecasts and tax planning opportunities. Judgement is required in determining our future forecasts and evaluating our tax positions.
Our estimates are made based on the best available information at the time we prepare our consolidated condensed financial statements. In making our estimates, we consider the impact of legislative and judicial developments. As these developments evolve, we update our estimates, which, in turn, may result in adjustments to our effective tax rate.
We anticipate realization of a significant portion of our deferred tax assets through the reversal of existing deferred tax liabilities. Although realization is not assured, management believes it is more likely than not that our deferred tax assets, net of valuation allowances, will be realized.
Uncertain tax positions taken or expected to be taken in a tax return are recognized (or derecognized) in the financial statements when it is more likely than not that the position would be sustained on its technical merits upon examination by tax authorities, taking into account available administrative remedies and litigation. Assessment of uncertain tax positions requires significant judgments relating to the amounts, timing and likelihood of resolution.
Stock-based Compensation Expenses
Probability of attaining vesting conditions and the fair value of the stock-based compensation is highly subjective and requires judgement, and results could change materially if different estimates and assumptions were used. The probability assumptions are critically examined by management each reporting period and reviewed by the board of directors for reasonableness.
Research and Development Tax Incentive Income
The refundable tax offset is one of the key elements of the Australian Government’s support for Australia’s innovation system and if eligible, provides the recipient with cash based upon its eligible research and development activities and expenditures. The calculation of the refundable tax offset requires judgement as to what is eligible research and development activity and expenditure and the outcome will change if different assumptions are used.
Note 3, “Summary of Significant Accounting Policies” in Item 1 of this Form 10-Q and Note 1, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in Part II, Item 8 of the 2021 Form 10-K describes in further detail the significant accounting policies and methods used in the preparation of the Company’s consolidated condensed financial statements. There have been no material changes to the Company’s critical accounting policies and estimates since the 2021 Form 10-K. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recognition of revenue and expenses. Actual results may differ from these estimates.
Financial Condition, Liquidity and Capital Resources
Net Financial Assets
Our net financial assets position is shown below:
|
June 30, 2022 |
December 31, 2021 |
|||||||
|
A$ |
A$ |
|||||||
|
Financial assets |
||||||||
|
Cash and cash equivalents |
31,556,056 | 15,318,201 | ||||||
|
Accounts receivable |
1,217,381 | 476,164 | ||||||
|
Total financial assets |
32,773,437 | 15,794,365 | ||||||
|
Debt |
||||||||
|
Short-term debt/ loan |
222,757 | 64,900 | ||||||
|
Total debt |
222,757 | 64,900 | ||||||
|
Net financial assets |
32,550,680 | 15,729,465 | ||||||
Since inception, we have financed our business primarily through the issuance of equity securities, funding from strategic partners, government grants and rebates (including the research and development tax incentive income), cash flows generated from operations and a loan.
The increase in our net financial assets position is primarily a result of the A$26 million raised pursuant to a A$20 million fully underwritten rights issue and a A$6 million placement, both at A$0.77, which occurred during May 2022.
We believe we have sufficient cash and cash equivalents to fund our operations for at least the next twelve months from the date of issuance. Liquidity risk is the risk that the Company may encounter difficulty meeting obligations associated with financial liabilities. The Company manages liquidity risk through the management of its capital structure. The purpose of liquidity management is to ensure that there is sufficient cash to meet all the financial commitments and obligations of the Company as they come due. In managing the Company’s capital, management estimates future cash requirements by preparing a budget and a multi-year plan for review and approval by the Board of Directors (“the Board”). The budget is reviewed and updated periodically and establishes the approved activities for the next twelve months and estimates the costs associated with those activities. The multi-year plan estimates future activity along with the potential cash requirements and is based upon management’s assessment of current progress along with the expected results from the coming years’ activity. Budget to actual variances are prepared and reviewed by management and are presented on a regular basis to the Board.
The carrying value of the cash and cash equivalents and the accounts receivables approximates fair value because of their short-term nature.
We regularly review all our financial assets for impairment. There were no impairments recognized as at June 30, 2022 or for the year ended December 31, 2021.
The Company is continuing to monitor the potential impact of COVID-19, if any, on the Company’s business and financial position.
Derivative Instruments and Hedging Activities
In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as consider our own and counterparty credit risk. For the six months ended June 30, 2022 and for the year ended December 31, 2021, we did not have any assets or liabilities that utilize Level 3 inputs.
We had no derivatives or outstanding contracts in place through the period ended June 30, 2022 and for the year ended December 31, 2021.
Measures of Liquidity and Capital Resources
The following table provides certain relevant measures of liquidity and capital resources:
|
June 30, 2022 |
December 31, 2021 |
|||||||
|
A$ |
A$ |
|||||||
|
Cash and cash equivalents |
31,556,056 | 15,318,201 | ||||||
|
Working capital |
33,147,791 | 15,448,181 | ||||||
|
Ratio of current assets to current liabilities |
3.98 | 2.64 | ||||||
|
Shareholders’ equity per common share |
0.21 | 0.16 | ||||||
The movement in cash and cash equivalents and working capital (calculated as current assets less current liabilities) during the above periods was primarily the result of the A$26 million raised pursuant to a A$20 million fully underwritten rights issue and a A$6 million placement which occurred in May 2022. This was offset by ongoing investment in our R&D activities and expenditure associated with the general operations of the Company.
We have not identified any collection issues with respect to receivables.
Summary of Cash Flows
|
Six Months ended June 30, 2022 |
Year Ended December 31, 2021 |
|||||||
|
A$ |
A$ |
|||||||
|
Cash provided by/ (used in): |
||||||||
|
Operating activities |
(9,658,341 | ) | (9,896,620 | ) | ||||
|
Investing activities |
(406,134 | ) | (664,584 | ) | ||||
|
Financing activities |
25,282,116 | 95,621 | ||||||
|
Net decrease in cash, cash equivalents and restricted cash |
15,217,641 | (10,465,583 | ) | |||||
Our net cash used in operating activities for all periods represents receipts offset by payments for our R&D projects including efforts involved in establishing and maintaining our manufacturing operations and selling, general and administrative expenditure. Cash outflows from operating activities primarily represent the ongoing investment in our R&D activities and the general operations of the Company.
Our net cash used in investing activities for all periods is primarily for the purchase of various equipment and for the various continuous improvement programs we are undertaking.
Our net cash increase in financing activities for the six months ended June 30, 2022 is driven by proceeds received pursuant to the issuance of common stock and from the short-term loan facility the Company entered into to finance its 2022 insurance premium. This increase was offset by transaction costs incurred to facilitate the issuance of common stock and repayments of the Company’s short-term loan facility.
Off-Balance Sheet Arrangement
As of June 30, 2022 and December 31, 2021, we did not have any off-balance sheet arrangements, as such term is defined under Item 303 of Regulation S-K, that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Segment Operating Performance
We operate in one segment. We are a specialist biosensors Company focused on the development, manufacture and commercialization of a range of point of use devices for measuring different analytes across different industries.
We operate predominantly in one geographical area, being Australia.
The Company’s material long-lived assets are predominantly based in Australia.
Item 3 Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company”, we are not required to provide the information called for by this Item.
Item 4. Controls and Procedures
Disclosure Controls and Procedures.
At the end of the period covered by this report, the Company and management evaluated the effectiveness of the design and operation of its disclosure controls and procedures. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. John Sharman, Principal Executive Officer and Salesh Balak, Principal Financial Officer, reviewed and participated in this evaluation. Based on this evaluation, Messrs. Sharman and Balak concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting.
During the fiscal quarter ended June 30, 2022, there were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation referred to above in this Item 4 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II
Item 1 Legal Proceedings
None.
Item 1A Risk Factors
The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in Part I, Item 1A of the 2021 Form 10-K under the heading “Risk Factors,” any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price. There have been no material changes to the Company’s risk factors since the 2021 Form 10-K.
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3 Defaults Upon Senior Securities
None.
Item 4 Mine Safety Disclosures
Not applicable.
Item 5 Other Information
None.
Item 6 Exhibits
|
Exhibit No |
Description |
Location |
|
|
10.18 |
Filed herewith |
||
|
31.1 |
Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer) |
Filed herewith |
|
|
31.2 |
Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer) |
Filed herewith |
|
|
32 |
Furnished herewith |
||
|
101 |
The following materials from the Universal Biosensors, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 formatted in Inline Extensible Business Reporting Language (XBRL): (i) the Consolidated Condensed Balance Sheets, (ii) the Consolidated Condensed Statements of Comprehensive Income/(Loss), (iii) the Consolidated Condensed Statements of Changes in Stockholders’ Equity and Comprehensive Income/(Loss), (iv) the Consolidated Condensed Statements of Cash Flows and (v) the Notes to Consolidated Condensed Financial Statements |
As provided in Rule 406T of Regulation S-T, this information is furnished herewith and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934. |
|
|
104 |
Cover page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
UNIVERSAL BIOSENSORS, INC. |
|||
|
By: |
/s/ John Sharman |
||
|
Date: August 10, 2022 |
John Sharman |
||
|
Principal Executive Officer |
|||
|
By: |
/s/ Salesh Balak |
||
|
Date: August 10, 2022 |
Salesh Balak |
||
|
Principal Financial Officer |
