Australia | | | 4911 | | | 98-1634034 |
(State or other jurisdiction of incorporation or organization) | | | (Primary Standard Industrial Classification Code Number) | | | (I.R.S. Employer Identification Number) |
John T. Gaffney, Esq. Eric M. Scarazzo, Esq. Gibson, Dunn & Crutcher LLP 200 Park Avenue New York, New York 10166 Tel: (212) 351-4000 Fax: (212) 351-4035 | | | Jonathan J. Russo, Esq. Pillsbury Winthrop Shaw Pittman LLP 31 West 52nd Street New York, New York 10019 Tel: (212) 858-1000 Fax: (212) 858-1500 |
Title of Each Class of Securities to be Registered | | | Amount to be registered(1) | | | Proposed Maximum Offering Price Per Share(1) | | | Proposed Maximum Aggregate Offering Price(1)(4) | | | Amount of Registration Fee(5) |
Ordinary Shares, no par value | | | 7,187,500 | | | US$9.00 | | | US$64,687,500.00 | | | US$5,996.53 |
Underwriter’s Warrants(2)(3) | | | — | | | — | | | — | | | — |
Ordinary Shares underlying Underwriter’s Warrants | | | 503,125 | | | US$11.25 | | | US$ 5,660,156.25 | | | US$ 524.70 |
Total | | | 7,690,625 | | | — | | | US$70,347,656.25 | | | US$6,521.23 |
(1) | Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended. |
(2) | In accordance with Rule 457(g) under the Securities Act of 1933, as amended, because the Registrant’s Ordinary Shares underlying the warrants are registered hereby, no separate registration fee is required with respect to the warrants registered hereby. |
(3) | Registers warrants to be granted to the underwriter, or designees, for an amount equal to 7% of the number of Ordinary Shares sold to the public, and assuming a per share exercise price equal to 125% of the price per share in this offering. See “Underwriting” on page 116. |
(4) | Includes the aggregate offering price of additional shares that the underwriter has the option to purchase, if any. See “Underwriting” on page 116. |
(5) | The registrant previously paid US$4,960 in connection with a prior filing of the registration statement. |
Preliminary Prospectus | | | Subject to Completion, dated January 6, 2022 |
| | Per Ordinary Share(2) | | | Total | |
Public offering price | | | US$ | | | US$ |
Underwriting discounts and commissions | | | US$ | | | US$ |
Proceeds, before expenses, to us(1) | | | US$ | | | US$ |
(1) | We have agreed to issue warrants to the underwriter and reimburse the underwriter for certain expenses. See “Underwriting,” on page 116. |
(2) | Assumes no exercise of the over-allotment option by the underwriter. |
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• | “Verdant” refers to Verdant Earth Technologies Limited, an Australian corporation; |
• | “the Company,” “we,” “us,” or “our” refer to Verdant and its consolidated subsidiaries, through which it conducts its business; |
• | “tonne” refer to a metric ton, which equals approximately 2,204 pounds; |
• | “shares” or “Ordinary Shares” refers to Ordinary Shares of Verdant; and |
• | “Corporations Act” means the Australian Corporations Act 2001 (Cth). |
• | our goals and strategies, and the goals and strategies of our businesses, including with respect to the development and expansion of our business; |
• | potential projects, including the location, nature, fuel source and expected capacity of such projects; |
• | our capital commitments and/or intentions with respect to our business, including the sufficiency of our liquidity and capital resources; |
• | the nature and extent of future competition in the energy industry in the markets in which we plan to operate; |
• | expected supply and demand trends in the Australian power market; |
• | our ability to finance existing, and to source and finance new and greenfield projects and acquisitions; |
• | the expected cost and expected timing of completion of our existing project and proposed projects and the anticipated capacity and results of such projects; |
• | our ability to secure, or renew, appropriate governmental and regulatory licenses and approvals for our existing project and our proposed projects, including our ability to obtain a development consent for the Redbank Power Station; |
• | the price of, and our ability to successfully integrate, any acquired projects or businesses; |
• | the expected cash flows from our electricity generation and future green hydrogen production businesses; |
• | our planned capital expenditures; |
• | our ability to successfully pursue renewable energy-based projects and acquisition opportunities; |
• | our ability to obtain appropriate connection agreements; |
• | our ability to enter into supply and generation agreements on competitive terms; |
• | our ability to secure fuels, including biomass, timber waste and other fuels, to operate our power generation plant and, in turn, power our hydrogen production plant; |
• | the performance and reliability of our future electricity generation plant and green hydrogen production plant and our ability to manage our operation and maintenance costs; |
• | the expected cost and timing of the Redbank Recommission Project (as defined herein); |
• | expected growth in demand for electricity and hydrogen in the markets that we plan to serve; |
• | the legal and regulatory framework of the energy industry at the national, regional or municipal level in Australia; |
• | the timing for the determination of all relevant consents, approvals and licenses required for the Redbank Recommission Project and the Verdant HV Hydrogen Project, including our ability to obtain a development consent for the Redbank Power Station; |
• | increased development costs, and the impact such increased costs could have on the development of additional power generation assets and the value of our assets, particularly with respect to electric and hydrogen power plants; |
• | expected trends in energy consumption, particularly in Australia, Japan and South Korea; and |
• | our intended use of proceeds from this offering. |
• | The Paris Agreement, which to date has been signed by 191 states and the European Union, aims to limit CO2 emissions to net zero emissions globally in the second half of the century. Signatories to the agreement must submit emissions reduction commitments. The NSW government has committed to an aspirational objective of achieving net zero emissions by 2050. Additionally, approximately 70% of Australia’s major trading partners have pledged to achieve net zero emissions by 2050 or 2060, including Japan, South Korea, the United States and the European Union. |
• | The potential for hydrogen to play a key role in achieving net zero emissions if it is produced from renewable energy. According to Bloomberg New Energy Finance, green hydrogen could provide up to 22% of global energy needs by 2050, cutting CO2 emissions by up to 23%. According to MarketsandMarkets, the global hydrogen fuel generation market is projected to reach approximately US$201 billion by 2025. |
• | Commitment to national hydrogen strategies by over 30 countries, including Australia, Japan, South Korea and the United States, to transform themselves into hydrogen fueled economies in the next 30 years and to make significant investments in research, development and commercialization of green hydrogen. Japan has allocated approximately US$19 billion to a Green Innovation Fund (which includes hydrogen development), South Korea plans to spend approximately US$17 billion on green mobility (including hydrogen) and the United States has earmarked approximately US$8 billion to build several “regional clean hydrogen hubs” in the proposed bipartisan infrastructure legislation currently in discussions in the United States House of Representatives. Additionally, Japan and South Korea have signed a cooperation agreement and letter of intent with Australia, respectively, to support future hydrogen export from Australia and to develop international certification standards for hydrogen trade. |
• | Australia’s positioning to play a key role in the global shift to hydrogen-fueled economies based on its: (1) abundant renewable energy resources available at low cost, which are essential for green hydrogen to reach scale; (2) developed regulatory, safety and market infrastructure that is necessary for the industrialization of green hydrogen production; and (3) geographic proximity to Asian markets where demand for green hydrogen is expected to grow in the coming years, including Japan, South Korea, China and Singapore. |
• | Our baseload electric power plant gives us financial advantages. We own and are recommissioning a coal-fired baseload electric power plant, which we acquired at a discount to greenfield replacement cost, and are in the process of converting it into a renewable energy plant. Because the plant has substantially all of the necessary infrastructure in place, including primary power generating equipment and the balance-of-plant systems, we estimate that the cost of the Redbank Recommission Project will be significantly lower than the cost of constructing a new standalone renewable energy plant of similar generation capacity. Currently, when completed, we expect the plant will be one of the largest green baseload generators in Australia (excluding hydroelectric plants). |
• | Short recommissioning timeline and payback period for our Redbank Recommission Project. We estimate the recommissioning period of the Redbank Power Station to be approximately 10 months from the completion of this offering, as opposed to the typical power generation plant development and construction timeline for equivalent electrical output of several years. In addition, unlike many infrastructure projects of similar size, the payback period for the Redbank Recommission Project is anticipated to be less than five full years of operations, based on the low upfront capital costs, assuming (i) operation on a stand-alone basis, (ii) no delays or obstacles in the regulatory approval process and (iii) earnings based on the wholesale price of energy sold into the NEM, our entitlement to and average pricing of LGCs and tipping fees, and operating costs at levels similar to the historic operating costs of the Redbank Power Station. See “Business—Sources of Revenue.” |
• | We expect that the Verdant HV Hydrogen Plant, once completed, will benefit from being close to both the Sydney domestic market and the Port of Newcastle. Once completed, our Verdant HV Hydrogen Plant will be strategically positioned with access to both large local markets on the east coast of Australia, as well as to Asian markets via ports. The planned site for the Verdant HV Hydrogen Plant will be well situated, via major highways, to the Port of Newcastle, Australia’s third largest port by volume, and to Sydney, Australia’s largest city. It will also be adjacent to a major railway with direct access to the east coast rail network and the Port of Newcastle. |
• | Our Verdant HV Power Station and Verdant HV Hydrogen Plant, once completed, are expected to have the flexibility to generate multiple revenue streams, including electricity sales, green certificates tipping fees and revenue from the sale of green hydrogen. The Verdant HV Power Station, when operating solely on sustainable forestry and timber residues, is expected to generate income from the sale of electricity and the generation and sale of LGCs (until the program’s expiration in 2030). Following receipt of all applicable approvals, as described in “—Regulatory Matters,” the Verdant HV Power Station can also generate tipping fees for disposing of commercial waste timber from commercial recycling sources (including post consumer waste; wood waste from mixed waste streams, such as construction and demolition waste; source separated green waste; treated timber; and painted/coated wood and most engineered wood products (collectively, “commercial waste timber”)). Following the planned construction and commencement of the Verdant HV Hydrogen Plant, we will begin to generate sales from the production of green hydrogen. We plan to grow the production of green hydrogen based on market demand and financial returns relative to the sale of green electricity, subject to the requisite governmental and regulatory approvals and the receipt of additional required financing. Additionally, we plan to build flexibility into our hydrogen contracts such that in times of high electricity demand or a shortage in supply leading to high energy prices, we are able to elect to sell green energy into the grid (subject to satisfying any green hydrogen offtake agreements). |
• | Competitive advantage over other new entrants and access to new project opportunities for green hydrogen projects via our experienced senior management team with a history of acquiring, developing, financing, building and operating businesses in the energy industry. Management has previously held senior business development, financial, operations, and sales positions at private and publicly traded energy companies, including renewable energy operations. We believe our senior management team has strong relationships in Australia’s renewable energy industry, including with key biomass feed stock sources, key plant engineering firms and related supply chain partners in Australia and Asia. We believe that these relationships may give us a competitive advantage over other new entrants. In addition, we believe we will be able to leverage our management’s relationships, built over decades, to identify new project opportunities for green hydrogen projects. |
• | Establishing a green energy and green hydrogen project by leveraging our baseload green power project. Subject to receipt of the requisite governmental and regulatory approvals, we intend to recommission the 146 MW Redbank Power Station, which we believe provides us significant financial advantages over green field power production development. Upon completion of the Redbank Recommission Project, we plan to commence electricity sales into the NEM, which we believe can be done profitably, to support the development of our Verdant HV Hydrogen Project. Then, subject to available capital and the receipt of the requisite governmental and regulatory approvals, we intend to build out an integrated green hydrogen production facility. |
• | Leverage our expected position as an early mover in the green hydrogen market to identify and create a network of green hydrogen project opportunities to become a leading green hydrogen provider for Australia. We believe successful development of the Verdant HV Hydrogen Project would make us an early mover of green hydrogen production in Australia and allow us to build a significant |
• | Utilize our expected position as a future producer of green hydrogen, from strategically positioned Australia, to develop opportunities that facilitate the adoption of, and demand for, green hydrogen and its export to high demand markets such as Asia. We believe our expected position as a future producer of green hydrogen and Australia’s regulatory, safety and market infrastructure will help provide opportunities to facilitate adoption and demand of green hydrogen in Australia and in nearby Asian countries like Japan and South Korea. We intend to leverage our expected early mover position and geographic proximity to and relationships with nearby Asian countries in the energy space to take advantage of the continued growth of the market for green hydrogen in Asia. |
• | Leverage our status as a U.S. publicly-traded company and access to the capital markets to support inorganic growth. We believe our initial public offering will provide us with a competitive advantage in developing and building out potential green hydrogen projects in Australia. |
• | the last day of the fiscal year during which we have total annual gross revenues of US$1.07 billion (as such amount is indexed for inflation every five years by the SEC) or more; |
• | the last day of our fiscal year following the fifth anniversary of the completion of our first sale of common equity securities pursuant to an effective registration statement under the Securities Act; |
• | the date on which we have, during the previous three-year period, issued more than US$1 billion in non-convertible debt; or |
• | the date on which we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our Ordinary Shares that are held by non-affiliates exceeds US$700 million as of the last day of our most recently completed second fiscal quarter. |
• | Our results of operations and financial condition are dependent upon the economic, environmental, social and political conditions in Australia. |
• | The global pandemic arising from the outbreak and spread of coronavirus (“COVID-19”) has had, and may continue to have, a significant impact on the energy industry and the macro-economic environment in which we plan to operate. |
• | Our lack of any significant operating history may make it difficult for you to evaluate our future viability. |
• | Our financial statements contain an explanatory paragraph regarding uncertainty as our ability to raise capital and therefore cast substantial doubt about our ability to continue as a going concern. |
• | We plan to operate in highly competitive energy and power markets. |
• | We will be exposed to electricity spot market, fuel and other commodity price volatility. |
• | We have limited experience producing green hydrogen on a commercial basis. |
• | The generation of green hydrogen by us and our competitors may outpace the demand for green hydrogen, resulting in an oversupply and lower than expected prices. |
• | Our revenue and profitability will initially rely on our ability to generate and sell electricity, and once our planned Verdant HV Hydrogen Plant is operational, will thereafter rely substantially on our ability to sell green hydrogen, and disruption in the operation of our planned plants for any reason will have an adverse effect on our operating and financial performance. |
• | We may be unsuccessful or face delays in recommissioning the Verdant HV Power Station, and such delays may have an adverse effect on our expected cash flows and operating and financial performance. |
• | Once operational, our Verdant HV Power Station will rely on power transmission and distribution facilities that we do not own or control and that may be subject to transmission constraints. If these facilities fail to provide us with adequate capacity, we may be restricted in our ability to deliver wholesale electric power and we may either incur additional costs or forego revenues. |
• | The results of the full-scale feasibility study on the Verdant HV Hydrogen Project may not be favorable, and we may be unable to pursue the Verdant HV Hydrogen Project. |
• | We do not know with certainty what the likely price of green hydrogen fuel will be at the time that our Verdant HV Hydrogen Plant becomes operational, if ever, and therefore our Verdant HV Hydrogen Project may not generate expected levels of revenue and our projections of financial feasibility are subject to inherent risk. |
• | We may be unable to access the capital or financial markets on favorable terms or at all, which would impede our ability to meet our funding requirements and successfully recommission, construct and develop our proposed projects. |
• | Proposed and potential recommissioning, construction or development projects may not be completed or, if completed, may not be completed on time or perform as expected. |
• | Our expansion, development and acquisition strategy may be limited due to market conditions beyond our control. We may also be unable to identify suitable assets for acquisition. |
• | We may not be able to enter into long-term contracts for the sale of green hydrogen, which would reduce volatility in our results of operations, or secure appropriate shipping for export of green hydrogen. |
• | We may be unable to secure biomass for the Verdant HV Power Station and be exposed to significant financial credit or performance risk. |
• | If the Verdant HV Power Station is unable to provide electricity to the Verdant HV Hydrogen Plant, the Verdant HV Hydrogen Plant will lose its ability to produce green energy. |
• | In order to complete the Redbank Recommission Project and to further develop the Verdant HV Power Station and the Verdant HV Hydrogen Project, a number of commonwealth, state and local regulatory approvals and licenses are required, including a development consent to convert our facility from a coal to biomass fuel source, which we have not received as of the date of this prospectus. Obtaining such approvals and licenses can be costly and time-consuming and our business and anticipated profitability may be adversely affected if we do not timely obtain required approvals or licenses. |
• | We may not acquire the necessary approvals and effect the necessary policy changes to use commercial waste timber or alternatively the government program that provides these incentives could end, which would limit our access to revenues through tipping fees. |
• | The Australian electricity market in which we operate is subject to various government regulations. |
• | The variation, reduction or elimination of government economic incentives for renewable energy technologies or other related policies or any change in the market design of the NEM could adversely affect our business, financial condition and results of operations. |
• | Our facilities, operations, equipment and new projects are subject to numerous environmental, health and safety laws and regulations that may expose us to significant costs and liabilities. |
• | We will need to comply with Australian regulations regarding the use of water, including the acquisition of the requisite water access licenses. |
• | The existing development consent for the Redbank Power Station allows the power station to operate until 2031, and we will need to modify the development consent in order to extend the operating life of the plant beyond 2031. |
• | Certain Australian government regulations that we will have to comply with require conducting environmental assessments that may cause delay in our planned projects. |
• | We are incorporated in Australia and our shareholders may have greater difficulty in protecting their interests than they would as shareholders of a corporation incorporated in the United States. |
• | It may be difficult to enforce a judgment of U.S. courts for civil liabilities under U.S. federal securities laws against us, our directors or officers in Australia. |
• | We are subject to the laws of Australia, which differ in certain material respects from the laws of the United States. |
• | Our constitution provides that courts having jurisdiction in Western Australia have non-exclusive jurisdiction to settle any dispute arising out of or in connection with our constitution and each of our shareholders irrevocably submits to the jurisdiction of such courts, which could limit our shareholders' ability to obtain what such shareholders believe to be a favorable judicial forum for disputes with us or our directors, officers or other employees. |
• | We are a “foreign private issuer” under U.S. securities laws and, as a result, are subject to disclosure obligations that are different from those applicable to U.S. domestic issuers listed on the Nasdaq Capital Market. |
• | We are an “emerging growth company,” and our election to comply with the reduced disclosure requirements as a public company may make our Ordinary Shares less attractive to investors. |
• | The market price of our Ordinary Shares could be adversely affected by future sales and distributions of our Ordinary Shares or the perception that such sales and distributions may occur. |
• | Because our Chief Executive Officer will hold his Ordinary Shares through other entities he controls, conflicts of interest may arise between him, as an executive officer of the Company, and entities controlled by him that are holders of our Ordinary Shares. |
(1) | The number of Ordinary Shares outstanding after this offering is based on 16,017,808 Ordinary Shares outstanding as of June 30, 2021, and excludes: |
• | 500,000 Ordinary Shares issuable upon the vesting of performance shares outstanding, which we refer to as the Performance Shares, pursuant to a Sale and Purchase Agreement dated February 17, 2021, which we refer to as the Sale and Purchase Agreement, which shares are subject to repurchase by us at a nominal amount if applicable vesting conditions are not satisfied; |
• | 1,077,778 Ordinary Shares issuable upon the optional conversion of approximately A$1,940,000 (or US$1,454,030) of outstanding indebtedness under Convertible Notes due November 2021 and December 2021, which we refer to as the 2021 Notes; |
• | an aggregate of 3,353,672 Ordinary Shares issuable upon the exercise of share options outstanding as of June 30, 2021, which includes options to purchase (i) 368,197 Ordinary Shares at an exercise price of A$6.000 (or US$4.380), (ii) 1,200,000 Ordinary Shares at an exercise price of A$1.500 (or US$1.100) and (iii) 1,785,475 Ordinary Shares at an exercise price of A$4.000 (or US$2.920); |
• | warrants to be issued to the underwriter upon the completion of this offering in an amount equal to 7% of the Ordinary Shares sold in this offering, as described in “Underwriting—Other Relationships”; and |
• | five-year warrants issued to Digital Offering, LLC, which we refer to as Digital Offering, for the purchase of 204,493 Ordinary Shares, exercisable at any time at an exercise price of US$0.20, and five-year warrants to be issued to Digital Offering for the purchase of 0.5% of the Ordinary Shares outstanding after the completion of this offering, exercisable at an exercise price of US$0.20 if the volume weighted average price of our Ordinary Shares is at least 120% of the initial public offering price for 30 consecutive trading days within the first six months after the completion of this offering, as described in “Underwriting—Other Relationships.” |
• | a 1-for-20 reverse share split of our Ordinary Shares to be effected immediately prior to the pricing of this offering; |
• | no exercise by the underwriter of its option to purchase additional Ordinary Shares in this offering; and |
• | no exercise of the outstanding stock options or conversion of performance shares described above. |
• | heightened economic volatility; |
• | difficulty in obtaining authorizations, permits and licenses required for the operation of our projects and planned projects; |
• | fluctuations in revenues, operating margins and/or other financial measures due to currency exchange rate fluctuations and restrictions on currency and earnings repatriation; |
• | trade protection measures, import or export restrictions, licensing requirements and environmental, codes and standards; |
• | issues related to occupational safety, work hazard, and adherence to local labor laws and regulations; |
• | Potentially adverse tax developments or interpretations; |
• | changes in political, social and/or economic conditions; |
• | fluctuations in the availability of funding; |
• | changes in our relationships with the different stakeholders in the communities surrounding our facilities; and |
• | changes in the regulatory and environmental legal framework, including the costs of complying with environmental and energy regulations. |
• | Economic risk - ongoing restrictions and uncertainty caused by COVID-19 may result in an overall economic downturn that adversely affects demand for our energy generation; and |
• | Operational risk - the ongoing COVID-19 pandemic may disrupt our planned operations, sourcing of fuels and/or the supply chain related to our business. Supply shortages and higher operating costs for our business may arise if the manufacturers and suppliers of components, spare parts, fuel and other inputs are disrupted, temporarily closed or experience worker shortages as a result of COVID-19 travel and work related restrictions or backlogs that result from previous restrictions that take time to be rectified. If manufacturers' and suppliers' operations are curtailed or unable to service the demand, we may need to seek alternate sources, which may not be available or be more expensive and less reliable and ultimately our financial and operating performance may be adversely impacted. |
• | the initiation, progress, timing, costs and results of our Redbank Recommission Project, including the necessary refurbishment or update of certain key plant infrastructure; |
• | costs associated with expanding our organization, including our management infrastructure; |
• | the costs involved in filing development applications and addressing subsequent queries or objections to those applications raised by third parties and potentially appealing the decisions of various governmental authorities; |
• | the cost of acquiring water rights in an amount sufficient to run the Verdant HV Power Station and any delays or additional costs that we may encounter in connection therewith; |
• | the time and costs involved in obtaining the requisite governmental and regulatory approvals for our planned operations (including environmental approvals, licenses and levies) and any delays we may encounter as a result of evolving governmental or regulatory requirements or adverse results with respect to any of these planned operations; |
• | the revenue we expect to generate, which will depend in part on energy prices in the wholesale spot market; |
• | selling and marketing activities undertaken in connection with the sale of output from the Verdant HV Power Station; and |
• | the costs of operating as a public listed company in the United States. |
• | adverse economic conditions; |
• | adverse market conditions in the global financial and capital markets; |
• | poor performance and health of the green energy or green hydrogen industries in general; |
• | bankruptcy or financial distress of unrelated green energy or green hydrogen companies or marketers; |
• | significant decrease in the demand for green energy or green hydrogen in Australia or Asia; or |
• | adverse regulatory actions that affect our projects or the use of green energy or green hydrogen generally. |
• | unanticipated cost overruns; |
• | claims from contractors; |
• | an inability to obtain financing at affordable rates or at all; |
• | delays in obtaining necessary governmental and regulatory permits and licenses, including environmental permits; |
• | design, engineering, equipment manufacturing, environmental and geological problems and defects; |
• | adverse changes in the political and regulatory environment in the country in which the project is located; |
• | native title and cultural heritage requirements of Australia’s indigenous communities; |
• | the inability to obtain an adequate water rights; |
• | opposition by political, environmental and other local groups; |
• | shortages or increases in the price of equipment, fuel or other materials or labor; |
• | work stoppages or other labor disputes; |
• | adverse weather conditions, natural disasters, accidents or other unforeseen events; and |
• | the inability to perform under power purchase agreements as a result of any delays in the plants becoming operational or material defects to the plants after reaching the commercial operation date. |
• | acquired businesses may not perform as expected; |
• | we may incur unforeseen obligations or liabilities, which may entail significant expense; |
• | the fuel supply needed to operate an acquired generation business at full capacity may not be available; |
• | connection to the grid, where secured, may be subject to prejudicial terms or marginal loss factors and suffer disruption or curtailment; |
• | acquired businesses may not generate sufficient cash flow to support existing indebtedness, the indebtedness incurred to acquire them or the capital expenditures needed to operate them; |
• | the rate of return from acquired businesses may be lower than anticipated; |
• | any benefits gained may not outweigh the management and personnel resources which will need to be diverted from our operations to achieve those benefits; and |
• | we may not be able to expand as planned, manage the acquired company’s activities and achieve the economies of scale and any expected efficiency or other gains we had planned, which often drive such acquisition decisions. |
• | physical damage to access communications lines, including damage due to theft, vandalism, terrorism or other similar events; |
• | energy surges or outages; |
• | software defects; |
• | scarcity of network capacity and equipment; |
• | disruptions beyond our control; |
• | breaches of security, including cyber-attacks and other external attacks; and |
• | natural disasters. |
• | modification of a development consent (initially granted by Singleton Shire Council in March 1994 to operate the Redbank Power Station using coal washery tailings) to authorize the use of biomass material as part of the Redbank Recommission Project and to extend the consent beyond April 2031; |
• | alternatively to the above modified consent, and to the extent we are not granted a modified consent, a standalone development consent from the local council, the NSW Government or the Land and Environment Court to enable the Redbank Power Station to operate using a fuel source of 100% biomass waste and to extend the consent beyond April 2031; |
• | a separate development consent from the local council, the NSW Government or the Land and Environment Court to permit the use of commercial waste timber as a fuel, together with a request to the EPA to amend the Eligible Waste Fuel Guidelines or to amend its Energy from Waste Infrastructure Plan to enable the use of commercial waste timber as a fuel source; |
• | Resource Recovery Orders and Exemptions from the EPA to (i) to enable the receipt of eligible biomass material and (ii) to enable the receipt of construction and demolition waste, in particular (which is required to receive tipping fees); |
• | a development consent from the local council, the NSW Government or the Land and Environment Court for the construction and operation of the Verdant HV Hydrogen Plant; |
• | Federal Government environmental approval to the extent the planned Verdant HV Power Station and the Verdant HV Hydrogen Plant is considered to have a significant impact on certain aspects of the environment such as wetlands, migratory species or listed threatened species and ecological communities; |
• | an updated Environmental Protection License (“EPL”) to authorize the use of biomass at the Redbank Power Station and subsequently authorize the planned Verdant HV Hydrogen Project. The updated EPL will also need to authorize the receipt and storage of biomass material before it is used in the Redbank Power Station; |
• | registration with AEMO to participate in the NEM; |
• | sufficient water access licenses on the open market to account for the take of water that is required for the Redbank Recommission Project and the operation of the planned Verdant HV Power Station as well as any additional water required in the future as it transitions into the planned Verdant HV Hydrogen Project; and |
• | sufficient credits under an NSW tradeable emission scheme to authorize the discharge of saline water into the Hunter River Catchment from the Verdant HV Power Station. |
• | a shareholder's claim to a dividend or return of capital; |
• | the election of a shareholder for appointment as a director, secretary, or other officer; |
• | a decision of ours to do or refrain from doing something we were entitled or empowered to do by our constitution; and |
• | the removal of a director or officer for breach of our constitution. |
• | Nasdaq's requirement that an issuer provide for a quorum for any meeting of the holders of ordinary shares, which quorum may not be less than 33 1/3% of the outstanding shares of an issuer's voting ordinary shares. In compliance with Australian law, our Constitution provides that two shareholders present shall constitute a quorum for a general meeting. |
• | Nasdaq’s requirement that we establish a compensation committee and that all members of such committee be “independent” as defined in the Nasdaq rules. Nasdaq rules would require that compensation be determined, or recommended to the Board for determination, either by a compensation committee comprised of independent directors or by a majority of the independent directors on the Board. Instead, compensation of our directors and officers will be determined by the Board. |
• | Nasdaq’s requirement that we establish a nominating committee and that all members of such committee be “independent” as defined in the Nasdaq rules. Nasdaq rules would require that nominations be determined, or recommended to the Board for determination, either by a nominating committee comprised of independent directors or by a majority of the independent directors on the Board. The ASX Listing Rules and Australian law do not require an Australian company to establish a nominating committee. As such, nominations of persons for election to the Board of Directors will be determined by the Board. |
• | fluctuations in our financial performance; |
• | economic and stock market conditions generally and specifically as they may impact us, participants in our industry or comparable companies; |
• | changes in financial estimates and recommendations by securities analysts following our Ordinary Shares or comparable companies; |
• | earnings and other announcements by, and changes in market evaluations of, us, participants in our industry or comparable companies; |
• | our ability to meet or exceed any future earnings guidance we may issue; |
• | changes in business or regulatory conditions affecting us, participants in our industry or comparable companies; |
• | changes in accounting standards, policies, guidance, interpretations or principles; |
• | announcements or implementation by our competitors or us of acquisitions, technological innovations, or other strategic actions by our competitors; or |
• | trading volume of our Ordinary Shares or sales of shares by our management team, directors or principal shareholders. |
• | on an actual basis (after giving effect to the 1-for-20 reverse share split of our Ordinary Shares to be effective immediately prior to the pricing of this offering); and |
• | on an as-adjusted basis to further give effect to the issuance of and sale of 6,250,000 Ordinary Shares in this offering and the application of the net proceeds from this offering to repay the current and non-current portions of loans outstanding, as described under “Use of Proceeds,” at a price of US$8.00 per ordinary share (the midpoint of the price range set forth on the cover of this prospectus) after deducting underwriting discounts, commissions and estimated offering expenses payable by us. |
(in thousands) | | | Actual | | | As Adjusted |
Cash and cash equivalents | | | A$ 4,273 | | | A$ 59,799 |
Non-current debt | | | 3,702 | | | — |
Equity | | | | | ||
Contributed equity | | | 20,140 | | | 82,022 |
Reserves | | | 2,548 | | | 2,548 |
Accumulated losses | | | (19,524) | | | (20,506) |
Total equity | | | A$ 3,164 | | | A$ 64,064 |
Total capitalization | | | A$ 6,236 | | | A$ 64,064 |
• | 500,000 Ordinary Shares issuable upon the vesting of the Performance Shares pursuant to the Sale and Purchase Agreement, which shares are subject to repurchase by us at a nominal amount if applicable vesting conditions are not satisfied; |
• | 1,077,778 Ordinary Shares issuable upon the optional conversion of approximately A$1,940,000 (or US$1,454,030) of outstanding indebtedness under the 2021 Notes; |
• | an aggregate of 3,353,672 Ordinary Shares issuable upon the exercise of share options outstanding as of June 30, 2021, which includes options to purchase (i) 368,197 Ordinary Shares at an exercise price of A$6.000 (or US$4.380), (ii) 1,200,000 Ordinary Shares at an exercise price of A$1.500 (or US$1.100) and (iii) 1,785,475 Ordinary Shares at an exercise price of A$4.000 (or US$2.920); |
• | warrants to be issued to the underwriter upon the completion of this offering in an amount equal to 7% of the Ordinary Shares sold in this offering, as described in “Underwriting—Other Relationships”; and |
• | five-year warrants issued to Digital Offering for the purchase of 204,493 Ordinary Shares, exercisable at any time at an exercise price of US$0.20, and five-year warrants to be issued to Digital Offering for the purchase of 0.5% of the Ordinary Shares outstanding after the completion of this offering, exercisable at an exercise price of US$0.20 if the volume weighted average price of our Ordinary Shares is at least 120% of the initial public offering price for 30 consecutive trading days within the first six months after the completion of this offering, as described in “Underwriting-Other Relationships.” |
| | As at June 30, 2021 | ||||
| | (US$ per ordinary share) | ||||
| | (unaudited) | ||||
Assumed public offering price | | | | | US$8.00 | |
Historic net tangible book value per Ordinary Share as at June 30, 2021 | | | US$0.15 | | | |
Increase in net tangible book value per Ordinary Share attributable to new investors in this offering | | | 2.01 | | | |
As-adjusted net tangible book value per Ordinary Share immediately after this offering | | | | | 2.16 | |
Dilution to new investors in this offering | | | | | US$5.84 |
| | Shares Purchased | | | Total Consideration | | | Average Price Per Share | |||||||
| | Number | | | Percent | | | Amount | | | Percent | | |||
Existing Shareholders | | | 16,017,808 | | | 71.9% | | | US$12,985,561 | | | 20.6% | | | US$0.81 |
New Investors | | | 6,250,000 | | | 28.1 | | | US$50,000,000 | | | 79.4 | | | US$8.00 |
Total | | | 22,267,808 | | | 100.0% | | | US$62,985,561 | | | 100.0% | | |
• | 500,000 Ordinary Shares issuable upon the vesting of the Performance Shares pursuant to the Sale and Purchase Agreement, which shares are subject to repurchase by us at a nominal amount if applicable vesting conditions are not satisfied; |
• | 1,077,778 Ordinary Shares issuable upon the optional conversion of approximately A$1,940,000 (or US$1,454,030) of outstanding indebtedness under the 2021 Notes; |
• | an aggregate of 3,353,672 Ordinary Shares issuable upon the exercise of share options outstanding as of June 30, 2021, which includes options to purchase (i) 368,197 Ordinary Shares at an exercise price of A$6.000 (or US$4.380), (ii) 1,200,000 Ordinary Shares at an exercise price of A$1.500 (or US$1.100) and (iii) 1,785,475 Ordinary Shares at an exercise price of A$4.000 (or US$2.920); |
• | warrants to be issued to the underwriter upon the completion of this offering in an amount equal to 7% of the Ordinary Shares sold in this offering, as described in “Underwriting—Other Relationships”; and |
• | five-year warrants issued to Digital Offering for the purchase of 204,493 Ordinary Shares, exercisable at any time at an exercise price of US$0.20, and five year-warrants to be issued to Digital Offering for the purchase of 0.5% of the Ordinary Shares outstanding after the completion of this offering, exercisable at an exercise price of US$0.20 if the volume weighted average price of our Ordinary Shares is at least 120% of the initial public offering price for 30 consecutive trading days within the first six months after the completion of this offering, as described in “Underwriting—Other Relationships.” |
• | the hiring of seven additional employees as of June 30, 2021, compared to four as of June 30, 2020, which resulted in an increase of salaries and associated costs of A$924,492. Six of the additional employees are engaged at the Redbank Power Station in maintenance and administrative activities. An additional person was engaged at our head office to improve accounting and administrative processes and to address segregation of duty issues that were highlighted by our auditor in the prior year; |
• | the expensing of share-based payments to employees with an accounting value of A$369,766 for the year ended June 30, 2021, compared to A$154,142 for the year ended June 30, 2020, an increase of A$215,624. Share-based payments to employees consist of grants of options for no consideration, the accounting expense for which is spread over the expected period of associated vesting conditions being achieved; and |
• | an offset of an increase in A$63,600 in Australian Federal Government grants relating to its JobKeeper program that was provided to Australian businesses in response to the COVID-19 pandemic. |
• | a share-based payments expense of A$1,126,088 relating to an issue of options to consultants in connection with the renegotiation of a fuel supply agreement; |
• | an increase in consultancy costs of A$1,047,612 for specialist services relating to the negotiation of fuel supply arrangements, the analysis of various financing alternatives, development of reporting process required to obtain regulatory approvals, development of alternative revenue streams from energy produced and development of the Verdant HV Hydrogen Plant; |
• | an expense of A$739,772 which is part of the estimated costs incurred through June 30, 2021 in connection with the proposed listing of the Company’s securities. The portion of estimated costs that is expensed is the estimated amount associated with the listing process as distinct from the associated capital raising, based on a ratio of the securities outstanding as of June 30, 2021 to the securities that will be outstanding following the consummation of this offering; |
• | a share-based payments expense of A$543,573 for consultancy services provided related to the sourcing of fuel suipplies for the Redbank Power Station; |
• | a payment of A$261,000 in costs related to alternative sources of funding and due diligence costs associated with Australian capital raising activities; |
• | an increase of A$194,717 in communication and media costs associated with the promotion of our activities; |
• | an increase of A$177,083 in audit fees arising from the transition from private to public company reporting requirements; |
• | other increases in professional and consulting fees of A$173,740 related to the negotiation of water rights, electicity offtakes and business systems; and |
• | a payment of A$52,964 for financial planning associated with the Verdant HV Hydrogen Plant. |
• | interest expense incurred on our convertible notes outstanding increased by A$62,205 compared to the prior year due to the convertible notes being outstanding for a full 12 months in the current year; |
• | a reduction in the cost of interest embedded in the loan owed for the acquisition of the Redbank Power Station of A$12,491; |
• | amortization of transaction costs of our convertible notes outstanding increased by A$78,139 compared to the prior year due to the convertible notes being on issue for a full 12 months in the current year; and |
• | expensing of an entry to adjust the actual interest rate of our convertible notes outstanding to its effective interest rate (i.e., allowance for the cost of the potential conversion to ordinary shares of the convertible notes) increased by A$72,466 compared to the prior year due to the convertible notes being outstanding for a full 12 months in the current year. |
• | an amount of A$1,822,520 incurred in connection with the renegotiation of the RFF (as defined below), comprised of an increase of A$1.265 million to offset the cancellation of a A$5.0 million contingent liability owed to the vendor of the Redbank Power Station and payable from its future earnings and an increase of A$0.557 million relating to legal and other costs of the lender; |
• | an amount of A$1,500,000 incurred in connection with the issuance of 15,000,000 ordinary shares (prior to our 1-for-20 reverse share split), or 750,000 ordinary shares after giving effect to our 1-for-20 reverse share split, in consideration for the cancellation of a A$4.5 million contingent liability owed to HB Energy Pty Limited and Albertson Resources Pty Ltd (see “—Liquidity and Capital Resources—Redbank Acquisition Funding”). |
• | the initiation, progress, timing, costs and results of our Redbank Recommission Project, including the necessary refurbishment or update of certain key plant infrastructure; |
• | costs associated with expanding our organization, including our management infrastructure; |
• | the costs involved in pursuing development applications and addressing subsequent queries or objections to those applications raised by third parties and potentially appealing the decisions of various governmental authorities; |
• | the cost of acquiring water rights in an amount sufficient to run the Verdant HV Power Station and any delays or additional costs that we may encounter in connection therewith; |
• | the time and costs involved in obtaining the requisite governmental and regulatory approvals for our planned projects (including environmental approvals, licenses and levies) and any delays we may encounter as a result of evolving governmental or regulatory requirements or adverse results with respect to any assessments involving these planned projects; |
• | the revenue we expect to generate, which will depend in part on energy prices in the wholesale spot market; |
• | selling and marketing activities undertaken in connection with the sale of output from the Verdant HV Power Station; and |
• | the costs of operating as a publicly traded company in the United States. |
• | employee benefit expenses; |
• | site service and maintenance expenses; |
• | feedstock storage costs; |
• | finance expenses, such as the costs of borrowings we plan to undertake; |
• | legal, professional and consulting fees; |
• | insurance expenses; |
• | compliance costs; and |
• | fees and licenses. |
| | Year Ended June 30, | | | Year Ended June 30, | |
| | 2020 | | | 2021 | |
| | (in thousands) | ||||
Net cash provided by (used in): | | | | | ||
Operating activities | | | A$(1,846) | | | A$(4,348) |
Investing activities | | | (28) | | | (248) |
Financing activities | | | 1,921 | | | 8,584 |
Net increase (decrease) in cash and cash equivalents | | | A$ 47 | | | A$ 3,988 |
• | A$11,845,401 from the issuance of new Ordinary Shares less costs of A$829,523; |
• | repayment of borrowings owed in relation to the purchase of the Redbank Power Station of A$1,656,200; and |
• | repayment of other liabilities of A$775,000. |
• | an unconditional A$4.5 million option exercise payment (the “Exercise Payment”). The Exercise Payment consisted of the assumption of a secured loan of A$2.5 million payable by Biogreen to its sole director, Mr. Richard Butler (the “RB Loan”), and an unsecured amount of A$2.0 million payable to Biogreen that was payable in installments (the “Biogreen Installments”); and |
• | a purchase payment obligation in the amount of A$5.0 million out of the future earnings generated by the Redbank Power Station (the “Biogreen Success Fee”). |
• | the maturity date was extended to July 2022; |
• | the Biogreen Installments, of which A$1,500,000 remained outstanding, were included as part of the amount owing under the RFF; |
• | the cancellation of the A$5.0 million Biogreen Success Fee in exchange for an increase in the RFF of A$1,265,520; and |
• | an increase in the RFF by A$557,000 in allowance for costs of the lender and other parties to the RFF arrangements. |
• | the plant had not been operating for a period of over four years; |
• | only one employee was engaged at the time of acquisition, who was on care and maintenance duties; and |
• | no contractual arrangements were included as part of the purchase for the supply of raw materials or the sale of output. |
• | “most likely amount” methodology when the outcome is binary or concentrated to a specific matter; or |
• | “expected value” or probability-weighted methodology when there is a range of possible outcomes. |
• | the last day of the fiscal year during which we have total annual gross revenues of US$1.07 billion (as such amount is indexed for inflation every five years by the SEC) or more; |
• | the last day of our fiscal year following the fifth anniversary of the completion of our first sale of common equity securities pursuant to an effective registration statement under the Securities Act; |
• | the date on which we have, during the previous three-year period, issued more than US$1 billion in non-convertible debt; or |
• | the date on which we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 of the Exchange Act, which would occur if the market value of our Ordinary Shares that are held by non-affiliates exceeds US$700 million as of the last day of our most recently completed second fiscal quarter. |
• | The Paris Agreement, which to date has been signed by 191 states and the European Union, aims to limit CO2 emissions to net zero emissions globally in the second half of the century. Signatories to the agreement must submit emissions reduction commitments. The NSW government has committed to an aspirational objective of achieving net zero emissions by 2050. Additionally, approximately 70% of Australia’s major trading partners have pledged to achieve net zero emissions by 2050 or 2060, including Japan, South Korea, the United States and the European Union. |
• | The potential for hydrogen to play a key role in achieving net zero emissions if it is produced from renewable energy. According to Bloomberg New Energy Finance, green hydrogen could provide up to 22% of global energy needs by 2050, cutting CO2 emissions by up to 23%. According to MarketsandMarkets, the global hydrogen fuel generation market is projected to reach approximately US$201 billion by 2025. |
• | Commitment to national hydrogen strategies by over 30 countries, including Australia, Japan, South Korea and the United States, to transform themselves into hydrogen fueled economies in the next 30 years and to make significant investments in research, development and commercialization of green hydrogen. Japan has allocated approximately US$19 billion to a Green Innovation Fund (which includes hydrogen development), South Korea plans to spend approximately US$17 billion on green mobility (including hydrogen) and the United States has earmarked approximately US$8 billion to build several “regional clean hydrogen hubs” in the proposed bipartisan infrastructure legislation currently in |
• | Australia’s positioning to play a key role in the global shift to hydrogen-fueled economies based on its: (1) abundant renewable energy resources available at low cost, which are essential for green hydrogen to reach scale; (2) developed regulatory, safety and market infrastructure that is necessary for the industrialization of green hydrogen production; and (3) geographic proximity to Asian markets where demand for green hydrogen is expected to grow in the coming years, including Japan, South Korea, China and Singapore. |
• | Our baseload electric power plant gives us financial advantages. We own and are recommissioning a coal-fired baseload electric power plant, which we acquired at a discount to greenfield replacement cost, and are in the process of converting it into a renewable energy plant. Because the plant has substantially all of the necessary infrastructure in place, including primary power generating equipment and the balance-of-plant systems, we estimate that the cost of the Redbank Recommission Project will be significantly lower than the cost of constructing a new standalone renewable energy plant of similar generation capacity. Currently, when completed, we expect the plant will be one of the largest green baseload generators in Australia (excluding hydroelectric plants). |
• | Short recommissioning timeline and payback period for our Redbank Recommission Project. We estimate the recommissioning period of the Redbank Power Station to be approximately 10 months from the completion of this offering, as opposed to the typical power generation plant development and construction timeline for equivalent electrical output of several years. In addition, unlike many infrastructure projects of similar size, the payback period for the Redbank Recommission Project is anticipated to be less than five full years of operations, based on the low upfront capital costs, assuming (i) operation on a stand-alone basis, (ii) no delays or obstacles in the governmental and |
• | We expect that the Verdant HV Hydrogen Plant, once completed, will benefit from being close to both the Sydney domestic market and the Port of Newcastle. Once completed, our Verdant HV Hydrogen Plant will be strategically positioned with access to both large local markets on the east coast of Australia, as well as to Asian markets via ports. The planned site for the Verdant HV Hydrogen Plant will be well situated, via major highways, to the Port of Newcastle, Australia’s third largest port by volume, and to Sydney, Australia’s largest city. It will also be adjacent to a major railway with direct access to the east coast rail network and the Port of Newcastle. |
• | Our Verdant HV Power Station and Verdant HV Hydrogen Plant, once completed, are expected to have the flexibility to generate multiple revenue streams, including electricity sales, green certificates, tipping fees and revenue from the sale of green hydrogen. The Verdant HV Power Station, when operating solely on sustainable forestry and timber residues, is expected to generate income from the sale of electricity and the generation and sale of LGCs (until the program’s expiration in 2030). Following receipt of all applicable approvals, as described in “Regulatory Matters,” the Verdant HV Power Station can also generate tipping fees for disposing of commercial waste timber from commercial recycling sources. Following the planned construction and commencement of the Verdant HV Hydrogen Plant, we will begin to generate sales from the production of green hydrogen. We plan to grow the production of green hydrogen based on market demand and financial returns relative to the sale of green electricity, subject to the requisite governmental and regulatory approvals and the receipt of additional required financing. Additionally, we plan to build flexibility into our hydrogen contracts such that in times of high electricity demand or a shortage in supply leading to high energy prices, we are able to elect to sell green energy into the grid (subject to satisfying any green hydrogen offtake agreements). |
• | Competitive advantage over other new entrants and access to new project opportunities for green hydrogen projects via our experienced senior management team with a history of acquiring, developing, financing, building and operating businesses in the energy industry. Management has previously held senior business development, financial, operations, and sales positions at private and publicly traded energy companies, including renewable energy operations. We believe our senior management team has strong relationships in Australia’s renewable energy industry, including with key biomass feed stock sources, key plant engineering firms and related supply chain partners in Australia and Asia. We believe that these relationships may give us a competitive advantage over other new entrants. In addition, we believe we will be able to leverage our management’s relationships, built over decades, to identify new project opportunities for green hydrogen projects. |
• | Establishing a green energy and green hydrogen project by leveraging our baseload green power project. Subject to receipt of the requisite governmental and regulatory approvals, we intend to recommission the 146 MW Redbank Power Station, which we believe provides us significant financial advantages over green field power production development. Upon completion of the Redbank Recommission Project, we plan to commence electricity sales into the NEM, which we believe can be done profitably, to support the development of our Verdant HV Hydrogen Project. Then, subject to available capital and the receipt of the requisite governmental and regulatory approvals, we intend to build out an integrated green hydrogen production facility. |
• | Leverage our expected position as an early mover in the green hydrogen market to identify and create a network of green hydrogen project opportunities to become a leading green hydrogen |
• | Utilize our expected position as a future producer of green hydrogen, from strategically positioned Australia, to develop opportunities that facilitate the adoption of, and demand for, green hydrogen and its export to high demand markets such as Asia. We believe our expected position as a future producer of green hydrogen and Australia’s regulatory, safety and market infrastructure will help provide opportunities to facilitate adoption and demand of green hydrogen in Australia and in nearby Asian countries like Japan and South Korea. We intend to leverage our expected early mover position and geographic proximity to and relationships with nearby Asian countries in the energy space to take advantage of the continued growth of the market for green hydrogen in Asia. |
• | Leverage our status as a U.S. publicly-traded company and access to the capital markets to support inorganic growth. We believe our initial public offering will provide us with a competitive advantage in developing and building out potential green hydrogen projects in Australia. |
| Work Item | | | Budgeted Amount (in millions) | | |||
| Capital Expenditures | | | | | | ||
| Plant recommissioning/construction | | | A$21.9 | | | US$16.4 | |
| Materials handling systems reconfiguration | | | 5.0 | | | 3.8 | |
| Connections, licensing, plant spare parts inventory and water rights | | | 10.6 | | | 7.9 | |
| Total Capital Expenditures | | | A$37.5 | | | US$28.1 | |
| | | | | | |||
| Operating Costs | | | | | | ||
| Employment and other costs of recommencement | | | 7.6 | | | 5.7 | |
| Fuel inventory | | | 2.5 | | | 1.9 | |
| Working capital (including green hydrogen development) | | | 8.6 | | | 6.4 | |
| Total Operating Costs | | | A$18.7 | | | US$14.0 | |
| | | | | | |||
| Total Capital Expenditures and Operating Costs | | | A$56.2 | | | US$42.1 | |
• | Assessing the work required to recommission the Redbank Power Station into the Verdant HV Power Station, including detailed plans for plant recommission and construction and requirements for return to work. |
• | Confirming the suitability of the Redbank Power Station to operate entirely on biomass and obtaining engineering designs for conversions of the Redbank Power Station for biomass operations. B&PPS, an Australian engineering firm that specializes in thermal power stations assessments confirmed the ability of the Redbank Power Station to operate using timber biomass as a feedstock within a range of heat and moisture specifications. |
• | Working on interconnection matters for the recommissioning process and obtaining a quotation and timetable for the work required for the restart and recommissioning of the Redbank Power Station and scoping of work required for reconnection to the NEM. |
• | Continue seeking all applicable approvals to enable the use of biomass instead of coal tailings, as described below in “Regulatory Matters—Environment and Planning Regulatory Framework,” which we expect to be completed within five to eight months following the completion of this offering. We have filed an application to modify the existing development consent granted by Singleton Shire Council in March 1994 for the Redbank Power Station by adding the ability to operate entirely on biomass as fuel (which application is currently pending in the Australian court system) and, as an alternative process, if the Company is not granted the modification, plan to file a separate new development application concerning the right to operate entirely on biomass. Further approvals will be subsequently sought to enable us to use other commercial waste timber as a fuel source at the power station; |
• | Finalize quotations for any major expense items, which we expect to be finalized within six months following the completion of this offering; |
• | Continue engagement with one of our engineering consultants to manage the discussions with the electricity distribution company to physically connect to the grid. Once completed, an application will be submitted to the Australia Energy Market Operator (the “AEMO”) for approval as a generating power station connected to the grid. We expect this entire process, including reconnection to the grid, to be completed within eight months following the completion of this offering; |
• | Continue our pre-commissioning work at the Redbank Power Station on pre-testing, instrument and valve condition reports and replacement (where necessary), which we expect to be completed within nine months following the completion of this offering; and |
• | Finalize agreements with contractors for engineering procurement, construction and management and develop and retain human resources and implement safety and environmental reporting processes, which we expect to be completed within nine months following the completion of this offering. |
• | Negotiate and complete transactions to acquire necessary feedstock; |
• | Complete acquisition of water rights through negotiation on the open market, which we expect to be completed within eight months following the completion of this offering; |
• | Complete materials handling system modifications to address the use of biomass, which we expect to be completed within nine months following the completion of this offering; and |
• | Complete recommissioning, which we expect to be completed within 10 months following the completion of this offering. |
• | the pricing of electricity sold at spot on the NEM (assuming a price of A$50/MWh (or US$36/MWh)); |
• | the eligibility for LGCs and their average sale price (assuming a price for LGCs of A$25/MWh (or US$18/MWh) during the initial years of operation); |
• | the ability to negotiate tipping fees (upon obtaining the requisite governmental and regulatory approvals to use commercial waste timber as biofuel, as described in “Regulatory Matters”) and their expected pricing for a portion of feedstock (assuming tipping fees of A$50/tonne (or US$36/tonne)); |
• | the cost of delivered feedstock at an estimated price of A$35/tonne (or US$26/tonne) for delivery to the Verdant HV Power Station of an estimated 400,000 tonnes of material per annum, as discussed further below; |
• | the costs of other fuel inputs of A$5/tonne (or US$4/tonne) based on the total fuel consumption; and |
• | operating, administration and management costs (at similar levels with the historic costs of the Redbank Power Station) of approximately A$27/MWh (or US$20/MWh). |
• | the sale of approximately 1,000,000 MWh per annum of electricity to the NEM immediately upon recommissioning and connection to the grid. According to AEMO, the average annual price in New South Wales per MWH over the past five years has ranged from A$64-A$89 (or US$47-US$66). |
• | the sale of approximately 1,000,000 LGCs per annum that we expect to obtain due to the use of eligible biomass material as fuel (upon obtaining appropriate regulatory accreditation, which we expect to receive prior to the completion of the Redbank Recommission Project and until the expiration of the LGC program in 2030). According to the CER, the average annual price per certificate over the past five years has ranged from A$39-A$85 (or US$29 -US$64); |
• | tipping fees on commercial waste timber of an estimated 250-420,000 tonnes per annum negotiated with suppliers of commercial waste (upon obtaining the requisite governmental and regulatory approvals to use commercial waste timber as biofuel). According to the EPA, the average levy payable over the past five years per tonne has ranged from A$77-A$84 (or US$57 -US$63); and |
• | the provision of ancillary services, such as frequency control ancillary services, to the NEM. |
| Financial year ended June 30, | | | NSW Base Average annual price per MWh | | | NSW Base Average lowest monthly price per MWh | | | NSW Base Average highest monthly price per MWh | |
| 2017 | | | A$81.22 | | | A$44.88 | | | A$277.26 | |
| 2018 | | | A$82.27 | | | A$66.71 | | | A$128.32 | |
| 2019 | | | A$88.56 | | | A$74.99 | | | A$156.44 | |
| 2020 | | | A$71.95 | | | A$40.37 | | | A$185.29 | |
| 2021 | | | A$64.81 | | | A$35.13 | | | A$253.10 | |
| 2022 YTD (through November 30) | | | A$63.82 | | | A$48.90 | | | A$124.01 | |
• | waste productions from the construction of buildings; |
• | sawmill residue; and |
• | biomass from a native forest that has been harvested for a purpose other than as energy production. |
| Financial year ended June 30, | | | Average annual price per certificate | | | Average highest monthly price per certificate | | | Average lowest monthly price per certificate | |
| 2017 | | | A$85 | | | A$90 | | | A$76 | |
| 2018 | | | A$84 | | | A$87 | | | A$78 | |
| 2019 | | | A$54 | | | A$79 | | | A$31 | |
| 2020 | | | A$40 | | | A$52 | | | A$27 | |
| 2021 | | | A$39 | | | A$49 | | | A$32 | |
| 2022 YTD (through November 30) | | | A$37 | | | A$42 | | | A$33 | |
Financial year | | | Waste Levy payable per tonne of material MLA | | | Waste Levy payable per tonne of material RRA |
2021-22 | | | A$147.10 | | | A$84.70 |
2020-21 | | | A$146.00 | | | A$84.10 |
2019-20 | | | A$143.60 | | | A$82.70 |
2018-19 | | | A$141.20 | | | A$81.30 |
2017-18 | | | A$138.20 | | | A$79.60 |
2016-17 | | | A$135.70 | | | A$78.20 |
• | extend the operating life for the Redbank Power Station beyond 2031; and |
• | authorize the use of biomass material (or other construction waste) as part of the recommissioning of the Redbank Power Station and the operation of the Verdant HV Power Station. |
• | The existing development consent can be modified by the local council if certain statutory requirements are satisfied, namely, if the development that is the subject of the application is substantially the same as the development that was originally approved; or |
• | A new standalone development consent could be sought from either the local council or the New South Wales State government. The relevant consent authority is determined based on the size, scale and cost of the proposed development to be carried out. Specifically, the New South Wales state government must be the consent authority if the development will have a capital investment value of more than A$30 million. The capital investment value of a development includes all costs necessary to establish and operate the project, including the design and construction of buildings, structures, associated infrastructure and fixed or mobile plant and equipment. If the capital investment value is less than A$30 million, then the local council will be the relevant consent authority. |
• | assess the merits of the proposed development, which will require the Court to reassess the application and decide (standing in the shoes of the consent authority) whether consent should be granted for the development (known as a “merits appeal”). A merits appeal could not be commenced in respect of the modification application for the existing development consent but could be commenced in respect of any standalone development consent that is applied for. A merits appeal of this nature would generally take between four to nine months for an outcome. If the Court grants consent, there is a risk that the matter could be further appealed to an appellate court; or |
• | alternatively, the Court may be required to consider whether the consent authority has correctly followed the procedural requirements in determining the application (known as “judicial review proceedings”). If the Court determines that the correct procedural process was not followed by the consent authority, then the Court will remit the decision back to that consent authority to remake the decision in accordance with the statutory requirements. Judicial review proceedings could be commenced in respect of either the modification application or a new standalone consent. Judicial review proceedings would generally take six to twelve months for an outcome. Again, if either party is not satisfied with the outcome of any judicial review proceedings in the NSW Land and Environment Court and the original judge has made an error of law, then the matter could be further appealed to an appellate court. There is also a risk of judicial review proceedings being commenced by a third party in relation to the modification application if approved by the local council. |
• | the proposed waste consistently meets the definition of an EPA approved eligible waste fuel under the Eligible Waste Fuel Guidelines; |
• | there are no practical, higher order reuse opportunities for the waste; |
• | the waste has been fully characterized and proof of performance has been undertaken (if required); and |
• | the facility will meet the relevant emission standards as set out in the Protection of the Environment Operations (Clean Air) Regulation 2010. |
Name | | | Age | | | Position |
Richard Poole | | | 58 | | | Executive Director, Managing Director and Chief Executive Officer |
Warren Kember | | | 60 | | | Executive Director, Chief Financial Officer and Company Secretary |
James Myatt | | | 55 | | | Director |
Michael Allman | | | 61 | | | Director and Chairman Nominee |
Michael Addison | | | 64 | | | Director Nominee |
• | there must be a minimum of three directors and a maximum of nine directors; |
• | in respect of a matter where a director has a material interest, the director may not vote in relation to the proposed arrangement except as permitted by the Corporations Act; |
• | the Chairman of our Board should, where possible, be a non-executive director; and |
• | our Board should, collectively, have the appropriate mix of qualifications, expertise and experience which will assist the Board in fulfilling its responsibilities, as well as assisting the Company in achieving growth and delivering value to shareholders. |
• | act honestly, with integrity and in the best interests of the Company as a whole; |
• | operate within the law at all times; |
• | carry out their work to a high standard; |
• | preserve the confidentiality of sensitive information of the Company; |
• | avoid conflicts of interest which may influence the conduct of duties; |
• | not participate in corrupt conduct; and |
• | observe the Company’s Trading Policy and insider trading laws. |
• | we are currently focused on undertaking development activities; |
• | risks associated with developing projects; and |
• | we do not expect to be undertaking profitable operations until sometime after the commencement of commercial production on our projects. |
• | enable us to recruit, incentivize and retain KMP and other eligible employees to assist with the Redbank Recommission Project and the Verdant HV Hydrogen Project; |
• | link the reward of eligible employees with the achievements of strategic goals and our long-term performance; |
• | align the financial interests of eligible participants of the Plan with those of Shareholders; and |
• | provide incentives to eligible employees of the Plan to focus on superior performance that creates Shareholder value. |
2021 | | | Short-term benefits | | | Post- employment benefits A$ | | | Share- based payments A$ | | | Termin- ation Payments A$ | | | Total A$ | | | Perform- ance related % | ||||||
| Salary & fees A$ | | | Cash Bonus A$** | | | Other A$ | | ||||||||||||||||
Mr. Richard Poole* | | | 275,920 | | | — | | | — | | | 182 | | | — | | | — | | | 276,102 | | | 0.0% |
Mr. Warren Kember | | | 250,000 | | | 125,000 | | | — | | | 35,625 | | | 36,375 | | | — | | | 447,000 | | | 28.0% |
Mr. James Myatt | | | 60,000 | | | — | | | — | | | — | | | 259,414 | | | — | | | 319,414 | | | 0.0% |
| | 585,920 | | | 125,000 | | | — | | | 35,807 | | | 295,789 | | | — | | | 1,042,516 | | | 12.0% |
* | Amounts paid to Mr. Richard Poole were made pursuant to the Corporate Advisory and Business Development Mandate with Arthur Phillip. See “Related Party Transactions.” |
** | The cash bonus is not payable until after the consummation of this Offering. |
2020 | | | Short-term benefits | | | Post- employment benefits A$ | | | Share- based payments A$ | | | Termin- ation Payments A$ | | | Total A$ | | | Perform- ance related % | ||||||
| Salary & fees A$ | | | Cash Bonus A$ | | | Other A$ | | ||||||||||||||||
Mr. Richard Poole* | | | 277,500 | | | — | | | — | | | — | | | — | | | — | | | 277,500 | | | 0.0% |
Mr. Warren Kember | | | 160,002 | | | — | | | — | | | 15,200 | | | 38,690 | | | — | | | 213,892 | | | 0.0% |
Mr. James Myatt | | | 90,000 | | | — | | | — | | | — | | | — | | | — | | | 90,000 | | | 0.0% |
| | 527,502 | | | — | | | — | | | 15,200 | | | 38,690 | | | — | | | 581,392 | | | — |
* | Amounts paid to Mr. Richard Poole were made pursuant to the Corporate Advisory and Business Development Mandate with Arthur Phillip. See “Related Party Transactions.” |
• | each person known by us to be the beneficial owner of more than 5% of our Ordinary Shares; |
• | each of our directors and executive officers individually; and |
• | each of our directors and executive officers as a group. |
| | Ordinary Shares Beneficially Owned Prior to the Offering | | | Ordinary Shares Beneficially Owned After the Offering | |||||||
Shareholder | | | Number | | | Percent | | | Number | | | Percent |
5% and Greater Shareholders | | | | | | | | | ||||
Richard Poole(1) | | | 4,985,246 | | | 31.1% | | | 4,985,246 | | | 22.4% |
HB Energy Pty Limited(2) | | | 2,542,500 | | | 15.9% | | | 2,542,500 | | | 11.4% |
Officers and Directors | | | | | | | | | ||||
James Myatt | | | — | | | — | | | — | | | —% |
Richard Poole(1) | | | 4,985,246 | | | 31.1% | | | 4,985,246 | | | 22.4% |
Warren Kember(3) | | | 119,961 | | | *% | | | 119,961 | | | *% |
Michael Allman | | | — | | | — | | | — | | | —% |
Michael Addison | | | — | | | — | | | — | | | —% |
Officers and directors as a group (5 persons) | | | 5,105,207 | | | 31.9% | | | 5,105,207 | | | 22.9% |
* | Represents beneficial ownership of less than 1% of the outstanding Ordinary Shares of Verdant. |
(1) | Consists of 4,985,276 Ordinary Shares held by Arthur Phillip Nominees Pty Limited ACN 83111862358 (“Arthur Phillip Nominees”), as nominee for Fontelina Pty Ltd (“Fontelina”), Lee and Grant Pty Ltd, and Haxby Pty Ltd (“Haxby”), each of which is controlled by Mr. Richard Poole. The address of Arthur Phillip Nominees is Level 33, Colonial Centre, 52 Martin Place, Sydney NSW 2000. |
(2) | Consists of 2,542,500 Ordinary Shares held by HB Energy Pty Limited ACN 626 544 661 (“HB Energy”) that were issued between 2018 and 2020. See “Related Party Transactions—Shareholders’ Agreement.” The directors of HB Energy are John McGuigan, James McGuigan and Neil Whittaker. In such capacity, each of them may be deemed to be the beneficial owner of the shares held by HB Energy. Each of them disclaims beneficial ownership of such securities, except to the extent of their actual pecuniary interest therein. The address of HB Energy is Level 27, Suite 2, 1 O’Connell Street, Sydney NSW 2000. |
(3) | Consists of 119,961 Ordinary Shares held by Point Assets Pty Limited ATF HK Super Fund. |
• | as a condition to Hunter Bay’s (or its nominee’s) investment in the Company, we would assume Albertson’s obligations under the Redbank Option, including, upon exercise of the option to purchase the Redbank Power Station, the obligation to enter into an asset sale agreement with Biogreen providing for payment to Biogreen of an amount equal to A$9.5 million, comprised of an unconditional A$4.5 million option exercise payment and the Biogreen Success Fee; |
• | the Initial Fee payable to Albertson under the Acquisition Agreement would be reduced from A$1.3 million to A$1.0 million; and |
• | the Shareholder Success Fee payable under the Acquisition Agreement would be amended as follows: |
• | 75% of the Shareholder Success Fee is payable to Albertson out of the future earnings generated by the Redbank Power Station; |
• | 25% of the Shareholder Success Fee is payable to Hunter Bay (or HB Energy, as its nominee) out of the future earnings generated by the Redbank Power Station; and |
| | 2021 | | | 2020 | | | 2019 | |
Occupancy expenses: Office rent | | | A$120,000 | | | A$120,000 | | | A$ 70,000 |
Management fees: fees for provision of management and administrative services | | | A$274,000 | | | A$277,500 | | | A$455,227 |
| | A$394,000 | | | A$397,500 | | | A$525,227 |
• | a special resolution passed by members holding shares in the class; or |
• | the written consent of members with at least 75% of the shares in the class. |
• | by a foreign person (as defined in the FATA) or associated foreign persons that would result in such persons having an interest in 20% or more of the issued shares of, or control of 20% or more of the voting power in, an Australian company; and |
• | by non-associated foreign persons that would result in such foreign person having an interest in 40% or more of the issued shares of, or control of 40% or more of the voting power in, an Australian company. |
| ITEM | | | AUSTRALIAN CORPORATIONS ACT | | | DELAWARE GENERAL CORPORATION LAW | |
| Share capital | | | Australian law does not contain any concept of authorized capital or par value per share. The number and issue price of shares is set by the our directors collectively as a board at the time of each issue. | | | Under the Delaware General Corporation Law (“DGCL”), a corporation may issue one or more classes of stock or one or more series of stock within any class thereof, any or all of which classes may be of stock with par value or stock without par value with any such issuance of shares of common stock limited by an authorized capital stock set out in such corporation's certificate of incorporation. | |
| Share buy-backs | | | Under the Corporations Act, a company may buy back its shares. The procedure, which may include shareholder approval, depends on the type of the buy-back and the quantity of shares subject to the buy-back. Share buy-backs must not materially prejudice the company’s ability to pay its creditors. | | | The DGCL generally permits corporations to purchase or redeem its outstanding shares out of funds legally available for that purpose without obtaining stockholder approval, provided that: • the capital of the corporation is not impaired; • such purchase or redemption would not cause the capital of the corporation to become impaired; • the purchase price does not exceed the price at which the shares are redeemable at the option of the corporation; and • immediately following any such redemption, the corporation shall have outstanding one or more shares of one or more classes or series of stock, which shares shall have full voting powers. | |
| Variation of class rights | | | The rights and privileges attached to any class of shares may generally only be varied with the written consent of holders of 75% of the issued shares of the affected class or by special resolution passed by at least 75% of the votes cast by shareholders entitled to vote at a meeting of the holders of the issued shares of the affected class. | | | Under the DGCL, any amendment to a corporation’s certificate of incorporation requires approval by holders representing a majority of the outstanding shares of a particular class if that amendment would: • increase or decrease the aggregate number of authorised shares of that | |
| ITEM | | | AUSTRALIAN CORPORATIONS ACT | | | DELAWARE GENERAL CORPORATION LAW | |
| | | | | class; • increase or decrease the par value of the shares of that class; or • alter or change the powers, preferences or special rights of the shares of that class so as to affect them adversely. If an amendment would alter or change the powers, preferences or special rights of one or more series of any class so as to adversely affect that series without adversely affecting the entire class, then only the shares of the series so affected shall be considered a separate class and entitled to such separate class approval of the proposed amendment. Under the DGCL, amendments to a corporation’s certificate of incorporation also generally require: • a board resolution recommending the amendment; and • approval of a majority of the outstanding shares entitled to vote and a majority of the outstanding shares of each class entitled to vote. | | ||
| Number of directors | | | As a public company in Australia, Verdant must have no fewer than three directors (not counting alternate directors), at least two of whom are ordinarily resident in Australia, and at least one company secretary ordinarily resident in Australia. | | | Under the DGCL, the board of directors of a corporation shall consist of 1 or more members. The number of directors shall be fixed by, or in the manner provided in, the corporation’s bylaws or certificate of incorporation. | |
| Payment of dividends | | | The Corporations Act provides that a company must not pay a dividend unless its assets exceed its liabilities immediately before the dividend is declared and the excess is sufficient for the payment of the dividend. The dividend must be fair and reasonable to the company’s shareholders as a whole and must not materially prejudice the company’s ability to pay its creditors. | | | Under the DGCL, a corporation’s board of directors is permitted to declare and pay dividends to stockholders either: • out of the corporation’s surplus, which is defined as the net assets less statutory capital; or • if no surplus exists, then out of the net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year, provided that the capital of the corporation is not less than the aggregate amount of the capital represented by the corporation’s outstanding stock of all classes having a preference on distribution of assets. | |
| ITEM | | | AUSTRALIAN CORPORATIONS ACT | | | DELAWARE GENERAL CORPORATION LAW | |
| Removal of directors | | | Under the Corporations Act, a director may only be removed by resolution at a general meeting of Verdant shareholders. A notice of intention to move the resolution must generally be given to the Company at least two months before the meeting is to be held. | | | The DGCL provides that, subject to the rights of the holders of any series of preferred stock, directors may be removed with or without cause by the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of capital stock, or of a single class, entitled to vote generally in the election of directors, voting together as a single class. | |
| Directors’ duties | | | Under Australian law, directors have a wide range of both general law and statutory fiduciary duties to Verdant, including duties to: act in good faith in the best interests of the company as a whole; act for a proper purpose; not improperly use information or their position; exercise care, skill and diligence; and avoid actual or potential conflicts of interest. | | | Under Delaware law, the directors of a corporation have fiduciary obligations, including the duty of care and the duty of loyalty. The duty of care requires directors to inform themselves of all reasonably available material information before making business decisions on behalf of the corporation and to act with requisite care in discharging their duties to the corporation. The duty of loyalty requires directors to act in good faith and in the corporation’s best interests. | |
| Related party transactions | | | The Corporations Act prohibits Verdant from giving related parties (including any director) a financial benefit unless it falls within an applicable exception or Verdant obtains shareholder approval in accordance with the Corporations Act and gives the benefit within 15 months after such approval. | | | Under the DGCL, no contract or transaction between a corporation and one or more of its directors, or between the corporation and any other corporation, partnership, association or other organization in which one or more of its directors are directors or officers, or have a financial interest, will be void or voidable solely for that reason, or solely because the relevant director is present at or participates in the corporation’s board or committee meeting that authorizes the contract or transaction, or solely because the vote of the relevant director is counted for that purpose, if: • the material facts as to the director’s relationship or interest, and as to the contract or transaction, are disclosed or known to the corporation’s board or committee, and the corporation’s board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; • the material facts as to the director’s relationship or interest and as to the | |
| ITEM | | | AUSTRALIAN CORPORATIONS ACT | | | DELAWARE GENERAL CORPORATION LAW | |
| | | | | contract or transaction are disclosed or known to the corporation’s stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by the vote of the stockholders; or • the contract or transaction is fair to the corporation as of the time that it is authorized, approved or ratified by the corporation’s board, committee or stockholders. | | ||
| Right to call meetings | | | Under the Corporations Act, shareholders with at least 5% of the votes that may be cast at a general meeting may call and arrange to hold a general meeting. The meeting must be called in the same way in which general meetings of the company may be called, including the dispatch of a notice of meeting including the matters to be voted upon. The shareholders calling the meeting must pay the expenses of calling and holding the meeting. The Corporations Act requires the directors to call and arrange to hold a general meeting on the request of shareholders with at least 5% of the votes that may be cast at a general meeting. The request must be made in writing, state any resolution to be proposed at the meeting, be signed by the shareholders making the request and be given to the company. The board of directors must call the meeting not more than 21 days after the request is made. The meeting must be held not later than two months after the request is given. | | | The DGCL states that each corporation shall hold an annual meeting of shareholders and that only the board of directors has the right to call a special meeting of shareholders, unless either the corporation's certificate of incorporation or bylaws provides otherwise. | |
| Quorum | | | Under the Corporations Act, the presence of two shareholders constitutes a quorum for a general meeting. | | | Under the DGCL, the default rule is that a quorum consists of a majority of the shares entitled to vote, present in person or represented by proxy. A company's organizational documents may alter this default requirement, but may not lower it to less than one-third of the shares entitled to vote at the meeting. | |
| Written Consent | | | Under the Corporations Act, shareholders of a public company are not permitted to approve corporate matters by written consent. | | | Under the DGCL, any action required to be taken at an annual or special meeting by stockholders may be taken without a meeting if consent in writing is signed by holders in the amount necessary to take such action at a meeting at which all shares entitled to vote thereon were present and voted. | |
| ITEM | | | AUSTRALIAN CORPORATIONS ACT | | | DELAWARE GENERAL CORPORATION LAW | |
| Shareholder resolutions | | | The Corporations Act requires certain matters to be resolved by a company by special resolution (passed by at least 75% of the votes cast by shareholders entitled to vote), including: the change of name of the company; a selective reduction of capital or selective share buy-back; the conversion of the company from one type or form to another; a decision to wind up the company voluntarily; and modification or repeal of the company's constitution. | | | The DGCL contains no concept of special resolutions. The DGCL requires the approval of a majority of all votes entitled to be cast by a corporation’s stockholders for specified actions including: • dissolution of the corporation; • most mergers or consolidations; and • amendments to the corporation’s certificate of incorporation. | |
| Minority shareholder protections / relief from oppression | | | Under the Corporations Act, any shareholder of a company can apply for an order from the court in circumstances where the conduct of the company’s affairs, or any actual or proposed act or omission or resolution is either: • contrary to the interests of shareholders as a whole; or • oppressive to, unfairly prejudicial to, or unfairly discriminatory against, any shareholders in that capacity or any other capacity. Former shareholders can also bring an action if it relates to the circumstances in which they ceased to be a shareholder. The court may make any order that it considers appropriate in relation to the circumstances and the company including, among other things, an order that the company be wound up, that the company’s existing constitution be modified or repealed, or that a person is required to do a specified act. | | | The DGCL contains no equivalent statutory provisions. However, Delaware law may provide judicial remedies to stockholders in certain comparable circumstances. | |
| Takeovers and takeovers defenses | | | The Corporations Act restricts the acquisition by any person of a “relevant interest” in issued “voting shares” in a company under a transaction where, as a result of the acquisition, that person or someone else’s “voting power” in the company increases from 20% or below to more than 20% or from a starting point that is above 20% and below 90%. The takeovers prohibition is subject to a number of exceptions detailed in the Corporations Act. These exceptions include, for example, an acquisition: | | | The DGCL provides that if a holder acquires 15% or more of a corporation’s voting stock, or is an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of the corporation at any time within three years immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder (an “Interested Holder”), the corporation is prohibited from engaging in any business combination with the Interested Holder for a period of three years following the time the holder | |
| ITEM | | | AUSTRALIAN CORPORATIONS ACT | | | DELAWARE GENERAL CORPORATION LAW | |
| | | • of not more than 3% of the voting shares during any six-month period; • made with shareholder approval under section 611(7) of the Corporations Act; • made under a takeover bid; or • resulting from a scheme of arrangement undertaken in accordance with the Corporations Act and approved by the court. Any takeover bid must treat all shareholders alike, must not involve any collateral benefits and must comply with the timetable, disclosure and other requirements set out in the Corporations Act. | | | became an Interested Holder. Such business combinations include (a) certain mergers or consolidations with the Interested Holder or entities affiliated with the Interested Holder, (b) certain sales, leases, exchanges, pledges, transfers or other dispositions of the corporation’s assets to the Interested Holder, which assets have an aggregate market value equal to 10% or more of either all of the assets of the corporation or all of the outstanding stock of the corporation and (c) certain transactions which result in the issuance or transfer by the corporation or by any direct or indirect majority owned subsidiary of the corporation, to the Interested Holder, of any stock of the corporation or of such subsidiary. | | |
| Winding up | | | Under the Corporations Act, a company can be wound up voluntarily by the shareholders by special resolution (i.e., passed by at least 75% of the votes cast by shareholders entitled to vote) in circumstances where the directors give a statutory declaration of solvency for such winding up. If the directors do not give a statutory declaration of solvency, a creditors’ voluntary winding up can commence by the shareholders passing a special resolution. Any surplus after payment of debts and interest will go to the shareholders according to the rights attached to their shares. | | | The DGCL permits the board of directors to authorise the dissolution of a corporation if: • a majority of the directors in office adopt a resolution to approve such dissolution at a meeting called for that purpose; • holders of a majority of the issued and outstanding shares entitled to vote on the matter adopt a resolution to approve dissolution at a stockholders’ meeting called for that purpose; and • a certificate of dissolution is filed with the Delaware Secretary of State. The DGCL also permits stockholders to authorize the dissolution of a corporation without board action if: • all of the stockholders entitled to vote on the matter provide written consent to dissolution; and • a certificate of dissolution is filed with the Delaware Secretary of State. | |
• | 1.0% of the number of our Ordinary Shares then outstanding; or |
• | the average weekly reported trading volume of our Ordinary Shares on Nasdaq during the four calendar weeks preceding the date on which a notice of the sale on Form 144 is filed with the SEC by such person. |
• | insurance companies; |
• | banks or other financial institutions; |
• | individual retirement and other tax-deferred accounts; |
• | regulated investment companies; |
• | real estate investment trusts; |
• | individuals who are former U.S. citizens or former long-term U.S. residents; |
• | brokers, dealers or traders in securities, commodities or currencies; |
• | traders that elect to use a mark-to-market method of accounting; |
• | investors subject to special tax accounting rules as a result of any item of gross income with respect to our Ordinary Shares being taken into account in an applicable financial statement; |
• | persons holding our Ordinary Shares through a partnership (including an entity or arrangement treated as a partnership for U.S. federal income tax purposes) or S corporation; |
• | grantor trusts; |
• | tax-exempt entities; |
• | persons that hold Ordinary Shares as a position in a straddle or as part of a hedging, constructive sale, conversion or other integrated transaction for U.S. federal income tax purposes; |
• | persons that have a functional currency other than the U.S. dollar; |
• | persons that hold our Ordinary Shares in connection with a trade or business outside the United States; |
• | persons that own (directly, indirectly or constructively) 5% or more of our equity; or |
• | persons that are not U.S. Holders (as defined below). |
• | an individual who is a citizen or resident of the United States; |
• | a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state thereof or the District of Columbia; |
• | an estate the income of which is subject to U.S. federal income taxation regardless of its source; or |
• | a trust (i) the administration of which is subject to the primary supervision of a court in the United States and for which one or more U.S. persons have the authority to control all substantial decisions or (ii) that has an election in effect under applicable income tax regulations to be treated as a U.S. person for U.S. federal income tax purposes. |
• | the excess distribution or gain will be allocated ratably over your holding period for the Ordinary Shares; |
• | the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were classified as a PFIC in the U.S. holder’s holding period, will be treated as ordinary income arising in the current taxable year; and |
• | the amount allocated to each other taxable year during your holding period in which we were classified as a PFIC (i) will be subject to income tax at the highest rate in effect for that year and applicable to you and (ii) will be subject to an interest charge generally applicable to underpayments of tax with respect to the resulting tax attributable to each such year. |
Name | | | Number of Ordinary Shares |
Roth Capital Partners, LLC | | | 6,250,000 |
Total | | | 6,250,000 |
| | Per Share | | | Total | |||||||
| | Without Over- allotment Option | | | With Over- allotment Option | | | Without Over- allotment Option | | | With Over- allotment Option | |
Public offering price | | | US$ | | | US$ | | | US$ | | | US$ |
Underwriting discounts and commissions to be paid by us | | | | | | | | |
• | transfers of Ordinary Shares or securities convertible into or exercisable or exchangeable for Ordinary Shares as a bona fide gift or, upon the death of the signatory, by will or intestacy; provided that no public announcement or filing under Section 16(a) of the Exchange Act, or any other public filing or disclosure, shall be made during the restricted period unless such filing is required and clearly indicates in the footnotes thereto that the transfer is by bona fide gift, will, or intestacy, as applicable; |
• | transactions relating to Ordinary Shares or securities convertible into or exercisable or exchangeable for Ordinary Shares acquired in open market transactions after the completion of the offering of the Ordinary Shares; provided that no filing under Section 16(a) of the Exchange Act is required or voluntarily made in connection with subsequent sales of the Ordinary Shares or such other securities acquired in such open market transactions; |
• | transfers of Ordinary Shares or securities convertible into or exercisable or exchangeable for Ordinary Shares that occur by operation of law pursuant to a qualified domestic order in connection with a divorce settlement or other court order; provided that no public announcement or filing under |
• | dispositions to any trust the beneficiaries of which are the signatory or immediate family members of the signatory, or, if the signatory is a trust, to any beneficiaries of such trust; provided that no public announcement or other filing under Section 16(a) of the Exchange Act, or any other public filing or disclosure reporting a reduction in beneficial ownership of Ordinary Shares, shall be required or shall be voluntarily made during the restricted period; |
• | transfers to an immediate family member or a trust formed for the benefit of an immediate family member; provided that no public announcement or other filing under Section 16(a) of the Exchange Act, or any other public filing or disclosure reporting a reduction in beneficial ownership of Ordinary Shares, shall be required or shall be voluntarily made during the restricted period; |
• | transfers of Ordinary Shares or securities convertible into or exercisable or exchangeable for Ordinary Shares in connection with a tender offer, merger, consolidation or other similar transaction made to all holders of the Ordinary Shares involving a change of control. |
• | Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. |
• | Sales by the underwriter of securities in excess of the number of securities the underwriter is obligated to purchase creates a syndicate short position. The underwriter may close out any syndicate short position by purchasing shares in the open market. |
• | Syndicate covering transactions involve purchases of Ordinary Shares in the open market after the distribution has been completed in order to cover syndicate short positions. |
• | Penalty bids permit the underwriter to reclaim a selling concession from a syndicate member when the Ordinary Shares originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions. |
• | to any legal entity which is a qualified investor as defined in the Prospectus Regulation; |
• | to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Regulation), subject to obtaining the prior consent of the underwriter; or |
• | in any other circumstances falling within Article 1(4) of the Prospectus Regulation, |
• | to Italian qualified investors, as defined in Article 100 of Decree no. 58 by reference to Article 34-ter of CONSOB Regulation no. 11971 of 14 May 1999 (“Regulation no. 1197l”) as amended (“Qualified Investors”); and |
• | in other circumstances that are exempt from the rules on public offer pursuant to Article 100 of Decree No. 58 and Article 34-ter of Regulation No. 11971 as amended. |
• | made by investment firms, banks or financial intermediaries permitted to conduct such activities in Italy in accordance with Legislative Decree No. 385 of 1 September 1993 (as amended), Decree No. 58, CONSOB Regulation No. 16190 of 29 October 2007 and any other applicable laws; and |
• | in compliance with all relevant Italian securities, tax and exchange controls and any other applicable laws. |
• | to persons whose principal business is the investment of money or who, in the course of and for the purposes of their business, habitually invest money; |
• | to persons who in all the circumstances can properly be regarded as having been selected otherwise than as members of the public; |
• | to persons who are each required to pay a minimum subscription price of at least NZ$500,000 for the Ordinary Shares before the allotment of those shares (disregarding any amounts payable, or paid, out of money lent by the issuer or any associated person of the issuer); or |
• | in other circumstances where there is no contravention of the Securities Act 1978 of New Zealand (or any statutory modification or reenactment of, or statutory substitution for, the Securities Act 1978 of New Zealand). |
SEC registration fee | | | US$6,522 |
Financial Industry Regulatory Authority Inc. filing fee | | | 11,053 |
Stock exchange listing fee | | | 155,000 |
Transfer agent’s fees and expenses | | | 8,500 |
Printing expenses | | | 20,000 |
Legal fees and expenses | | | 1,763,053 |
Accounting fees and expenses | | | 113,659 |
Miscellaneous and other fees and expenses | | | 25,000 |
Total | | | US$2,102,787 |
• | effect service of process within the United States upon our non-U.S. resident directors or on us; |
• | enforce in U.S. courts judgments obtained against our non-U.S. resident directors or us in the U.S. courts in any action, including actions under the civil liability provisions of U.S. securities laws; |
• | enforce in U.S. courts judgments obtained against our non-U.S. resident directors or us in courts of jurisdictions outside the United States in any action, including actions under the civil liability provisions of U.S. securities laws; or |
• | bring an original action in an Australian court to enforce liabilities against our non-U.S. resident directors or us based solely upon U.S. securities laws. |
Contents | | | Page |
Consolidated Financial Statements for the Year Ended June 30, 2021 | | | |
| | ||
| | ||
| | ||
| | ||
| | ||
| |
| | Notes | | | 2021 | | | 2020 | |
Revenue | | | | | $— | | | $— | |
| | | | | | ||||
Other income – government grant | | | | | 100,000 | | | — | |
Employee benefits expense | | | 7(a) | | | (1,965,205) | | | (891,689) |
Directors' fees | | | | | (60,000) | | | (90,000) | |
Management fees | | | 19(b) | | | (274,000) | | | (277,500) |
Legal, professional and consulting fees | | | | | (4,781,568) | | | (465,030) | |
Rental expenses | | | 19(b) | | | (120,000) | | | (123,555) |
Site service and maintenance costs | | | | | (369,327) | | | (281,079) | |
Insurance | | | | | (32,825) | | | (28,880) | |
Other expenses | | | | | (38,910) | | | (36,818) | |
Finance costs | | | 7(b) | | | (531,199) | | | (330,880) |
Loss on refinancing secured loan | | | 13 | | | (3,322,520) | | | — |
Consulting fees settled via an issue of shares | | | 7(c) | | | (3,200,000) | | | — |
Depreciation | | | | | (1,622) | | | — | |
Loss from operations for the year before income tax | | | | | (14,597,176) | | | (2,525,431) | |
Income tax benefit | | | 8(a) | | | — | | | — |
Loss after tax from operations | | | | | (14,597,176) | | | (2,525,431) | |
Other comprehensive income (net of tax) | | | | | — | | | — | |
Total comprehensive loss for the year | | | | | (14,597,176) | | | (2,525,431) | |
Loss per common share, basic and diluted (cents) | | | 21 | | | (6.77) | | | (1.34) |
| | Notes | | | 2021 | | | 2020 | |
Assets | | | | | | | |||
Current assets | | | | | | | |||
Cash and short term deposits | | | 9 | | | $4,272,984 | | | $285,037 |
Other assets | | | 10 | | | 50,000 | | | — |
Total current assets | | | | | 4,322,984 | | | 285,037 | |
| | | | | | ||||
Non-current assets | | | | | | | |||
Plant and equipment | | | 11 | | | 7,415,391 | | | 6,761,086 |
Total non- current assets | | | | | 7,415,391 | | | 6,761,086 | |
Total assets | | | | | 11,738,375 | | | 7,046,123 | |
| | | | | | ||||
Liabilities | | | | | | | |||
Current liabilities | | | | | | | |||
Trade and other payables | | | 12 | | | 2,926,859 | | | 590,568 |
Provisions | | | | | 155,377 | | | 58,586 | |
Financial liabilities | | | 13 | | | 2,903,198 | | | 4,102,194 |
Total current liabilities | | | | | 5,985,434 | | | 4,751,348 | |
| | | | | |||||
Non-current liabilities | | | | | | | |||
Financial liabilities | | | 13 | | | 2,588,810 | | | 1,427,950 |
Total non-current liabilities | | | | | 2,588,810 | | | 1,427,950 | |
Total liabilities | | | | | 8,574,244 | | | 6,179,298 | |
| | | | | | ||||
Equity | | | | | | | |||
Issued capital | | | 14(a) | | | 20,140,054 | | | 5,020,000 |
Other contributed equity | | | | | — | | | 265,000 | |
Reserves | | | 15 | | | 2,548,629 | | | 509,201 |
Accumulated losses | | | | | (19,524,552) | | | (4,927,376) | |
Total equity | | | | | 3,164,131 | | | 866,825 | |
Total liabilities and equity | | | | | 11,738,375 | | | 7,046,123 |
| | Issued capital | | | Other contributed equity | | | Reserves | | | Accumulated losses | | | Total | |
Balance at July 1, 2019 | | | $4,372,000 | | | $— | | | $89,166 | | | $(2,401,945) | | | $2,059,221 |
| | | | | | | | | | ||||||
Total comprehensive loss for the period | | | — | | | — | | | — | | | (2,525,431) | | | (2,525,431) |
Transactions with owners in their capacity as owners: | | | | | | | | | | | |||||
Issue of ordinary shares | | | 660,000 | | | — | | | — | | | — | | | 660,000 |
Contributed equity – shares not yet issued | | | — | | | 265,000 | | | — | | | — | | | 265,000 |
Costs of raising equity | | | (12,000) | | | — | | | — | | | — | | | (12,000) |
Share-based payments expense | | | — | | | — | | | 154,142 | | | — | | | 154,142 |
Convertible note transaction costs | | | — | | | — | | | (81,937) | | | — | | | (81,937) |
Recognition of equity component on issue of convertible notes | | | — | | | — | | | 347,830 | | | — | | | 347,830 |
Balance at June 30, 2020 | | | 5,020,000 | | | 265,000 | | | 509,201 | | | (4,927,376) | | | 866,825 |
Balance at July 1, 2020 | | | 5,020,000 | | | 265,000 | | | 509,201 | | | (4,927,376) | | | 866,825 |
Total comprehensive loss for the year | | | — | | | — | | | — | | | (14,597,176) | | | (14,597,176) |
Transactions with owners in their capacity as owners: | | | | | | | | | | | |||||
Issue of ordinary shares | | | 17,998,321 | | | (265,000) | | | — | | | — | | | 17,733,321 |
Costs of raising equity | | | (2,878,267) | | | — | | | — | | | — | | | (2,878,267) |
Share-based payments expense | | | — | | | — | | | 2,039,428 | | | — | | | 2,039,428 |
Balance at June 30, 2021 | | | 20,140,054 | | | — | | | 2,548,629 | | | (19,524,552) | | | 3,164,131 |
| | Notes | | | 2021 | | | 2020 | |
Cash flows from operating activities | | | | | | | |||
Other income – government grant | | | | | $100,000 | | | $— | |
Payments to suppliers and employees | | | | | (4,290,149) | | | (1,828,624) | |
Interest paid | | | | | (158,024) | | | (16,914) | |
Net cash flows used in operating activities | | | 9(b) | | | (4,348,173) | | | (1,845,538) |
| | | | | | ||||
Cash flows from investing activities | | | | | | | |||
Payments for property, plant and equipment | | | | | (248,558) | | | (28,238) | |
Net cash flows used in investing activities | | | | | (248,558) | | | (28,238) | |
| | | | | | ||||
Cash flows from financing activities | | | | | | | |||
Repayment of borrowings | | | | | (1,656,200) | | | (475,000) | |
Proceeds from borrowings | | | | | — | | | 1,940,000 | |
Borrowing raising costs | | | | | — | | | (97,000) | |
Repayment of other liabilities | | | | | (775,000) | | | — | |
Proceeds from issue of ordinary shares | | | | | 11,845,401 | | | 565,000 | |
Transaction costs of issue of shares | | | | | (829,523) | | | (12,000) | |
Net cash flows provided by financing activities | | | | | 8,584,678 | | | 1,921,000 | |
| | | | | | ||||
Net increase/(decrease) in cash and cash equivalents | | | | | 3,987,947 | | | 47,224 | |
Cash and cash equivalents at beginning of period | | | | | 285,037 | | | 237,813 | |
Cash and cash equivalents at end of period | | | 9(a) | | | 4,272,984 | | | 285,037 |
Corporate information |
2 | Summary of significant accounting policies |
a | Basis of preparation |
b | Going concern |
(i) | the Group had a cash balance of $4,272,984 at balance date; |
(ii) | continuing financial support from existing shareholders, directors or related parties; |
(iii) | the availability of equity and financing facilities to fund working capital requirements from new investors; |
(iv) | realising value from its assets through joint ventures or outright sale; and |
(v) | the ability for the directors to scale back activities in order to preserve cash when required. |
c | Basis of consolidation |
d | Current versus non-current classification |
(i) | expected to be realised or intended to be sold or consumed in the normal operating cycle; |
(ii) | held primarily for the purpose of trading; |
(iii) | expected to be realised within twelve months after the reporting period; or |
(iv) | cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. |
(i) | it is expected to be settled in the normal operating cycle |
(ii) | it is held primarily for the purpose of trading |
(iii) | it is due to be settled within twelve months after the reporting period; or |
(iv) | there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. |
e | Fair value measurement |
Level 1: | quoted prices (unadjusted) in active markets for identical assets or liabilities; |
Level 2: | inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; |
Level 3: | unobservable inputs for the asset or liability. |
f | Financial instruments |
i) | the Group’s business model for managing the financial asset; and |
ii) | the contractual cash flow characteristics of the financial asset. |
i) | they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows; and |
ii) | the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding. |
i) | financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’); and |
ii) | financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage 2’). |
g | Property, plant and equipment |
h | Leases |
i) | The contract contains an identified asset which is either explicitly or implicitly identified as made available to the Group: |
ii) | the Group has the right to obtain substantially all economic benefits from the use of the identified assets throughout the period of use; and |
iii) | the Group has the right to direct the use of the identified asset throughout the period of use. |
i | Borrowing costs |
j | Impairment of non-financial assets |
k | Employee benefits |
l | Share capital |
m | Other contributed capital |
n | Share-based payments |
o | Government grants |
p | Income tax |
3 | Significant accounting judgements, estimates and assumptions |
(i) | ‘most likely amount’ methodology – when the outcome is binary or concentrated to a specific matter; or |
(ii) | ‘expected value’ or probability-weighted methodology – when there is a range of possible outcomes. |
4 | New and amended accounting standards early adopted by the Group |
5 | Accounting standards issued by not yet effective and have not been adopted early by the Group |
Amended Standard | | | Date of effectiveness | | | First period to be adapted by the Group |
IFRS 3 Business Combinations | | | January 1, 2022 | | | June 30, 2023 |
IFRS 9 Financial Instruments | | | January 1, 2022 | | | June 30, 2023 |
IFRS 16 Leases | | | January 1, 2022 | | | June 30, 2023 |
IAS 16 Property, Plant and Equipment | | | January 1, 2022 | | | June 30, 2023 |
IAS 37 Provisions, Contingent Liabilities and Contingent Assets | | | January 1, 2022 | | | June 30, 2023 |
6 | Segment information |
7 | Expenses |
| | 2021 | | | 2020 | |
(a) Employee benefits expense | | | | | ||
Wages and salaries | | | $1,586,644 | | | $755,593 |
Other employee expenses | | | 96,395 | | | 5,954 |
Job Keeper payments received | | | (87,600) | | | (24,000) |
Equity settled share based payment to employees | | | 369,766 | | | 154,142 |
| | 1,965,205 | | | 891,689 | |
(b) Finance costs net | | | | | ||
Discounting impact on deferral amount payable for acquisition of plant | | | 11,727 | | | 24,218 |
Financing costs of convertible notes | | | 519,472 | | | 306,662 |
| | 531,199 | | | 330,880 | |
(c) Consulting fees settled via an issue of shares | | | | | ||
Consulting fees settled via an issue of shares (Note 14(a) (2)) | | | 3,200,000 | | | — |
| | | | |||
(d) Rental expense | | | | | ||
Rental expense | | | 120,000 | | | 123,555 |
8 | Income tax |
| | 2021 | | | 2020 | |
(a) Income tax expense | | | | | ||
Loss before income tax expense | | | $(14,597,176) | | | $(2,525,431) |
| | | | |||
Prima facie tax benefit at 26.0% (2020: 27.5%) | | | 3,795,266 | | | 694,494 |
| | | | |||
Tax effect of amounts that are not deductible in calculating taxable income | | | | | ||
Share-based payments | | | (530,244) | | | (42,389) |
Settlement of contingent consideration via issue of shares | | | (832,000) | | | — |
Refinancing costs of loan (Notes 18(a) and 18(b) | | | (773,635) | | | — |
Finance costs of convertible notes | | | (86,304) | | | (54,249) |
Discounting impact on deferral amount payable for acquisition of plant | | | (3,049) | | | (6,660) |
| | 1,570,034 | | | 591,195 | |
Movement in temporary differences | | | | | ||
Movement in leave provision | | | (25,166) | | | (5,307) |
Movement in accrual | | | (607,532) | | | (19,228) |
Movement in loan refinancing costs | | | (9,022) | | | — |
Tax losses not recognised | | | (928,314) | | | (566,660) |
Income tax expense – tax benefit not recognised | | | — | | | — |
(b) Income tax recognised directly in equity | | | | | ||
Capital raising costs | | | 156,170 | | | 6,875 |
Tax losses not recognised | | | (156,170) | | | (6,875) |
Income tax recognised directly in equity – tax benefit not recognised | | | — | | | — |
(c) Unrecognised deferred tax asset | | | | | ||
Capital raising costs | | | 169,260 | | | 13,090 |
Loan refinancing costs | | | 9,022 | | | — |
Accruals and provision for employee benefit expense | | | 676,287 | | | 43,589 |
Carry forward tax losses | | | 2,281,194 | | | 1,196,710 |
| | 3,135,763 | | | 1,253,389 |
(i) | the Group and the Company derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised; |
(ii) | the Group and the Company continue to comply with the conditions for deductibility imposed by tax legislation; and |
(iii) | no changes in tax legislation adversely affect the Group and the Company in realising the benefit from the deductions for the losses. |
9 | Cash and cash equivalents |
| | 2021 | | | 2020 | |
(a) Cash and bank balances | | | $4,272,984 | | | $285,037 |
| | | | |||
Cash at bank earns interest at floating rates based on daily bank deposit rates. | | | | | ||
| | | | |||
(b) Reconciliation from the net profit after tax to the net cash flows from operations | ||||||
| | | | |||
Loss from continuing operations after tax | | | (14,597,176) | | | (2,525,431) |
| | | | |||
Adjustments for: | | | | | ||
Equity settled share based payment to employees | | | 369,766 | | | 154,142 |
Share-based payments | | | 1,669,662 | | | — |
Non cash finance costs | | | 3,485,687 | | | 317,824 |
Consulting fees settled via an issue of shares | | | 3,200,000 | | | — |
Depreciation | | | 1,622 | | | — |
| | | | |||
Changes in operating assets and liabilities, net of effects from purchase of controlled entity | | | | | ||
(Increase) in other assets | | | (50,000) | | | — |
Increase in trade and other payables | | | 1,475,474 | | | 217,435 |
Decrease in other liabilities | | | — | | | (28,806) |
Increase in provision | | | 96,791 | | | 19,298 |
| | | | |||
Net cash used in operating activities | | | (4,348,173) | | | (1,845,538) |
| | | | |||
(c) Non-cash investing activities | | | | | ||
| | | | |||
Finance costs capitalised (Note 11) | | | 407,369 | | | 220,925 |
| | | | |||
(d) Non-cash financing activities | | | | | ||
| | | | |||
Share issuance costs related to a proposed listing of securities | | | 900,744 | | | — |
| | | | |||
Issue of shares in-lieu of cash for services provided (Note 14) | | | 1,120,000 | | | 360,000 |
| | | | |||
Issue of shares in settlement of a contingent liability (Notes 14 and 18) | | | 1,500,000 | | | — |
| | | | |||
Recognition of equity component of convertible note (Note 15) | | | — | | | 347,830 |
10 | Other assets |
| | 2021 | | | 2020 | |
Prepayments | | | 50,000 | | | — |
11 | Property, plant and equipment |
| | Plant and machinery | | | Office equipment | | | Total | |
Cost | | | | | | | |||
At July 1, 2019 | | | $6,511,923 | | | $— | | | $6,511,923 |
Borrowing costs(1) | | | 220,925 | | | — | | | 220,925 |
Additions at cost(2) | | | 28,238 | | | — | | | 28,238 |
At June 30, 2020 | | | 6,761,086 | | | — | | | 6,761,086 |
| | | | | | ||||
At July 1, 2020 | | | 6,761,086 | | | — | | | 6,761,086 |
Borrowing costs(1) | | | 407,369 | | | — | | | 407,369 |
Additions at cost(2) | | | 218,474 | | | 30,084 | | | 248,558 |
At June 30, 2021 | | | 7,386,929 | | | 30,084 | | | 7,417,013 |
| | | | | | ||||
Depreciation and impairment | | | | | | | |||
At July 1, 2020 | | | — | | | — | | | — |
Depreciation charged for year | | | — | | | — | | | — |
At June 30, 2020 | | | — | | | — | | | — |
At July 1, 2020 | | | — | | | — | | | — |
Depreciation charged for year | | | — | | | (1,622) | | | (1,622) |
At June 30, 2021 | | | — | | | (1,622) | | | (1,622) |
| | Plant and machinery | | | Office equipment | | | Total | |
Net book value | | | | | | | |||
At June 30, 2020 | | | $6,761,086 | | | $— | | | $6,761,086 |
At June 30, 2021 | | | 7,386,929 | | | 28,462 | | | 7,415,391 |
(1) | The Redbank Power Station is not available for use. The Group capitalises borrowing costs directly attributable to the purchase of the asset and bringing the asset to a useable condition. |
(2) | Subsequent to the purchase of the Redbank Power Station, the Group evaluates costs incurred and capitalises allowable costs incurred in bringing the asset to a useable condition. |
12 | Trade and other payables |
| | 2021 | | | 2020 | |
Trade payables | | | $692,981 | | | $490,647 |
Accrued expenses | | | 2,233,878 | | | 99,921 |
Closing balance | | | 2,926,859 | | | 590,568 |
13 | Financial liabilities |
| | 2021 | | | 2020 | |
Current | | | | | ||
Payable on acquisition of plant (Note 19 (b)) | | | $— | | | $750,000 |
Secured loan(1) | | | 1,113,800 | | | 1,838,929 |
Convertible notes(2) | | | 1,789,398 | | | — |
Deferred amount payable for acquisition of plant(3) | | | — | | | 1,488,265 |
Other | | | — | | | 25,000 |
| | 2,903,198 | | | 4,102,194 | |
| | | | |||
Non-current | | | | | ||
Secured loan(1) | | | 2,588,810 | | | — |
Convertible notes(2) | | | — | | | 1,427,950 |
| | 2,588,810 | | | 1,427,950 | |
Total | | | 5,492,008 | | | 5,530,144 |
(1) | Upon purchase of the Redbank Power Station on September 7, 2018, the Group assumed a loan owed by the vendor of a principal amount of $2,500,000. The loan is secured against the assets acquired and carries an interest rate of 12.0%. The Company started repaying this balance but in the period from December 15, 2019 until December 18, 2020, the Company was in default of repayment obligations under the loan facility agreement. On December 18, 2020, the Company renegotiated new terms and conditions and executed an updated loan facility agreement, which resulted in the Company no longer being in default. The renegotiated repayment terms include monthly repayment installments, additional substantial payments upon the occurrence of significant events and a final maturity date of July 31, 2022.The Group incurred a loss on refinancing the secured loan of $3,322,520 which included transaction costs, renegotiation of amounts and the settlement of contingent liabilities associated with the acquisition of the Redbank Power Station |
(2) | The convertible notes have an interest payable at 8% per annum until repaid or converted and a term of 24 months from the date of issue, unless converted or repaid prior. They can be converted at the holders’ option at a deemed value of $0.09 per ordinary share (equivalent to 21,555,554 ordinary shares). If the listing of the Company’s securities on a stock exchange has not occurred within 6 months of electricity generation, then the notes are to be repaid at 115% of the face value of the notes. The Company can elect to repay at anytime prior to redemption at 150% of face value. A significant estimate in the valuation and treatment of the Group’s convertible notes is determining a market interest rate. Management performed this by observing comparable loans without conversion features to determine the market value of the conversion feature. Management determined a market interest rate for a comparable loan without a conversion feature to be 20%. This is a tier 3, non-recurring fair value input. |
(3) | Amount owing on the purchase of the Redbank Power Station that was due for repayment in 3 equal installments on June 18, 2020, December 18, 2020 and June 18, 2021. As required by IFRS 9, the Group determined a fair value at initial recognition discounting the financial liability to represent the time-value and market risk of these cash flows. During the year ended June 30, 2021, the terms of the amount payable were renegotiated and combined with the secured loan. A significant estimate in the valuation and treatment of the Group’s deferred amount payable for acquisition of plant is determining a market interest rate. Management performed this by observing comparable loans. Management determined a market interest rate for a comparable loan to be 20%. This is a tier 3, non-recurring fair value input. |
14 | Equity |
(a) | Shares |
| | | | 2021 | | | 2020 | |||||||||||
| | | | | | Shares | | | $ | | | Shares | | | $ | |||
Ordinary shares - fully paid(1) | | | 320,356,158 | | | 21,040,799 | | | 95,222,224 | | | 5,020,000 | ||||||
| | | | | | | | | | | | |||||||
Movements in fully paid ordinary shares | | | Date issued | | | Issue price | | | | | | | | | ||||
Balance at the beginning of the financial period | | | | | | | 95,222,224 | | | 5,020,000 | | | 91,555,558 | | | 4,372,000 | ||
Issue of shares | | | 23/10/19 | | | $0.18 | | | — | | | — | | | 1,666,666 | | | 300,000 |
Issue of shares | | | 05/11/19 | | | $0.18 | | | — | | | — | | | 2,000,000 | | | 360,000 |
Issue of shares | | | 31/07/20 | | | $0.20 | | | 15,729,605 | | | 3,145,921 | | | — | | | — |
Share split 2:1 | | | 30/09/20 | | | $0.00 | | | 110,951,829 | | | — | | | — | | | — |
Issue of shares (Note 18) | | | 18/12/20 | | | $0.10 | | | 15,000,000 | | | 1,500,000 | | | — | | | — |
Issue of shares | | | 15/03/21 | | | $0.16 | | | 39,696,250 | | | 6,351,400 | | | — | | | — |
Issue of shares | | | 14/04/21 | | | $0.16 | | | 16,756,250 | | | 2,681,000 | | | — | | | — |
Issue of shares(2) | | | 30/06/21 | | | $0.16 | | | 20,000,000 | | | 3,200,000 | | | — | | | — |
Issue of shares for services | | | 30/06/21 | | | $0.16 | | | 7,000,000 | | | 1,120,000 | | | — | | | — |
Transaction costs of issues | | | | | | | — | | | (2,878,267) | | | — | | | (12,000) | ||
Balance at the end of the financial year | | | | | | | 320,356,158 | | | 20,140,054 | | | 95,222,224 | | | 5,020,000 |
(1) | Ordinary shares entitle the shareholder to participate in dividends and the proceeds of winding up the Company in proportion to the number of shares held and the amounts paid on shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital. On a show of hands, every member present at a meeting in person, or by proxy, shall have one vote per share and upon a poll, each share shall have one vote. |
(2) | Issue of ordinary shares subject to performance conditions. In the event performance conditions are not achieved within 36 months form the date of issue the Company has the right to repurchase the shares at a nominal value. |
Tranche 1:a) | at least $500,000 be raised by the Company to assist in the funding of a study into the commercial and operational aspects of establishing a hydrogen production facility (Feasibility Study); and |
b) | the Feasibility Study is completed within 6 months from date of issue; and |
c) | the Feasibility Study delivers a commercially acceptable result. |
Tranche 2:a) | Tranche 1 conditions have been satisfied; and |
b) | an agreement is reached for the location of a hydrogen production facility acceptable to the Company. |
Tranche 3:a) | Tranche 1 and 2 conditions have been satisfied; and |
b) | an offtake agreement from the hydrogen production facility is negotiated on reasonable commercial terms. |
(b) | Options |
| | | | 2021 | | | 2020 | ||||||||
| | | | Number of options | | | Weighted average exercise price | | | Number of options | | | Weighted average exercise price | ||
| | | | | | | | | | ||||||
Movements in options(1) | | | Date issued | | | | | | | | | ||||
Opening balance (adjusted for share split)(2) | | | 14,000,000 | | | $0.107 | | | 7,000,000 | | | $0.214 | |||
Granted | | | 01/12/20 | | | 8,000,000 | | | $0.075 | | | — | | | — |
Granted | | | 15/03/21 | | | 3,326,750 | | | $0.300 | | | — | | | — |
Granted | | | 15/03/21 | | | 11,531,250 | | | $0.200 | | | — | | | — |
Granted | | | 14/04/21 | | | 6,250,000 | | | $0.200 | | | — | | | — |
Granted | | | 14/04/21 | | | 1,476,250 | | | $0.300 | | | — | | | — |
Granted | | | 30/06/21 | | | 9,028,250 | | | $0.200 | | | — | | | — |
Granted | | | 30/06/21 | | | 2,560,937 | | | $0.300 | | | — | | | — |
Granted | | | 30/06/21 | | | 2,000,000 | | | $0.075 | | | — | | | — |
Granted | | | 30/06/21 | | | 8,900,000 | | | $0.200 | | | — | | | — |
Closing balance | | | | | 67,073,437 | | | $0.173 | | | 7,000,000 | | | $0.210 | |
Exercisable at 30 June | | | | | 50,173,437 | | | $0.139 | | | 1,000,000 | | | $0.600 |
(1) | No options were exercised, expired or were cancelled during the current or prior financial year. Share options outstanding at the end of the year have the following expiry date and exercise prices. |
(2) | The number of options doubled as a result of a share split that occurred on 30 September 2020. |
Class | | | Vesting Conditions | | | Grant date | | | Expiry date | | | Exercise price | | | Vested & exercisable | | | Not vested, not exercisable | | | Number | |||
| 2021 | | | 2020 | ||||||||||||||||||||
A* | | | Vested | | | 30/04/18 | | | 30/04/23 | | | $0.300 | | | 2,000,000 | | | — | | | 2,000,000 | | | 1,000,000 |
B* | | | Employed 4 years | | | 01/12/18 | | | 01/12/25 | | | $0.075 | | | — | | | 8,000,000 | | | 8,000,000 | | | 4,000,000 |
C* | | | Vested | | | 01/12/18 | | | 01/12/25 | | | $0.075 | | | 4,000,000 | | | — | | | 4,000,000 | | | 2,000,000 |
D | | | Vested | | | 01/12/20 | | | 01/12/25 | | | $0.075 | | | 8,000,000 | | | — | | | 8,000,000 | | | — |
E | | | Vested | | | 15/03/21 | | | 31/07/24 | | | $0.300 | | | 3,326,750 | | | — | | | 3,326,750 | | | — |
F | | | Vested | | | 14/04/21 | | | 31/07/24 | | | $0.300 | | | 1,476,250 | | | — | | | 1,476,250 | | | — |
G | | | Vested | | | 15/03/21 | | | 31/03/25 | | | $0.200 | | | 11,531,250 | | | — | | | 11,531,250 | | | — |
H | | | Vested | | | 14/04/21 | | | 31/03/25 | | | $0.200 | | | 6,250,000 | | | — | | | 6,250,000 | | | — |
I | | | Vested | | | 30/06/21 | | | 31/03/25 | | | $0.200 | | | 9,028,250 | | | — | | | 9,028,250 | | | — |
J | | | Vested | | | 30/06/21 | | | 31/07/24 | | | $0.300 | | | 2,560,937 | | | — | | | 2,560,937 | | | — |
K | | | Vested | | | 30/06/21 | | | 01/12/25 | | | $0.075 | | | 2,000,000 | | | — | | | 2,000,000 | | | — |
L | | | Remain employed 1 year | | | 30/06/21 | | | 01/12/25 | | | $0.200 | | | — | | | 4,000,000 | | | 4,000,000 | | | — |
M | | | Remain employed 2 years | | | 30/06/21 | | | 01/12/25 | | | $0.200 | | | — | | | 4,900,000 | | | 4,900,000 | | | — |
| | | | | | | | | | 50,173,437 | | | 16,900,000 | | | 67,073,437 | | | 7,000,000 |
* | The number of options doubled as a result of a share split that occurred on 30 September 2020. |
(c) | Capital risk management |
15 | Reserve |
| | 2021 | | | 2020 | |
Share based payment reserve | | | | | ||
Opening balance | | | $243,308 | | | $89,166 |
Share-based payment expense | | | 2,039,428 | | | 154,142 |
Closing balance | | | 2,282,736 | | | 243,308 |
The share-based payment reserve records the value of share options issued to Directors and employees of the Company and third parties. | | | | |
| | 2021 | | | 2020 | |
Other capital reserve - equity component on issue of convertible notes | | | | | ||
Opening balance | | | $265,893 | | | $— |
Recognition of equity component on issue of convertible notes | | | — | | | 347,830 |
Costs of issued capital | | | — | | | (81,937) |
Closing balance | | | 265,893 | | | 265,893 |
The other capital reserve is used to recognise the equity component of financing transactions. This includes the equity component within convertible notes payable. | | | | | ||
| | | | |||
Total reserves | | | 2,548,629 | | | 509,201 |
16 | Share-based payments |
(a) | Details of share options granted during the current period. |
| | Class D | | | Class I | | | Class J | | | Class L | | | Class M | | | Class K | |
Grant date | | | 12/1/2020 | | | 6/30/2021 | | | 6/30/2021 | | | 6/30/2021 | | | 6/30/2021 | | | 6/30/2021 |
Expiry date | | | 12/1/2025 | | | 3/31/2025 | | | 7/31/2024 | | | 12/1/2025 | | | 12/1/2025 | | | 12/1/2025 |
Exercisable from | | | 12/1/2020 | | | 6/30/2021 | | | 6/30/2021 | | | 30/06/2022 | | | 30/06/2023 | | | 6/30/2021 |
Exercise price | | | $0.075 | | | $0.200 | | | $0.300 | | | $0.200 | | | $0.200 | | | $0.075 |
Number of options issued | | | 8,000,000 | | | 9,028,250 | | | 2,560,937 | | | 4,000,000 | | | 4,900,000 | | | 2,000,000 |
Fair value at grant date | | | $542,648 | | | $919,521 | | | $206,566 | | | $435,701 | | | $533,734 | | | $259,414 |
Fair value at grant date per option | | | $0.068 | | | $0.102 | | | $0.081 | | | $0.109 | | | $0.109 | | | $0.130 |
Vesting conditions | | | None | | | None | | | None | | | Remain employed 1 year | | | Remain employed 2 years | | | None |
| | Class D | | | Class I | | | Class J | | | Class L | | | Class M | | | Class K | |
Expected volatility of ordinary shares(1) | | | 79% | | | 101% | | | 101% | | | 101% | | | 101% | | | 101% |
Risk free interest rate | | | 0.29% | | | 0.10% | | | 0.10% | | | 0.10% | | | 0.10% | | | 0.10% |
Underlying share price at valuation date ($/share)(2) | | | $0.100 | | | $0.160 | | | $0.160 | | | $0.160 | | | $0.160 | | | $0.160 |
Weighted average life of option (years) | | | 5.0 | | | 3.8 | | | 3.1 | | | 4.4 | | | 4.4 | | | 4.4 |
Exercise price ($/share) | | | $0.075 | | | $0.200 | | | $0.300 | | | $0.200 | | | $0.200 | | | $0.075 |
Valuation method | | | Black Scholes | | | Black Scholes | | | Black Scholes | | | Black Scholes | | | Black Scholes | | | Black Scholes |
(1) | A significant estimate in the valuation and treatment of the Group’s share-based payments is determining an appropriate volatility. Management performed this by observing a basket of comparable companies listed on the Australian Stock Exchange. Management determined an expected volatility of ordinary shares of 101%, except for Class D options where a volatility of 79% was applied. This would be reflected through the profit or loss over the life of the share-based payment. This is a tier 2, non-recurring fair value input. |
(2) | A significant estimate in the valuation and treatment of the Group’s share-based payments is determining an appropriate underlying share price. Management performed this by observing capital raises undertaken by the Group around the time of issuance. At the time of the valuation, the most recent capital raising by the Group occurred on 15 March 2021 and subsequently 14 April 2021 for $0.16 per share. This is a tier 2, non-recurring fair value input. |
(3) | At a shareholder meeting held on 27 August 2020 shareholders approve a 1:2 split of the Company's ordinary shares. |
| | Class B | | | Class C | |
Grant date | | | 12/1/2018 | | | 12/1/2018 |
Expiry date | | | 12/1/2025 | | | 12/1/2025 |
Exercisable from | | | 12/1/2022 | | | 12/1/2020 |
Exercise price | | | $0.15 | | | $0.15 |
Number of options issued | | | 4,000,000 | | | 2,000,000 |
Fair value at grant date | | | $308,600 | | | $154,300 |
Fair value at grant date per option | | | $0.077 | | | $0.077 |
Vesting conditions – remain employed for | | | 4 years | | | 2 years |
| | Class B | | | Class C | |
Expected volatility of ordinary shares(1) | | | 70% | | | 70% |
Risk free interest rate | | | 2.44% | | | 2.44% |
Underlying share price at valuation date(2) | | | $0.120 | | | $0.120 |
Weighted average life of option | | | 7.0 | | | 7.0 |
Exercise price | | | $0.15 | | | $0.15 |
Valuation method | | | Binomial | | | Binomial |
(1) | A significant estimate in the valuation and treatment of the Group’s share-based payments is determining an appropriate volatility. Management performed this by observing a basket of comparable companies listed on the Australian Stock Exchange. Management determined an expected volatility of ordinary shares of 70%. This would be reflected through the profit or loss over the life of the share-based payment. This is a tier 2, non-recurring fair value input. |
(2) | A significant estimate in the valuation and treatment of the Group’s share-based payments is determining an appropriate underlying share price. Management performed this by observing capital raises undertaken by the Group around the time of issuance. At the time of the valuation, the most recent capital raising by the Group occurred on June 7, 2018 for $0.12 per share. This is a tier 2, non-recurring fair value input. |
17 | Financial assets and liabilities |
(a) | Financial risk management objectives |
(b) | Categories of financial instruments |
| | Note | | | 2021 | | | 2020 | |
Financial assets | | | | | | | |||
Measured at amortised cost | | | | | | | |||
Cash and cash equivalents | | | | | $4,272,984 | | | $285,037 | |
Financial liabilities | | | | | | | |||
Liabilities measured at amortised cost: | | | | | | | |||
Trade and other payables | | | | | 2,926,859 | | | 522,621 | |
Payable on acquisition of plant | | | | | — | | | 750,000 | |
Secured loan | | | | | 3,702,610 | | | 1,838,929 | |
Deferred amount payable for acquisition of plant | | | | | — | | | 1,488,265 | |
Convertible notes | | | | | 1,789,398 | | | 1,427,950 | |
Other liabilities | | | | | — | | | 25,000 | |
| | | | 8,418,867 | | | 6,052,765 |
(c) | Credit risk exposures |
2021 | | | Interest rates | | | Contractual repayment amount | | | Within 1 year | | | 1-5 years |
Cash and cash equivalents | | | 0.0% | | | 4,272,984 | | | 4,272,984 | | | — |
2020 | | | | | | | | | ||||
Cash and cash equivalents | | | 0.0% | | | 285,037 | | | 285,037 | | | — |
(d) | Liquidity risk management |
i) | continuously monitoring forecast and actual cash flows; |
ii) | having in place loan facilities structured to grow as the size of the business increases; and |
iii) | arranging issues of securities as required. |
2021 | | | Interest rate | | | Within 1 year | | | 1-5 years | | | Total |
Trade payables | | | 0% | | | 2,926,859 | | | — | | | 2,926,859 |
Secured loan | | | 12% | | | 1,525,352 | | | 3,060,605 | | | 4,585,957 |
Convertible note | | | 8% | | | 2,015,098 | | | — | | | 2,015,098 |
| | | | 6,467,309 | | | 3,060,605 | | | 9,527,914 |
2020 | | | Interest rate | | | Within 1 year | | | 1-5 years | | | Total |
Trade payables | | | 0% | | | 522,621 | | | — | | | 522,621 |
Payable on acquisition of plant | | | 0% | | | 750,000 | | | — | | | 750,000 |
Secured loan | | | 12% | | | 2,059,600 | | | — | | | 2,059,600 |
Deferred amount payable for acquisition of plant | | | 0% | | | 1,500,000 | | | — | | | 1,500,000 |
Convertible note | | | 8% | | | 155,200 | | | 2,017,600 | | | 2,172,800 |
Other liabilities | | | 0% | | | 25,000 | | | — | | | 25,000 |
| | | | 5,012,421 | | | 2,017,600 | | | 7,030,021 |
2021 | | | Within 6 months | | | 6 to 12 months | | | 1-5 years | | | Total |
Group financial liabilities due for payment | | | | | | | | | ||||
Trade payables | | | $2,926,859 | | | $— | | | $— | | | $2,926,859 |
Secured loan | | | 519,522 | | | 1,005,830 | | | 3,060,605 | | | 4,585,957 |
Convertible note | | | 2,015,098 | | | — | | | — | | | 2,015,098 |
Total contractual and expected outflows | | | 5,461,479 | | | 6,670,012 | | | 3,060,605 | | | 9,527,914 |
Group financial assets – cash flows realisable | | | | | | | | | ||||
Cash and cash equivalents | | | 4,272,984 | | | — | | | — | | | 4,272,984 |
Total anticipated inflows | | | 4,272,984 | | | — | | | — | | | 4,272,984 |
Net outflows | | | 1,188,495 | | | 1,005,830 | | | 3,060,605 | | | 5,254,930 |
2020 | | | Within 6 months | | | 6 to 12 months | | | 1-5 years | | | Total |
Group financial liabilities due for payment | | | | | | | | | ||||
Trade payables | | | $522,621 | | | $— | | | $— | | | $522,621 |
Payable on acquisition of plant | | | 750,000 | | | — | | | — | | | 750,000 |
Secured loan | | | 2,059,600 | | | — | | | — | | | 2,059,600 |
Deferred amount payable for acquisition of plant | | | 1,500,000 | | | — | | | — | | | 1,500,000 |
Convertible note | | | 77,600 | | | — | | | 2,017,600 | | | 2,172,800 |
Other liabilities | | | 25,000 | | | — | | | — | | | 25,000 |
Total contractual and expected outflows | | | 4,934,821 | | | 77,600 | | | 2,017,600 | | | 7,030,021 |
Group financial assets - cash flows realisable | | | | | | | | | ||||
Cash and cash equivalents | | | 285,037 | | | — | | | — | | | 285,037 |
Total anticipated inflows | | | 285,037 | | | — | | | — | | | 285,037 |
Net outflow/(inflows) | | | 4,649,784 | | | 77,600 | | | 2,017,600 | | | 6,744,984 |
(e) | Interest rate risk management |
18 | Contingent Liabilities |
(a) | $1,500,000 via an issue of 15,000,000 ordinary shares at 10 cents each (refer Note 14); and |
(b) | an increase in secured borrowings of $1,822,520. |
19 | Related party disclosures |
(a) | Subsidiaries |
| | Country of incorporation | | | % Equity interest | ||||
Name | | | 2021 | | | 2020 | |||
Flumine Investments Pty Limited | | | Australia | | | 100% | | | 100% |
Verdant HP NSW 2 Pty Ltd | | | Australia | | | 100% | | | 0% |
Verdant HP NSW 1 Pty Ltd | | | Australia | | | 100% | | | 0% |
Verdant Operations Pty Ltd | | | Australia | | | 100% | | | 0% |
Australian Green Hydrogen Pty Limited | | | Australia | | | 100% | | | 0% |
Verdant Power Station Pty Limited | | | Australia | | | 100% | | | 0% |
(b) | Transactions with controlling shareholder |
| | 2021 | | | 2020 | |
Occupancy expenses: Office rent | | | $120,000 | | | $120,000 |
Management fees: fees for provision of management and administrative services | | | 274,000 | | | 277,500 |
| | 394,000 | | | 397,500 |
20 | Key management personnel disclosures |
(a) | Compensation of Key Management Personnel |
| | 2021 | | | 2020 | |
Short-term | | | $710,920 | | | $527,502 |
Share-based payments | | | 295,789 | | | 38,690 |
Post employment | | | 35,807 | | | 15,200 |
| | 1,042,516 | | | 581,392 |
(b) | Share option holdings |
2021 | | | Balance at the start of the period | | | Share split | | | Granted as compensation | | | Balance at the end of the year |
Key management personnel | | | 2,000,000 | | | 2,000,000 | | | 6,000,000 | | | 10,000,000 |
2020 | | | | | | | | | ||||
Key management personnel | | | 2,000,000 | | | — | | | — | | | 2,000,000 |
21 |
| | 2021 | | | 2020 | |
Basic and diluted earnings per share (continuing operations) (cents per share)(1) | | | (6.41) | | | (1.34) |
Loss used to calculate basic and diluted earnings per share | | | (14,597,176) | | | (2,525,431) |
Weighted average number of ordinary shares for basic earnings per share(2) | | | 215,746,244 | | | 187,998,182 |
Weighted average number of ordinary shares adjusted for the effect of dilution(3) | | | 215,746,244 | | | 187,998,182 |
(1) | Share options and convertible instruments on issue that have been assessed as being antidilutive for the purpose of calculating earnings per share have been excluded from the calculation of earnings per share as the Group has incurred a loss after tax. In that circumstance the inclusion of share options would reduce the loss per share and present a misleading result. |
(2) | The weighted average number of shares during the period and all periods amended were adjusted for events that changed the number of shares without a change in resources (refer Note 16(a)(3)). |
(3) | Excludes the dilutive effect of conversion of 67,073,437 options (2020: 7,000,000) on issue and the conversion of convertible notes at the expected conversion price of 9 cents each resulting in 21,555,554 ordinary shares (2020: 10,777,777). |
22 | Auditor's remuneration |
| | 2021 | | | 2020 | |
Fees charged by the auditor of the Company for auditing or reviewing the financial report | | | | | ||
Half year review | | | $32,000 | | | $— |
Prior year overruns | | | 20,000 | | | |
Year end audit | | | 145,000 | | | 40,000 |
| | 197,000 | | | 40,000 | |
| | | | |||
Other assurance services – services provided with respect to a confidential draft registration statement submitted to the Securities and Exchange Commission in connection with a proposed offering of securities | | | 115,000 | | | — |
Total | | | 312,000 | | | 40,000 |
23 | Events after balance sheet date |
Item 6. | Indemnification of Directors and Officers |
• | a liability owed to the company or a related body corporate of the company; |
• | a liability for a pecuniary penalty order made under section 1317G or a compensation order under section 961M, 1317H, 1317HA, 1317HB, 1317HC or 1317HE of the Corporations Act; |
• | a liability that is owed to someone other than the company or a related body corporate of the company and did not arise out of conduct in good faith; or |
• | legal costs incurred in defending an action for a liability incurred as an officer or director of the company if the costs are incurred: in defending or resisting proceedings in which the officer or director is found to have a liability for which they cannot be indemnified as set out above; |
• | in defending or resisting criminal proceedings in which the officer or director is found guilty; |
• | in defending or resisting proceedings brought by the Australian Securities & Investments Commission or a liquidator for a court order if the grounds for making the order are found by the court to have been established (except costs incurred in responding to actions taken by the Australian Securities & Investments Commission or a liquidator as part of an investigation before commencing proceedings for a court order); or |
• | in connection with proceedings for relief to the officer or a director under the Corporations Act, in which the court denies the relief. |
Item 7. | Recent Sales of Unregistered Securities |
• | In March 2019, we issued (i) 1,666,667 Ordinary Shares at A$0.18 per share (prior to our 1-for-20 reverse share split), or 83,333 Ordinary Shares at a price of A$3.60 per share after giving effect to our 1-for-20 reverse share split, to Arthur Phillip Nominees Pty Limited ABN 83111862358, (ii) 1,666,667 Ordinary Shares at A$0.18 per share (prior to our 1-for-20 reverse share split), or 83,333 Ordinary Shares at a price of A$3.60 per share after giving effect to our 1-for-20 reverse share split, to HB Energy Pty Limited and (iii) 5,555,558 Ordinary Shares as part of a private placement at A$0.18 per share (prior to our 1-for-20 reverse share split), or 277,777 Ordinary Shares at a price of A$3.60 per share after giving effect to our 1-for-20 reverse share split, to institutional and professional investors. |
• | In October 2019, we issued (i) 833,333 Ordinary Shares at A$0.18 per share (prior to our 1-for-20 reverse share split), or 41,666 Ordinary Shares at a price of A$3.60 per share after giving effect to our 1-for-20 reverse share split, to Arthur Phillip Nominees Pty Limited ABN 83111862358 and (ii) 833,333 Ordinary Shares at A$0.18 per share (prior to our 1-for-20 reverse share split), or 41,666 Ordinary Shares at a price of A$3.60 per share after giving effect to our 1-for-20 reverse share split, to HB Energy Pty Limited. |
• | In December 2019, we issued A$1,940,000 of unsecured convertible notes to certain institutional and professional investors. |
• | In November 2019, we issued 2,000,000 Ordinary Shares as part of a private placement at A$0.18 per share (prior to our 1-for-20 reverse share split), or 100,000 Ordinary Shares at a price of A$3.60 per share after giving effect to our 1-for-20 reverse share split, to an advisor for the arranging of a convertible note. |
• | In July 2020, we issued a total of 15,729,605 Ordinary Shares as part of a private placement at A$0.20 per share (prior to our 1-for-20 reverse share split), or 786,480 Ordinary Shares at a price of A$4.00 per share after giving effect to our 1-for-20 reverse share split, to Arthur Phillip Nominees Pty Limited and institutional and professional investors. |
• | In September 2020, we effected a forward share split pursuant to which each Ordinary Share outstanding on the date thereof was divided into two Ordinary Shares, which resulted in the issuance of 110,951,829 Ordinary Shares (prior to our 1-for-20 reverse share split), or 5,547,591 Ordinary Shares after giving effect to our 1-for-20 reverse share split, to existing shareholders. |
• | In December 2020, we issued a total of 15,000,000 Ordinary Shares at A$0.10 per share (prior to our 1-for-20 reverse share split), or 750,000 Ordinary Shares at a price of A$2.00 per share after giving effect to our 1-for-20 reverse share split, to HB Energy Pty Limited and Alberton Resources Pty Limited as part of a settlement agreement to eliminate certain contingent liabilities owed to such parties. |
• | In March 2021, we issued a total of 39,696,250 Ordinary Shares at A$0.16 per share (prior to our 1-for-20 reverse share split), or 1,984,812 Ordinary Shares at a price of A$3.20 per share after giving effect to our 1-for-20 reverse share split, as part of private placements to institutional and professional investors. |
• | In April 2021, we issued 16,756,250 Ordinary Shares as part of a private placement at A$0.16 per share (prior to our 1-for-20 reverse share split), or 837,812 Ordinary Shares at a price of A$3.20 per share after giving effect to our 1-for-20 reverse share split, to institutional and professional investors. |
• | We have issued 30,000,000 performance shares at A$0.16 per share (prior to our 1-for-20 reverse share split), or 1,500,000 performance shares at a price of A$3.20 per share after giving effect to our 1-for-20 reverse share split, to vendors of the issued share capital of Australian Green Hydrogen Pty Limited pursuant to the Sale and Purchase Agreement. Since July 1, 2018, 20,000,000 of these performance shares (prior to our 1-for-20 reverse share split), or 1,000,000 of these performance shares after giving effect to our 1-for-20 reverse share split, achieved there conditions for vesting and are included as Ordinary Shares on issue as of June 30, 2021. |
• | We have granted, from time to time since July 1, 2018, options to employees, directors, investors and consultants covering an aggregate of 67,073,437 Ordinary Shares, with exercise prices ranging from A$0.075 to A$0.30 per share (prior to our 1-for-20 reverse share split), or 3,353,671 Ordinary Shares, with exercise prices ranging from A$1.50 to A$6.00 per share after giving effect to our 1-for-20 reverse share split. As of June 30, 2021, none of these options have been exercised, and none of these options have been forfeited or cancelled without being exercised. |
Item 8. | Exhibits and Financial Statement Schedules |
(a) | Exhibits |
Exhibits | | | Description |
| | Form of Underwriting Agreement | |
| | Certificate of the Registration of the Registrant | |
| | Constitution of the Registrant | |
| | Specimen ordinary share certificate | |
| | Term Sheet, by and among the Registrant, Hunter Bay Partners Pty Ltd, Arthur Phillip Nominees Pty Ltd and Fontelina Pty Ltd, dated May 30, 2018 | |
| | Shareholders’ Agreement, by and among the Registrant, HB Energy Pty Ltd, Arthur Phillip Nominees Pty Ltd, Fontelina Pty Ltd, Proprietary & Fiduciary Services Pty Ltd and Haxby Pty Ltd, dated June 6, 2018 | |
| | Form of Warrant to purchase Ordinary Shares to be issued to Roth Capital Partners, LLC | |
| | Form of Warrant to purchase Ordinary Shares to be issued to Digital Offering LLC | |
| | Opinion of McCullough Robertson regarding the validity of the Ordinary Shares being issued | |
| | Opinion of Gibson, Dunn & Crutcher LLP regarding the Warrant to purchase Ordinary Shares to be issued to Roth Capital Partners, LLC | |
| | Services Agreement, by and between Registrant and Arthur Phillip Pty Ltd | |
| | Binding Option Agreement, by and between Registrant (as successor-in-interest to Albertson Resources Pty Ltd) and Biogreen Energy Pty Ltd, dated December 18, 2017 | |
| | Acquisition Rights Agreement, by and between Registrant and Albertson Resources Party Ltd, dated March 29, 2018 | |
| | Settlement Agreement, by and among the Registrant, HB Energy Pty Limited and Albertson Resources Pty Limited, dated September 2, 2020 | |
| | Sale and Purchase Agreement, by and among the Registrant, Australian Green Hydrogen Pty Limited, Apaert Pty Limited and Hest Pty Limited, dated February 17, 2021 | |
| | Form of Deed of Access, Insurance and Indemnity | |
| | Letter of Offer, by and between the Registrant and Warren Kember, dated October 15, 2018 | |
| | Verdant Incentive Option Plan | |
| | The Redbank Finance Facility, by and between Hunter Energy Pty Limited and Richard Liam Butler, dated December 18, 2020 | |
| | Form of Registration Rights Agreement to be entered into with Mr. Richard Poole and Arthur Phillips Nominees Pty Ltd | |
| | List of subsidiaries | |
| | Consent of Grant Thornton Audit Pty Ltd, independent registered public accounting firm | |
| | Consent of McCullough Robertson (included in Exhibit 5.1) | |
| | Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.2) | |
| | Consent of Boiler & Power Plant Services Pty Ltd | |
| | Power of Attorney | |
| | Consent of Michael Allman, as director and chairman nominee | |
| | Consent of Michael Addison, as director nominee |
* | Previously filed. |
+ | Indicates management contract or compensatory plan. |
(b) | Financial Statement Schedules |
Item 9. | Undertakings |
(1) | For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. |
(2) | For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
(3) | For the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
(i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
(ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
(iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
(iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
| | Verdant Earth Technologies Limited | |||||||
| | | | | | ||||
| | By: | | | /s/ Richard Poole | ||||
| | | | Name: | | | Richard Poole | ||
| | | | Title: | | | Chief Executive Officer and Managing Director (principal executive officer) |
Signature | | | Title | | | Date |
| | | | |||
/s/ Richard Poole | | | Chief Executive Officer and Managing Director (principal executive officer) | | | January 6, 2022 |
Name: Richard Poole | | | ||||
| | | | |||
/s/ Warren Kember | | | Chief Financial Officer, Company Secretary and Director (principal financial officer and principal accounting officer) | | | January 6, 2022 |
Name: Warren Kember | | | ||||
| | |||||
| | | | |||
* | | | Director | | | January 6, 2022 |
Name: James Myatt | | | ||||
| | | |
*By: | | | /s/ Warren Kember | | | |
Warren Kember | | | ||||
As Attorney-in-Fact | | |
| | Authorized U.S. Representative | |||||||
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| | CT Corporation System | |||||||
| | | | | | ||||
| | By: | | | /s/ Angel Shearer | ||||
| | | | Name: | | | Angel Shearer | ||
| | | | Title: | | | Assistant Secretary |
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(A – B)
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VERDANT EARTH TECHNOLOGIES LIMITED
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By:
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Name:
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Title:
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a “Cash Exercise” with respect to _________________ Warrant Shares; and/or
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a “Cashless Exercise” with respect to _______________ Warrant Shares.
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Date: _______________ __, ______
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Name of Registered Holder
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By:
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Name:
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Title:
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Name:
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(Please Print)
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Address:
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(Please Print)
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Dated: _______________ __, ______
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Holder’s Signature:
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Holder’s Address:
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1 |
We have acted as Australian counsel to Verdant Earth Technologies Limited ACN 624 824 791 (Company), an Australian corporation, in connection
with the registration statement on Form F-1 (File No. 333-260311) filed on 18 October 2021 under the U.S. Securities Act of 1933, as amended (the Securities Act)
(as amended, the Registration Statement), in connection with a proposed public offering (Offering) of ordinary shares of the Company (Shares).
|
2 |
Based upon and subject to the matters set out below,
|
(a) | we are of the opinion that when issued and paid for as contemplated by the Registration Statement, the Shares and the shares issued pursuant to the warrant included as Exhibit 4.4 to the Registration
Statement (the Warrant, and the shares issues thereunder, Warrant Shares) will be legally issued and fully paid, and holders of such Shares and Warrant Shares,
having fully paid all amounts due on such Shares and Warrant Shares, will be under no personal liability to contribute to the assets and liabilities of the Company in their capacities purely as holders of such Shares and Warrant Shares; and |
(b) | the Warrant has been duly authorized and, when issued as contemplated by the Registration Statement, shall be authorized, created and validly issued by the Company. |
3 |
We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement and to the use of our name under the caption ‘Legal Matters’ in the Registration Statement.
In giving this consent, we do not admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the SEC promulgated thereunder.
|
4 |
For the purposes of this opinion, we have, amongst other things, examined and relied upon the following documents:
|
(a) |
the Registration Statement;
|
(b) | the Warrant; |
(c) |
a certificate, dated the date hereof, of the Company Secretary of the Company certifying, among other things, certain matters concerning the Constitution of the Company, resolutions of
the Board of Directors of the Company relating to the Offering and the capital structure of the Company; and
|
(d) |
the Company's Constitution.
|
5 |
In giving the opinion expressed in this letter we have assumed the following matters:
|
(a) |
the genuineness of all signatures, seals, duty stamps and markings in relation to documents reviewed by us;
|
(b) |
the authenticity of all documents submitted to us as originals;
|
(c) |
the conformity to original documents of all documents submitted to us as copies (certified or otherwise);
|
(d) |
the authenticity of the originals of such copies;
|
(e) |
that all information contained in all documents reviewed by us is true and correct;
|
(f) |
that resolutions of the Board of Directors of the Company that we have relied upon for the purposes of this letter have not been and will not be varied or revoked after the date of this
letter and that the meetings of the Board of Directors of the Company at which the resolutions were considered were properly convened, all Directors who attended and voted were entitled to do so, the resolutions were properly passed, and the
Directors have performed their duties properly and all provisions relating to the declaration of Directors' interests or the power of interested Directors were duly observed;
|
(g) |
the accuracy of any searches obtained from the Australian Securities and Investments Commission (or from elsewhere) in relation to the Company (Searches);
|
(h) |
that each natural person signing any document reviewed by us had the legal capacity to do so and to perform his or her obligations thereunder;
|
(i) |
that we are entitled to make all of the assumptions specified in section 129 of the Corporations Act 2001 (Commonwealth of Australia) (Corporations Act);
|
(j) |
that no person entitled to rely on this opinion is aware that any assumption made by us is incorrect (but this assumption is not to affect any other person who is entitled to rely on
this opinion who is not so aware); and
|
(k) |
each person signing in a representative capacity any document reviewed by us had authority to sign in such capacity.
|
6 |
Our opinion in this letter is subject to the qualifications we have noted in this letter and the following matters:
|
(a) |
the role that we have performed is as described in this letter;
|
(b) |
we express no opinion as to any law other than laws of the States of Australia and the Commonwealth of Australia in force at and as interpreted at the date of this letter. We are not
qualified to, and we do not, express an opinion on the laws of any other jurisdiction. In particular, we have not independently investigated the laws of the United States of America;
|
(c) |
we express no opinion on any non-Australian legal matters, including but not limited to operational, financial, statistical or accounting matters;
|
(d) |
we express no opinion on any taxation information referred to or published by the Company in the Registration Statement or in any other document;
|
(e) |
our opinion relates only to the matters detailed in section 2 of this letter and does not relate to any additional statements concerning the Company or any other matter that may be made
by any person, or any other conduct that any person may engage in concerning the Registration Statement or any other matter;
|
(f) |
in issuing this opinion, we have relied on information obtained from the Searches as at the date of this letter and the opinion stated is based in part on the Searches. We take no
responsibility for any matter which has been filed subsequent to the date of the Searches and shall have no liability in respect of any such matter notwithstanding that it may be inconsistent with this opinion;
|
(g) |
the statements made and opinion in this letter are based on the knowledge of those partners and employees of McCullough Robertson who have acted for the Company in relation to the
Registration Statement; and
|
(h) |
we have not verified work performed by any other advisers or experts retained by the Company and accept no responsibility for the accuracy or completeness of their work.
|
7 |
We also rely (without limitation):
|
(a) |
as to matters involving the application of laws other than the laws of the Commonwealth of Australia in force as at the date of this letter, upon the legal opinion issued by Gibson,
Dunn & Crutcher LLP as US legal counsel to the Company; and
|
(b) |
as to matters of fact, on certificates or other written statements of officers of the Company and officers of departments of various jurisdictions having custody of documents respecting
the corporate existence or good standing of the Company.
|
8 |
The opinion expressed in this letter is limited to the laws of the Commonwealth of Australia in force as at the date of this letter and is given without any ongoing obligation to inform
any party of, or update this opinion with respect to, any changes in the laws of Australia having effect after the date of this opinion. We do not express any opinion as to the effect of any other laws, for example as to whether an agreement
which is governed by a law other than such laws is valid and binding. This letter is limited to the matters stated and no opinion may be inferred beyond the matters expressly stated.
|
Re: |
Verdant Earth Technologies Limited
Registration Statement on Form F-1 (File No. 333-260311)
|
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