Pronouncement | Title (Issue date) | Effective date |
| IFRS 15 | Revenue from contracts with customers | Annual periods beginning on or after January 1, 2017 Earlier application is permitted. | The Company is currently not generating revenue from contracts and thus the impact is expected to be nil. |
| IFRS 9 | Financial instruments | Annual periods beginning on or after January 1, 2018 Earlier application is permitted. | Management is in the process of determining the impact of this standard for subsequent reporting periods. |
| IFRS 16 | Leases | Annual periods beginning on or after January 1, 2019 Earlier application is permitted. | Management is in the process of determining the impact of this standard for subsequent reporting periods |
| IFRS 2 (Amendments) | Classification and Measurement of Share-based Payment Transactions | Annual periods beginning on or after January 1, 2018 Earlier application is permitted. | Management is in the process of determining the impact of this standard for subsequent reporting periods. |
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| B. | Liquidity and Capital Resources |
We are a development stage company and have had no sales income to date, and as of June 30, 20152016 our accumulated deficit totaled A$117,148,302.124,875,182. From inception until our initial public offering in March 2000 we financed our operations primarily through borrowings from two of our then directors, which were repaid from the proceeds of such offering. Since our initial public offering we have financed our operations primarily through sales of equity securities, proceeds from the exercise of options, government grants, licensing and research collaborations and interest earned on investments. During the period from 2001 to 2006, we were awarded government grants in the aggregate amount of A$3.3 million. During the current financial year we were awarded government grants in the aggregate amount of A$228,541.
In September 2009, we raised A$6.0 million before costs (approximately A$5.7 million net of costs) in a private placement to one of our institutional shareholders in the United States of 30 million ordinary shares (equivalent to three million ADSs)500,000 ADSs on a post reverse ratio basis) at a price of A$0.20 per share (A$2.012 per ADS)ADS on a post reverse ratio basis)). We also agreed to grant the investor, subject to shareholder approval, options to purchase 10 million ordinary shares (equivalent to one million ADSs) at an exercise price of A$0.30 per share (A$3.018 per ADS)ADS on a post reverse ratio basis)) that willwould expire four years after the date of the issuance of the shares in the September 2013 private placement. We also issued to the investor, based on an agreed upon formula, an additional 750,000 ordinary shares pursuant to the approval of our shareholders obtained in November 2009. For additional information, see Item 10.C. “Additional Information - Material Contracts.”
In July 2010, we raised A$1.15 million (US$1.0 million) before costs in a private placement of 7.065 million of our ordinary shares (equivalent to 0.7 million ADSs)117,750 ADSs on a post reverse ratio basis)) to Quintiles, at a price of A$0.1624 per ordinary share (US$1.6249.74 per ADS)ADS on a post reverse ratio basis). For additional information, see Item 10.C. “Additional Information - Material Contracts.”
On February 21, 2011, the ADDF awarded us a grant of US$700,000, to be provided in two equal instalments over two years. The purpose of the grant was to support a Phase II imaging trial with PBT2 to investigate the effect of PBT2 on the deposition of beta-amyloid in the brains of patients with mild Alzheimer’s disease The ADDF is based in New York and functions on a venture philanthropy model. We issued a convertible promissory note to the ADDF in the principal amount of the grant and a five-year warrant to purchase 612,397 ordinary shares of our company at a price per share of A$0.17 (equivalent to US$0.169), being the closing pricing of our ordinary shares on the ASX on the date of our agreement with ADDF. We have also agreed to issue an additional five-year warrant to purchase US$105,000 of our ordinary shares of our company at a price per share equal to the closing price of our ordinary shares on the ASX on the date on which we will receive the second instalment of US$350,000.350,000 was paid. The note was due and payable on February 25, 2014. As at June 30, 2014 both instalments totalling US$700,000 received in prior reporting periods were repaid in full. We may, under certain conditions, elect to issue our ordinary shares to satisfy our repayment obligation at a price per shares equal to 80% of the then prevailing volume weighted average price of our ordinary shares on the ASX during the five trading days prior to the issuance. Under the terms of the convertible note, the ADDF may elect, at its discretion, to convert the promissory note into ordinary shares of our company following the consummation by us of a debt or equity financing to third party investors resulting in gross proceeds to our company of at least US$1.0 million, or upon a sale of our company. Following the completion of the private placement described in the following paragraph, the ADDF is now entitled to convert the note under the same terms as such private placement, or under the same terms as any subsequent financing that we may complete prior to the conversion or repayment of the note. The purpose of the grants is to support a Phase II imaging trial with PBT2 to investigate the effect of PBT2 on the deposition of beta-amyloid in the brains of patients with mild Alzheimer’s disease.
In March 2011, we completed a private placement of our securities to institutional investors for aggregate gross proceeds of approximately A$6.12 million (US$6.19 million). Under the terms of the offering, we sold an aggregate of approximately 27.2 million ordinary shares (equivalent to 2,720,000 ADSs)453,333ADSs) at a price of A$0.225 per share (A$2.2513.5 per ADS)ADS on a post reverse ratio basis). We also granted to the investors options to purchase up to an aggregate of approximately 6.8 million ordinary shares (equivalent to 680,000113,333 ADSs) at an exercise price of A$0.225 per share (A$2.2513.2 per ADS)ADS on a post reverse ratio basis). The options are exercisable for a term of four years, and the exercise price is subject to future adjustment for various events, such as stock splits or dividend distributions.
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In June 2011, we completed a private placement of 5.69 million of our ordinary shares to institutional investors and Quintiles Limited, at a price of A$0.225 per share, for aggregate gross process of approximately A$1.28 million (US$1.4 million). We also granted the investors options to purchase 1.42 million ordinary shares at an exercise price of A$0.225 per share that expired March 24, 2015.
In July 2011, we entered into an At-The-Market Issuance Sales Agreement with McNicoll, Lewis & Vlak LLC, now known as MLV & Co. LLC, or MLV, under which we may sell ADSs, each representing tensixty ordinary shares, from time to time through MLV, as our agent for the offer and sale of the ADSs. As of June 30, 2015,2016, we issued a total amount of 12.22,785,221 million ADSs on a post reverse ratio basis under thisthe At-The-Market Issuance Sales Agreement for gross proceeds of A$39.4 million (U.S.$37.0 million).
In October 2012, we raised approximately A$6.0 million through a private placement of 32.5 million ordinary shares (equivalent to 3.250.54 million ADSs)ADSs on a post reverse ratio basis) at a price of A$0.185 per ordinary share. The capital was raised in order to support our two ongoing Phase II clinical trials, the IMAGINE trial and Reach2HD trial.
In March 2013, we completed a private placement of 36.0 million ordinary shares to Australian institutions and high net worth investors, at a price of A$0.195 per share, for aggregate gross proceeds of approximately A$7 million. The proceeds includes A$2 million as part of an underwritten Share Purchase Plan (SPP) under which eligible shareholders were able to apply for up to A$15,000 worth of shares (subject to a scale back) at the same price as the private placement (approximately 76,900 ordinary shares at an issue price of A$0.195 per share, representing a 13.3% discount to the market closing price on the ASX as at the record date). The first A$2 million under the SPP were underwritten by JM Financial Group Ltd.
On November 26, 2014, we entered into Amendment No. 2 to our At-The-Market Issuance Sales Agreement, to continue the at-the-market equity program under which we from time to time may sell up to an additional aggregate of US$50,000,000 of ordinary shares represented by ADSs. As of June 30, 2015,2016, we sold 4,495,451749,242 of our ADSs on a post reverse ratio basis for aggregate gross proceeds of approximately A$7.11 million (US$5.54 million) through our ATM facility.
As of June 30, 20152016 we had a total of 20.0119.4 million unlisted, unexercised options. The options have exercise prices ranging from A$0.170.25 to A$1.12. If all unlisted options were exercised, we would receive consideration of A$7.527.5 million in total.
From inception to June 30, 2015,2016, our capital expenditures have totaled A$627,499 (including A$200,000 of non-cash expenditures),630,298, consisting of computer equipment, furniture and fixtures, fit-out costs and laboratory equipment that is being used in connection with our research at the University of Melbourne. Capital expenditures for equipment are depreciated on a straight-line basis over the estimated useful lives of three to 20 years, with a net balance at June 30, 20152016 of A$44,727.24,225. We currently do not have significant capital spending requirements, but we expect to continue to engage in capital spending consistent with anticipated growth in our operations and personnel.
We had A$34,909,57428,593,538 of cash and cash equivalents at June 30, 2015,2016, compared to A$34,167,01834,909,574 at June 30, 2014.2015. For the years ended June 30, 20152016 and 2014,2015, we incurred an operating loss of A$5.97.7 million and A$13.35.9 million, respectively, and an operating cash outflow of A$10.97.4 million and A$13.510.9 million, respectively. Cash on hand at June 30, 20152016 are considered sufficient to meet the Company’s forecast cash outflows for, at least 12 months from the date of this report.
We believe that Australian Government tax incentive scheme relating to eligible research and development activities, introduced on July 1, 2011, will provide us with significant benefits in future years. Such eligible R&D activities include but are not limited to:
| · | Core activities, which are experimental activities whose outcome cannot be known or determined in advance, but can only be determined by applying a systematic progression of work; |
| · | Core activities conducted for the purpose of generating new knowledge (including new knowledge in the form of new or improved processes and materials); or |
| · | Supporting activities that are directly related and designed to support the above). |
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Under the research and development incentive scheme, entities with an aggregated turnover for the income year of less than A$20 million will be entitled to a 45% refundable tax incentive. In the year ended June 30, 2015,2016, we recorded A$6.54.8 million in other income with respect to funds we will receive in relation to the 20152016 financial year under the 2011 research and development incentive scheme.
In the event that we will not be able to raise the required funding for our planned expenditure, we have the ability to further reduce expenses around our current commitments. We retain the ability to curtail other planned, but not committed expenditure, in order to ensure we continue to have adequate funds to pay all liabilities as and when they fall due.
Management remains confident that we will be successful in raising the additional funding required to complete the planned research and development activities and accordingly have prepared the financial statements on a going concern basis.
At this time, our directors are of the opinion that no asset is likely to be realized for an amount less than the amount at which it is recorded in the Statement of Financial Position as of June 30, 2015.2016. Therefore, no adjustments have been made to our consolidated financial statements relating to the recoverability and classification of the asset carrying amounts or the classification of liabilities that might be necessary should we not continue as a going concern.
Cash Flows
The following table summarizes our cash flows for the periods presented:
| Year ended June 30, | Year ended June 30, | |||||||||||||||||||||||
| 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | |||||||||||||||||||
| (A$) | (A$) | |||||||||||||||||||||||
Net cash used in operating activities | (10,871,074 | ) | (13,536,223 | ) | (7,951,254 | ) | (7,418,526 | ) | (10,871,074 | ) | (13,536,223 | ) | ||||||||||||
Net cash used in investing activities | (182,834 | ) | (23,048 | ) | (28,151 | ) | (833 | ) | (182,834 | ) | (23,048 | ) | ||||||||||||
| Net cash provided by financing activities | 6,843,211 | 34,960,792 | 15,582,031 | - | 6,843,211 | 34,960,792 | ||||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | (4,210,697 | ) | 21,401,521 | 7,602,626 | (7,419,359 | ) | (4,210,697 | ) | 21,401,521 | |||||||||||||||
Cash and cash equivalents at beginning of period | 34,167,018 | 13,346,760 | 5,636,469 | 34,909,574 | 34,167,018 | 13,346,760 | ||||||||||||||||||
| Redemption of security deposit | 152,603 | - | - | |||||||||||||||||||||
| Exchange rate adjustments on cash held in foreign currencies | 4,953,253 | (581,263 | ) | 107,665 | 950,720 | 4,953,253 | (581,263 | ) | ||||||||||||||||
Cash and cash equivalents at end of period | 34,909,574 | 34,167,018 | 13,346,760 | 28,593,538 | 34,909,574 | 34,167,018 | ||||||||||||||||||
Net cash used in operating activities was A$7,418,526, A$10,871,074 A$13,536,223 and A$7,951,25413,536,223 during the years ended June 30, 2016, 2015 2014 and 2013,2014, respectively. Our payments to suppliers and employees during the years ended June 30, 2016, 2015 2014 and 20132014 were A$14,055,879, A$18,124,103 A$18,011,310 and A$10,650,823,18,011,310, respectively. Our operating activity receipts for the years ended June 30, 2016, 2015 2014 and 20132014 of A$6,637,353, A$7,253,029 A$4,475,087 and A$2,699,5694,475,087 consisted of R&D tax incentive refunds, interest and grants. The A$4,068,224 decrease in payments to suppliers and employees for the year ended June 30, 2016 when compared to the year ended June 30, 2015 reflects the U.S. Food and Drug Administration’s placement of PBT2 on Partial Clinical Hold. The A$112,793 increase in payments to suppliers and employees for the year ended June 30, 2015 when compared to the year ended June 30, 2014 reflects the timing of payments to complete the ‘Reach2HD’ Huntington disease trial, the ‘IMAGINE’ Alzheimer’s disease trial and the ongoing IMAGINE – Extension trial together with the initiation of new API (Active Pharmaceutical Ingredient) manufacturing campaigns. The A$7,360,487 increase in payments to suppliers and employees for the year ended June 30, 2014 when compared to the year ended June 30, 2013 reflects expenditure to complete the ‘Reach2HD’ Huntington disease trial, the ‘IMAGINE’ Alzheimer’s disease trial and the ongoing IMAGINE – Extension trial together with the initiation of new API (Active Pharmaceutical Ingredient) manufacturing campaigns. During the years ended June 30, 2016, 2015 2014 and 2013,2014, our payments to suppliers and employees was offset by interest received of A$120,392, A$216,317 and A$377,587, and A$93,789, respectively.
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Net cash used in investing activities was A$833, A$182,834 A$23,048 and A$28,15123,048 during the years ended June 30, 2016, 2015 2014 and 2013,2014, respectively. Cash flows used for investing activities was primarily attributable to payments for the purchase of a payroll account term deposit for the year ended June 30, 20152016 and the purchase of property and equipment for the years ended June 30, 2016, 2015 2014 and 2013.2014.
Net cash provided by financing activities was A$nil, A$6,843,211 A$34,960,792 and A$15,582,03134,960,792 for the years ended June 30, 2016, 2015 2014 and 2013.2014. There have been no funds raised under our At-The-Market facility during the year ended June 30, 2016. Cash flows provided by financing activities during the year ended June 30, 2015 is primarily attributable to funds raised under our At-The-Market facility of A$7.11 million (US$5.54 million). Cash flows provided by financing activities during the year ended June 30, 2014 is primarilyare attributable to funds raised under our At-The-Market facility of A$32.37 million (US$29.74 million). Cash flows provided by financing activities during
We realized a foreign exchange gain of A$950,720 for the year ended June 30, 2013 are attributable2016 compared to funds raised under our At-The-Market facility of A$3.21 million (US$3.29 million) and A$6.01 and A$5.00 million private placements of our securities to high net worth and institutional investors in September 2012 and March 2013. We also raised A$2.02 million in April 2013 through a share purchase plan of our securities and grants awarded to us by the ADDF.
In recent years, we have continued our practice of building valuable research collaborations with institutes based in Australia, the United States, the United Kingdom and other countries to enable us to investigate a variety of therapeutic indications including Alzheimer’s disease, Huntington disease, Parkinson’s disease andParkinsonian movement disorders and selected cancers. These collaborative arrangements ensure that we work with well-respected laboratories with specific expertise in screening and animal modelling of relevance to the particular indication, without incurring ongoing administrative and personnel costs. We maintain in-house patent counsel and research and development project expertise to coordinate these research collaborations.
When a lead compound is identified as suitable for clinical development, we establish a project team to coordinate all non-clinical and clinical development and manufacturing activities. Typically, we engage a clinical research organization to manage patient enrollment, data management, clinical site coordination and statistical analysis, as was the case with the development of our lead compound PBT2 through Phase I and II development and prospectively for Phase III. We manage our manufacturing campaigns through clinical manufacturing organizations for quality assurance and GMP compliance. All clinical, non-clinical, clinical development and manufacturing of our compounds is performed in compliance with the appropriate governing authorities, regulators and standards (for example, the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use).
Research and development expenses net amounted to A$9,585,371, A$12,298,167 A$14,908,098 and A$8,203,82214,908,098 during the years ended June 30, 2016, 2015 2014 and 2013,2014, respectively. Costs associated with patent applications and defense of patent applications are classified as intellectual property expenses and amounted to A$241,954, A$257,299 A$477,079 and A$294,894477,079 during the years ended June 30, 2016, 2015 2014 and 2013,2014, respectively.
Our research and development expenses consist primarily of expenses for contracted research and development activities conducted by third parties on our behalf, including personnel, testing facilities and other payments in accordance with our research and clinical agreements. Research and development expenses also include costs associated with the acquisition and development of patents. Due to the numerous variables and the uncertain nature of the development of a clinical compound, including obtaining regulatory approvals, we are not able to reasonably estimate the nature, timing and costs of the future expenditures necessary to complete our research and development projects, the anticipated completion dates of each project and when material net cash flows from our research and development programs will commence.
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D.Trend Information
We are a development stage company and while we believe that our technology will offer novel therapeutic strategies into an expanding market, we cannot predict with any degree of accuracy the outcome of our research or commercialization efforts.
We have not commercialized any products to date. Accordingly, any trends within the markets in which we operate are expected to have more direct impact on our business in the event that we are successful in commercializing our product candidates, including our current lead product candidate, PBT2.candidates, PBT2 and PBT434.
Over the past few years, there has been increasing pressure to reduce drug prices in the developed markets as a consequence of political initiatives and regulations aiming to curb continuous increases in healthcare spending. Any revenue we earn in the future may be negatively affected by such political initiatives and regulations. The increased burden of healthcare costs in the aging population have led to an increased focus on reducing costs and, therefore, have further increased the pressure to lower drug prices. We expect this trend to continue in the years ahead. However, we believe spending in the healthcare industry, as compared to many other industries, is less linked to economic trends. We expect sales growth to continue at higher levels in emerging markets and also for niche, orphan indications. We also expect that demographic developments, increased treatment penetration, especially in newly established drug markets, and better diagnostic tools to enable the tailoring of drugs to specific needs, will result in continuing growth in overall global drug sales.
We will need substantial additional funding in order to complete the development, testing and commercialization of our product candidates. The commitment to these projects will require additional external funding, at least until we are able to generate sufficient cash flow from sale of one or more of our products to support our continued operations. If adequate funding is not available, we may be required to delay, scale back or eliminate certain aspects of our operations or attempt to obtain funds through unfavorable arrangements with partners or others that may force us to relinquish rights to certain of our technologies, products or potential markets or that could impose onerous financial or other terms. Management is continuing its efforts to obtain additional funds so that we can meet our obligations and sustain operations.
We are not a party to any material off-balance sheet arrangements. In addition, we have no unconsolidated special purpose financing or partnership entities that are likely to create material contingent obligations.
The following table summarizes our minimum contractual obligations as of June 30, 2015.2016. The majority of our contracts for research and development programs have a termination notice period of 30 days. As at June 30, 2015,2016, we had research and development termination commitments approximating A$2.541.45 million. No liability has been recognised within our financial statements for this period. In addition, we have the ability to scale down our operations and prioritize our research and development programs in neurology to reduce expenditures as discussed in Item 5B. Liquidity and Capital Resources.
| Contractual Obligations | Payments due by period | |||||||||||||||||||
| Total | less than 1 year | 1-3 years | 3-5 Years | more than 5 years | ||||||||||||||||
| Operating lease obligations | 193,940 | 145,610 | 48,330 | - | - | |||||||||||||||
Total | 193,940 | 145,610 | 48,330 | - | - | |||||||||||||||
Contractual Obligations | Payments due by period | |||||||||||||||||||
Total | less than 1 year | 1-3 years | 3-5 Years | more than 5 years | ||||||||||||||||
Operating lease obligations | 167,047 | 134,272 | 32,776 | - | - | |||||||||||||||
Total | 167,047 | 134,272 | 32,776 | - | - | |||||||||||||||
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| ITEM 6. | DIRECTORS, |
| A. | Directors and Senior Management |
Our directors and executive officers are as follows:
Name | Age | Position | ||
Geoffrey P. Kempler | 60 | Chairman of the Board of Directors and Chief Executive Officer | ||
Kathryn Andrews | 48 | Chief Financial Officer | ||
Phillip A. Hains | 55 | Company Secretary | ||
Dianne M. Angus | 55 | Chief Operating Officer | ||
Peter A. Marks(1) | 59 | Director | ||
Brian D. Meltzer(1)(2)(3) | 61 | Director | ||
George W. Mihaly(1)(2)(3) | 62 | Director | ||
Lawrence B. Gozlan(3) | 36 | Director | ||
Ira Shoulson | 69 | Director |
_________________________
(1)Member of the Audit Committee
(2)Member of the Remuneration Committee and Share Plan Committee
(3)Member of the Nominations Committee
Mr. Geoffrey Paul Kempler has served as the Chairman of our Board of Directors since November 1997. Between November 1997 and August 2004 he served as our Chief Executive Officer, and in June 2005 he again assumed the position of Chief Executive Officer. Mr. Kempler is one of the founders of our company. Mr. Kempler is a qualified psychologist. Mr. Kempler, who has extensive experience in investment and business development, has been responsible for the implementation of our strategic plan and the commercialization of our technology. Mr. Kempler holds a B.Sc degree in science from Monash University and a Grad. Dip. App. Soc. Psych. degree from Swinburne University. Mr. Kempler was appointed as a Non-Executive Chairman of Opthea Limited, an ASX listed drug development company developing innovative, biologics-based therapies for the treatment of eye disease, on November 30, 2015.
Ms. Kathryn Andrews was appointed as Chief Financial Officer of our company on November 4, 2014. From December 2012 to October 2014 Ms. Andrews held a senior role with The CFO Solution, a firm focused on the listed company and life sciences environments. Between 2007 and 2012 Ms. Andrews provided contract accounting, governance and consulting services to various mining and government organizations. Between 2002 and 2006 Ms. Andrews was the Chief Financial Officer and Company Secretary of Antisense Therapeutics Limited. Between 1999 and 2002 Ms. Andrews provided contract accounting and consulting services to various mining and resources, technology and government organizations. Between 1989 and 1998 Ms. Andrews was employed by Rio Tinto Limited in a variety of accounting, auditing and financial management roles. Between 1985 and 1989 Ms. Andrews was employed by BP Australia Limited in an accounting role. Ms. Andrews is a Certified Practicing Accountant and holds a Bachelor of Commerce from the University of Melbourne.
Mr. Phillip Hains was appointed as Company Secretary of our company on November 4, 2014. Mr. Hains is a Chartered Accountant operating a specialist public practice, 'The CFO Solution'. The CFO Solution focuses on providing back office support, financial reporting and compliance systems for listed public companies. A specialist in the public company environment, Mr. Hains has served the needs of a number of company boards and their related committees. He has over 20 years' experience in providing businesses with accounting, administration, compliance and general management services. He holds a Master of Business Administration from RMIT and a Public Practice Certificate from the Institute of Chartered Accountants.
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Ms. Dianne Angus has served as our Chief Operating Office since May 2007. Ms. Angus joined our company in August 2002, initially serving as our Vice President of Intellectual Property and Licensing, she was promoted to Senior Vice President of Business Development, Intellectual Property and Research in July 2004 and served in that position until being promoted to her current position in May 2007. From 1992 to 2000, Ms. Angus managed the intellectual property, licensing and biotechnology product development assets of two Australian companies, AMRAD Corporation Limited and Florigene Limited. At Florigene, Ms. Angus was the joint venture alliance manager with Suntory for three years. From June 2000 to August 2002, Ms. Angus was Director of Dianne Angus and Associates Pty. Ltd. providing strategic business development, technology evaluation and intellectual property consulting services to biotechnology companies. Ms. Angus has worked in the commercial biotechnology sector for over 20 years directing product valuation, acquisition and product licensing. During her career, Ms. Angus has managed large and diverse intellectual property portfolios, contract rights and enforcement. Ms. Angus has negotiated and executed many commercial licenses and research and product development agreements with entities ranging from large pharmaceutical companies to numerous global research institutes. Ms. Angus has also undertaken due diligence assessments on several Australian biotechnology companies for investment brokers. Ms. Angus holds a Bachelor of Science (Education) and Bachelor of Science (Honors) degree from the University of Melbourne, a Master’s degree in Biotechnology from Monash University, a Graduate Diploma in Intellectual Property Law from Monash University, a Diploma in Intellectual Property Practice from the Institute of Patent and Trademark Attorneys of Australia and is a registered Australian Patent and Trade Mark Attorney. Ms. Angus is also a member of the Australian Institute of Company Directors.
Mr. Peter Marks has served as a director of our company since July 2005. For the period November 21, 2006 to October 20, 2011, Mr. Marks has also served as Executive Chairman of iSonea Ltd, formally KarmelSonix Ltd, a medical devices company listed on the ASX that is focused on developing and commercializing a range of devices in the respiratory and medicine space. For over 13 years until the end of August 2014, Mr. Marks was a Director of Peregrine Corporate Ltd, an Australian based investment bank. Mr. Marks is currently a Director of Armadale Capital Plc (formerly Watermark Global Plc), an AIM listed investment company, focused on natural resources projects based principally in Africa with its current major investments being a gold exploration company in DRC and a coal briquetting operation in South Africa. Mr. Marks is currently a principal of Henslow Pty Ltd (formerly Halcyon Corporate Pty Ltd), a corporate and capital markets advisory firm specializing in advising small to mid-cap companies. Mr. Marks was appointed asis a non-executive ChairmanDirector of Emefcy Group Limited (formerly Savcor Group Limited,Limited), an ASX listed industrial technology business. From September 1998 until March 2001, Mr. Marks was employed by KPMG Corporate Finance Ltd (Australia), where he rose to Director and was responsible for heading up the equity capital markets group in Melbourne. From January 1992 until July 1994, Mr. Marks served as Head of the Melbourne Companies Department at the ASX and was founding Director of Momentum Funds Management Pty Ltd, an Australian venture capital firm. From December 1990 until December 1991, Mr. Marks served as Director of Corporate Finance at Burdett Buckeridge & Young Ltd in their Melbourne offices, from August 1988 until November 1990, he held senior corporate finance position at Barings Securities Ltd, and from July 1985 until July 1988, he served as an Associate Director of McIntosh Securities, now Merrill Lynch Australia. In his roles with these various financial institutions, Mr. Marks was responsible for advising a substantial number of listed and unlisted companies on issues ranging from corporate and company structure, to valuation, business strategies, acquisitions and international opportunities. Mr. Marks holds a Bachelor of Economics degree, a Bachelor of Law degree and Graduate Diploma in Commercial Law from Monash University in Melbourne, Australia, and an MBA degree from the Scottish School of Business at the University of Edinburgh.
Mr. Brian Derek Meltzer has served as a director of our company since December 1999. Mr. Meltzer has over 30 years of experience in economics, finance and investment banking. Until December 2013 Mr. Meltzer was a director of Momentum Ventures Limited, licensed by the government as an Innovation Investment Fund with venture capital investments including biotechnology. Mr. Meltzer is a non-executive director on the board of directors of a number of private companies. Mr. Meltzer is also a director on the board of the Australian-Israel Chamber of Commerce and is Chairman of Independence Australia (previously Paraquad). Mr. Meltzer is Chairman of our Audit Committee and Remuneration Committee. Mr. Meltzer holds a Bachelor of Commerce degree from the University of Auckland and a Master of Economics degree from Monash University.
Dr. George William Mihaly has served as director of our company since December 1999. Dr. Mihaly also serves as a director of Waide Pty Ltd., a private company. Dr. Mihaly has had an extensive and successful career spanning the research and commercial facets of the pharmaceutical industry. During the period from mid-1994 to early 2000, Dr. Mihaly was the founding executive Chairman and Managing Director of Synermedica Pty Ltd, or Synermedica, one of Australia’s leading independent consultant research organizations to the pharmaceutical industry. Synermedica merged with the global consultant research organization Kendle International Inc. in April 2000 and Dr. Mihaly continued as Managing Director of the merged entity in Australia (now called Kendle Pty Ltd) until December 2004. Over the course of the last 35 years in academia and industry, Dr. Mihaly has amassed extensive experience in both the science and logistics of setting up, monitoring, managing and evaluating results from Phase I, II, III and IV clinical trials. Dr. Mihaly holds a B.Pharm. from Monash University, an M.Sc. degree from Sydney University and a Ph.D. degree from Melbourne University, and he is a fellow of the Australian Institute of Company Directors.
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Mr. Lawrence Gozlan was appointed as a director of our company on August 8, 2011. Mr. Gozlan, a leading biotechnology investor and advisor, is the Chief Investment Officer and Founder of Scientia Capital, a specialized global investment fund focused exclusively in life sciences. The Company was founded to provide high level expertise and to manage investments for high net worth individuals, family offices and institutional investors wanting exposure to the biotechnology industry. Prior to this, Mr. Gozlan was responsible for the largest biotechnology investment portfolio in Australia as the institutional biotechnology analyst at QIC (“the Queensland Investment Corporation”), an investment fund with over A$60 billion under management. He previously worked as the senior biotechnology analyst in the equities team at Foster Stockbroking Pty Ltd, and gained senior corporate finance experience advising life sciences companies at Deloitte. During 2014, Mr. Gozlan was a Director of ASX-listed companies OncosilOncoSil Medical Limited (ASX:OSL) and Phosphagenics Limited (ASX:POH).He. He retired from these appointments in May 2015. Mr. Gozlan is currently a non-executive director of AusBiotech, which is the Australian Biotechnology Industry body. He holds a Bachelor of Science with Honors in microbiology and immunology from the University of Melbourne specializing in neurodegenerative diseases.
Prof.Prof.IraIra Shoulson was appointed as a director of our company on May 13, 2014. Professor Shoulson is the Chairman of our Research and Development Advisory Board and has served as a consultant to, and member of, several FDA advisory committees over the past three decades, and has been involved in eight successful new drug applications to the FDA, notably long-acting methylphenidate (Concerta©) for attention deficit disorder, rasagiline (Azilect©) for Parkinson disease, and tetrabenazine (Xenazine©), the first drug approved by the FDA for the treatment of chorea in Huntington disease (HD). Prior to taking up his position with our company, Professor Shoulson concluded his elected term as Chair and President of the Huntington Study Group. Professor Shoulson is Professor of Neurology, Pharmacology and Human Science at Georgetown University, Washington, DC, USA, and Director of the University’s Program for Regulatory Science and Medicine (PRSM). He is also principal investigator of the Georgetown University Center of Excellence in Regulatory Science and Innovation (CERSI), one of four research and education centers currently funded by the FDA.
There are no family relationships among our directors and senior executives.
| B. | Compensation |
The following table sets forth all compensation we paid for the year ended June 30, 20152016 with respect to each of our executive officers and directors during the 20152016 fiscal year.
Salaries, fees, commissions, bonuses and other | Pension, retirement and other similar benefits | |||||||
Geoffrey P. Kempler (1) | $ | -- | ||||||
| $ | A378,658 | -- | ||||||
| $ | A136,429 | -- | ||||||
| $ | ||||||||
| A60,000 | -- | |||||||
Brian D. Meltzer | $ | A85,000 | -- | |||||
George W. Mihaly | $ | A75,000 | -- | |||||
Lawrence B. Gozlan | $ | A60,000 | -- | |||||
Ira Shoulson (2) | $ | |||||||
| -- | ||||||||
______________
| (1) |
| (2) |
| Prof. Ira Shoulson provides consulting services to |
In accordance with the approval of our shareholders at our 2004 annual general meeting of shareholders, the aggregate amount available per annum for the remuneration of our non-executive directors for their services (payable in cash, ordinary shares or options) is A$1,250,000.
As of June 30, 2015,2016, our directors and executive officers as a group, then consisting of nine persons, held options to purchase an aggregate 9,317,819 of our ordinary shares. Of such options, (i) options to purchase 157,819 ordinary shares are exercisable for A$0.25 consideration on or before March 20, 2017; (ii) options to purchase 8,000,000 ordinary shares are exercisable for A$0.33 consideration on or before December 13, 2017; (iii) options to purchase 160,000 ordinary shares are exercisable for A$0.73 consideration on or before November 3, 2018; and (iv) options to purchase 1,000,000 ordinary shares exercisable for A$0.34 consideration on or before October 2, 2018. All such options were granted under our 2004 Employees’, Directors’ & Consultants’ Share and Option Plan. See Item 6.E. “Directors, Senior Management and Employees - Share Ownership – Stock Option Plans.”
Agreement with Chief Executive Officer. On September 21, 2007, we entered into an agreement with Mr. Geoffrey Kempler, a director, in connection with his employment as our Chief Executive Officer. Under the agreement, we agreed to pay Mr. Kempler a base salary of A$386,400 per annum (which may be increased at the discretion of our Board of Directors). Mr. Kempler is entitled to a bonus of A$6,000 for holding regular meetings (minimum twice a year) of the full Research and Development Advisory Board. Mr. Kempler is entitled to up to 20 days’ vacation a year (vacation days that are not used in any calendar year will be carried over for use in the following year to a maximum carry-over of two years) and reimbursement of reasonable business expenses incurred in the performance of his duties. Mr. Kempler is also entitled to participate in the employee benefits established by our company, as applicable to executives, including, without limitation, a Section 401(k) retirement plan, health, dental, life insurance and short and long term disability plans. The agreement contains customary confidentiality provisions.
In the event of termination of Mr. Kempler’s employment:
| · | By our company without cause (as defined in the agreement) or by Mr. Kempler with good reason (as defined in the agreement), he will be entitled to: (i) the sum of A$1 million provided we have sufficient capital requirements to fulfill this obligation within 90 days of termination date; (ii) business expenses that have not been reimbursed and accrued and unused vacation days; and (iii) the acceleration of the vesting of any unvested options to purchase ordinary shares which may be purchased during the remainder of the exercise period of such options. |
| · | By our company with cause (as defined in the agreement) or by Mr. Kempler without good reason (as defined in the agreement), he will be entitled to business expenses that have not been reimbursed and accrued and unused vacation days. Mr. Kempler will only be permitted to exercise unvested options to purchase shares that had been granted to him prior to the employment agreement. |
| · | Due to death or disability (as defined in the agreement), we shall pay Mr. Kempler or his estate, as applicable, all accrued base salary, pro-rata bonus, business expenses that have not been reimbursed and accrued, unused vacation days (and in the case of disability, less such amounts under any disability policy maintained by our company). Mr. Kempler or his estate, as applicable, will be entitled to exercise vested options for ordinary shares. |
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Agreement with Chief Operating Officer. On June 12, 2007, we entered into an amendment to an employment agreement with Ms. Angus in connection with her appointment as our Chief Operating Officer, effective as of May 31, 2007. Under the amended agreement we agreed to pay Ms. Angus a base salary of A$268,125 per year, plus superannuation equivalent to 9.0% of the base salary (or the percentage stipulated by applicable Australian law). Effective May 1, 2010, Ms. Angus received a salary increase of 8% bringing her annual base salary inclusive of 9% superannuation to A$344,044. In the 2014 fiscal year, as per changes to Australian law, superannuation increased to 9.25%. In the 2015 fiscal year, as per changes to Australian law, superannuation increased to 9.5%. During the 2013 fiscal year, Ms. Angus also received options to purchase 315,637 ordinary shares, which are exercisable for A$0.25 on or before March 20, 2017, as remuneration for her services. The options were granted under the 2004 ASX Plan (as defined below). During the 2014 fiscal year, Ms. Angus also received options to purchase 160,000 ordinary shares, which are exercisable for A$0.73 on or before November 3, 2018, as remuneration for her services. The options were granted under the 2004 ASX Plan. During the 2015 fiscal year, Ms. Angus also received options to purchase 1,000,000 ordinary shares, which are exercisable for A$0.34 per share on or before October 2, 2018, as remuneration for her services. The options were granted under the 2004 ASX Plan. If we terminate the employment agreement without cause or if Ms. Angus terminates the employment agreement with good reason (as such terms are defined in the agreement) (i) we will pay to Ms. Angus, within 90 days of such termination, the sums she would have been entitled to receive had she continued to provide services for three months following the termination date; and (ii) any unvested options shall be accelerated and will become fully vested and she will be entitled to exercise her options during the remainder of their term.
| C. | Board Practices |
Introduction
Our Board of Directors is elected by and accountable to our shareholders. Our Board of Directors’ responsibilities are divided into operating activities, financial and capital markets activities and scientific activities. The Chairman of our Board of Directors, currently Mr. Geoffrey Kempler, is responsible for the management of the Board of Directors and its functions.
Election of Directors
Directors are elected at our annual general meeting of shareholders. Under our Constitution, the term of office of our directors are staggered, such that at every annual general meeting of shareholders one-third, rounded down to the nearest whole number, of the directors, except a Managing Director, must retire from office and may offer himself/herself for re-election. No director, except a Managing Director, shall retain office for a period in excess of three years without submitting for re-election. Our Board of Directors has the power to appoint any person to be a director, either to fill a vacancy or as an additional director (provided that the total number of directors does not exceed the maximum allowed by law), and any director so appointed may hold office only until the next annual general meeting when he or she shall be eligible for election. Mr. Kempler is our Managing Director. Dr. Mihaly must retire and may stand for re-election at our 2015 annual general meeting of shareholders. Mr. Brian Meltzer must retire and may stand for re-election at our 2016 annual general meeting of shareholders. Mr. Peter Marks, Mr. Lawrence Gozlan and Prof. Ira Shoulson must retire and may stand for re-election at our 2017 annual general meeting of shareholders. Dr. Mihaly must retire and may stand for re-election at our 2018 annual general meeting of shareholders.
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Non-Executive and Independent Directors
Australian law does not require a company to appoint a certain number of independent directors to its board of directors or audit committee. However, under the ASX Corporate Governance Council’s Corporate GoverananceGovernance Principles and Recommendations 3rd Edition (“ASX Recommendations”), the ASX recommends, but does not require, that an ASX-listed company have a majority of independent directors on its board of directors and that the audit committee be comprised of independent directors, within the meaning of the rules of the ASX. Our Board of Directors currently has fivesix directors, of which fourfive are non-executive directors within the meaning of the ASX Recommendations, and our audit committee consists of such three non-executive directors. Accordingly, we currently comply with the foregoing recommendations of the ASX Recommendations.
Under the rules of the NASDAQ Stock Market, a majority of our Board of Directors must qualify as independent directors within the meaning of the rules of the NASDAQ Stock Market, each of whom satisfies the respective “independence” requirements of the NASDAQ Stock Market Rules and the Securities and Exchange Commission. Our Board of Directors has determined that each of Messrs. Lawrence Gozlan, Peter Marks and Brian Meltzer and Dr. George Mihaly qualifies as an independent director under the requirements of the ASX, the NASDAQ Stock Market and the Securities and Exchange Commission.
Committees of the Board of Directors
Our Board of Directors has established the following committees:
Audit Committee. The NASDAQ Stock Market rules require us to establish an audit committee comprised of at least three members, each of whom is financially literate and satisfies the respective “independence” requirements of the Securities and Exchange Commission and NASDAQ and one of whom has accounting or related financial management expertise at senior levels within a company.
Our Audit Committee assists our Board of Directors in overseeing the accounting and financial reporting processes of our company and audits of our financial statements, including the integrity of our financial statements, compliance with legal and regulatory requirements, our independent public accountants’ qualifications and independence, the performance of our internal audit function and independent public accountants, and such other duties as may be directed by our Board of Directors. The Audit Committee is also required to assess risk management. The audit committee meets at least four times per year.
Our Audit Committee currently consists of three board members, each of whom satisfies the “independence” requirements of the Securities and Exchange Commission, the NASDAQ Stock Market Rules and ASX Rules. Our Audit Committee is currently composed of Messrs. Marks and Meltzer and Dr. Mihaly.
Remuneration Committee. Our Board of Directors has established a Remuneration Committee, which is comprised solely of independent directors, within the meaning of the NASDAQ Stock Market Rules. The Remuneration Committee is responsible for reviewing the salary, incentives and other benefits of our executive officers and to make recommendations on such matters for approval by our Board of Directors. The Remuneration Committee is also responsible for overseeing and advising our Board of Directors with regard to the adoption of policies that govern our compensation programs, including share and ADS option and employee benefit plans. Additionally, the Remuneration Committee administers our share and ADS option plans and any other employee benefit plans through a sub-committee that it established for this purpose (see Share Plan Committee below). Dr. Mihaly and Mr. Meltzer are the current members of the Remuneration Committee, each of whom qualifies as an “independent director” within the meaning of the NASDAQ Stock Market Rules.
Share Plan Committee. Our Remuneration Committee has established a sub-committee, the Share Plan Committee, which administers our share and ADS option plans. Dr. Mihaly and Mr. Meltzer are the current members of the Share Plan Committee, each of whom qualifies as an “independent director” within the meaning of the NASDAQ Stock Market Rules.
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Nominations Committee. Our Board of Directors has established a Nominations Committee, which is comprised solely of independent directors, within the meaning of the NASDAQ Stock Market Rules. The Nominations Committee is responsible for identifying and recommending to the Board of Directors director nominees for election at the annual meetings of shareholders, as well as candidates to fill any vacancies on the Board of Directors or as an addition to existing directors. Messrs. Gozlan and Meltzer and Dr. Mihaly and Mr. Meltzer are the current members of the Nominations Committee, each of whom qualifies as an “independent director” within the meaning of the NASDAQ Stock Market Rules.
Research and Development Advisory Board. Our Research and Development Advisory Board oversees and administers our research activities. Our Research and Development Advisory Board is comprised of a number of the leading scientists in the field of age-related degenerative disorders. The members of our ScientificResearch and Development Advisory Board are as follows:
Professor Jean-Marc Orgogozo, MD, is the Chair of the Department of Clinical Neurosciences and Professor of Neurology at the University of Bordeaux, France. Professor Orgogozo has extensive experience in neuroepidemiology and clinical trials, particularly in stroke and dementia. Professor Orgogozo’s early publications on the amyloid vaccines have helped to shape the field of anti-amyloid therapeutics. Professor Orgogozo’s main therapeutic research now is on the prodromal phase of Alzheimer’s disease.
Professor Colin Masters is the Executive Director of the Mental Health Research Institute (Australia) and a Laureate Professor at The University of Melbourne. He is also the Senior Deputy Director of the Florey Institute of Neuroscience and Mental Health. For more than 30 years, Professor Masters has dedicated his research to the study of the nature of Alzheimer’s disease and other neurodegenerative disorders. Professor Masters and his team are internationally renowned for their work on the disease and he is considered the most eminent neuroscientist in Australia. In addition, Professor Masters is regarded as one of the leading worldwide researchers in the study of Alzheimer’s disease. In 2006, Professor Masters was awarded the Lifetime Achievement Award in Alzheimer‘s Disease Research at the 10th International Conference on Alzheimer‘s disease (ICAD), the Lennox K. Black International Prize for Excellence in Biomedical Research and the Grand Hamdan International Award for a research breakthrough in the subject of Molecular and Cellular Pathology of Neurological Disorders.
Professor Rudolph Emile Tanzi is the Joseph P. and Rose F. Kennedy Professor of Neurology at Harvard Medical School and Director of Genetics and the Aging Research Unit at MGH. Professor Tanzi co-discovered three of the four known Alzheimer’s disease genes and contributed greatly to elucidating the molecular mechanisms by which they cause of Alzheimer’s disease. Professor Tanzi’s laboratory at MGH is one of the leaders in the field. Professor Tanzi conceived the “Metal Hypothesis of Alzheimer's disease” with Professor Ashley Bush, and over the past 15 years has helped guide the design and development of our platform technology. In January 2012, Professor Tanzi was appointed our Chief Scientific Advisor.
Directors’ Service Contracts
Except for the agreement with Mr. Kempler in connection with his employment as our Chief Executive Officer, as described above, there are no arrangements or understandings between us and any of our subsidiaries, on the one hand, and any of our directors, on the other hand, providing for benefits upon termination of their employment or service as directors of our company or any of our subsidiaries.
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Indemnification of Directors and Officers
Our Constitution provides that, subject to the Australian Corporations Act, every director, secretary, manager or officer of our company or any person employed by our company as auditor shall be indemnified out of our funds against all liability incurred by such person as a director or officer in defending proceedings, whether civil or criminal, in which judgment is given in the persons favor or in which the person is acquitted in connection with any application under the Australian Corporations Act in which relief is granted to the person by a Court.
Under our Constitution no director, auditor or other officer shall be liable for (i) any acts, receipts, neglect or defaults of any other director or officer for joining in any receipt or other act for conformity; (ii) any loss or expense that may happen to us through the inefficiency or deficiency of title to any property acquired by order of the directors or on our behalf; (iii) the inefficiency or deficiency of any security in or upon which any of our monies shall be invested; (iv) any loss or damage arising from bankruptcy, insolvency or tortuous act of any person with whom any monies, securities or effects shall be deposited; (v) any loss occasioned by any error of judgment, omission, default or oversight on the persons part; or (vi) any other loss damage or misfortune whatsoever which shall happen in relation to those things unless the same shall happen through the persons own negligence, default, breach or duty, breach of trust or dishonesty.
In addition, our Constitution provides that to the extent permitted by law, we may pay, or agree to pay, a premium in respect of a contract insuring a person who is or has been an officer of our company or one of our subsidiaries against a liability:
| · | incurred by the person in his or her capacity as an officer of our company or a subsidiary of our company provided that the liability does not arise out of a conduct involving a willful breach of duty in relation to our company or a subsidiary of our company; or |
| · | for costs and expenses incurred by that person defending proceedings, whatever their outcome. |
We maintain a directors’ and officers’ liability insurance policy. We have established a policy for the indemnification of our directors and officers against certain liabilities incurred as a director or officer, including costs and expenses associated in successfully defending legal proceedings.
| D. | Employees |
At June 30, 2016, we had twelve employees. Of such employees, 8 persons were employed in research and development and four persons in management. All such employees are located in Australia and one employee is located in the United States.
At June 30, 2015, we had fifteen employees. Of such employees, 11eleven persons were employed in research and development and four persons in management. All such employees were located in Australia.
At June 30, 2014, we had twelve employees. Of such employees, eight persons were employed in research and development, three persons in management and administration and one person in operations. All such employees were located in Australia.
Australian labor laws and regulations are applicable to all of our employees. The laws concern various matters, including severance pay rights at termination, retirement or death, length of work day and work week, minimum wage, overtime payments and insurance for work-related accidents.
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| Share Ownership |
Beneficial Ownership of Executive Officers and Directors
The following table sets forth certain information as of August 24, 2015October 3, 2016 regarding the beneficial ownership of our ordinary shares by each of our directors and executive officers and by all of our directors and executive officers as a group:
Name | Number of Ordinary Shares Beneficially Owned (1) | Percentage of Ownership (2) | ||||||
Geoffrey P. Kempler (3) | 22,011,000 | 4.05 | % | |||||
Kathryn Andrews | - | * | ||||||
Dianne M. Angus (4) | 1,463,947 | * | ||||||
Peter A. Marks (5) | 1,043,111 | * | ||||||
Brian D. Meltzer (6) | 1,326,666 | * | ||||||
George W. Mihaly (7) | 1,226,666 | * | ||||||
Lawrence B. Gozlan (8) | 1,000,000 | * | ||||||
Ira Shoulson | - | * | ||||||
| All directors and executive officers as a group (9 persons) | 28,071,390 | 5.17 | % | |||||
| Name | Number of Ordinary Shares Beneficially Owned (1) | Percentage of Ownership (2) | ||||||
Geoffrey P. Kempler (3) | 22,011,000 | 4.05 | % | |||||
| Kathryn Andrews | - | * | ||||||
Dianne M. Angus (4) | 1,463,947 | * | ||||||
Peter A. Marks (5) | 1,043,111 | * | ||||||
Brian D. Meltzer (6) | 1,326,666 | * | ||||||
George W. Mihaly (7) | 1,226,666 | * | ||||||
Lawrence B. Gozlan (8) | 1,000,000 | * | ||||||
Ira Shoulson | - | * | ||||||
| All directors and executive officers as a group (9 persons) | 28,071,390 | 5.17 | % | |||||
* | Less than 1% |
| Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, and generally includes voting or investment power with respect to securities. Ordinary shares relating to options currently exercisable or exercisable within 60 days of the date of the above table are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares shown as beneficially owned by them. |
| The percentages shown are based on 543,209,289 consisting of 533,891,470 ordinary shares and 9,317,819 unlisted options, issued and outstanding as of |
| Includes options to purchase 4,000,000 ordinary shares that are exercisable for A$0.33 consideration on or before December 13, 2017. Of the 18,011,000 outstanding ordinary shares, 30,000 ordinary shares are held of record by Mr. Kempler, 14,165,000 ordinary shares are held by Baywick Pty Ltd., an Australian corporation owned by Mr. Kempler, |
| Includes (i) options to purchase 160,000 ordinary shares that are exercisable for A$0.73 consideration on or before November 3, 2018; (ii) options to purchase 157,819 ordinary shares that are exercisable for A$0.25 consideration on or before March 20, 2017; (iii) options to purchase 1,000,000 ordinary shares that are exercisable for A$0.34 consideration on or before October 2, 2018; and (iv) 146,128 outstanding ordinary shares held of record by Ms. Dianne Angus. |
| Includes options to purchase 1,000,000 ordinary shares that are exercisable for A$0.33 consideration on or before December 13, 2017. The 43,111 outstanding ordinary shares are held of record by Lampam Pty |
| Includes options to purchase 1,000,000 ordinary shares that are exercisable for A$0.33 consideration on or before December 13, 2017. The 326,666 outstanding ordinary shares are held of record by Navigator Australia Ltd., a superannuation fund of Mr. Meltzer. |
| Includes options to purchase 1,000,000 ordinary shares that are exercisable for A$0.33 consideration on or before December 13, 2017. Of the 226,666 outstanding ordinary shares, 166,666 ordinary shares are held of record by Dr. Mihaly, 52,000 ordinary shares are held of record by Waide Pty Ltd., an Australian corporation owned by Dr. Mihaly, and 4,000 ordinary shares are held of record by each of Kieren Mihaly and Warwick Mihaly, Dr. Mihaly’s sons. Dr. Mihaly disclaims beneficial ownership of the ordinary shares held by his sons, Kieren Mihaly and Warwick Mihaly. |
| Includes options to purchase 1,000,000 ordinary shares that are exercisable for A$0.33 consideration on or before December 13, 2017. |
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Stock Option Plans
In November 2004, we adopted the 2004 Employees’, Directors’ and Consultants’ Share and Option Plan, or the 2004 ASX Plan, and the 2004 American Depository Share (ADS) Option Plan, or the 2004 ADS Plan. For the description below, the 2004 ASX Plan and 2004 ADS Plan are referred to together as the 2004 Plans. Under the 2004 ASX Plan we may issue ordinary shares and under the 2004 ADS Plan we may issue ADSs. We were initially authorized to issue under the 2004 Plans up to an aggregate 12,000,000 ordinary shares or ADSs representing 12,000,000 ordinary shares. Pursuant to subsequent shareholder approvals, the most recent of which was in November 2009, we are entitled to issue up to an aggregate 60,000,000 ordinary shares (or ADSs representing 60,000,000 ordinary shares) under the 2004 Plans. Any increase in such maximum number of ordinary shares or ADSs issuable under the 2004 Plans is subject to shareholder approval.
2004 ASX Plan. The purpose of the 2004 ASX Plan is to promote the interest of our company and the interest of the employees, directors and consultants of our company and its subsidiaries. Under the 2004 ASX Plan, we may issue to employees, directors and consultants of our company and its subsidiaries, from time to time, ordinary shares, either by issuance of ordinary shares or under options to purchase ordinary shares granted under the 2004 ASX Plan.
The 2004 ASX Plan is administered by the Share Plan Committee, a sub-committee of the Remuneration Committee. For the purpose of the disclosure below, the term “Remuneration Committee” shall refer to the Remuneration Committee or Share Plan Committee, as applicable. Subject to Board approval where required by applicable law, the Remuneration Committee has the authority, in its sole discretion, to grant options under the 2004 ASX Plan, to interpret the provisions of the 2004 ASX Plan and to prescribe, amend, and rescind rules and regulations relating to the 2004 ASX Plan or any issue or grant thereunder as it may deem necessary or advisable, subject to any other approval if required by applicable law. All decisions made by the Remuneration Committee pursuant to the provisions of the 2004 ASX Plan will be final, conclusive and binding on all persons.
The number of shares issued or options granted, the exercise price and option term or options granted, the vesting schedule and escrow periods of shares issued and options granted, under the 2004 ASX Plan are determined by the Remuneration Committee, in accordance with the provisions of the ASX Plan, and specified in an offer document from our company and accepted by the eligible person, subject to the terms of the 2004 ASX Plan. Options granted under the 2004 ASX Plan will be unlisted and exercisable at an exercise price equal to less than market value of an ordinary share on the ASX at the date of grant, or such other exercise price that the Remuneration Committee determines to be appropriate under the circumstances. The term of an option granted under the 2004 ASX Plan will be determined by the Remuneration Committee; however, no option will be exercisable after the expiration of ten years from the date of its grant. Except as otherwise provided in the 2004 ASX Plan or determined by the Remuneration Committee and set forth in an offer document, the issuance of shares and exercise of options granted under the 2004 ASX Plan will either (i) be subject to an escrow, under which such shares or options cannot be disposed of or exercised, respectively, within six months from the date of issue or grant (or 12 months if issued or granted to a director); or (ii) will vest over a four year period in four equal installments, 25% at the end of each year from the date of grant. Shares issued and options granted under the 2004 ASX Plan may be subject to other performance criteria and hurdles, as determined by the Remuneration Committee.
2004 ADS Plan. The purpose of the 2004 ADS Plan is to promote the interests of our company and non-Australian based employees, officers, consultants, independent contractors and directors. Options granted under the 2004 ADS Plan may be incentive stock options, as provided in Section 422 of the Internal Revenue Code of 1986, as amended, or the Code, or non-qualifiednon‑qualified stock options. Incentive stock options may only be granted to employees of our company and its subsidiaries (including, without limitation, officers and directors who are also employees of our company and its subsidiaries) and may not be granted to any owner of 10% or more of the total combined voting power of all classes of stock of our company and subsidiaries, or a 10% Holder. To the extent that the aggregate fair market value, determined on the date that an option is granted, of ADSs, with respect to which incentive stock options are exercisable for the first time by an optionee during any calendar year exceeds US$100,000, such option shall be treated as a non-qualified stock option.
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Under the 2004 ADS Plan, we may grant to employees, officers, consultants, independent contractors and directors of our company or any of its subsidiaries, from time to time, options to purchase ADSs representing our ordinary shares. The number of ADSs with respect to which options may be granted to any employee under the 2004 ADS Plan in any calendar year shall not exceed 500,00083,333 ADSs (representing 5,000,000 of our ordinary shares). ADSs that are forfeited under the terms of the 2004 ADS Plan and ADSs that are the subject to options that expire unexercised or which are otherwise surrendered by an optionee without receiving any payment or other benefit with respect to such option may again become available for new option grants under the 2004 ADS Plan.
The 2004 ADS Plan is administered by our Share Plan Committee. Subject to Board approval where required by applicable law, the Remuneration Committee has authority, in its sole discretion, to grant options under the 2004 ADS Plan, to interpret the provisions of the 2004 ADS Plan and to prescribe, amend, and rescind rules and regulations relating to the 2004 ADS Plan or any options granted thereunder as it may deem necessary or advisable, subject to any other approval if required by applicable law. All decisions made by the Remuneration Committee pursuant to the provisions of the 2004 ADS Plan shall be final, conclusive and binding on all persons.
The type of option (incentive stock option or non-qualifiednon‑qualified stock option), exercise price, option term and vesting schedule of options granted under the 2004 ADS Plan are determined by the Remuneration Committee, in accordance with the provisions of the ADS Plan, and specified in an option agreement by and between our company and the optionee, subject to the terms of the 2004 ADS Plan. The exercise price per each ADS will be determined by the Remuneration Committee at the time any option is granted, however the exercise price of an incentive stock option will not be less than 100% of the fair market value of such ADS on the date of the grant and the price of an incentive stock option granted to a 10% Holder will not be less than 110% of the fair market value of such ADS on the date of the grant. Options granted under the 2004 ADS Plan will not be exercisable after the expiration of ten years from the date of grant, and in the case of an incentive stock option granted to a 10% Holder, the term of the option will be five years from the date of grant or such shorter term as may be provided in the option agreement. The options will vest over a four year period in four equal installments, 25% at the end of each year from the date of grant, unless otherwise provided by the Remuneration Committee in an option agreement.
Options granted under the 2004 ADS Plan are not assignable or transferable by the grantee, other than by will or the laws of descent and distribution, and may be exercised during the lifetime of the grantee only by the grantee or his guardian or legal representative.
A summary of the status of the 2004 Plans as of June 30, 2016, 2015 2014 and 2013,2014, and changes during the years ended on those dates, is presented below:
As of June 30, | ||||||||||||||||||||||||
2015 | 2014 | 2013 | ||||||||||||||||||||||
Amount | Weighted average exercise price | Amount | Weighted average exercise price | Amount | Weighted average exercise price | |||||||||||||||||||
| Options outstanding at the beginning of the year | 16,375,582 | $ | 0.41 | 17,031,476 | $ | 0.23 | 10,147,683 | $ | 0.27 | |||||||||||||||
| Granted | 4,400,000 | $ | 0.28 | 3,926,490 | $ | 0.69 | 10,683,793 | $ | 0.34 | |||||||||||||||
| Exercised | (180,000 | ) | -- | (4,582,384 | ) | $ | 0.11 | -- | -- | |||||||||||||||
| Expired | (1,000,000 | ) | -- | -- | -- | (3,800,000 | ) | $ | 0.55 | |||||||||||||||
| Lapsed | (200,000 | ) | -- | -- | -- | -- | -- | |||||||||||||||||
| Options outstanding at the end of the year | 19,395,582 | $ | 0.38 | 16,375,582 | $ | 0.41 | 17,031,476 | $ | 0.23 | |||||||||||||||
| Options exercisable at the end of the year | 19,395,582 | $ | 0.38 | 16,175,582 | $ | 0.40 | 16,010,786 | $ | 0.28 | |||||||||||||||
| Options that may be granted as of the end of the year | 15,319,202 | 19,629,202 | 21,135,692 | |||||||||||||||||||||
| As of June 30, | |||||||||||||||||||||
| 2016 | 2015 | 2014 | |||||||||||||||||||
| Amount | Weighted average exercise price | Amount | Weighted average exercise price | Amount | Weighted average exercise price | ||||||||||||||||
| Options outstanding at the beginning of the year… | 19,395,582 | 16,375,582 | $ | 0.41 | 17,031,476 | $ | 0.23 | ||||||||||||||
| Granted | 4,400,000 | $ | 0.28 | 3,926,490 | $ | 0.69 | |||||||||||||||
| Exercised | (180,000 | ) | -- | (4,582,384 | ) | $ | 0.11 | ||||||||||||||
| Expired | (1,000,000 | ) | -- | -- | -- | ||||||||||||||||
| Lapsed | (200,000 | ) | -- | -- | -- | ||||||||||||||||
| Options outstanding at the end of the year | 19,395,582 | $ | 0.38 | 16,375,582 | $ | 0.41 | |||||||||||||||
| Options exercisable at the end of the year | 19,395,582 | 19,395,582 | $ | 0.38 | 16,175,582 | $ | 0.40 | ||||||||||||||
| Options that may be granted as of the end of the year | 15,319,202 | 15,319,202 | 19,629,202 | ||||||||||||||||||
| ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
| A. | Major Shareholders |
There are no shareholders as of August 24, 2015October 3, 2016, known to us who own beneficially more than 5% of our ordinary shares.
Significant Changes in the Ownership of Major Shareholders
Major Shareholders Voting Rights
A major shareholder would not have different voting rights.
Record Holders
As of September 27, 2016, there were 3,277 holders of record of our ordinary shares, of which 20 record holders, holding approximately 0.61% of our ordinary shares, had registered addresses in the United States. These numbers are not representative of the number of beneficial holders of our shares nor are they representative of where such beneficial holders reside, since many of these ordinary shares were held of record by brokers or other nominees. The majority of trading by our U.S. investors is done by means of ADSs that are held of record by National Nominees Ltd., which held 72.66% of our ordinary shares as of such date.
As of August 24 2015, there were 3,470 holders of record of our ordinary shares, of which 20 record holders, holding approximately 0.58% of our ordinary shares, had registered addresses in the United States. These numbers are not representative of the number of beneficial holders of our shares nor are they representative of where such beneficial holders reside, since many of these ordinary shares were held of record by brokers or other nominees. The majority of trading by our U.S. investors is done by means of ADSs that are held of record by National Nominees Ltd., which held 73.19% of our ordinary shares as of such date.
| B. | Related Party Transactions |
Prof. Ira Shoulson provides consulting services to our companyPrana Biotechnology in a separate capacity to his position as Non-Executive Director. Prof. Ira Shoulson was appointed as a Non-Executive Director on May 13, 2014. Total cash compensation of $205,426$258,474 was paid to Prof. Ira Shoulson for the period July 1, 20142015 to June 30, 20152016 in his capacity as a consultant to the Company.
There were no other related party transactions other than those related to Director and Key Management Personnel remuneration and equity and transactions by the parent with its subsidiaries.
| A. | Interests of Experts and Counsel |
Not applicable.
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| A. | Financial Statements and Other Financial Information |
See our consolidated financial statements, including the notes thereto, in Item 18.
Legal Proceedings
We are not involved in any legal proceedings nor are we subject to any threatened litigation that is material to our business or financial condition.
Dividend Distribution Policy
We have never paid cash dividends to our shareholders. We intend to retain future earnings for use in our business and do not anticipate paying cash dividends on our ordinary shares in the foreseeable future. Any future dividend policy will be determined by the Board of Directors and will be based upon various factors, including our results of operations, financial condition, current and anticipated cash needs, future prospects, contractual restrictions and other factors as the Board of Directors may deem relevant.
| B. | Significant Changes |
There have been no significant changes in the operation or financial condition of our company since June 30, 2015.2016.
| ITEM 9. | THE OFFER AND LISTING |
| A. | Offer and Listing Details |
Australian Securities Exchange
Our ordinary shares have traded on the ASX since our initial public offering on March 29, 2000. The following table sets forth, for the periods indicated, the high and low market quotations for our ordinary shares, as quoted on the ASX.
| Per Ordinary Share (A$) | Per Ordinary Share (A$) | |||||||||||||||
| High | Low | High | Low | |||||||||||||
| Fiscal Year Ended June 30, | ||||||||||||||||
2011 | 0.38 | 0.11 | ||||||||||||||
| 2012 | 0.22 | 0.14 | 0.22 | 0.14 | ||||||||||||
2013 | 0.31 | 0.14 | 0.31 | 0.14 | ||||||||||||
2014 | 1.37 | 0.16 | 1.37 | 0.16 | ||||||||||||
2015 | 0.36 | 0.14 | 0.36 | 0.14 | ||||||||||||
| 2016 | 0.17 | 0.06 | ||||||||||||||
Fiscal Year Ended June 30, 2013: | ||||||||||||||||
Fiscal Year Ended June 30, 2014: | ||||||||||||||||
First Quarter | 0.29 | 0.14 | 0.74 | 0.24 | ||||||||||||
Second Quarter | 0.31 | 0.20 | 0.85 | 0.38 | ||||||||||||
Third Quarter | 0.26 | 0.19 | 1.37 | 0.62 | ||||||||||||
Fourth Quarter | 0.25 | 0.20 | 0.30 | 0.16 | ||||||||||||
Fiscal Year Ended June 30, 2014: | ||||||||||||||||
Fiscal Year Ended June 30, 2015: | ||||||||||||||||
| First Quarter | 0.74 | 0.24 | 0.36 | 0.22 | ||||||||||||
| Second Quarter | 0.85 | 0.38 | 0.25 | 0.17 | ||||||||||||
Third Quarter | 1.37 | 0.62 | 0.22 | 0.14 | ||||||||||||
Fourth Quarter | 0.30 | 0.16 | 0.26 | 0.14 | ||||||||||||
Fiscal Year Ended June 30, 2015: | ||||||||||||||||
Fiscal Year Ended June 30, 2016: | ||||||||||||||||
First Quarter | 0.36 | 0.22 | 0.18 | 0.13 | ||||||||||||
Second Quarter | 0.25 | 0.17 | 0.14 | 0.10 | ||||||||||||
Third Quarter | 0.22 | 0.14 | 0.11 | 0.06 | ||||||||||||
Fourth Quarter | 0.26 | 0.14 | 0.12 | 0.06 | ||||||||||||
Month Ended: | ||||||||||||||||
April 2015 | 0.15 | 0.14 | ||||||||||||||
May 2015 | 0.20 | 0.14 | ||||||||||||||
June 2015 | 0.26 | 0.15 | ||||||||||||||
July 2015 | 0.18 | 0.15 | ||||||||||||||
August 2015 (through August 24) | 0.17 | 0.14 | ||||||||||||||
Month Ended: | ||||||||||||||||
April 2016 | 0.09 | 0.06 | ||||||||||||||
May 2016 | 0.09 | 0.08 | ||||||||||||||
June 2016 | 0.12 | 0.08 | ||||||||||||||
July 2016 | 0.11 | 0.10 | ||||||||||||||
August 2016 | 0.15 | 0.09 | ||||||||||||||
September 2016 | 0.12 | 0.09 | ||||||||||||||
NASDAQ Capital Market
Since September 5, 2002 our ADSs have traded on the NASDAQ Capital Market under the symbol “PRAN.” The following table sets forth, for the periods indicated, the high ask and low bid prices of our ADSs on the NASDAQ Capital Market:Market as adjusted to give effect to the reverse ordinary share to ADS ratio implemented on March 24,2016.
| Per ADS (U.S. $) | ||||||||
| High | Low | |||||||
| Fiscal Year Ended June 30, | ||||||||
2010 | 3.35 | 1.02 | ||||||
2011 | 4.50 | 1.09 | ||||||
| 2012 | 2.31 | 1.40 | ||||||
2013 | 3.06 | 1.50 | ||||||
2014 | 13.29 | 1.47 | ||||||
Fiscal Year Ended June 30, 2013: | ||||||||
First Quarter | 2.74 | 1.50 | ||||||
Second Quarter | 3.06 | 1.81 | ||||||
Third Quarter | 2.94 | 2.06 | ||||||
Fourth Quarter | 2.45 | 2.12 | ||||||
Fiscal Year Ended June 30, 2014: | ||||||||
First Quarter | 6.50 | 2.31 | ||||||
Second Quarter | 7.87 | 3.62 | ||||||
Third Quarter | 13.29 | 2.78 | ||||||
Fourth Quarter | 2.71 | 1.47 | ||||||
Fiscal Year Ended June 30, 2015: | ||||||||
First Quarter | 2.94 | 1.93 | ||||||
Second Quarter | 2.29 | 1.40 | ||||||
Third Quarter | 1.71 | 1.07 | ||||||
Fourth Quarter | 1.85 | 1.08 | ||||||
Month Ended: | ||||||||
April 2015 | 1.30 | 1.08 | ||||||
May 2015 | 1.85 | 1.15 | ||||||
June 2015 | 1.62 | 1.14 | ||||||
July 2015 | 1.28 | 1.12 | ||||||
August 2015 (through August 24) | 1.19 | 0.86 | ||||||
| Per ADS (U.S. $) | ||||||||
High 1 | Low 1 | |||||||
Fiscal Year Ended June 30, | ||||||||
| 2012 | 13.86 | 8.40 | ||||||
2013 | 18.36 | 9.00 | ||||||
2014 | 79.74 | 8.82 | ||||||
2015 | 17.64 | 6.42 | ||||||
2016 | 7.68 | 2.70 | ||||||
Fiscal Year Ended June 30, 2014: | ||||||||
First Quarter | 39.00 | 13.86 | ||||||
Second Quarter | 47.22 | 21.72 | ||||||
Third Quarter | 79.74 | 16.68 | ||||||
Fourth Quarter | 16.26 | 8.82 | ||||||
Fiscal Year Ended June 30, 2015: | ||||||||
First Quarter | 17.64 | 11.58 | ||||||
Second Quarter | 13.74 | 8.40 | ||||||
Third Quarter | 10.26 | 6.42 | ||||||
Fourth Quarter | 11.10 | 6.48 | ||||||
Fiscal Year Ended June 30, 2016: | ||||||||
First Quarter | 7.68 | 4.20 | ||||||
Second Quarter | 6.42 | 4.08 | ||||||
Third Quarter | 4.50 | 2.70 | ||||||
Fourth Quarter | 5.14 | 2.79 | ||||||
Month Ended: | ||||||||
April 2016 | 4.01 | 2.79 | ||||||
May 2016 | 3.99 | 3.60 | ||||||
June 2016 | 5.14 | 3.65 | ||||||
July 2016 | 5.04 | 4.25 | ||||||
August 2016 | 6.69 | 4.30 | ||||||
September 2016 | 5.39 | 4.38 | ||||||
1 On March 9, 2016, the company effected a ratio change from 1 ADS representing 10 ordinary shares to 1ADS representing 60 ordinary shares (representing a 6-for-1 reverse split). The above prices have been adjusted to reflect the new ratio.
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| B. | Plan of Distribution |
Not applicable.
| C. | Markets |
The principal listing of our ordinary shares and listed options to purchase ordinary shares is on the ASX. As of April 5, 2002, our ADSs were eligible to trade on the NASDAQ Capital OTC Bulletin Board in the United States and since September 5, 2002, our ADSs have traded on the NASDAQ Capital Market under the symbol “PRAN.” We entered into a Deposit Agreement with the Bank of New York under which the Bank of New York, acting as depositary, issues ADRs, each of which evidences an ADS, which in turn representsrepresented ten of our ordinary shares.
On March 24, 2016, the company effected a ratio change from 1 ADS representing 10 ordinary shares to 1 ADS representing 60 ordinary shares (representing a 6-for-1 reverse split).
| D. | Selling Shareholders |
Not applicable.
| E. | Dilution |
Not applicable.
| F. | Expenses of the Issue |
Not applicable.
| A. | Share Capital |
Not applicable.
| B. | Memorandum and Articles of Association |
We were registered on November 11, 1997 as Prana Pty Ltd and on November 26, 1999 we converted to a public company and changed our name to Prana Corporation Ltd. On January 1, 2000, we changed our name to Prana Biotechnology Ltd.Limited. Our registration number is ACN 080699065.
Prana’s Purposes and Objects
As a public company we have all the rights, powers and privileges of a natural person. Our Constitution does not specify any purposes or objects.
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The Powers of the Directors
Under the provisions of our Constitution our directors may exercise all of the powers of our company, other than those that are required by our Constitution or the Corporations Law of Australia to be exercised at a general meeting of shareholders. A director may participate in a meeting and vote on a proposal, arrangement or contract in which he or she is materially interested, so long as the director’s interest is declared in accordance with the Corporations Law. The authority of our directors to enter into borrowing arrangements on our behalf is not limited, except in the same manner as any other transaction by us.
Rights Attached to Our Ordinary Shares
The concept of authorized share capital no longer exists in Australia and as a result, our authorized share capital is unlimited. All our outstanding ordinary shares are validly issued, fully paid and non-assessable. The rights attached to our ordinary shares are as follows:
Dividend rights. If our board of directors recommends a dividend, registered holders of our ordinary shares may declare a dividend by ordinary resolution in a general meeting. The dividend, however, cannot exceed the amount recommended by our board of directors. Our board of directors may declare an interim dividend.
Voting rights. Holders of ordinary shares have one vote for each ordinary share held on all matters submitted to a vote of shareholders. Such voting rights may be affected by the grant of any special voting rights to the holders of a class of shares with preferential rights that may be authorized in the future.
The quorum required for an ordinary meeting of shareholders consists of at least two shareholders represented in person or by proxy who hold or represent, in the aggregate, at least one third of the voting rights of the issued share capital. A meeting adjourned for lack of a quorum generally is adjourned to the same day in the following week at the same time and place or any time and place as the directors designate in a notice to the shareholders. At the reconvened meeting, the required quorum consists of any two members present in person or by proxy.
An ordinary resolution, such as a resolution for the declaration of dividends, requires approval by the holders of a majority of the voting rights represented at the meeting, in person, by proxy or by written ballot and voting thereon. Under our Constitution, a special resolution, such as amending our Constitution, approving any change in capitalization, winding-up, authorization of a class of shares with special rights, or other changes as specified in our Constitution, requires approval of a special majority, representing the holders of no less than 75% of the voting rights represented at the meeting in person, by proxy or by written ballot, and voting thereon.
Pursuant to our Constitution, our directors are elected at our annual general meeting of shareholders by a vote of the holders of a majority of the voting power represented and voting at such meeting.
Rights in our profits. Our shareholders have the right to share in our profits distributed as a dividend and any other permitted distribution.
Rights in the event of liquidation. In the event of our liquidation, after satisfaction of liabilities to creditors, our assets will be distributed to the holders of ordinary shares in proportion to the nominal value of their holdings. This right may be affected by the grant of preferential dividend or distribution rights to the holders of a class of shares with preferential rights that may be authorized in the future.
Changing Rights Attached to Shares
According to our Constitution, in order to change the rights attached to any class of shares, unless otherwise provided by the terms of the class, such change must be adopted by a general meeting of the shareholders and by a separate general meeting of the holders of the affected class with a majority of 75% of the voting power participating in such meeting.
63
Annual and Extraordinary Meetings
Our Board of Directors must convene an annual meeting of shareholders at least once every calendar year, within five months of our last fiscal year-end balance sheet data. Notice of at least 28 days prior to the date of the meeting is required. An extraordinary meeting may be convened by the board of directors, it decides or upon a demand of any directors, or of one or more shareholders holding in the aggregate at least five percent of our issued capital. An extraordinary meeting must be called 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.
Limitations on the Rights to Own Securities in Our Company
Neither our Constitution nor the laws of the Commonwealth of Australia restrict in any way the ownership or voting of our shares. However, (i) there are certain limitations on the percentage of shares a person may hold in our company as described under Item 3.D. “Risk Factors – “Risks Relating to our Location in Australia” above; and (ii) acquisitions and proposed acquisitions of securities in Australian companies may be subject to review and approval by the Australian Federal Treasurer under the Takeovers Act as described under Item 10.E. “Additional Information – Exchange Controls” above.
Changes in Our Capital
Pursuant to the Listing Rules of the ASX, our directors may in their discretion issue securities equal to not more than 25% of our issued capital within a 12-month period. Issuances of securities in excess of such amount require the approval of our shareholders by an ordinary resolution.
| C. | Material Contracts |
On December 1, 2000, we entered into a research funding and intellectual property assignment agreement with the University of Melbourne, under which the University of Melbourne agreed to conduct certain research projects on our behalf. Such projects include structure-based drug design involving the design of various metal-based compounds as potential diagnostics and therapeutics, drug screening and development involving the characterization of our compounds in vitro and in vivo models of neurodegenerative disorders, and cell-based drug discovery involving the screening and assessment of our compounds in cell-based systems to measure toxicity and cellular dysfunction and to develop new screens for our company. In consideration of such services, we agreed to pay the University of Melbourne a sum of A$591,000 (inclusive of goods and services tax). In consideration for the assignment of rights to intellectual property developed by the University of Melbourne during the research period, we agreed to pay to the University of Melbourne royalties equal to 1.5% of the net invoice price of all products incorporating such intellectual property sold by us or on our behalf, or, the lesser of 1.5% of the net invoice price of such products sold by a licensee or assignee and 10% of gross revenues received from licensees or assignees relating to the exploitation of such intellectual property. The parties extended the term of this agreement by entering into consecutive agreements on December 1, 2003, December 1, 2006 and December 1, 2009. The recent research funding and intellectual property assignment agreement is deemed to have commenced as of the expiration date of the previous agreement on December 1, 2009 and expired on December 1, 2012. The parties entered into a new research funding and intellectual property assignment agreement with the same key terms which expired on December 31, 2013. The University of Melbourne subcontracted substantial parts of the research to the Florey Institute of Neuroscience and Mental Health. Following the novation of the agreements with the Florey Institute on November 7, 2014, we entered into a sixth research funding and intellectual property assignment agreement.
In December 2008, we entered into a process development and manufacturing agreement with Dr. Reddy’s to enable the transfer of existing manufacturing methods for PBT2 to Dr. Reddy’s to work on improving the route of manufacture, optimization and scale up manufacture of PBT2. The agreement is comprised of a series of independent sub-projects, each of which is subject to our prior authorization to be initiated and funded, at our sole discretion. At this time, most of theThe work is completed, including the large scale manufacture of approximately 50kg of PBT2 API. Ongoing work includes stabilizationstability studies of the API and storage of chemical precursors. The term of the agreement is for 90 days post the receipt by us of a written report or manufacturing deliverables under the last approved sub-project under the agreement. Early termination is available to either party under specified conditions, including material breach and voluntary termination by either party upon 30 days written notice. On August 19, 2013, we entered into a new manufacturing service agreement to produce 20kg with an option for a further 40kg of PBT2 to service prospective Phase III trials. The option was exercised as of May 2014 and manufacturing of the 40kg PBT2 API is underway.complete. We paid Dr. Reddy’s US$389,520, US$264,000, US$137,500, and US$14,100137,500 for the fiscal years 2016, 2015 and 2014, respectively, for services provided under the agreement.
64
On March 24, 2014, we entered into a manufacturing services agreement with Dr. Reddy’s for PBT434 API supply. We paid Dr. Reddy’s US$66,500, US$22,000 and 2013,US$336,000 for the fiscal years 2016, 2015 and 2014, respectively, for services provided under the agreement.
On March 24, 2014, we entered into a manufacturing services agreement with Dr. Reddy’s for PBT434 API supply. We paid Dr. Reddy’s US$66,500, US$22,000 and US$336,000 for the fiscal years 2016, 2015 and 2014, respectively, for services provided under the agreement.
On September 21 2015, we entered into a master services agreement with Orgapharm S.A.S for the manufacture of PBT2 API. We paid Orgapharm S.A.S €186,012 during the fiscal year 2016 for services provided under this agreement.
On July 13, 2011, we entered into an At-The-Market Issuance Sales Agreement with MLV, under which we may sell ADSs, each representing ten ordinary shares, from time to time through MLV, as our agent for the offer and sale of the ADSs. This agreement was amended on August 30, 2013 and on November 26, 2014. On March 24, 2016 we completed a ratio change of our ADSs from 1 ADS representing 10 ordinary shares to 1 ADS representing 60 ordinary shares. We agreed to pay MLV a commission equal to 3% of the gross proceeds of the sales price of all ADSs sold through it as sales agent under the sales agreement. Because there is no minimum offering amount required as a condition to closing this offering, the actual total public offering amount, commissions and proceeds to us, if any, are not determinable at this time. The offering of our ADSs pursuant to the sales agreement will terminate on the earliest of (1) the sale of all of the ordinary shares subject to the sales agreement, or (2) termination of the sales agreement by us or MLV. We and MLV may terminate the sales agreement at any time in our sole discretion upon five days prior notice. MLV may terminate the sales agreement at any time in certain circumstances, including the occurrence of a material adverse change that, in the sales agent’s judgment, may make it impracticable or inadvisable to market or sell our ADSs or a suspension or limitation of trading of our ADSs on The NASDAQ Capital Market. The aggregate offering price for the ordinary shares represented by ADSs may not exceed the aggregate amount that can be sold under the registration statement that we filed on November 3, 2014, an aggregate of US$50,000,000 in addition to any ordinary shares. As of June 30, 2015,2016, we issued a total amount of 4.5 million ADSs under this At-The-Market Issuance Sales Agreement for gross proceeds of A$7.11 million (US$5.54 million).
On January 22, 2015 we entered into a Master Services Agreement with Certara Portugal to undertake pharmacokinetic, pharmacosafety and pharmacodynamic modelling and analyses from non-clinical and clinical studies with PBT2. No payments were made to Certara Portugal in the fiscal year 2015. We paid Certara Portugal US$421,651 in fiscal year 2016 for services provided under this agreement.
On March 17, 2015 we entered into a Master Services Agreement with d3 Medicine LLC to provide clinical pharmacology, clinical safety, safety pharmacology and regulatory consulting services in relation to non-clinical and clinical studies with PBT2. We paid d3 Medicine LLC $US US $1,363,930 and US$700,057 in fiscal yearyears 2016 and 2015 respectively for services provided under this agreement.
On September 1, 2015 we entered into a Master Services Agreement with the Institute of Drug Technology (IDT) Australia Limited to provide manufacturing services, in particular process development for the encapsulation of PBT434 and its manufacture into drug product. We paid IDT A$17,724 in fiscal year 2016 for services provided under the agreement.
| D. | Exchange Controls |
Australia has largely abolished exchange controls on investment transactions. The Australian dollar is freely convertible into U.S. dollars. In addition, there are currently no specific rules or limitations regarding the export from Australia of profits, dividends, capital, or similar funds belonging to foreign investors, except that certain payments to non-residents must be reported to the Australian Cash Transaction Reports Agency, which monitors such transactions, and amounts on account of potential Australian tax liabilities may be required to be withheld unless a relevant taxation treaty can be shown to apply.
65
The Foreign Acquisitions and Takeovers Act 1975
Under Australian law, in certain circumstances foreign persons are prohibited from acquiring more than a limited percentage of the shares in an Australian company without notification to or approval from the Australian Treasurer. These limitations are set forth in the Australian Foreign Acquisitions and Takeovers Act, or the Takeovers Act.
Under the Takeovers Act, as currently in effect, any foreign person, together with associates, is prohibited from acquiring 15% or more of the shares in any company having total assets exceeding A$252 million or more. In addition, a foreign person may not acquire shares in a company having total assets of A$252 million or more if, as a result of that acquisition, the total holdings of all foreign persons and their associates will exceed 40% in aggregate without the approval of the Australian Treasurer. However, for “U.S. Investors” and investors from certain other countries, a threshold of A$1,094 million applies (except in certain circumstances) to each of the previous acquisitions. A “U.S. Investor” is defined by the Takeovers Act as a U.S. national or a U.S. enterprise.
If the necessary approvals are not obtained, the Treasurer may make an order requiring the acquirer to dispose of the shares it has acquired within a specified period of time. Under the current Australian foreign investment policy, however, it is unlikely that the Treasurer would make such an order where the level of foreign ownership exceeds 40% in the ordinary course of trading, unless the Treasurer finds that the acquisition is contrary to the national interest. The same rule applies if the total holdings of all foreign persons and their associates already exceeds 40% and a foreign person (or its associate) acquires any further shares, including in the course of trading in the secondary market of the ADSs. At present, we do not have total assets of A$252 million.
If the level of foreign ownership exceeds 40% at any time, we would be considered a foreign person under the Takeovers Act. In such event, we would be required to obtain the approval of the Treasurer for our company, together with our associates, to acquire (i) more than 15% of an Australian company or business with assets totaling over A$252million; or (ii) any direct or indirect ownership interest in Australian residential real estate.
The percentage of foreign ownership in our company would also be included in determining the foreign ownership of any Australian company or business in which it may choose to invest. Since we have no current plans for any such acquisitions and do not own any property, any such approvals required to be obtained by us as a foreign person under the Takeovers Act will not affect our current or future ownership or lease of property in Australia.
Our Constitution does not contain any additional limitations on a non-resident’s right to hold or vote our securities.
Australian law requires the transfer of shares in our company to be made in writing. No stamp duty will be payable in Australia on the transfer of ADSs.
| E. | Taxation |
The following is a discussion of Australian and U.S. tax consequences material to our shareholders. To the extent that the discussion is based on tax legislation which has not been subject to judicial or administrative interpretation, the views expressed in the discussion might not be accepted by the tax authorities in question or by court. The discussion is not intended, and should not be construed, as legal or professional tax advice and does not exhaust all possible tax considerations.
Holders of our ADSs should consult their own tax advisors as to the United States, Australian or other tax consequences of the purchase, ownership and disposition of ADSs, including, in particular, the effect of any foreign, state or local taxes.
66
AUSTRALIAN TAX CONSEQUENCES
In this section we discuss the material Australian tax considerations that apply to non-Australian tax residents with respect to the acquisition, ownership and disposal of the absolute beneficial ownership of ADSs, which are evidenced by ADRs. This discussion is based upon existing Australian tax law as of the date of this annual report, which is subject to change, possibly retrospectively. This discussion does not address all aspects of Australian income tax law which may be important to particular investors in light of their individual investment circumstances, such as ADSs or shares held by investors subject to special tax rules (for example, financial institutions, insurance companies or tax exempt organizations). In addition, this summary does not discuss any foreign or state tax considerations, other than stamp duty. Prospective investors are urged to consult their tax advisors regarding the Australian and foreign income and other tax considerations of the purchase, ownership and disposition of the ADSs or shares.
Nature of ADSs for Australian Taxation Purposes
Holders of our ADSs are treated as the owners of the underlying ordinary shares for Australian income tax and capital gains tax purposes. Therefore, dividends paid on the underlying ordinary shares will be treated for Australian tax purposes as if they were paid directly to the owners of ADSs, and the disposal of ADSs will be treated for Australian tax purposes as the disposal of the underlying ordinary shares. In the following analysis we discuss the application of the Australian income tax and capital gains tax rules to non-Australian resident holders of ADSs.
Taxation of Dividends
Australia operates a dividend imputation system under which dividends may be declared to be ‘franked’ to the extent of tax paid on company profits. Fully franked dividends are not subject to dividend withholding tax. Dividends that are not franked or are partly franked and are paid to non-Australian resident shareholders are subject to dividend withholding tax, but only to the extent the dividends are not franked.
Unfranked dividends paid to a non-resident shareholder are subject to withholding tax at 30%, unless the shareholder is a resident of a country with which Australia has a double taxation agreement. In accordance with the provisions of the Double Taxation Convention between Australia and the United States., the maximum rate of Australian tax on unfranked dividends to which a resident of the United States is beneficially entitled is 15%, where the U.S. resident holds less than 10% of the voting rights in our company, or 5% where the U.S. resident holds 10% or more of the voting rights in our company. The Double Taxation Convention between Australia and the United States does not apply to limit the tax rate on dividends where the ADSs are effectively connected to a permanent establishment or a fixed base carried on by the owner of the ADSs in Australia through which the shareholder carries on business or provides independent personal services, respectively.
Tax on Sales or other Dispositions of Shares - Capital Gains Tax
Australian capital gains derived by non-Australian residents in respect of the disposal of capital assets that are not taxable Australian property will be disregarded. Non-Australian resident shareholders will not be subject to Australian capital gains tax on the capital gain made on a disposal of our shares, unless they, together with associates, hold 10% or more of our issued capital, tested either at the time of disposal or over any continuous 12 month period in the 24 months prior to disposal, and the value of our shares at the time of disposal are wholly or principally attributable to Australian real property assets.
Australian capital gains tax applies to net capital gains at a taxpayer’s marginal tax rate. Previously, certain shareholders, such as individuals were entitled to a discount of 50% for capital gains on shares held for greater than 12 months. However, as part of the 2012-2013 Federal Budget measures, the Australian Government announced changes to the application of the CGT discount for foreign resident individuals on taxable Australian assets, including shares. These changes became effective on 29 June 2013.
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The effect of the change is to:
| · | Retain access to the full CGT discount for discount capital gains of foreign resident individuals in respect of the increase in the value of a CGT asset that occurred before 9 May 2013; and |
| · | Remove the CGT discount for discount capital gains for foreign resident individuals that arise after 8 May 2013. |
Foreign residents will still have access to a discount on discount capital gains accrued prior to 8 May 2013 provided they choose to obtain a market valuation for their assets as at that date.
Net capital gains are calculated after reduction for capital losses, which may only be offset against capital gains.
Tax on Sales or other Dispositions of Shares - Shareholders Holding Shares on Revenue Account
Some non-Australian resident shareholders may hold shares on revenue rather than on capital account, for example, share traders. These shareholders may have the gains made on the sale or other disposal of the shares included in their assessable income under the ordinary income provisions of the income tax law, if the gains are sourced in Australia.
Non-Australian resident shareholders assessable under these ordinary income provisions in respect of gains made on shares held on revenue account would be assessed for such gains at the Australian tax rates for non-Australian residents, which start at a marginal rate of 32.5% for non-Australian resident individuals. Some relief from the Australian income tax may be available to such non-Australian resident shareholders under the Double Taxation Convention between the United States and Australia, for example, because the shareholder does not have a permanent establishment in Australia.
To the extent an amount would be included in a non-Australian resident shareholder’s assessable income under both the capital gains tax provisions and the ordinary income provisions, the capital gain amount would generally be reduced, so that the shareholder would not be subject to double tax on any part of the income gain or capital gain.
Dual Residency
If a shareholder were a resident of both Australia and the United States under those countries’ domestic taxation laws, that shareholder may be subject to tax as an Australian resident. If, however, the shareholder is determined to be a U.S. resident for the purposes of the Double Taxation Convention between the United States and Australia, the Australian tax applicable would be limited by the Double Taxation Convention. Shareholders should obtain specialist taxation advice in these circumstances.
Stamp Duty
A transfer of shares of a company listed on the ASX is not subject to Australian stamp duty except in some circumstances where one person, or associated persons, acquires 90% or more of the shares.
Australian Death Duty
Australia does not have estate or death duties. No capital gains tax liability is realized upon the inheritance of a deceased person’s shares. The disposal of inherited shares by beneficiaries, may, however, give rise to a capital gains tax liability.
Goods and Services Tax
The issue or transfer of shares will not incur Australian goods and services tax and does not require a shareholder to register for Australian goods and services tax purposes.services.
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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain material U.S. federal income tax consequences that generally apply to U.S. Holders (as defined below) who hold ADSs as capital assets. This summary is based on the United States Internal Revenue Code of 1986, as amended, or the Code, Treasury regulations promulgated thereunder, judicial and administrative interpretations thereof, and the bilateral taxation convention between Australia and the U.S., or the Tax Treaty, all as in effect on the date hereof and all of which are subject to change either prospectively or retroactively. This summary does not address all tax considerations that may be relevant with respect to an investment in ADSs. This summary does not discuss all the tax consequences that may be relevant to an investment in ADSs by a U.S. Holder in light of such holder’s particular circumstances or to U.S. Holders subject to special rules, including broker-dealers,broker‑dealers, financial institutions, certain insurance companies, investors liable for alternative minimum tax, tax-exempttax‑exempt organizations, regulated investment companies, non-resident aliens of the U.S. or taxpayers whose functional currency is not the U.S. dollar, persons who hold the ADSs through partnerships or other pass-through entities, persons who acquired their ADSs through the exercise or cancellation of any employee stock options or otherwise as compensation for their services, investors that actually or constructively own 10% or more of our shares by vote or value, and investors holding ADSs as part of a straddle or appreciated financial position or as part of a hedging or conversion transaction.
If a partnership or an entity treated as a partnership for U.S. federal income tax purposes owns ADSs, the U.S. federal income tax treatment of a partner in such a partnership will generally depend upon the status of the partner and the activities of the partnership. A partnership that owns ADSs and the partners in such partnership should consult their own tax advisors about the U.S. federal income tax consequences of holding and disposing of ADSs.
This summary does not address the effect of any U.S. federal taxation other than U.S. federal income taxation. In addition, this summary does not include any discussion of U.S. federal estate and gift tax, state, local or foreign taxation. You are urged to consult your tax advisors regarding the foreign and U.S. federal, state and local tax considerations of an investment in ADSs.
For purposes of this summary, the term “U.S. Holder” means an individual who is a citizen or, for U.S. federal income tax purposes, a resident of the United States, a corporation or other entity taxable as a corporation created or organized in or under the laws of the United States or any political subdivision thereof, an estate whose income is subject to U.S. federal income tax regardless of its source, or a trust if (a) a court within the United States is able to exercise primary supervision over administration of the trust, and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
Taxation of Dividends
For U.S. federal income tax purposes, U.S. Holders of ADSs will be treated as owning the underlying ordinary shares represented by the ADSs held by them. Subject to the passive foreign investment company, or PFIC rules discussed below, the gross amount of any distributions received with respect to the underlying ordinary shares represented by the ADSs, including the amount of any Australian taxes withheld therefrom, will constitute dividends for U.S. federal income tax purposes, to the extent of our current and accumulated earnings and profits, as determined under U.S. federal income tax principles. You will be required to include this amount of dividends in gross income as ordinary income. Distributions in excess of our earnings and profits will be treated as a non-taxablenon‑taxable return of capital to the extent of your tax basis in the ADSs, and any amount in excess of your tax basis will be treated as gain from the sale of ADSs. See “Disposition of ADSs” below for the discussion on the taxation of capital gains. Dividends will not qualify for the dividends-receiveddividends‑received deduction generally available to corporations under Section 243 of the Code.
Dividends that we pay in Australian dollars, including the amount of any Australian taxes withheld therefrom, will be included in your income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the day such dividends are received. A U.S. Holder who receives payment in Australian dollars and converts Australian dollars into U.S. dollars at an exchange rate other than the rate in effect on such day will likely have a foreign currency exchange gain or loss, which would be treated as U.S.-source ordinary income or loss for purposes of U.S. foreign tax credits.credit.
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Subject to complex limitations, any Australian withholding tax imposed on our dividends will be a foreign income tax eligible for credit against a U.S. Holder’s U.S. federal income tax liability (or, alternatively, for deduction against income in determining such tax liability). The limitations set outforth in the Code include computational rules under which foreign tax credits allowable with respect to specific classes of income cannot exceed the U.S. federal income taxes otherwise payable with respect to each such class of income. Dividends generally will be treated as foreign-source passive category income or general category income for U.S. foreign tax credit purposes, depending upon the holder’s circumstances. A U.S. Holder will be denied a foreign tax credit with respect to Australian income tax withheld from dividends received with respect to the underlying ordinary shares represented by the ADSs to the extent such U.S. Holder has not held the ADSs for at least 16 days of the 31-day period beginning on the date that is 15 days before the ex-dividendex‑dividend date or to the extent such U.S. Holder is under an obligation to make related payments with respect to substantially similar or related property. Any days during which a U.S. Holder has substantially diminished its risk of loss on the ADSs are not counted toward meeting the 16-day holding period required by the statute. The rules relating to the determination of the foreign tax credit are complex. You should consult with your personalown tax advisors to determine whether and to what extent you would be entitled to this credit.
Subject to certain limitations, “qualified dividend income” received by a non-corporate U.S. Holder will be subject to tax at a reduced maximum tax rate of 20 percent. Distributions taxable as dividends generally qualify for the 20 percent rate provided that either: (i) the issuer is entitled to benefits under the Tax Treaty or (ii) the sharesADSs are readily tradable on an established securities market in the United States and certain other requirements are met. We believe that we are entitled to benefits under the Tax Treaty and that the ADSs currently are readily tradable on an established securities market in the United States. However, no assurance can be given that the ADSs will remain readily tradable. Furthermore, the reductionreduced rate does not apply to dividends received from PFICs. The amount of foreign tax credit is limited in the case of foreign qualified dividend income. U.S. Holders of ADSs should consult their own tax advisors regarding the effect of these rules in their particular circumstances.
Disposition of ADSs
If you sell or otherwise dispose of ADSs, you will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the amount realized on the sale or other disposition and your adjusted tax basis in the ADSs. Subject to the passive foreign investment companyPFIC rules discussed below, such gain or loss generally will be capital gain or loss and will be long-termlong‑term capital gain or loss if you have held the ADSs for more than one year at the time of the sale or other disposition. In general, any gain that you recognize on the sale or other disposition of ADSs will be U.S.-sourceU.S.‑source for purposes of the foreign tax credit limitation; losses will generally be allocated against U.S.-source income. Deduction of capital losses is subject to certain limitations under the Code.
In the case of a cash basis U.S. Holder who receives Australian dollars in connection with the sale or disposition of ADSs, the amount realized will be based on the U.S. dollar value of the A$Australian dollars received with respect to the ADSs as determined on the settlement date of such exchange. A U.S. Holder who receives payment in Australian dollars and converts A$them into U.S. dollars at a conversion rate other than the rate in effect on the settlement date may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss.
An accrual basis U.S. Holder may elect the same treatment of foreign currency gain or loss required of cash basis taxpayers with respect to a sale or disposition of ADSs, provided that the election is applied consistently from year to year. Such election may not be changed without the consent of the Internal Revenue Service.Service, or IRS. In the event that an accrual basis U.S. Holder does not elect to be treated as a cash basis taxpayer (pursuant to the Treasury regulations applicable to foreign currency transactions), such U.S. Holder may have a foreign currency gain or loss for U.S. federal income tax purposes because of differences between the U.S. dollar value of the currencyAustralian dollars received prevailing on the trade date and the settlement date. Any such currency gain or loss would be treated as ordinary income or loss and would be in addition to gain or loss, if any, recognized by such U.S. Holder on the sale or other disposition of such ADSs.
Passive Foreign Investment Companies
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For U.S. federal income tax purposes, we will be classified as a PFIC for any taxable year in which either (i) 75% or more of our gross income is passive income, or (ii) at least 50% of the average value of all of our assets for the taxable year produce or are held for the production of passive income. For this purpose, cash is considered to be an asset that produces passive income. Passive income generally includes dividends, interest, royalties, rents, annuities and the excess of gains over losses from the disposition of assets that produce passive income. As a result of our substantial cash position and the decline in the value of our stock, we believe that we became a PFIC during the taxable year ended June 30, 2005. We believe that we continued to be classified as a PFIC during each of the subsequent fiscal years and that we will once again qualify as a PFIC for the taxable year ended June 30, 2014.2016 and may continue to be a PFIC for each of the subsequent fiscal years.
| · | you will be required to allocate “excess distributions” or gain recognized upon the disposition of ADRs ratably over your holding period for the ADSs. An “excess distribution” is the amount by which distributions during a taxable year in respect of an ADS exceed 125% of the average annual distributions during the three preceding taxable years (or, if shorter, your holding period for the ADSs). |
| · | the amount allocated to each year during which we are considered a PFIC, other than the year of the distribution or disposition, will be subject to tax at the highest individual or corporate tax rate, as the case may be, in effect for that year and an interest charge will be imposed with respect to the resulting tax liability allocated to each such year, |
| · | the amount allocated to the current taxable year and any taxable year before we became a PFIC will be taxable as ordinary income in the current year, and |
| · | you will be required to file an annual return on |
The PFIC provisions discussed above apply to U.S. persons who directly or indirectly hold stock in a PFIC. Generally, a U.S. person is considered an indirect shareholder of a PFIC if it is:
| · | a direct or indirect owner of a pass-through entity, including a trust or estate, that is a direct or indirect shareholder of a PFIC, |
| · | a shareholder of a PFIC that is a shareholder of another PFIC, or |
| · | a 50%-or-more shareholder of a foreign corporation that is not a PFIC and that directly or indirectly owns stock of a PFIC. |
An indirect shareholder may be taxed on a distribution paid to the direct owner of the PFIC and on a disposition of the stock indirectly owned. Indirect shareholders are strongly urged to consult their tax advisors regarding the application of these rules.
If we cease to be a PFIC in a future year, a U.S. Holder may avoid the continued application of the tax treatment described above by electing to be treated as if it sold its ADSs on the last day of the last taxable year in which we were a PFIC. Any gain would be recognized and subject to tax under the rules described above. Loss would not be not recognized. A U.S. Holder’s basis in its ADSs would be increased by the amount of gain, if any, recognized on the sale. Solely for purposes of the PFIC rules, a U.S. Holder would be required to treat its holding period for its ADSs as beginning on the day following the last day of the last taxable year in which we were a PFIC.
If the ADSs are considered “marketable stock” and if you elect to “mark-to-market”“mark‑to‑market” your ADSs, you would not be subject to the rules described above. Instead, you will generally include in income any excess of the fair market value of the ADSs at the close of each tax year over your adjusted basis in the ADSs. If the fair market value of the ADSs had depreciated below your adjusted basis at the close of the tax year, you may generally deduct the excess of the adjusted basis of the ADSs over its fair market value at that time. However, such deductions generally would be limited to the net mark-to-marketmark‑to‑market gains, if any, that you included in income with respect to such ADSs in prior years. Income recognized and deductions allowed under the mark-to-marketmark‑to‑market provisions, as well as any gain or loss on the disposition of ADSs with respect to which the mark-to-marketmark‑to‑market election is made, is treated as ordinary income or loss (except that loss is treated as capital loss to the extent the loss exceeds the net mark-to-marketmark‑to‑market gains, if any, that a U.S. Holder included in income with respect to such ADSs in prior years). However, gain or loss from the disposition of ADSs (as to which a “mark-to-market” election was made) in a year in which we are no longer a PFIC, will be capital gain or loss. Our ADSs should be considered “marketable stock” if they traded at least 15 days during each calendar quarter of the relevant calendar year in more than de-minimis quantities.
A U.S. Holder of ADSs will not be able to avoid the tax consequences described above by electing to treat us as a qualified electing fund, or QEF, because we do not intend to prepare the information that U.S. Holders would need to make a QEF election.
Additional Tax on Investment Income
U.S. Holders that are individuals, estates, or trusts and whose income exceeds certain thresholds will be subject to a 3.8% Medicare contribution tax on net investment income, which will include dividends on and capital gains from the sale or other taxable disposition of ADSs, subject to certain limitations and exceptions.
Backup Withholding and Information Reporting
Payments in respect of ADSs may be subject to information reporting to the U.S. Internal Revenue ServiceIRS and to U.S. backup withholding tax at a rate equal to the fourth lowest income tax rate applicable to individuals (which, under current law, is 28%). Backup withholding will not apply, however, if you (i) are a corporation or come within certain exempt categories and demonstrate the fact when so required or (ii) furnish a correct taxpayer identification number and make any other required certification.
Backup withholding is not an additional tax. Amounts withheld under the backup withholding rules may be credited against a U.S. Holder’s U.S. tax liability. A U.S. Holder may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the Internal Revenue Service,IRS, which is generally an annual income tax return.
U.S. individuals who hold certain specified foreign financial assets, including stock in a foreign corporation, with values in excess of certain thresholds are required to file IRS Form 8938 with their U.S. federal income tax return. Such form requires disclosure of information concerning such foreign assets, including their value. Failure to file the form when required is subject to penalties. An exemption from reporting applies to foreign assets held through a U.S. financial institution, generally including a non-U.S. branch or subsidiary of a U.S. institution and a U.S. branch of a non-US institution. Investors are encouraged to consult with their own tax advisors regarding the possible application of this disclosure requirement to their investment in our ADSs.
| F. | Dividends and Paying Agents |
Not applicable.
| G. | Statement by Experts |
Not applicable.
| H. | Documents on Display |
We are subject to the reporting requirements of the Exchange Act, as applicable to “foreign private issuers” as defined in Rule 3b-4 thereunder. As a foreign private issuer, we are exempt from certain provisions of the Exchange Act. Accordingly, our proxy solicitations are not subject to the disclosure and procedural requirements of Regulation 14A under the Exchange Act, transactions in our equity securities by our officers and directors are exempt from reporting and the “short-swing” profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required to file periodic reports and financial statements as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we file with the Securities and Exchange Commission an annual report on Form 20-F containing financial statements that have been examined and reported on, with an opinion expressed by, an independent registered public accounting firm, and we submit reports to the Securities and Exchange Commission on Form 6-K containing (among other things) press releases and unaudited financial information for the first six months of each fiscal year. We post our annual report on Form 20-F on our website (www.pranabio.com)(www.pranabio.com) promptly following the filing of our annual report with the Securities and Exchange Commission. The information on our website is not incorporated by reference into this annual report.
This annual report and the exhibits thereto and any other document we file pursuant to the Exchange Act may be inspected without charge and copied at prescribed rates at the Securities and Exchange Commission public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Securities and Exchange Commission’s public reference room in Washington, D.C. by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Exchange Act file number for our Securities and Exchange Commission filings is 000-49843.
The Securities and Exchange Commission maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the Securities and Exchange Commission using its EDGAR (Electronic Data Gathering, Analysis, and Retrieval) system.
The documents concerning our company referred to in this annual report may also be inspected at our offices located at Suite 1, 1233 High Street, Armadale, Victoria, Australia, 3143.
| I. | Subsidiary Information |
Not applicable.
| ITEM 11. |
We invest our excess cash and cash equivalents in interest-bearing accounts and term deposits with banks in Australia. Our management believes that the financial institutions that hold our investments are financially sound and accordingly, minimal credit risk exists with respect to these investments. Certain of our cash equivalents are subject to interest rate risk. Due to the short duration and conservative nature of these instruments, we do not believe that we have a material exposure to interest rate risk. Our major market risk is changes in foreign exchange rates as we had approximately A$21,890,509, A$27,100,354 A$26,398,943 and A$2,035,76926,398,943 in cash held in U.S. dollars, GBP and Euro as of June 30, 2016, 2015 2014 and 2013,2014, respectively. A hypothetical 3%, 6%3% and 0.5%12% adverse movement in end-of-period exchange rates for U.S. dollars, GBP and Euro, respectively, would reduce the cash balance at the end of each year by approximately A$656,715, A$838,149 A$815,288 and A$62,963 and would increase the cash balance by approximately A$789,325, A$767,796 and A$59,295815,288, respectively.
We conduct our activities almost exclusively in Australia. We are required to make certain payments in U.S. dollars and other currencies, however such payments are not significant to our operations and we believe an adverse movement in end-of-period exchange rates would not have a material impact on our operating results. In the twelve months ended June 30, 2015,2016, the Australian dollar depreciated against the U.S. dollar by 18%3%. In the financial years 20142015 and 2013,2014, the Australian dollar depreciated by 18% and appreciated by 3% and depreciated by 10% against the U.S. dollar, respectively. As of June 30, 2015,2016, payables in U.S. dollars and other currencies were immaterial. A hypothetical 3% adverse movement in the U.S. dollar, 0.5% adverse movement in the Euro and 6% adverse movement in the Great British Pound exchange rates would increase the cost of these payables by approximately A$2,902.2,622.
We do not currently utilize derivative financial instruments or other financial instruments subject to market risk.
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Fees and Charges Payable by ADS Holders
The table below summarizes the fees and charges that a holder of our ADSs may have to pay, directly or indirectly, to our depositary, The Bank of New York Mellon, or BoNY, pursuant to the Deposit Agreement, which was filed as Exhibit 2.1 to our Registration Statement on Form F-6 filed with the SEC on December 21, 2007, and the types of services and the amount of the fees or charges paid for such services. The disclosure under this heading “Fees and Charges Payable by ADS Holders” is subject to and qualified in its entirety by reference to the full text of the Deposit Agreement. The holder of an ADS may have to pay the following fees and charges to BoNY in connection with ownership of the ADS:
| Persons Depositing or Withdrawing Shares Must Pay: | For: | |
| • US$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) | • Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property • Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates | |
| • US$0.005 (or less) per ADS | • Any cash distribution to you | |
| • A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs | • Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADS holders | |
| • US$1.50 (or less) per ADS | • Transfers, combination and split-up of ADSs | |
| • Expenses of the depositary | • Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement) • Converting foreign currency to U.S. dollars | |
| • Taxes and other governmental charges the depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes | • As necessary | |
| • Any charges incurred by the depositary or its agents for servicing the deposited securities | • As necessary |
The depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may collect any of its fees by deduction from any cash distribution payable to ADS holders that are obligated to pay those fees. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.
From time to time, the depositary may make payments to us to reimburse and/or share revenue from the fees collected from ADS holders, or waive fees and expenses for services provided, generally relating to costs and expenses arising out of establishment and maintenance of the ADS program. In performing its duties under the deposit agreement, the depositary may use brokers, dealers or other service providers that are affiliates of the depositary and that may earn or share fees or commissions.
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Fees and Payments Made by the Depositary to the Company
We incurred expenses in relation to services for our annual general meeting and special general meeting of shareholders. For the year ended June 30, 2016, we paid BoNY a total of US$26,281 (comprised of payments for the distribution and printing of meeting material and proxy vote tabulation). For the year ended June 30, 2015, we paid BoNY a total of US$33,523 (comprised of payments for the distribution and printing of meeting material and proxy vote tabulation). We also paid BoNY US$22,479 in the year ended June 30, 2015 in connection with the conversion of ordinary shares into ADSs for issuance under our “At-The-Market” facility. The conversion charge of US$0.005 per ADS was applied plus international wire charges.
| ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
Not applicable.
| ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
Not applicable.
| ITEM 15. | CONTROLS AND PROCEDURES |
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our chief executive officer and chief financial officer to allow timely decisions regarding required disclosure. Our management, including our chief executive officer and chief financial officer, conducted an evaluation of our disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e), as of the end of the period covered by this Annual Report on Form 20-F. Based upon that evaluation, our chief executive officer and chief financial officer concluded that, as of June 30, 2015,2016, our disclosure controls and procedures were effective.
Management's Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
| · | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; |
| · | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and |
| · | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use of disposition of the company’s assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of June 30, 2015.2016. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on that assessment, our management concluded that as of June 30, 2015,2016, our internal control over financial reporting is effective.
Changes in Internal Control over Financial Reporting
During the year ended June 30, 2015,2016, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our Board of Directors has determined that Mr. Brian Meltzer, an independent director, meets the definition of an audit committee financial expert, as defined by rules of the Securities and Exchange Commission. For a brief listing of Mr. Meltzer’s relevant experience, see Item 6.A. “Directors, Senior Management and Employees - Directors and Senior Management.”
ITEM 16B. CODE OF ETHICS
We have adopted a code of ethics that applies to all senior financial officers of our company, including our chief executive officer, chief financial officer, chief accounting officer or controller, or persons performing similar functions. The code of ethics is publicly available on our website at www.pranabio.com.www.pranabio.com. Written copies are available upon request. If we make any substantive amendment to the code of ethics or grant any waivers, including any implicit waiver, from a provision of the codes of ethics, we will disclose the nature of such amendment or waiver on our website.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Fees Paid to Independent Public Accountants
The following table sets forth, for each of the years indicated, the fees billed by PricewaterhouseCoopers, which has served as our principal independent registered public accounting firm since November 30, 2006.
Year Ended June 30, | Year Ended June 30, | |||||||||||||||
Services Rendered | 2015 | 2014 | 2016 | 2015 | ||||||||||||
| Audit (1) | $ | A160,158 | $ | A145,187 | $ | A166,479 | $ | A160,158 | ||||||||
| Audit-Related (2) | $ | A256,113 | $ | A187,422 | $ | A38,297 | $ | A256,113 | ||||||||
| Other (3) | $ | A83,640 | $ | A65,000 | - | $ | A83,640 | |||||||||
| Total | $ | A499,911 | $ | A397,609 | $ | A204,776 | $ | A499,911 | ||||||||
______________
(1) Audit fees consist of services that would normally be provided in connection with statutory and regulatory filings or engagements, including services that generally only the independent accountant can reasonably provide.
(2) Audit-related fees relate to services provided in connection with the auditor’s review of our internal controls.
(3) Other fees relate to services provided in connection with other public filings for the Securities and Exchange Commission.
Pre-Approval Policies and Procedures
Our Audit Committee has adopted policies and procedures for the pre-approval of audit and non-audit services rendered by our independent registered public accounting firm. Pre-approval of an audit or non-audit service may be given as a general pre-approval, as part of the audit committee’s approval of the scope of the engagement of our independent registered public accounting firm, or on an individual basis. Any proposed services exceeding general pre-approved levels also requires specific pre-approval by our audit committee. The policy prohibits retention of the independent registered public accounting firm to perform the prohibited non-audit functions defined in Section 201 of the Sarbanes-Oxley Act or the rules of the Securities and Exchange Commission, and also requires the audit committee to consider whether proposed services are compatible with the independence of the registered public accounting firm. All of the fees described above were pre-approved by our Audit Committee.
77
Not applicable.
| ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
Issuer Purchase of Equity Securities
Neither we, nor any affiliated purchaser of our company, has purchased any of our securities during the year ended June 30, 2015.2016.
| ITEM 16F. CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT |
None.
ITEM 16G. CORPORATE GOVERNANCE
Under NASDAQ Stock Market Rule 5615(a)(3), foreign private issuers, such as our company, are permitted to follow certain home country corporate governance practices instead of certain provisions of the NASDAQ Stock Market Rules. A foreign private issuer that elects to follow a home country practice instead of any NASDAQ rule must submit to NASDAQ, in advance, a written statement from an independent counsel in such issuer’s home country certifying that the issuer’s practices are not prohibited by the home country’s laws. As of the date of this annual report, we have not submitted notice to NASDAQ informing them of that we elect to follow home country practice instead of a NASDAQ rule.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
| ITEM 17. | FINANCIAL STATEMENTS |
Our company has elected to furnish financial statements and related information specified in Item 18.
| ITEM 18. | FINANCIAL STATEMENTS |
| Page | |
Index to Consolidated Financial Statements | |
Report of Independent Registered Public Accounting Firm | |
Consolidated Statements of Financial Position | F-3 |
Consolidated Statements of Profit or Loss and Other Comprehensive Income | F-4 |
Consolidated Cash Flow Statements | F-5 |
Consolidated Statements of Changes in Shareholders’ Equity | F-6 |
Notes to Consolidated Financial Statements | F-7 |
Index to Exhibits.
| Form | Exhibit | Filing Date/ Period End Date | ||||||
| 1 | Constitution of Registrant. | 20-F | 1.1 | 6/30/09 | ||||
| 2.1 | Deposit Agreement dated March 23, 2001, as amended and restated as of December 21, 2007, among the Registrant, the Bank of New York, as Depositary, and owners and holders from time to time of ADRs issued thereunder, including the Form of American Depositary Receipts. | F-6 POS | 1 | 12/21/07 | ||||
| 4.1 | License Agreement dated January 1, 2001, between the Registrant and The General Hospital Corporation. | 20-F | 5/29/02 | |||||
| 4.2 | Variation Agreement dated August 8, 2001, between the Registrant and The General Hospital Corporation, which amends the License Agreement dated January 1, 2001, between the parties. | 20-F | 5/29/02 | |||||
| 4.3 | Agreement to Provide Accounting, Administration, Corporate Advice and Company Secretarial Services dated February 23, 2000, between the Registrant and Malvern Administrative Services (now The CFO solution). | 20-F | 5/29/02 | |||||
| 4.4 | Second Amendment to Exclusive License Agreement dated January 1, 2001, between the Registrant and The General Hospital Corporation dated March 15, 2004. | 20-F | 4.6 | 6/30/04 | ||||
| 4.5 | Settlement Agreement dated July 28, 2004, among the Registrant, P.N. Gerolymatos S.A, or PNG, Mr. Gerolymatos, GHC, Professor Ashley Bush, Dr. Rudolph Tanzi and Dr. Robert Cherny and the ancillary agreements of even date therewith exhibited thereto, including the Patent Assignment and Settlement Agreement among the Registrant and PNG, Patent Rights Security Agreement among the Registrant and PNG and the Derivatives Agreement among the Registrant and PNG. | 20-F | 4.21 | 6/30/04 | ||||
| 4.6 | Prana Biotechnology Limited, 2004 American Depository Share (ADS) Option Plan. | 6-K | Annexure A to Item 1 | 11/3/04 | ||||
| 4.7 | Prana Biotechnology Limited, 2004 Employees’, Directors’ and Consultants’ Share and Option Plan. | 6-K | Annexure B to Item 1 | 11/3/04 | ||||
| 4.8 | Fourth Research Funding and Intellectual Property Assignment Agreement dated December 1, 2009. | 20-F | 4.9 | 6/30/12 | ||||
| 4.9 | Fifth Research Funding and Intellectual Property Assignment Agreement dated December 1, 2012. | 20-F | 4.9 | 6/30/13 | ||||
Exhibit Number | Exhibit Description | Incorporated by Reference | ||||||
| Form | Exhibit | Filing Date/ Period End Date | ||||||
| 1 | Constitution of Registrant. | 20-F | 1.1 | 6/30/09 | ||||
| 2.1 | Deposit Agreement dated March 23, 2001, as amended and restated as of December 21, 2007, among the Registrant, the Bank of New York, as Depositary, and owners and holders from time to time of ADRs issued thereunder, including the Form of American Depositary Receipts. | F-6 POS | 1 | 12/21/07 | ||||
| 4.1 | License Agreement dated January 1, 2001, between the Registrant and The General Hospital Corporation. | 20-F | 5/29/02 | |||||
| 4.2 | Variation Agreement dated August 8, 2001, between the Registrant and The General Hospital Corporation, which amends the License Agreement dated January 1, 2001, between the parties. | 20-F | 5/29/02 | |||||
| 4.3 | Agreement to Provide Accounting, Administration, Corporate Advice and Company Secretarial Services dated February 23, 2000, between the Registrant and Malvern Administrative Services (now The CFO solution). | 20-F | 5/29/02 | |||||
| 4.4 | Second Amendment to Exclusive License Agreement dated January 1, 2001, between the Registrant and The General Hospital Corporation dated March 15, 2004. | 20-F | 4.6 | 6/30/04 | ||||
| 4.5 | Settlement Agreement dated July 28, 2004, among the Registrant, P.N. Gerolymatos S.A, or PNG, Mr. Gerolymatos, GHC, Professor Ashley Bush, Dr. Rudolph Tanzi and Dr. Robert Cherny and the ancillary agreements of even date therewith exhibited thereto, including the Patent Assignment and Settlement Agreement among the Registrant and PNG, Patent Rights Security Agreement among the Registrant and PNG and the Derivatives Agreement among the Registrant and PNG. | 20-F | 4.21 | 6/30/04 | ||||
| 4.6 | Prana Biotechnology Limited, 2004 American Depository Share (ADS) Option Plan. | 6-K | Annexure A | 11/3/04 | ||||
| to Item 1 | ||||||||
| 4.7 | Prana Biotechnology Limited, 2004 Employees’, Directors’ and Consultants’ Share and Option Plan. | 6-K | Annexure B | 11/3/04 | ||||
| to Item 1 | ||||||||
| 4.8 | Fourth Research Funding and Intellectual Property Assignment Agreement dated December 1, 2009. | 20-F | 4.9 | 6/30/12 | ||||
| 4.9 | Fifth Research Funding and Intellectual Property Assignment Agreement dated December 1, 2012. | 20-F | 4.9 | 6/30/13 | ||||
| 4.10* | Sixth Research Funding and Intellectual Property Assignment Agreement dated November 7, 2014. | |||||||
| 4.11 | Employment Agreement dated September 21, 2007, among the Registrant and Mr. Kempler. | 20-F | 4.19 | 6/30/07 | ||||
| 4.12 | Letter Agreements effective as of June 12, 2007 between the Registrant and Ms. Dianne Angus. | 20-F | 4.21 | 6/30/07 | ||||
| 4.13 | Placement Confirmation Letter dated September 8, 2009, between the Registrant and BAM Capital LLC. | 20-F | 4.25 | 6/30/07 | ||||
| 4.14 | Manufacturing Services Agreement for PBT2 HCI Supply dated August 19, 2013 between the Registrant and Dr. Reddy’s Laboratories Limited. | 20-F | 4.30 | 6/30/13 | ||||
| 4.15 | Amendments to Manufacturing Services Agreement for PBT2 HCI Supply dated August 19, 2013 between the Registrant and Dr. Reddy’s Laboratories Limited, as amended: Amendment No. 1 effective September 26, 2013; and Amendment No. 2 effective August 31, 2013. | 20-F | 4.35 | 6/30/14 | ||||
| 4.16 | Manufacturing Services Agreement for PBT434 API supply dated March 28, 2014 | 20-F | 4.36 | 6/30/14 | ||||
| 4.17 | Master Service Agreement between the Registrant and Certara Portugal dated January 22, 2015 | 20-F | 4.17 | 6/30/15 | ||||
| 4.18 | Master Service Agreement between the Registrant and d3 Medicine LLC dated March 17, 2015 | 20-F | 4.18 | 6/30/15 | ||||
| 4.19* | Master Service Agreement between the Registrant and Orgapharm S.A.S. dated September 21, 2015. | |||||||
| 4.20* | Master Service Agreement between the Registrant and IDT Australia Limited dated September 1, 2015 | |||||||
| 8.1* | List of Subsidiaries of the Registrant. | |||||||
| 12.1* | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act, as amended. | |||||||
| 12.2* | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act, as amended. | |||||||
| 13.1* | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 13.2* | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 15.1* | Consent of PricewaterhouseCoopers. | |||||||
| 4.10* | Sixth Research Funding and Intellectual Property Assignment Agreement dated November 7, 2014. | |||||||
| 4.11 | Employment Agreement dated September 21, 2007, among the Registrant and Mr. Kempler. | 20-F | 4.19 | 6/30/07 | ||||
| 4.12 | Letter Agreements effective as of June 12, 2007 between the Registrant and Ms. Dianne Angus. | 20-F | 4.21 | 6/30/07 | ||||
| 4.13 | Placement Confirmation Letter dated September 8, 2009, between the Registrant and BAM Capital LLC. | 20-F | 4.25 | 6/30/07 | ||||
| 4.14 | Manufacturing Services Agreement for PBT2 HCI Supply dated August 19, 2013 between the Registrant and Dr. Reddy’s Laboratories Limited. | 20-F | 4.30 | 6/30/13 | ||||
| 4.15 | Amendments to Manufacturing Services Agreement for PBT2 HCI Supply dated August 19, 2013 between the Registrant and Dr. Reddy’s Laboratories Limited, as amended: Amendment No. 1 effective September 26, 2013; and Amendment No. 2 effective August 31, 2013. | 20-F | 4.35 | 6/30/14 | ||||
| 4.16 | Manufacturing Services Agreement for PBT434 API supply dated March 28, 2014 | 20-F | 4.36 | 6/30/14 | ||||
| 4.17* | Master Service Agreement between the Registrant and Certara Portugal dated January 22, 2015 | |||||||
| 4.18* | Master Service Agreement between the Registrant and d3 Medicine LLC dated March 17, 2015 | |||||||
| 8.1* | List of Subsidiaries of the Registrant. | |||||||
| 12.1* | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act, as amended. | |||||||
| 12.2* | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act, as amended. | |||||||
| 13.1* | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 13.2* | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 15.1* | Consent of PricewaterhouseCoopers. | |||||||
____________
* Filed herewith.
PRANA BIOTECHNOLOGY LIMITED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| Page Number | |
| F-3 | |
| F-4 | |
| F-5 | |
| F-6 | |
| F-7 |
To the Board of Directors and Shareholders of Prana Biotechnology Limited
In our opinion, the accompanying consolidated statements of financial position and the related consolidated statements of profit or loss and other comprehensive income, consolidated statements of changes in of shareholders’ equity and ofconsolidated cash flowsflow statements present fairly, in all material respects, the financial position of Prana Biotechnology Limited and its subsidiaries at June 30, 20152016 and June 30, 2014,2015, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 20152016 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion,These financial statements are the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2015, based on criteria established in Internal Control - Integrated Framework 2013 issued by the Committee of Sponsoring Organizationsresponsibility of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 15.Company’s management. Our responsibility is to express opinionsan opinion on these financial statements and on the Company's internal control over financial reporting based on our audits (which were integrated audits in fiscal years 2015 and 2014).audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the auditsaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements includedmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.opinion.
/s/ PricewaterhouseCoopers
Melbourne, Australia
October 3, 2016
F - 2
PRANA BIOTECHNOLOGY LIMITED
(in Australian dollars, except number of shares)
| June 30, | June 30, | ||||||||||||||||||||||
| Notes | 2015 | 2014 | Notes | 2016 | 2015 | ||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Current Assets | |||||||||||||||||||||||
| Cash and cash equivalents | 34,909,574 | 34,167,018 | 28,593,538 | 34,909,574 | |||||||||||||||||||
| Trade and other receivables | 5 | 6,521,154 | 7,285,409 | 5 | 4,786,765 | 6,521,154 | |||||||||||||||||
| Other current assets | 6 | 313,465 | 96,883 | 6 | 276,504 | 313,465 | |||||||||||||||||
| Total Current Assets | 41,744,193 | 41,549,310 | 33,656,807 | 41,744,193 | |||||||||||||||||||
| Non-Current Assets | |||||||||||||||||||||||
| Property and equipment, net of accumulated depreciation of A$322,342 and $345,238, respectively | 7 | 44,727 | 47,557 | ||||||||||||||||||||
| Property and equipment, net of accumulated depreciation of A$329,541 and $322,342, respectively | 7 | 24,225 | 44,727 | ||||||||||||||||||||
| Other non-current assets | 6 | 45,462 | 43,988 | 6 | 43,988 | 45,462 | |||||||||||||||||
| Total Non-Current Assets | 90,189 | 91,545 | 68,213 | 90,189 | |||||||||||||||||||
| Total Assets | 41,834,382 | 41,640,855 | 33,725,020 | 41,834,382 | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Current Liabilities | |||||||||||||||||||||||
| Trade and other payables | 8 | 2,152,015 | 3,358,358 | 8 | 1,748,566 | 2,152,015 | |||||||||||||||||
| Other financial liabilities | 9 | 12,076 | 98,398 | 9 | - | 12,076 | |||||||||||||||||
| Provisions | 10 | 554,615 | 494,784 | 10 | 608,771 | 554,615 | |||||||||||||||||
| Total Current Liabilities | 2,718,706 | 3,951,540 | 2,357,337 | 2,718,706 | |||||||||||||||||||
| Non-Current Liabilities | |||||||||||||||||||||||
| Provisions | 10 | 2,412 | 3,028 | 10 | 470 | 2,412 | |||||||||||||||||
| Total Non-Current Liabilities | 2,412 | 3,028 | 470 | 2,412 | |||||||||||||||||||
| Total Liabilities | 2,721,118 | 3,954,568 | 2,357,807 | 2,721,118 | |||||||||||||||||||
| Net Assets | 39,113,264 | 37,686,287 | 31,367,213 | 39,113,264 | |||||||||||||||||||
| Equity | |||||||||||||||||||||||
Issued capital 2015: 533,891,470 fully paid ordinary shares Nil options over fully paid ordinary shares 2014: 488,646,960 fully paid ordinary shares Nil options over fully paid ordinary shares | 13 | 146,895,714 | 140,009,415 | ||||||||||||||||||||
Issued capital 2016: 533,891,470 fully paid ordinary shares Nil options over fully paid ordinary shares 2015: 533,891,470 fully paid ordinary shares Nil options over fully paid ordinary shares | 12 | 146,879,214 | 146,895,714 | ||||||||||||||||||||
| Reserves | 14 | 9,363,181 | 8,937,434 | 13 | 9,363,181 | 9,363,181 | |||||||||||||||||
| Accumulated deficit during the development stage | 15 | (117,145,631 | ) | (111,260,562 | ) | 14 | (124,875,182 | ) | (117,145,631 | ) | |||||||||||||
| Total Equity | 39,113,264 | 37,686,287 | 31,367,213 | 39,113,264 | |||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
| PRANA BIOTECHNOLOGY LIMITED |
(in Australian dollars, except number of shares)
| Years ended June 30, | Years ended June 30, | ||||||||||||||||||||||||||||||
| Notes | 2015 | 2014 | 2013 | Notes | 2016 | 2015 | 2014 | ||||||||||||||||||||||||
| Revenues from ordinary activities | 2 | 176,842 | 363,775 | 150,867 | 2 | 142,657 | 176,842 | 363,775 | |||||||||||||||||||||||
| Other income | 2 | 6,317,438 | 7,845,396 | 4,488,526 | 2 | 4,753,697 | 6,317,438 | 7,845,396 | |||||||||||||||||||||||
| Intellectual property expenses | (241,954 | ) | (257,299 | ) | (477,079 | ) | |||||||||||||||||||||||||
| General and administration expenses | 3 | (3,610,551 | ) | (4,506,122 | ) | (4,925,411 | ) | ||||||||||||||||||||||||
| Research and development expenses | 3 | (12,298,167 | ) | (14,908,098 | ) | (8,203,822 | ) | 3 | (9,585,371 | ) | (12,298,167 | ) | (14,908,098 | ) | |||||||||||||||||
| Corporate personnel expenses | 3 | (2,344,337 | ) | (2,059,642 | ) | (2,298,426 | ) | ||||||||||||||||||||||||
| Intellectual property expenses | 3 | (257,299 | ) | (477,079 | ) | (294,894 | ) | ||||||||||||||||||||||||
| Auditor and accounting expenses | 3 | (416,271 | ) | (342,609 | ) | (166,086 | ) | ||||||||||||||||||||||||
| Travel expenses | 3 | (125,532 | ) | (421,013 | ) | (131,710 | ) | ||||||||||||||||||||||||
| Public relations and marketing expenses | 3 | (87,851 | ) | (358,597 | ) | (136,186 | ) | ||||||||||||||||||||||||
| Depreciation expenses | 3 | (31,587 | ) | (22,384 | ) | (23,130 | ) | ||||||||||||||||||||||||
| Other expenses | 3 | (1,626,076 | ) | (2,142,179 | ) | (1,169,407 | ) | ||||||||||||||||||||||||
| Interest expense - ADDF | - | (29,978 | ) | (17,676 | ) | ||||||||||||||||||||||||||
| Foreign exchange gain (loss) | 3 | 4,721,449 | (746,593 | ) | 140,761 | ||||||||||||||||||||||||||
| Gain (loss) on fair valuation of financial liabilities | 3 | 86,322 | (30,238 | ) | (126,059 | ) | |||||||||||||||||||||||||
| Finance expenses | - | - | (29,978 | ) | |||||||||||||||||||||||||||
| Other operating expenses | (45,276 | ) | (39,210 | ) | (451,251 | ) | |||||||||||||||||||||||||
| Other gains and losses | 3 | 857,247 | 4,721,449 | (746,593 | ) | ||||||||||||||||||||||||||
| Loss before income tax expense | (5,885,069 | ) | (13,329,239 | ) | (7,787,242 | ) | (7,729,551 | ) | (5,885,069 | ) | (13,329,239 | ) | |||||||||||||||||||
| Income tax expense | 4 | - | - | - | 4 | - | - | - | |||||||||||||||||||||||
| Loss for the year | (5,885,069 | ) | (13,329,239 | ) | (7,787,242 | ) | (7,729,551 | ) | (5,885,069 | ) | (13,329,239 | ) | |||||||||||||||||||
| Other comprehensive loss | - | - | - | - | - | ||||||||||||||||||||||||||
| Total comprehensive loss for the year | 16a | (5,885,069 | ) | (13,329,239 | ) | (7,787,242 | ) | 15 (a) | (7,729,551 | ) | (5,885,069 | ) | (13,329,239 | ) | |||||||||||||||||
| Loss per share (basic and diluted - cents per share) | 20 | (1.17 | ) | (3.11 | ) | (2.30 | ) | 19 | (1.45 | ) | (1.17 | ) | (3.11 | ) | |||||||||||||||||
| Weighted average number of ordinary shares used in computing basic and diluted net loss per share | 502,714,982 | 428,047,123 | 338,700,006 | 533,891,470 | 502,714,982 | 428,047,123 | |||||||||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
PRANA BIOTECHNOLOGY LIMITED
(in Australian dollars)
| Years Ended June 30, | Years Ended June 30, | ||||||||||||||||||||||||||||||
| Notes | 2015 | 2014 | 2013 | Notes | 2016 | 2015 | 2014 | ||||||||||||||||||||||||
| Cash Flows from Operating Activities | |||||||||||||||||||||||||||||||
| Payments to suppliers and employees | (18,124,103 | ) | (18,011,310 | ) | (10,650,823 | ) | (14,055,879 | ) | (18,124,102 | ) | (18,011,310 | ) | |||||||||||||||||||
| Interest received | 216,317 | 377,587 | 93,789 | 120,392 | 216,317 | 377,587 | |||||||||||||||||||||||||
| Grants received | 228,541 | 2,500 | 107,097 | - | 228,541 | 2,500 | |||||||||||||||||||||||||
| R&D tax refund | 6,808,171 | 4,095,000 | 2,492,683 | 6,516,961 | 6,808,170 | 4,095,000 | |||||||||||||||||||||||||
| Other | - | - | 6,000 | ||||||||||||||||||||||||||||
| Net cash flows used in operating activities | 16(a) | (10,871,074 | ) | (13,536,223 | ) | (7,951,254 | ) | 15(a) | (7,418,526 | ) | (10,871,074 | ) | (13,536,223 | ) | |||||||||||||||||
| Cash Flows from Investing Activities | |||||||||||||||||||||||||||||||
| Payment for payroll and rental security deposits | (154,077 | ) | - | (6,151 | ) | 1,474 | (154,077 | ) | - | ||||||||||||||||||||||
| Payments for purchase of plant and equipment | (28,757 | ) | (23,048 | ) | (22,000 | ) | (2,307 | ) | (28,757 | ) | (23,048 | ) | |||||||||||||||||||
| Net cash flows used in investing activities | (182,834 | ) | (23,048 | ) | (28,151 | ) | (833 | ) | (182,834 | ) | (23,048 | ) | |||||||||||||||||||
| Cash Flows from Financing Activities | |||||||||||||||||||||||||||||||
| Proceeds from exercise of options and issue of securities | 7,128,142 | 37,110,325 | 16,260,806 | - | 7,128,142 | 37,110,325 | |||||||||||||||||||||||||
| Payment of share issue costs | (284,931 | ) | (1,339,369 | ) | (1,015,775 | ) | - | (284,931 | ) | (1,339,369 | ) | ||||||||||||||||||||
| Proceeds from borrowings | - | - | 337,000 | ||||||||||||||||||||||||||||
| Repayment of borrowings | - | (810,164 | ) | - | - | - | (810,164 | ) | |||||||||||||||||||||||
| Net cash flows provided by financing activities | 6,843,211 | 34,960,792 | 15,582,031 | - | 6,843,211 | 34,960,792 | |||||||||||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | (4,210,697 | ) | 21,401,521 | 7,602,626 | |||||||||||||||||||||||||||
| Net (decrease) increase in cash and cash equivalents | (7,419,359 | ) | (4,210,697 | ) | 21,401,521 | ||||||||||||||||||||||||||
| Opening cash and cash equivalents brought forward | 34,167,018 | 13,346,760 | 5,636,469 | 34,909,574 | 34,167,018 | 13,346,760 | |||||||||||||||||||||||||
| Redemption of security deposit | 152,603 | - | - | ||||||||||||||||||||||||||||
| Exchange rate adjustments on cash and cash equivalents held in foreign currencies | 4,953,253 | (581,263 | ) | 107,665 | 950,720 | 4,953,253 | (581,263 | ) | |||||||||||||||||||||||
| Closing cash and cash equivalents carried forward | 16(b) | 34,909,574 | 34,167,018 | 13,346,760 | 15(b) | 28,593,538 | 34,909,574 | 34,167,018 | |||||||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
PRANA BIOTECHNOLOGY LIMITED
(in Australian dollars, except for number of shares)
| Notes | Number of Shares | Issued Capital | Reserves | Accumulated Deficit During Development Stage | Total Equity | Notes | Number of Shares | Issued Capital | Reserves | Accumulated Deficit During Development Stage | Total Equity | ||||||||||||||||||||||||||||||||||
| Balance, June 30, 2012 | 297,980,818 | 86,134,077 | 9,633,451 | (90,144,081 | ) | 5,623,447 | |||||||||||||||||||||||||||||||||||||||
| Transactions with owners in their capacity as owners: | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares in connection with private placement, net of costs | 13(b) | 58,141,030 | 10,629,011 | - | - | 10,629,011 | |||||||||||||||||||||||||||||||||||||||
| Issuance of shares in connection with share purchase plan, net of costs | 13(b) | 10,370,488 | 1,570,863 | - | - | 1,570,863 | |||||||||||||||||||||||||||||||||||||||
| Issuance of shares in connection with At-The-Market facility, net of costs | 13(b) | 15,008,090 | 3,023,160 | - | - | 3,023,160 | |||||||||||||||||||||||||||||||||||||||
| Non-cash issuance of shares to consultants | 13(b) | 110,000 | 22,000 | - | - | 22,000 | |||||||||||||||||||||||||||||||||||||||
| Non-cash issuance of options to employees | 14(b) | - | - | 86,969 | - | 86,969 | |||||||||||||||||||||||||||||||||||||||
| Non-cash issuance of options to consultants | 14(b) | - | - | 215,083 | - | 215,083 | |||||||||||||||||||||||||||||||||||||||
| Non-cash issuance of options to directors | 14(b) | - | - | 591,422 | - | 591,422 | |||||||||||||||||||||||||||||||||||||||
| 83,629,608 | 15,245,034 | 893,474 | - | 16,138,508 | |||||||||||||||||||||||||||||||||||||||||
| Net loss | 15 | - | - | - | (7,787,242 | ) | (7,787,242 | ) | |||||||||||||||||||||||||||||||||||||
| Total comprehensive loss for the year | - | - | - | (7,787,242 | ) | (7,787,242 | ) | ||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2013 | 381,610,426 | 101,379,111 | 10,526,925 | (97,931,323 | ) | 13,974,713 | 381,610,426 | 101,379,111 | 10,526,925 | (97,931,323 | ) | 13,974,713 | |||||||||||||||||||||||||||||||||
| Transactions with owners in their capacity as owners: | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares in connection with At-The-Market facility, net of costs | 13(b) | 85,108,500 | 30,818,030 | - | - | 30,818,030 | 12(b) | 85,108,500 | 30,818,030 | - | - | 30,818,030 | |||||||||||||||||||||||||||||||||
| Issuance of shares in connection with share purchase plan, net of costs | 13(c) | 1,000,000 | 276,950 | - | - | 276,950 | 12(c) | 1,000,000 | 276,950 | - | - | 276,950 | |||||||||||||||||||||||||||||||||
| Non-cash issuance of options to employees | 14(b) | - | - | 33,824 | - | 33,824 | 13(b) | - | - | 33,824 | - | 33,824 | |||||||||||||||||||||||||||||||||
| Non-cash issuance of options to consultants | 14(b) | - | - | 959,084 | - | 959,084 | 13(b) | - | - | 959,084 | - | 959,084 | |||||||||||||||||||||||||||||||||
| Issuance of shares in connection with exercise of options, net of costs | 13(b) & 14(b) | 20,928,034 | 7,535,324 | (2,582,399 | ) | - | 4,952,925 | 12(b) &(b)(b) | 20,928,034 | 7,535,324 | (2,582,399 | ) | - | 4,952,925 | |||||||||||||||||||||||||||||||
| 107,036,534 | 38,630,304 | (1,589,491 | ) | - | 37,040,813 | 107,036,534 | 38,630,304 | (1,589,491 | ) | - | 37,040,813 | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | (13,329,239 | ) | (13,329,239 | ) | - | - | - | (13,329,239 | ) | (13,329,239 | ) | |||||||||||||||||||||||||||||||
| Total comprehensive loss for the year | - | - | - | (13,329,239 | ) | (13,329,239 | ) | - | - | - | (13,329,239 | ) | (13,329,239 | ) | |||||||||||||||||||||||||||||||
| Balance, June 30, 2014 | 488,646,960 | 140,009,415 | 8,937,434 | (111,260,562 | ) | 37,686,287 | 488,646,960 | 140,009,415 | 8,937,434 | (111,260,562 | ) | 37,686,287 | |||||||||||||||||||||||||||||||||
| Transactions with owners in their capacity as owners: | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares in connection with At-The-Market facility, net of costs | 13(b) | 44,954,510 | 7,129,242 | (284,931) | - | - | 7,129,242 | 12(b) | 44,954,510 | 6,844,311 | - | - | 6,844,311 | ||||||||||||||||||||||||||||||||
| Issuance of shares in connection with share purchase plan, net of costs | 13(c) | 110,000 | 16,500 | - | - | 16,500 | 12(c) | 110,000 | 16,500 | - | - | 16,500 | |||||||||||||||||||||||||||||||||
| Non-cash issuance of options to employees | 14(b) | - | - | 170,397 | - | 170,397 | 13(b) | - | - | 170,397 | - | 170,397 | |||||||||||||||||||||||||||||||||
| Non-cash issuance of options to consultants | 14(b) | - | - | 280,838 | - | 280,838 | 13(b) | - | - | 280,838 | - | 280,838 | |||||||||||||||||||||||||||||||||
| Issuance of shares in connection with exercise of options, net of costs | 13(b) & 14(b) | 180,000 | 25,488 | (25,488 | ) | - | - | 12(b) &(b)(b) | 180,000 | 25,488 | (25,488 | ) | - | - | |||||||||||||||||||||||||||||||
| 45,244,510 | 6,886,299 | 425,747 | - | 7,312,046 | 45,244,510 | 6,886,299 | 425,747 | - | 7,312,046 | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | (5,885,069 | ) | (5,885,069 | ) | - | - | - | (5,885,069 | ) | (5,885,069 | ) | |||||||||||||||||||||||||||||||
| Total comprehensive loss for the year | - | - | - | (5,885,069 | ) | (5,885,069 | ) | - | - | - | (5,885,069 | ) | (5,885,069 | ) | |||||||||||||||||||||||||||||||
| Balance, June 30, 2015 | 533,891,470 | 146,895,714 | 9,363,181 | (117,145,631 | ) | 39,113,264 | 533,891,470 | 146,895,714 | 9,363,181 | (117,145,631 | ) | 39,113,264 | |||||||||||||||||||||||||||||||||
| Transactions with owners in their capacity as owners: | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares in connection with At-The-Market facility, net of costs | 12(b) | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
| Issuance of shares in connection with share purchase plan, net of costs | 12(c) | - | (16,500 | ) | - | - | (16,500 | ) | |||||||||||||||||||||||||||||||||||||
| Non-cash issuance of options to employees | 13(b) | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
| Non-cash issuance of options to consultants | 13(b) | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
| Issuance of shares in connection with exercise of options, net of costs | 12(b) &(b)(b) | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
| - | (16,500 | ) | - | - | (16,500 | ) | |||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | (7,729,551 | ) | (7,729,551 | ) | ||||||||||||||||||||||||||||||||||||||
| Total comprehensive loss for the year | �� | - | - | - | (7,729,551 | ) | (7,729,551 | ) | |||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2016 | 533,891,470 | 146,879,214 | 9,363,181 | (124,875,182 | ) | 31,367,213 | |||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
Background
Prana Biotechnology Limited and its controlled subsidiaries, Prana Biotechnology Inc. and Prana Biotechnology UK Limited (referred to collectively as “Prana” or the “Company”), is a development stage enterprise engaged in the research and development of therapeutic drugs designed to treat the underlying cause of degeneration of the brain focusing on Alzheimer’s disease, Huntington disease, Parkinson’s disease and the eye as the aging process progresses.other neurological disorders. Prana Biotechnology Limited, the parent entity, was incorporated on November 11, 1997 in Melbourne, Australia and the UK and U.S. subsidiaries were incorporated in August 2004.
Financial Reporting Framework
The financial report of Prana Biotechnology Limited for the year ended June 30, 20152016 was authorized for issue in accordance with a resolution of the Board of Directors on August 26, 2015.September 29, 2016.
Prana Biotechnology Limited is a for-profit entity for the purpose of preparing the financial statements.
The consolidated financial statements of the Company comply with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (IASB).
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial liabilities at fair value through profit or losses.
Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.
The accounting policies set out below have been applied in preparing the financial statements for the year ended June 30, 20152016 and the comparative information presented in these financial statements for the years ended June 30, 20142015 and 2013.2014.
Critical accounting estimates, judgments and assumptions
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(a) Critical judgments in applying the entity’s accounting policies - use of volatility period in valuing warrant liabilities
Warrants and options exercisable into American Depository Receipts ("ADRs") recorded as financial liabilities under IAS 32 Financial Instruments: Presentation (see Note 9) are measured at fair value using a Black-Scholes valuation model. At each reporting date any options and warrants for ADRs are recorded at fair value with the corresponding difference being recorded in the income statement as a gain or loss.
Warrants that were exercisable for ADRs expired without being exercised on June 4, 2009. On June 30, 2011, the Company granted warrants to purchase 612,397 ordinary shares to Alzheimer’s Drug Discovery Foundation (“ADDF”). The warrants arewere exercisable at A$0.17 consideration and expireexpired without being exercised on 25 February 25, 2016, 612,397 options for ADRs remain outstanding at 30 June 2015.2016.
Share-based Payments
The value attributed to share options and remuneration shares issued is an estimate calculated using an appropriate mathematical formula based on an option pricing model. The choice of models and the resultant option value require assumptions to be made in relation to the likelihood and timing of the conversion of the options to shares and the value and volatility of the price of the underlying shares.
R&D Tax Incentives
The Australian Government replaced the research and development tax concession with the research and development tax incentive from July 1, 2011. The provisions provide refundable or non-refundable tax offsets. The research and development tax incentive applies to expenditure incurred and the use of depreciating assets in an income year commencing on or after July 1, 2011. A 45% refundable tax offset, equivalent to a deduction of 150%, will be available to eligible small companies with an annual aggregate turnover of less than $20 million. Eligible companies can receive a refundable tax offset of 45% of their research and development spending.
PRANA BIOTECHNOLOGY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
The Company's research and development activities are eligible under an Australian Government tax incentive for eligible expenditure from July 1, 2011. Management has assessed these activities and expenditure to determine which are likely to be eligible under the incentive scheme. For the period to June 30, 20152016 the Company has recorded an item in other income of A$6.14.8 million (2014:(2015: A$7.186.1 million) to recognize this amount which relates to this period.
Going Concern Basis
The Company is a development stage medical biotechnology company and as such expects to be utilizing cash until its research activities have become marketable. For the year ended June 30, 2015,2016, the Company incurred an operating loss of A$5.97.7 million (2014:(2015: Loss: A$13.35.9 million) and an operating cash outflow of A$10.97.4 million (2013:(2015: A$13.510.9 million). As at year end the net assets of the GroupCompany stood at A$39.131.4 million (2014:(2015: A$37.739.1 million) and the cash position has increaseddecreased to A$34.928.6 million from A$34.234.9 million at 30 June 2014.2015.
Cash on hand at June 30, 20152016 are considered sufficient to meet the Company’s forecast cash outflows for, at least 12 months from the date of this report. While there is uncertainty in the Group'sCompany's cash flow forecast in relation to the phasing of proposed expenditure on research and development which may impact the forecast cash position, the Directors believe the GroupCompany will be able to maintain sufficient cash reserves through a range of options, including:
| · | The Company continues to pursue raising additional funds through alternative funding structures and has a strong history of raising capital. The |
| · | The Company has on issue a total of |
| · | Notwithstanding, in the event that the Company will not have sufficient funds to effect its current plans through the above mentioned methods, the Company has the ability to scale down its operations and prioritize its research and development programs. |
In addition to these options, the GroupCompany has recorded a Trade Receivable at June 30, 20152016 in the amount of A$6.54.8 million from the Australian Tax Office in respect of its 20152016 research and development tax incentive claim. The GroupCompany expects to receive this amount during the 12 months ended 30 June 30, 2015.2017.
On this basis, the Directors are satisfied that the GroupCompany is a going concern and at this time and are of the opinion that no asset is likely to be realized for an amount less than the amount at which it is recorded in the Consolidated Statement of Financial Position as at June 30, 2015.2016.
Therefore, no adjustments have been made to the financial report relating to the recoverability and classification of the asset carrying amounts or the classification of liabilities that might be necessary should the GroupCompany not continue as a going concern.
Development Stage – Risks and Uncertainties
As a development stage enterprise, the Company’s prospects are subject to the risks, expenses and uncertainties frequently encountered by companies which have not yet commercialized any applications of their technology, particularly in new and evolving markets. Prana’s operating results may fluctuate significantly in the future as a result of a variety of factors, including capital expenditure and other costs relating to establishing, maintaining and expanding the operations, the number and mix of potential customers, potential pricing of future products by the Company and its competitors, new technology introduced by the Company and its competitors, delays or expense in obtaining necessary equipment, economic and social conditions in the biotechnology industry and general economic conditions.
The Company cannot be certain that it will be able to raise any required funding or capital, on favorable terms or at all, or that it will be able to establish corporate collaborations on acceptable terms, if at all. If the Company is unable to obtain such additional funding or capital, it may be required to reduce the scope of its development plans.
The Company’s experience in exploiting its technology is limited and it cannot be certain that its operations will be profitable in the short-term, or at all. If the Company fails in any of its efforts to establish or expand its business, the results of operations, financial condition and liquidity of the Company could be materially adversely affected. The Company cannot be certain that it will be able to sell and deliver its technology or to obtain or retain any permits required in the market in which it operates. Any of these factors could result in the reduction or cessation of the Company’s operations.
PRANA BIOTECHNOLOGY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
Significant Accounting Policies
Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.
The following significant accounting policies have been adopted in the preparation and presentation of the financial report.
(a)Principles of Consolidation
The consolidated financial statements are prepared by combining the financial statements of all the entities that comprise the Company, being Prana Biotechnology Limited and its subsidiaries as defined in Accounting Standard IAS 27: Consolidated and Separate Financial Statements. Consistent accounting policies are employed in the preparation and presentation of the consolidated financial statements.
Subsidiaries are all those entities (including special purpose entities) over which the Company has the power to govern the financial and operating policies, generally accompanying a shareholder of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are de-consolidated from the date that control ceases.
In preparing the consolidated financial statements, all inter-company balances and transactions, and unrealized profits/losses arising within the Company are eliminated in full. Investments in subsidiaries are accounted for at cost in the individual financial statements of Prana Biotechnology Limited.
(b)Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer of Prana Biotechnology Limited. For the current and previous reporting periods, the GroupCompany operated in one segment, being research into Alzheimer’s disease, Huntington disease, Parkinson’s disease and other neurodegenerative disorders.
(c)Income Tax
Current tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognized as a liability (or asset) to the extent that it is unpaid (or refundable).
Deferred tax
Deferred tax is accounted for using the liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items.
In principle, deferred tax assets and liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilized. However, deferred tax assets and liabilities are not recognized if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit or loss.
Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries except where the GroupCompany is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with these investments are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the asset and liability giving rise to them are realized or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the GroupCompany expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
PRANA BIOTECHNOLOGY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset when the entity has a legally enforceable right to offset and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
Current and deferred tax for the period
Current and deferred tax is recognized as an expense or income in the Statement of Profit or Loss, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognized directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill.
The Company has significant unused tax losses and as such a significant deferred tax asset; however, the deferred tax asset has not been recognized, as it is not probable that future taxable profit will be available against which the unused losses and unused tax credits can be utilized, given the nature of the Company’s business (research and development) and its history of losses.
(d)Property and Equipment
Property and equipment is measured at historical cost less accumulated depreciation and impairment and consists of laboratory equipment, computer equipment, furniture and fittings and leasehold improvements attributable to the Company’s premises at Parkville, Victoria, Australia.
Historical cost includes expenditure that is directly attributable to the acquisition of the item.
Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to the income statement during the reporting period in which they are incurred.
Depreciation
Depreciation is provided on property and equipment. Depreciation is calculated on a straight-line method to allocate their cost, net of their residual values, over their estimated useful lives.
The following estimated useful lives, ranging from three to 20 years are used in the calculation of depreciation:
Furniture and fittings 5-33%
Computer equipment 33%
Plant and equipment 10-33%
Leasehold improvements 33%
Leasehold improvements are depreciated over the shorter of the lease term and useful life.
The depreciation method, residual values and useful lives are reviewed, and adjusted if appropriate, at each annual reporting period.
(e)Leases
Leases in which a significant proportion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases.
Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.
(f)Financial Instruments
Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non-current assets. Loans and receivables are included in trade and other receivables in the balance sheet. Trade receivables, loans, and other receivables are recorded at amortized cost less impairment.
PRANA BIOTECHNOLOGY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
Warrants and Options
Under IAS 32, options and warrants issued other than for goods or services that are exercisable in a currency other than the functional currency of the Company and meet the definition of a liability, are recorded as financial liabilities rather than equity. See accounting policy (r) share-based payments for the accounting policy for warrants and options issued as share-based payments for goods or services.
Warrants and options recorded as financial liabilities under IAS 32 are valued at fair value using the Black-Scholes model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. At each reporting date, the options and warrants are revalued to their current fair value, with the difference in fair value recorded in the Statement of Profit or Loss and Other Comprehensive Income.
(g)Impairment of Assets
At each reporting date, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any).
Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Intangible assets not yet available for use are tested for impairment annually and whenever there is an indication that the asset may be impaired.
The recoverable amount for the asset (or cash-generating unit) is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount and an impairment loss is recognized in profit or loss immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized in profit or loss immediately.
No impairment charges were incurred during the three years ended June 30, 2015.2016.
(h)Intangible Assets - Research and Development
Expenditure during the research phase of a project is recognized as an expense when incurred. Where no internally generated intangible assets can be recognized, development expenditure is recognized as an expense in the period as incurred. Development costs are capitalized if and only if, all of the following are demonstrated:
• the technical feasibility of completing the intangible asset so that it will be available for use or sale;
• the intention to complete the intangible asset and use or sell it;
• the ability to use or sell the intangible asset;
• how the intangible asset will generate probable future economic benefits;
| • the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and |
• the ability to measure reliably the expenditure attributable to the intangible asset during its development.
Internally-generated intangible assets (capitalized development costs) are stated at cost less accumulated amortization and impairment, and are amortized on a straight-line basis over their useful lives over a maximum of five years.
At June 30, 2016, 2015 2014 and 2013,2014, Prana had no capitalized research and development costs.
(i)Foreign Currency Transactions and Balances
Functional and Presentation Currency
Items included in the financial statements of each of the Company’s entities are measured using Australian dollars, which is the currency of the primary economic environment in which the Company operates (the functional currency).
PRANA BIOTECHNOLOGY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
Foreign currency transactions
All foreign currency transactions during the financial year are brought to account using the exchange rate in effect at the date of the transaction. Foreign currency monetary items at each reporting date are translated at the exchange rate existing at each reporting date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined.
Exchange differences are recognized in profit or loss in the period in which they arise except for exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned or likely to occur, which form part of the net investment in a foreign operation, are recognized in the foreign currency translation reserve and recognized in profit or loss on disposal of the net investment.
Company entities The results and financial position of all the Company’s entities that have a functional currency difference from the presentation currency are translated into the presentation currency as follows:
| · | assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet, and |
| · | income and expenses for each income statement are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and |
| · | all resulting exchange differences are recognized as a separate component of equity. |
On consolidation, the assets and liabilities of the Company’s overseas operations are translated at exchange rates prevailing at the reporting date. Income and expense items are translated at the average exchange rates for the period unless exchange rates fluctuate significantly. Exchange differences arising, if any, are recognized in the foreign currency translation reserve, and recognized in profit or loss on disposal of the foreign operations.
Short-term obligations
Short-term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service, including wages, and salaries. Short-term employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled. The Company’s obligations for short-term employee benefits such as wages and salaries are recognized as a part of current trade and other payables in the statement of financial position.
The Company’s obligations for annual leave are presented as part of provisions in the Statement of Financial Position. The obligations are presented as current liabilities in the Statement of Financial Position if the Company does not have an unconditional right to defer settlement for at least twelve months after the reporting period regardless of when the actual settlement is expected to occur.
Other long-term obligations
The liability for long service leave is not expected to be settled wholly within twelve months after the end of the period in which the employees render the related service. The liability is therefore recognized in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period of government bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognized in profit or loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
| (k) Provisions |
Provisions are recognized when the Company has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that recovery will be received and the amount of the receivable can be measured reliably.
PRANA BIOTECHNOLOGY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
| (l) Cash and Cash Equivalents |
Cash and cash equivalents includes cash on hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.
| (m) Revenue from ordinary activities |
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. Revenue is made up of interest income which is recognized on a time proportion basis using the effective interest method.
| (n) Grants |
Grants are recognized when there is reasonable assurance that the grant will be received and all grant conditions will be complied with.
When the grant relates to an expense item, it is recognized as income over the periods necessary to match the grant on a systematic basis to the costs that it is expected to compensate.
| (o) Goods and Services Tax (“GST”) |
Revenues, expenses and assets are recognized net of the amount of GST, except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances the GST is recognized as part of the cost of acquisition of the asset or as part of an item of expense. Receivables and payables in the Balance Sheet are shown inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.
Cash flows are included in the Cash Flow Statement on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.
| (p) Trade and Other Payables |
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
| (q) Borrowings |
Loans and borrowings are initially recognized at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortized cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the loans or borrowings are classified as non-current.
| (r) Share-Based Payments |
Equity-settled share-based payments granted after November 7, 2002 that were unvested as of January 1, 2005 are measured at fair value. The measurement date is determined for share-based payments issued to directors, employees and consultants as follows:
Directors
The issuance of share-based payments to directors is subject to approval by shareholders as per ASX Listing Rule 10.11. The measurement date for share-based payments issued to directors is the grant date, being the date at which the share-based payments are approved by shareholders.
Employees
The issuance of share-based payments to employees may be subject to shareholder approval per ASX Listing Rule 7.1 which prohibits the issuance of more than 15% of the Company’s shares in a 12 month period without shareholder approval. The measurement date for share-based payments issued to employees is the grant date, being the date at which a shared understanding of the terms and conditions of the arrangement is reached. However, if an issuance to an employee is subject to shareholder approval because it exceeds the 15% threshold per ASX Listing Rule 7.1, then the measurement date of these share-based payments is the date at which the share-based payments are approved by shareholders.
PRANA BIOTECHNOLOGY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
Consultants
The issuance of share-based payments to consultants may be subject to shareholder approval per ASX Listing Rule 7.1 which prohibits the issuance of more than 15% of the Company’s shares in a 12 month period without shareholder approval. The measurement date for share-based payments issued to consultants who provide services considered to be similar to employees is deemed to be the date at which a shared understanding of the terms and conditions of the arrangement is reached. The measurement date for share-based payments issued to consultants who provide services considered to be differentiated from those provided by employees is deemed to be the date at which the entity obtains the goods or the counterparty renders the service. If a service period applies and the work is continually provided over the service period, and if the share price of the Company does not change significantly during the service period, then the average share price, volatility and risk-free rate over the service period are used in calculating the value of the share-based payments issued. However, if the underlying share price of the Company does change significantly during the service period, then the value of share-based payments are calculated at each individual date that goods and services are provided, using the actual valuation inputs at that date. Shares issued to consultants for services are recorded as non-cash compensation and are recognized at either the fair value of the services rendered, or if this cannot be reasonably estimated, the fair value of the underlying equity instruments issued.
Equity-based compensation benefits are provided to directors, employees and consultants under the 2004 ASX Plan (the “2004 ASX Plan”) and the 2004 American Depository Share (ADS) Option Plan (the “2004 ADS Plan”). Information relating to this plan is set out in Note 18.
The fair value of options granted under the 2004 ASX Plan is recognized as an expense with a corresponding increase in equity. The fair value is measured at grant date and recognized over the period during which the recipients become unconditionally entitled to the options.
The fair value at grant date is independently determined using a Black-Scholes (for options without market condition) and Barrier Pricing (for options with market conditions) model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioral considerations.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest.
| (s) Loss Per Share |
Basic loss per share is determined by dividing the net loss after income tax expense by the weighted average number of ordinary shares outstanding during the financial period. For all periods presented, diluted loss per share is equivalent to basic loss per share as the potentially dilutive securities are excluded from the computation of diluted loss per share because the effect is anti-dilutive.
| (t) Share Capital |
Ordinary share capital is recognized as the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognized directly in equity as a reduction of the share proceeds received.
| (u) Trade and Other Receivables |
Trade and other receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest rate method less provision for impairment.
| (v) Comparative Figures |
Comparative figures, are, where appropriate, reclassified to be comparable with figures presented in the current financial year.
| Impact of Re-classification of Expenses on Comparative Amounts The re-classification of expenses to function in Statement of Profit or Loss and Other Comprehensive Income has recently been completed to conform to standard industry practice and IFRS. The impact of the reclassification is shown in the table below. Prior periods’ comparatives have been revised to align to disclosure in the Financial Statements as shown below. This change in accounting policy has no impact on the total comprehensive loss for the prior periods, or the Statement of Financial Position and cash flow statement. F - 14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted) 1. BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
F - 15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted) 1. BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (w) Parent Information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The financial information for the parent entity, Prana Biotechnology Limited, has been prepared on the same basis as the consolidated statements, except as set out below:
Investments in Subsidiaries
Investments in subsidiaries are accounted for at cost in the financial statements of Prana Biotechnology Limited.
| (x) New Accounting Standards And Interpretations |
New and amended Accounting Standards and Interpretations issued and effective
There are no IFRS or IFRIC interpretations that are effective for the first time for the financial year beginning on or after June 30, 20152016 that would be expected to have a material impact on the Company.
Accounting Standards issued by not yet effective
Certain new accounting standards and interpretations have been published that are not mandatory for June 30, 20152016 reporting periods. Initial application of the following Standards and Interpretations are not expected to affect any of the amounts recognized in the financial report, but may change the disclosures presently made in relation to the Company.
| Pronouncement | Title (Issue date) | Effective date | |
| IFRS 15 | Revenue from contracts with customers | Annual periods beginning on or after January 1, 2017 Earlier application is permitted. | The Company is currently not generating revenue from contracts and thus the impact is expected to be nil. |
| IFRS 9 | Financial instruments | Annual periods beginning on or after January 1, 2018 Earlier application is permitted. | Management is in the process of determining the impact of this standard for subsequent reporting periods. |
| IFRS 16 | Leases | Annual periods beginning on or after January 1, 2019 Earlier application is permitted. | Management is in the process of determining the impact of this standard for subsequent reporting periods |
| IFRS 2 (Amendments) | Classification and Measurement of Share-based Payment Transactions | Annual periods beginning on or after January 1, 2018 Earlier application is permitted. | Management is in the process of determining the impact of this standard for subsequent reporting periods. |
There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.
PRANA BIOTECHNOLOGY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
| Years Ended June 30, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
2. REVENUE AND OTHER INCOME FROM CONTINUING OPERATIONS | ||||||||||||
| Other revenue | ||||||||||||
| Interest | 142,657 | 176,842 | 363,775 | |||||||||
| Total other revenue | 142,657 | 176,842 | 363,775 | |||||||||
| Other income | ||||||||||||
| R&D Tax Incentive | 4,753,697 | 6,088,897 | 7,802,947 | |||||||||
| Michael J Fox Foundation Grant | - | - | 39,949 | |||||||||
| Other Grants | - | 228,541 | 2,500 | |||||||||
| Total other income | 4,753,697 | 6,317,438 | 7,845,396 | |||||||||
| Total revenue and other income from continuing operations | 4,896,354 | 6,494,280 | 8,209,171 | |||||||||
| Years Ended June 30, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
3. EXPENSES FROM ORDINARY ACTIVITIES | ||||||||||||
| Research and Development Expenses (1) | ||||||||||||
| Employee expenses | 1,821,717 | 1,866,915 | 1,827,934 | |||||||||
| Other research and development expenses | 7,763,654 | 10,431,252 | 13,080,164 | |||||||||
| General and Administration Expenses | ||||||||||||
| Depreciation on fixed assets | 22,810 | 31,587 | 22,384 | |||||||||
| Employee expenses (non R&D related) | 992,751 | 937,348 | 807,502 | |||||||||
| 750,158 | 1,227,731 | 1,212,240 | ||||||||||
| Audit, internal control and other assurance expenses | 204,776 | 499,911 | 420,519 | |||||||||
| Corporate compliance expenses | 358,096 | 421,958 | 493,362 | |||||||||
| Office rental | 195,561 | 161,175 | 163,583 | |||||||||
| Other administrative and office expenses | 1,086,400 | 1,226,412 | 1,805,821 | |||||||||
| Other gains and losses | ||||||||||||
| Foreign exchange (gain)/loss | (857,247 | ) | (4,721,449 | ) | 746,593 | |||||||
(1) Research and development expenses consist of expenses paid for contracted research and development activities conducted by third parties on behalf of the Company.
F - 17
Years Ended June 30, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
2.REVENUE AND OTHER INCOME FROM CONTINUING OPERATIONS | ||||||||||||
| Other revenue | ||||||||||||
| Interest | 176,842 | 363,775 | 150,867 | |||||||||
| Total other revenue | 176,842 | 363,775 | 150,867 | |||||||||
| Other income | ||||||||||||
| R&D Tax Incentive | 6,088,897 | 7,802,947 | 4,408,761 | |||||||||
| Michael J Fox Foundation Grant | - | 39,949 | 73,765 | |||||||||
| Other Grants | 228,541 | 2,500 | 6,000 | |||||||||
| Total other income | 6,317,438 | 7,845,396 | 4,488,526 | |||||||||
| Total revenue and other income from continuing operations | 6,494,280 | 8,209,171 | 4,639,393 | |||||||||
PRANA BIOTECHNOLOGY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
Years Ended June 30, | |||||||||||||
| Notes | 2015 | 2014 | 2013 | ||||||||||
3.EXPENSES FROM ORDINARY ACTIVITIES | |||||||||||||
| Research and development expenses | 3(a) and 3(b) | 12,298,167 | 14,908,098 | 8,203,822 | |||||||||
| Corporate personnel expenses | |||||||||||||
| Employee expenses | 3(b) | 885,893 | 751,004 | 649,430 | |||||||||
| Equity based payments to employees | 3(b) | 170,397 | 33,824 | 18,252 | |||||||||
| Consultant and director expenses | 930,393 | 773,601 | 761,584 | ||||||||||
| Equity-based payments to consultants and directors | 297,338 | 438,639 | 800,833 | ||||||||||
| Defined contribution superannuation expenses | 3(b) | 60,316 | 62,574 | 68,327 | |||||||||
| Total corporate personnel expense* | 2,344,337 | 2,059,642 | 2,298,426 | ||||||||||
| Intellectual property expenses | |||||||||||||
| Overseas | 206,748 | 195,092 | 145,233 | ||||||||||
| Local | 50,551 | 281,987 | 149,661 | ||||||||||
| Total intellectual property expense | 257,299 | 477,079 | 294,894 | ||||||||||
| Depreciation of non-current assets | |||||||||||||
| Laboratory equipment | 853 | 44 | 2,831 | ||||||||||
| Computer equipment | 27,797 | 19,605 | 17,569 | ||||||||||
| Furniture and fittings | 2,937 | 2,735 | 2,730 | ||||||||||
| Total depreciation expense | 31,587 | 22,384 | 23,130 | ||||||||||
| Other expenses | |||||||||||||
| Corporate compliance | 421,958 | 487,632 | 251,552 | ||||||||||
| Administrative and office expenses | 865,241 | 1,365,151 | 634,552 | ||||||||||
| Computer expenses | 30,023 | 22,316 | 21,609 | ||||||||||
| Insurance | 147,679 | 103,497 | 84,679 | ||||||||||
| Office rental under operating lease | 161,175 | 163,583 | 177,015 | ||||||||||
| Interest Expense - ADDF | - | 29,978 | 17,676 | ||||||||||
| Total other expenses | 1,626,076 | 2,172,157 | 1,187,083 | ||||||||||
| Auditor and accounting expenses | 416,271 | 342,609 | 166,086 | ||||||||||
| Travel expenses | 125,532 | 421,013 | 131,710 | ||||||||||
| Public relations and marketing expenses | 87,851 | 358,597 | 136,186 | ||||||||||
| Foreign exchange (gain) loss | (4,721,449 | ) | 746,593 | (140,761 | ) | ||||||||
| (Gain) loss on fair valuation of financial liabilities | (86,322 | ) | 30,238 | 126,059 | |||||||||
| Total expenses | 12,379,349 | 21,538,410 | 12,426,635 | ||||||||||
*Corporate personnel expenses excludes salaries and fees paid to employees and consultants involved in research and development activities. | |||||||||||||
Years Ended June 30, | |||||||||||||
| (a) Research and development expenses (1) and (2) | 2015 | 2014 | 2013 | ||||||||||
| Personnel expenses related to research and development | 1,866,915 | 1,827,934 | 777,272 | ||||||||||
| Research and development expenses | 10,431,252 | 13,080,164 | 7,426,550 | ||||||||||
| Total research and development expenses | 12,298,167 | 14,908,098 | 8,203,822 | ||||||||||
Years Ended June 30, | ||||||||||||
| (b) Employee benefits expenses | 2015 | 2014 | 2013 | |||||||||
| Employee expenses | 2,668,199 | 1,948,607 | 1,413,368 | |||||||||
| Equity payments to employees | 170,397 | 33,824 | 382,678 | |||||||||
| Defined contribution superannuation expenses | 185,408 | 121,165 | 90,217 | |||||||||
| Total employee benefits expenses | 3,024,004 | 2,103,596 | 1,886,263 | |||||||||
Years Ended June 30, | Years Ended June 30, | |||||||||||||||||||||||
2015 | 2014 | 2013 | 2016 | 2015 | 2014 | |||||||||||||||||||
4.INCOME TAX | ||||||||||||||||||||||||
4. INCOME TAX | ||||||||||||||||||||||||
(a) The prima facie tax on net (loss) before tax is reconciled to the income tax is as follows: | ||||||||||||||||||||||||
| Prima facie tax on net (loss) before income tax at 30% (2015, 2014 & 2013: 30%) | (1,765,521 | ) | (3,998,772 | ) | (2,336,173 | ) | ||||||||||||||||||
(a) Income tax expense: | ||||||||||||||||||||||||
| Current tax | - | - | - | |||||||||||||||||||||
| Adjustment for current tax of prior periods | - | - | - | |||||||||||||||||||||
| Deferred tax | - | - | - | |||||||||||||||||||||
(b) Numerical reconciliation of income tax expense to prima facie tax payable: | ||||||||||||||||||||||||
| Prima facie tax on net loss before income tax at 30% (2016, 2015 & 2014: 30%) | (2,318,865 | ) | (1,765,431 | ) | (3,998,686 | ) | ||||||||||||||||||
| Effect of lower tax rates of tax on overseas income | (41 | ) | (43 | ) | (499 | ) | (11,111 | ) | (41 | ) | (43 | ) | ||||||||||||
| Add tax effect of: | ||||||||||||||||||||||||
| (Over)/Under provision of income tax in previous year relating to a correction of estimates (1) | 3,071,631 | 2,214,342 | 1,408,791 | |||||||||||||||||||||
| (Over)/Under provision of income tax in previous year relating to a revision of estimates | 4,582,839 | 3,071,631 | 2,214,342 | |||||||||||||||||||||
| Equity issued for nil consideration | 140,651 | 1,269,857 | 274,642 | - | 140,651 | 1,269,857 | ||||||||||||||||||
| Research and development tax incentive refund | (2,153,737 | ) | (7,180,486 | ) | (1,039,919 | ) | ||||||||||||||||||
| Research and development expenditure (net of tax incentive) | 1,743,004 | (2,153,737 | ) | (7,180,486 | ) | |||||||||||||||||||
| Gain/(loss) on fair value of financial liabilities | 25,897 | (30,238 | ) | (9,381 | ) | - | 25,897 | (30,238 | ) | |||||||||||||||
| Other | 1,549 | 5,761 | 1,766 | 54,222 | 1,549 | 5,761 | ||||||||||||||||||
| Deferred tax asset not recognized | 679,571 | 7,719,579 | 1,700,772 | (4,050,088 | ) | 679,571 | 7,719,579 | |||||||||||||||||
| Income tax expense attributable to loss before income tax | - | - | - | - | - | - | ||||||||||||||||||
(b)Potential deferred tax asset at June 30, 2015, 2014 and 2013 in respect of: tax losses not brought to account is (2): | 38,463,614 | 39,143,186 | 35,566,969 | |||||||||||||||||||||
(c) Potential deferred tax asset at June 30, 2016, 2015 and 2014 in respect of: tax losses not brought to account is (1): | 35,687,127 | 38,463,614 | 39,143,186 | |||||||||||||||||||||
Temporary differences | 3,934,146 | (37,806 | ) | (338,714 | ) | (1,655,223 | ) | 3,934,146 | (37,806 | ) | ||||||||||||||
(1) This is the result of the difference between the accounting estimate included in the prior year’s tax note, as disclosed in the annual report on Form 20-F for the year ended June 30, 2014 and the tax return lodged with the Australian Tax Office after the filing of the Form 20-F for such period.
| Years Ended June 30, | ||||||||
| 2016 | 2015 | |||||||
5. TRADE AND OTHER RECEIVABLES | ||||||||
| Grant receivable | 55,699 | |||||||
| Accrued interest income | 25,283 | 4,255 | ||||||
| R&D tax incentive receivable | 4,753,646 | 6,461,212 | ||||||
| Goods and services tax receivable | 7,836 | (12 | ) | |||||
| Total Trade and Other Receivables | 4,786,765 | 6,521,154 | ||||||
| Years Ended June 30, | ||||||||
| 2015 | 2014 | |||||||
5.TRADE AND OTHER RECEIVABLES | ||||||||
| Grant receivable | 55,699 | - | ||||||
| Accrued interest income | 4,255 | 43,730 | ||||||
| R&D tax incentive receivable | 6,461,212 | 7,180,486 | ||||||
| Goods and services tax receivable | (12 | ) | 61,193 | |||||
| Total Trade and Other Receivables | 6,521,154 | 7,285,409 | ||||||
| Years Ended June 30, | ||||||||
| 2016 | 2015 | |||||||
6. OTHER ASSETS | ||||||||
Current | ||||||||
| Prepayments | 276,504 | 159,963 | ||||||
| Payroll term deposit | - | 152,603 | ||||||
| Other receivables | - | 899 | ||||||
| Total | 276,504 | 313,465 | ||||||
Non-current | ||||||||
| Rental term deposit | 43,988 | 45,462 | ||||||
| Total | 43,988 | 45,462 | ||||||
PRANA BIOTECHNOLOGY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
| Years Ended June 30, | ||||||||
| 2015 | 2014 | |||||||
6.OTHER ASSETS | ||||||||
| Current | ||||||||
| Prepayments | 159,963 | 62,771 | ||||||
| Payroll term deposit | 152,603 | - | ||||||
| Other receivables | 899 | 34,112 | ||||||
| Total | 313,465 | 96,883 | ||||||
| Non-current | ||||||||
| Rental term deposit | 45,462 | 43,988 | ||||||
| Total | 45,462 | 43,988 | ||||||
| Years Ended June 30, | ||||||||||||
| Notes | 2016 | 2015 | ||||||||||
7. PROPERTY AND EQUIPMENT | ||||||||||||
| Gross carrying amount | ||||||||||||
| Balance at beginning of year | 367,069 | 392,795 | ||||||||||
| Additions | 2,799 | 28,757 | ||||||||||
| Disposals | (16,102 | ) | (54,483 | ) | ||||||||
| Balance at end of year | 353,766 | 367,069 | ||||||||||
| Accumulated depreciation | ||||||||||||
| Balance at beginning of year | (322,342 | ) | (345,238 | ) | ||||||||
| Disposals | 15,611 | 54,483 | ||||||||||
| Depreciation expense | 3 | (22,810 | ) | (31,587 | ) | |||||||
| Balance at end of year | (329,541 | ) | (322,342 | ) | ||||||||
| Net book value at end of year | 24,225 | 44,727 | ||||||||||
| Years Ended June 30, | |||||||||||
| Notes | 2015 | 2014 | |||||||||
7.PROPERTY AND EQUIPMENT | |||||||||||
| Gross carrying amount | |||||||||||
| Balance at beginning of year | 392,795 | 369,747 | |||||||||
| Additions | 28,757 | 23,048 | |||||||||
| Disposals | (54,483 | ) | - | ||||||||
| Balance at end of year | 367,069 | 392,795 | |||||||||
| Accumulated depreciation | |||||||||||
| Balance at beginning of year | (345,238 | ) | (322,854 | ) | |||||||
| Disposals | 54,483 | - | |||||||||
| Depreciation expense | 3 | (31,587 | ) | (22,384 | ) | ||||||
| Balance at end of year | (322,342 | ) | (345,238 | ) | |||||||
| Net book value at end of year | 44,727 | 47,557 | |||||||||
Aggregate depreciation allocated during the year is recognized as an expense and disclosed in Note 3.
| Years Ended June 30, | Years Ended June 30, | |||||||||||||||
| 2015 | 2014 | 2016 | 2015 | |||||||||||||
| Laboratory equipment, at cost | 112,631 | 116,007 | 112,631 | 112,631 | ||||||||||||
| Less accumulated depreciation | (110,963 | ) | (113,486 | ) | (111,839 | ) | (110,964 | ) | ||||||||
| Total laboratory equipment | 1,668 | 2,521 | 792 | 1,667 | ||||||||||||
| Computer equipment, at cost | 140,382 | 185,641 | 127,078 | 140,382 | ||||||||||||
| Less accumulated depreciation | (103,771 | ) | (149,190 | ) | (107,583 | ) | (103,771 | ) | ||||||||
| Total computer equipment | 36,611 | 36,451 | 19,495 | 36,611 | ||||||||||||
| Furniture and fittings, at cost | 38,398 | 37,598 | 38,398 | 38,398 | ||||||||||||
| Less accumulated depreciation | (31,949 | ) | (29,012 | ) | (34,460 | ) | (31,949 | ) | ||||||||
| Total furniture and fittings | 6,449 | 8,586 | 3,938 | 6,449 | ||||||||||||
| Leasehold improvements, at cost | 75,659 | 75,659 | 75,659 | 75,659 | ||||||||||||
| Less accumulated depreciation | (75,659 | ) | (75,659 | ) | (75,659 | ) | (75,659 | ) | ||||||||
| Total leasehold improvements | - | - | - | - | ||||||||||||
| Total | 44,727 | 47,557 | 24,225 | 44,727 | ||||||||||||
PRANA BIOTECHNOLOGY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
| Years Ended June 30, | ||||||||
| 2016 | 2015 | |||||||
8. TRADE AND OTHER PAYABLES | ||||||||
| Trade creditors | 311,719 | 362,493 | ||||||
| Accrued research and development expenses | 1,178,656 | 1,299,492 | ||||||
| Accrued intellectual property expenses | 10,910 | - | ||||||
| Accrued corporate personnel expenses | 7,421 | 535 | ||||||
| Accrued audit and accounting fees | 143,776 | 415,911 | ||||||
| Accrued travel expenses | 1,650 | - | ||||||
| Other accrued expenses | 94,434 | 73,584 | ||||||
| Total | 1,748,566 | 2,152,015 | ||||||
| Years Ended June 30, | ||||||||
| 2015 | 2014 | |||||||
8.TRADE AND OTHER PAYABLES | ||||||||
| Trade creditors | 362,493 | 651,152 | ||||||
| Accrued research and development expenses | 1,299,492 | 2,222,881 | ||||||
| Accrued intellectual property expenses | - | 60,380 | ||||||
| Accrued corporate personnel expenses | 535 | 361 | ||||||
| Accrued audit and accounting fees | 415,911 | 336,866 | ||||||
| Accrued travel expenses | - | 10,609 | ||||||
| Accrued marketing expenses | - | 22,645 | ||||||
| Other accrued expenses | 73,584 | 53,464 | ||||||
| Total | 2,152,015 | 3,358,358 | ||||||
| Years Ended June 30, | ||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
9.FINANCIAL LIABILITIES | No. | No. | A$ | A$ | ||||||||||||
| Current | ||||||||||||||||
| Warrants over ordinary shares (a) | 612,397 | 612,397 | 12,076 | 98,398 | ||||||||||||
| Total | 12,076 | 98,398 | ||||||||||||||
| Years Ended June 30, | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
9. FINANCIAL LIABILITIES | No. | No. | A$ | A$ | ||||||||||||
Current | ||||||||||||||||
| Warrants over ordinary shares (a) | - | 612,397 | - | 12,076 | ||||||||||||
| Total | - | 12,076 | ||||||||||||||
(a) Warrants over ordinary shares
As per the agreement with the ADDF, the Company issued warrants to purchase 612,397 ordinary shares to the ADDF representing 30% of the value of the first tranche of the US$350,000 grant received during the financial year end June 30, 2011. The warrants arewere convertible to ordinary shares on or before February 25, 2016, when they expired without being exercised, at an exercise price of A$ 0.17 per warrant.
Under IAS 32 paragraph 11, the warrants associated with this transaction are required to be classified as a financial liability, as opposed to issued capital. On initial recognition the warrants are measured at fair value on the Statement of Financial Position. At each reporting date the financial liability representing the warrants are required to be re-valued to fair value with the movement in the fair value recorded in the Statement of Profit or Loss.Loss and Other Comprehensive Income.
PRANA BIOTECHNOLOGY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
| Years Ended June 30, | Years Ended June 30, | ||||||||||||||||||
| Notes | 2015 | 2014 | 2016 | 2015 | |||||||||||||||
10.PROVISIONS | |||||||||||||||||||
10. PROVISIONS | |||||||||||||||||||
| Current | |||||||||||||||||||
| Annual leave (1) | 261,823 | 217,646 | 288,122 | 261,823 | |||||||||||||||
| Long service leave (1)(2) | 21 | 292,792 | 277,138 | 320,649 | 292,792 | ||||||||||||||
| Total | 554,615 | 494,784 | 608,771 | 554,615 | |||||||||||||||
| Non-Current | |||||||||||||||||||
| Long service leave (2) | 21 | 2,412 | 3,028 | 470 | 2,412 | ||||||||||||||
A provision has been recognized for employee entitlements relating to long service leave. In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based on historical data. The measurement and recognition criteria relating to employee benefits have been included in Note 1 to this report.
| (1) Movements in provisions |
Movements in each class of provision during the financial year are set out below: |
| Years Ended June 30, | Years Ended June 30, | |||||||||||||||
| 2015 | 2014 | 2016 | 2015 | |||||||||||||
| Annual leave | ||||||||||||||||
| Carrying amount at start of year | 217,646 | 179,609 | 261,823 | 217,646 | ||||||||||||
| Charged/(credited) to profit or loss | ||||||||||||||||
| -additional provisions recognized | 199,667 | 152,041 | 165,384 | 199,667 | ||||||||||||
| -unused amounts reversed | - | - | - | - | ||||||||||||
| Amounts used during the year | (155,490 | ) | (114,004 | ) | (139,085 | ) | (155,490 | ) | ||||||||
| Carrying amount at end of year | 261,823 | 217,646 | 288,122 | 261,823 | ||||||||||||
| Long service leave | ||||||||||||||||
| Carrying amount at start of year | 280,166 | 239,700 | 295,204 | 280,166 | ||||||||||||
| Charged/(credited) to profit or loss | ||||||||||||||||
| -additional provisions recognized | 15,038 | 40,466 | 25,915 | 15,038 | ||||||||||||
| -unused amounts reversed | - | - | - | - | ||||||||||||
| Amounts used during the year | - | - | - | - | ||||||||||||
| Carrying amount at end of year | 295,204 | 280,166 | 321,119 | 295,204 | ||||||||||||
| TOTAL | 557,027 | 497,812 | 609,241 | 557,027 | ||||||||||||
(2) Amounts not expected to be settled within the next 12 months
The current provision for long service leave includes all unconditional entitlements where employees have completed the required period of service and also those where employees are entitled to pro-rata payments in certain circumstances.
The entire amount is presented as current, since the Company does not have an unconditional right to defer settlement. However, based on past experience, the Company does not expect all employees to take the full amount of accrued long service leave or require payment within the next 12 months. The following amounts reflect leave that is not expected to be taken or paid within the next 12 months.
| Years Ended June 30, | ||||||||
| 2015 | 2014 | |||||||
| Long service leave obligation expected to be settled after 12 months | 292,792 | 277,138 | ||||||
| Years Ended June 30, | ||||||||
| 2016 | 2015 | |||||||
| Long service leave obligation expected to be settled after 12 months | 320,649 | 292,792 | ||||||
| 11. COMMITMENTS AND CONTINGENCIES |
There are no contingent assets or liabilities at the date of this report. The Company is not involved in any legal or arbitration proceedings and, so far as management is aware, no such proceedings are pending or threatened against the Company.
In respect of expenditure commitments, refer to Note 17.16.
PRANA BIOTECHNOLOGY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
| Years Ended June 30, | |||||||||||||
| Notes | 2015 | 2014 | 2013 | ||||||||||
| 13. ISSUED CAPITAL | |||||||||||||
| (a) Issued Capital | |||||||||||||
| 533,891,470 (2014: 488,646,960) fully paid ordinary shares | 13(b) | 144,194,070 | 137,307,771 | 98,677,467 | |||||||||
| Nil (2014: Nil) options for fully paid ordinary shares | 13(c) | 2,701,644 | 2,701,644 | 2,701,644 | |||||||||
| 146,895,714 | 140,009,415 | 101,379,111 | |||||||||||
| Years Ended June 30, | ||||||||||||||||
| Notes | 2016 | 2015 | 2014 | |||||||||||||
| 12. ISSUED CAPITAL | ||||||||||||||||
| (a) Issued Capital | ||||||||||||||||
| 533,891,470 (2015: 533,891,470) fully paid ordinary shares | 12(b) | 144,177,570 | 144,194,070 | 137,307,771 | ||||||||||||
| Nil (2015: Nil) options for fully paid ordinary shares | 12(c) | 2,701,644 | 2,701,644 | 2,701,644 | ||||||||||||
| 146,879,214 | 146,895,714 | 140,009,415 | ||||||||||||||
| (b) Movements in Issued Shares |
| June 30, | ||||||||||||||||||||||||
| 2016 | 2015 | 2014 | ||||||||||||||||||||||
| No. | A$ | No. | A$ | No. | A$ | |||||||||||||||||||
| Beginning of the year | 533,891,470 | 144,194,070 | 488,646,960 | 137,307,771 | 381,610,426 | 98,677,467 | ||||||||||||||||||
| Movement during the year | - | (16,500 | ) | 45,244,510 | 6,886,299 | 107,036,534 | 38,630,304 | |||||||||||||||||
| End of the year | 533,891,470 | 144,177,570 | 533,891,470 | 144,194,070 | 488,646,960 | 137,307,771 | ||||||||||||||||||
| June 30, | ||||||||||||||||||||||||
| 2015 | 2014 | 2013 | ||||||||||||||||||||||
No. | No. | A$ | No. | No. | A$ | |||||||||||||||||||
| Beginning of the year | 488,646,960 | 137,307,771 | 381,610,426 | 98,677,467 | 297,980,818 | 83,432,433 | ||||||||||||||||||
| Movement during the year | 45,244,510 | 6,886,299 | 107,036,534 | 38,630,304 | 83,629,608 | 15,245,034 | ||||||||||||||||||
| End of the year | 533,891,470 | 144,194,070 | 488,646,960 | 137,307,771 | 381,610,426 | 98,677,467 | ||||||||||||||||||
Details of share issuances are as follows:
| Date | Details | Notes | Number | Issue Price | A$ | |||||||||||
| Year ended June 30, 2013 | 83,629,608 | 15,245,034 | ||||||||||||||
| August 2, 2013 | Shares to investors as part of at-the-market facility | 1,469,780 | 0.40 | 588,216 | ||||||||||||
| August 5, 2013 | Shares to investors as part of at-the-market facility | 465,980 | 0.38 | 176,592 | ||||||||||||
| August 6, 2013 | Shares to investors as part of at-the-market facility | 3,601,550 | 0.39 | 1,413,617 | ||||||||||||
| August 7, 2013 | Shares to investors as part of at-the-market facility | 2,517,590 | 0.38 | 956,832 | ||||||||||||
| August 30, 2013 | Exercise of options – consultants | 150,000 | 0.35 | 52,140 | ||||||||||||
| August 30, 2013 | Exercise of options – consultants | 100,000 | 0.12 | 11,700 | ||||||||||||
| August 30, 2013 | Exercise of options – consultants | 86,625 | 0.14 | 12,266 | ||||||||||||
| August 30, 2013 | Exercise of options – consultants | 100,000 | 0.12 | 11,700 | ||||||||||||
| August 30, 2013 | Exercise of options – investors | 10,000,000 | 0.39 | 3,857,143 | ||||||||||||
| August 30, 2013 | Shares to investors as part of at-the-market facility | 1,167,610 | 0.57 | 662,809 | ||||||||||||
| September 9, 2013 | Shares to investors as part of at-the-market facility | 2,160,950 | 0.58 | 1,261,265 | ||||||||||||
| September 10, 2013 | Shares to investors as part of at-the-market facility | 1,395,610 | 0.56 | 786,494 | ||||||||||||
| September 11, 2013 | Shares to investors as part of at-the-market facility | 523,120 | 0.55 | 288,606 | ||||||||||||
| September 12, 2013 | Shares to investors as part of at-the-market facility | 2,056,760 | 0.52 | 1,071,557 | ||||||||||||
| October 3, 2013 | Exercise of options – employees | 97,418 | 0.18 | 17,577 | ||||||||||||
| October 3, 2013 | Exercise of options – employees | 625,000 | 0.45 | 282,828 | ||||||||||||
| October 25, 2013 | Exercise of options – consultants | 60,000 | 0.14 | 8,496 | ||||||||||||
| October 25, 2013 | Exercise of options – employees | 217,478 | 0.14 | 30,795 | ||||||||||||
| November 4, 2013 | Shares to investors as part of at-the-market facility | 6,745,750 | 0.48 | 3,209,209 | ||||||||||||
| November 5, 2013 | Shares to investors as part of at-the-market facility | 143,700 | 0.48 | 69,054 | ||||||||||||
| November 4, 2013 | Exercise of options – employees | 722,419 | 0.42 | 300,405 | ||||||||||||
| November 6, 2013 | Shares to investors as part of at-the-market facility | 8,380 | 0.49 | 4,070 | ||||||||||||
| November 25, 2013 | Exercise of options – consultants | 200,000 | 0.40 | 80,786 | ||||||||||||
| Date | Details | Notes | Number | Issue Price | A$ | |||||||||||
| Year ended June 30, 2012 | 22,694,035 | 3,793,258 | ||||||||||||||
| August 24, 2012 | Shares to investors as part of at-the-market facility | 1,364,190 | 0.18 | 239,238 | ||||||||||||
| August 27, 2012 | Shares to investors as part of at-the-market facility | 1,656,440 | 0.17 | 288,162 | ||||||||||||
| August 28, 2012 | Shares to investors as part of at-the-market facility | 52,000 | 0.17 | 8,970 | ||||||||||||
| August 29, 2012 | Shares to investors as part of at-the-market facility | 164,770 | 0.17 | 28,252 | ||||||||||||
| August 31, 2012 | Shares to investors as part of at-the-market facility | 347,000 | 0.17 | 58,771 | ||||||||||||
| September 3, 2012 | Shares to investors as part of at-the-market facility | 816,330 | 0.17 | 138,954 | ||||||||||||
| September 4, 2012 | Shares to investors as part of at-the-market facility | 169,060 | 0.17 | 27,909 | ||||||||||||
| September 14, 2012 | Shares to investors as part of at-the-market facility | 1,249,450 | 0.19 | 242,432 | ||||||||||||
| September 17, 2012 | Shares to investors as part of at-the-market facility | 2,507,610 | 0.20 | 507,067 | ||||||||||||
| September 18, 2012 | Shares to investors as part of at-the-market facility | 354,500 | 0.20 | 70,973 | ||||||||||||
| September 25, 2012 | Shares to investors as part of at-the-market facility | 1,196,500 | 0.25 | 296,530 | ||||||||||||
| September 26, 2012 | Shares to investors as part of at-the-market facility | 189,210 | 0.24 | 46,289 | ||||||||||||
| September 27, 2012 | Shares to investors as part of at-the-market facility | 121,350 | 0.22 | 27,055 | ||||||||||||
| September 28, 2012 | Shares to investors as part of at-the-market facility | 20,700 | 0.23 | 4,665 | ||||||||||||
| October 8, 2012 | Shares to investors as part of private placement | 32,500,000 | 0.18 | 6,012,500 | ||||||||||||
| March 1, 2013 | Non cash share issue in consideration for services provided by consultants | (i) | 110,000 | 0.20 | 22,000 | |||||||||||
| March 7, 2013 | Shares to investors as part of at-the-market facility | 1,843,240 | 0.27 | 502,879 | ||||||||||||
| March 7, 2013 | Shares to investors as part of at-the-market facility | 1,499,870 | 0.27 | 407,541 | ||||||||||||
PRANA BIOTECHNOLOGY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
| April 8, 2013 | Shares to investors as part of private placement | 25,641,030 | 0.20 | 5,000,000 | ||||||||||||
| April 8, 2013 | Shares to investors as part of at-the-market facility | 1,045,150 | 0.21 | 218,981 | ||||||||||||
| April 8, 2013 | Shares to investors as part of at-the-market facility | 244,740 | 0.22 | 53,110 | ||||||||||||
| April 8, 2013 | Shares to investors as part of at-the-market facility | 165,980 | 0.22 | 36,284 | ||||||||||||
| May 3, 2013 | Share Purchase Plan | 10,370,488 | 0.19 | 2,022,245 | ||||||||||||
| Security issuance costs | (1,015,775 | ) | ||||||||||||||
| Year ended June 30, 2013 | 83,629,608 | 15,245,034 | ||||||||||||||
| August 2, 2013 | Shares to investors as part of at-the-market facility | 1,469,780 | 0.40 | 588,216 | ||||||||||||
| August 5, 2013 | Shares to investors as part of at-the-market facility | 465,980 | 0.38 | 176,592 | ||||||||||||
| August 6, 2013 | Shares to investors as part of at-the-market facility | 3,601,550 | 0.39 | 1,413,617 | ||||||||||||
| August 7, 2013 | Shares to investors as part of at-the-market facility | 2,517,590 | 0.38 | 956,832 | ||||||||||||
| August 30, 2013 | Exercise of options – consultants | 150,000 | 0.35 | 52,140 | ||||||||||||
| August 30, 2013 | Exercise of options – consultants | 100,000 | 0.12 | 11,700 | ||||||||||||
| August 30, 2013 | Exercise of options – consultants | 86,625 | 0.14 | 12,266 | ||||||||||||
| August 30, 2013 | Exercise of options – consultants | 100,000 | 0.12 | 11,700 | ||||||||||||
| August 30, 2013 | Exercise of options – investors | 10,000,000 | 0.39 | 3,857,143 | ||||||||||||
| August 30, 2013 | Shares to investors as part of at-the-market facility | 1,167,610 | 0.57 | 662,809 | ||||||||||||
| September 9, 2013 | Shares to investors as part of at-the-market facility | 2,160,950 | 0.58 | 1,261,265 | ||||||||||||
| September 10, 2013 | Shares to investors as part of at-the-market facility | 1,395,610 | 0.56 | 786,494 | ||||||||||||
| September 11, 2013 | Shares to investors as part of at-the-market facility | 523,120 | 0.55 | 288,606 | ||||||||||||
| September 12, 2013 | Shares to investors as part of at-the-market facility | 2,056,760 | 0.52 | 1,071,557 | ||||||||||||
| October 3, 2013 | Exercise of options – employees | 97,418 | 0.18 | 17,577 | ||||||||||||
| October 3, 2013 | Exercise of options – employees | 625,000 | 0.45 | 282,828 | ||||||||||||
| October 25, 2013 | Exercise of options – consultants | 60,000 | 0.14 | 8,496 | ||||||||||||
| October 25, 2013 | Exercise of options – employees | 217,478 | 0.14 | 30,795 | ||||||||||||
| November 4, 2013 | Shares to investors as part of at-the-market facility | 6,745,750 | 0.48 | 3,209,209 | ||||||||||||
| November 5, 2013 | Shares to investors as part of at-the-market facility | 143,700 | 0.48 | 69,054 | ||||||||||||
| November 4, 2013 | Exercise of options – employees | 722,419 | 0.42 | 300,405 | ||||||||||||
| November 6, 2013 | Shares to investors as part of at-the-market facility | 8,380 | 0.49 | 4,070 | ||||||||||||
| November 25, 2013 | Exercise of options – consultants | 200,000 | 0.40 | 80,786 | ||||||||||||
| December 13, 2013 | Exercise of options – employees | 73,200 | 0.35 | 25,444 | ||||||||||||
| December 20, 2013 | Exercise of options – employees | 81,750 | 0.14 | 11,576 | ||||||||||||
| December 20, 2013 | Exercise of options – consultants | 100,000 | 0.40 | 40,393 | ||||||||||||
| January 3, 2014 | Exercise of options – investors | 1,700,000 | 0.35 | 593,622 | ||||||||||||
| January 28, 2014 | Exercise of options – investors | 500,000 | 0.35 | 174,595 | ||||||||||||
| February 6, 2014 | Exercise of options – investors | 3,928,900 | 0.35 | 1,371,931 | ||||||||||||
| February 6, 2014 | Exercise of options – employees | 50,000 | 0.35 | 17,380 | ||||||||||||
| February 21, 2014 | Exercise of options – employees | 60,000 | 0.28 | 16,800.00 | ||||||||||||
| February 21, 2014 | Exercise of options – employees | 146,128 | 0.25 | 36,532 | ||||||||||||
| February 21, 2014 | Exercise of options – employees | 157,818 | 0.35 | 54,858 | ||||||||||||
| February 26, 2014 | Exercise of options – employees | 34,220 | 0.51 | 17,298 | ||||||||||||
| February 26, 2014 | Exercise of options – employees | 47,700 | 0.35 | 16,581 | ||||||||||||
| March 11, 2014 | Exercise of options – consultants | 200,000 | 0.40 | 80,786 | ||||||||||||
| March 11, 2014 | Exercise of options – employees | 60,000 | 0.35 | 20,856 | ||||||||||||
| March 11, 2014 | Exercise of options – employees | 66,500 | 0.28 | 18,620 | ||||||||||||
| March 11, 2014 | Exercise of options – consultants | 1,000,000 | 0.26 | 260,000 | ||||||||||||
| March 11, 2014 | Exercise of options – employees | 146,128 | 0.25 | 36,532 | ||||||||||||
| March 11, 2014 | Shares to investors as part of at-the-market facility | 980,130 | 1.23 | 1,202,928 |
| Date | Details | Notes | Number | Issue Price | A$ | ||||||||||
| December 13, 2013 | Exercise of options – employees | 73,200 | 0.35 | 25,444 | |||||||||||
| December 20, 2013 | Exercise of options – employees | 81,750 | 0.14 | 11,576 | |||||||||||
| December 20, 2013 | Exercise of options – consultants | 100,000 | 0.40 | 40,393 | |||||||||||
| January 3, 2014 | Exercise of options – investors | 1,700,000 | 0.35 | 593,622 | |||||||||||
| January 28, 2014 | Exercise of options – investors | 500,000 | 0.35 | 174,595 | |||||||||||
| February 6, 2014 | Exercise of options – investors | 3,928,900 | 0.35 | 1,371,931 | |||||||||||
| February 6, 2014 | Exercise of options – employees | 50,000 | 0.35 | 17,380 | |||||||||||
| February 21, 2014 | Exercise of options – employees | 60,000 | 0.28 | 16,800.00 | |||||||||||
| February 21, 2014 | Exercise of options – employees | 146,128 | 0.25 | 36,532 | |||||||||||
| February 21, 2014 | Exercise of options – employees | 157,818 | 0.35 | 54,858 | |||||||||||
| February 26, 2014 | Exercise of options – employees | 34,220 | 0.51 | 17,298 | |||||||||||
| February 26, 2014 | Exercise of options – employees | 47,700 | 0.35 | 16,581 | |||||||||||
| March 11, 2014 | Exercise of options – consultants | 200,000 | 0.40 | 80,786 | |||||||||||
| March 11, 2014 | Exercise of options – employees | 60,000 | 0.35 | 20,856 | |||||||||||
| March 11, 2014 | Exercise of options – employees | 66,500 | 0.28 | 18,620 | |||||||||||
| March 11, 2014 | Exercise of options – consultants | 1,000,000 | 0.26 | 260,000 | |||||||||||
| March 11, 2014 | Exercise of options – employees | 146,128 | 0.25 | 36,532 | |||||||||||
| March 11, 2014 | Shares to investors as part of at-the-market facility | 980,130 | 1.23 | 1,202,928 | |||||||||||
| March 12, 2014 | Shares to investors as part of at-the-market facility | 41,760 | 1.18 | 49,339 | |||||||||||
| March 14, 2014 | Shares to investors as part of at-the-market facility | 1,594,220 | 1.11 | 1,767,019 | |||||||||||
| March 17, 2014 | Shares to investors as part of at-the-market facility | 2,280,750 | 1.05 | 2,405,397 | |||||||||||
| April 3, 2014 | Exercise of options – investors | 216,750 | 0.35 | 75,687 | |||||||||||
| April 3, 2014 | Shares to investors as part of at-the-market facility | 22,339,170 | 0.31 | 6,963,613 | |||||||||||
| April 4, 2014 | Shares to investors as part of at-the-market facility | 17,290,080 | 0.27 | 4,607,964 | |||||||||||
| April 7, 2014 | Shares to investors as part of at-the-market facility | 18,325,610 | 0.25 | 4,672,819 | |||||||||||
| April 7, 2014 | Non cash share issue in consideration for services provided by consultants | (i) | 1,000,000 | 0.25 | 252,750 | ||||||||||
| June 30, 2014 | Non cash share issue in consideration for services provided by consultants | - | - | 24,200 | |||||||||||
| Security issuance costs | - | - | (1,339,369 | ) | |||||||||||
| Year ended June 30, 2014 | 107,036,534 | 38,630,304 | |||||||||||||
| July 1, 2014 | Reverse proposed issue to a consultant | - | - | (24,200 | ) | ||||||||||
| July 21, 2014 | Non cash share issue in consideration for services provided by consultants | (i) | 110,000 | 0.23 | 25,300 | ||||||||||
| July 21, 2014 | Exercise of options – employees | 180,000 | - | 25,488 | |||||||||||
| February 23, 2015 | Shares to investors as part of at-the-market facility | 35,631,690 | 0.15 | 5,304,319 | |||||||||||
| February 24, 2015 | Shares to investors as part of at-the-market facility | 2,538,820 | 0.14 | 357,270 | |||||||||||
| June 2, 2015 | Shares to investors as part of at-the-market facility | 6,784,000 | 0.22 | 1,466,553 | |||||||||||
| June 30, 2015 | Non cash share issue in consideration for services provided by consultants | - | - | 16,500 | |||||||||||
| Security issuance costs | - | - | (284,931 | ) | |||||||||||
| Year ended June 30, 2015 | 45,244,510 | 6,886,299 | |||||||||||||
| July1, 2015 | Reverse proposed issue to a consultant | - | (16,500 | ) | |||||||||||
| Year ended June 30, 2016 | - | (16,500 | ) | ||||||||||||
PRANA BIOTECHNOLOGY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
| March 12, 2014 | Shares to investors as part of at-the-market facility | 41,760 | 1.18 | 49,339 | ||||||||||||
| March 14, 2014 | Shares to investors as part of at-the-market facility | 1,594,220 | 1.11 | 1,767,019 | ||||||||||||
| March 17, 2014 | Shares to investors as part of at-the-market facility | 2,280,750 | 1.05 | 2,405,397 | ||||||||||||
| April 3, 2014 | Exercise of options – investors | 216,750 | 0.35 | 75,687 | ||||||||||||
| April 3, 2014 | Shares to investors as part of at-the-market facility | 22,339,170 | 0.31 | 6,963,613 | ||||||||||||
| April 4, 2014 | Shares to investors as part of at-the-market facility | 17,290,080 | 0.27 | 4,607,964 | ||||||||||||
| April 7, 2014 | Shares to investors as part of at-the-market facility | 18,325,610 | 0.25 | 4,672,819 | ||||||||||||
| April 7, 2014 | Non cash share issue in consideration for services provided by consultants | (i) | 1,000,000 | 0.25 | 252,750 | |||||||||||
| June 30, 2014 | Non cash share issue in consideration for services provided by consultants | - | - | 24,200 | ||||||||||||
| Security issuance costs | - | - | (1,339,369 | ) | ||||||||||||
| Year ended June 30, 2014 | 107,036,534 | 38,630,304 | ||||||||||||||
| July 1, 2014 | Reverse proposed issue to a consultant | - | - | (24,200 | ) | |||||||||||
| July 21, 2014 | Non cash share issue in consideration for services provided by consultants | (i) | 110,000 | 0.23 | 25,300 | |||||||||||
| July 21, 2014 | Exercise of options – employees | 180,000 | - | 25,488 | ||||||||||||
| February 23, 2015 | Shares to investors as part of at-the-market facility | 35,631,690 | 0.15 | 5,304,319 | ||||||||||||
| February 24, 2015 | Shares to investors as part of at-the-market facility | 2,538,820 | 0.14 | 357,270 | ||||||||||||
| June 2, 2015 | Shares to investors as part of at-the-market facility | 6,784,000 | 0.22 | 1,466,553 | ||||||||||||
| June 30, 2015 | Non cash share issue in consideration for services provided by consultants | - | - | 16,500 | ||||||||||||
| Security issuance costs | - | - | (284,931 | ) | ||||||||||||
| Year ended June 30, 2015 | 45,244,510 | 6,886,299 |
(i) Shares issued to consultants for services are recorded as non-cash compensation and are recognized at either the fair value of the services rendered, or if this cannot be reasonably estimated, the fair value of the underlying equity instruments issued. Shares issued to consultants have been valued as o utlinedoutlined below:
The services provided by these consultants were documented in consultancy agreements which outlined remuneration in the form of an annual fee and share-based compensation in the form of shares. The equity-based compensation is not linked to any particular milestone or element of the services to be provided under the terms of the agreements.
Given the extended period of consultants’ involvement and associated milestones, the Company determined there were no comparable service examples against which to benchmark the value of the consultants’ services. Additionally, there was no distinction between the portion of the services which gave rise to the cash entitlements and the portion that gave rise to share entitlements. As the Company could not reliably estimate the fair value of the services received, the Company determined that it was appropriate to measure the services at the fair value of the underlying equity instruments issued.
| (c) Movements in Options |
| June 30, | June 30, | |||||||||||||||||||||||||||||||||||||||||||||||
| 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||||||
| Number of Options | A$ | Number of Options | A$ | Number of Options | A$ | Number of Options | A$ | Number of Options | A$ | Number of Options | A$ | |||||||||||||||||||||||||||||||||||||
| Beginning of the year | - | 2,701,644 | - | 2,701,644 | - | 2,701,644 | - | 2,701,644 | - | 2,701,644 | - | 2,701,644 | ||||||||||||||||||||||||||||||||||||
| End of the year* | - | 2,701,644 | - | 2,701,644 | - | 2,701,644 | - | 2,701,644 | - | 2,701,644 | - | 2,701,644 | ||||||||||||||||||||||||||||||||||||
*There was no movement in options during the financial years ended June 30, 2016, 2015 2014 and 2013.2014.
(d) Terms and Conditions of Issued Capital |
Ordinary shares |
| Ordinary shares have the right to receive dividends as declared and, in the event of a winding up of the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to vote, either in person or by proxy, at a meeting of the Company’s shareholders. |
Options |
| Option holders do not have the right to receive dividends and are not entitled to vote at a meeting of the Company’s shareholders. Options may be exercised at any time from the date they vest to the date of their expiration. Share options convert into ordinary shares on a one for one basis on the date they are exercised. |
| (e) Shares Issued after Reporting Date |
No equity issues have occurred after reporting date.
| Years Ended June 30, | ||||||||||||||||
| Notes | 2016 | 2015 | 2014 | |||||||||||||
(a) Share Based Payments | ||||||||||||||||
| 19,395,582 (2015: 19,395,582) options for fully paid ordinary shares | 13(b) | 7,394,184 | 7,394,184 | 6,968,437 | ||||||||||||
| Nil (2015: Nil) options for ADRs | 13(c) | 1,515,434 | 1,515,434 | 1,515,434 | ||||||||||||
| Nil (2015: 612,397) warrants for ADRs | 13(d) | 453,563 | 453,563 | 453,563 | ||||||||||||
| 9,363,181 | 9,363,181 | 8,937,434 | ||||||||||||||
| Years Ended June 30, | |||||||||||||
| Notes | 2015 | 2014 | 2013 | ||||||||||
(a)Share Based Payments | |||||||||||||
| 19,395,582 (2014: 18,542,577) options for fully paid ordinary shares | 14(b) | 7,394,184 | 6,968,437 | 8,557,928 | |||||||||
| Nil (2014: Nil) options for ADRs | 14(c) | 1,515,434 | 1,515,434 | 1,515,434 | |||||||||
| 612,397 (2014: 612,397) warrants for ADRs | 14(d) | 453,563 | 453,563 | 453,563 | |||||||||
| 9,363,181 | 8,937,434 | 10,526,925 | |||||||||||
F - 24
PRANA BIOTECHNOLOGY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
13. RESERVES (continued)
The share-based payment reserve is used to recognize the fair value of options and warrants issued to directors, executives, employees and consultants but not exercised. Amounts are transferred out of the reserve and into issued capital when the options or warrants are exercised.
(b)Movements in Options for Fully Paid Ordinary Shares
| Years Ended June 30, | ||||||||||||||||||||||||
| 2016 | 2015 | 2014 | ||||||||||||||||||||||
Number of Options | Comp. Expense (A$) | Number of Options | Comp. Expense (A$) | Number of Options | Comp. Expense (A$) | |||||||||||||||||||
| Beginning of the year | 19,395,582 | 7,394,184 | 18,542,577 | 6,968,437 | 35,544,121 | 8,557,928 | ||||||||||||||||||
| Issued during the year | - | - | 4,400,000 | 451,235 | 3,926,490 | 992,908 | ||||||||||||||||||
| Expired during the year | - | - | (3,166,995 | ) | - | - | - | |||||||||||||||||
| Forfeited during the year | - | - | (200,000 | ) | - | - | - | |||||||||||||||||
| Exercised during the year | - | - | (180,000 | ) | (25,488 | ) | (20,928,034 | ) | (2,582,399 | ) | ||||||||||||||
| End of the year | 19,395,582 | 7,394,184 | 19,395,582 | 7,394,184 | 18,542,577 | 6,968,437 | ||||||||||||||||||
| Years Ended June 30, | ||||||||||||||||||||||||
| 2015 | 2014 | 2013 | ||||||||||||||||||||||
| Number of Options | Comp. Expense (A$) | Number of Options | Comp. Expense (A$) | Number of Options | Comp. Expense (A$) | |||||||||||||||||||
| Beginning of the year | 18,542,577 | 6,968,437 | 35,544,121 | 8,557,928 | 28,360,328 | 7,664,454 | ||||||||||||||||||
| Issued during the year | 4,400,000 | 451,235 | 3,926,490 | 992,908 | 10,683,793 | 893,474 | ||||||||||||||||||
| Expired during the year | (3,166,995 | ) | - | - | - | (3,500,000 | ) | - | ||||||||||||||||
| Forfeited during the year | (200,000 | ) | - | - | - | - | - | |||||||||||||||||
| Exercised during the year | (180,000 | ) | (25,488 | ) | (20,928,034 | ) | (2,582,399 | ) | - | - | ||||||||||||||
| End of the year | 19,395,582 | 7,394,184 | 18,542,577 | 6,968,437 | 35,544,121 | 8,557,928 | ||||||||||||||||||
Details of option grants are summarized as follows.
· On December 12, 2012, the Company granted options to purchase 8,000,000 ordinary shares to directors under the 2004 ASX Plan (see Note 18) in recognition of services rendered to the Company. The options are exercisable at A$0.33 consideration and expire on December 13, 2017. The fair value of the options is A$0.07.
· On November 4, 2013, the Company granted options to purchase 200,000 ordinary shares to consultants under the 2004 Plan (see Note 18)17) in recognition of services rendered to the Company. The options are exercisable at A$0.73 consideration and expire on November 3, 2018. The fair value of the options is A$0.21.
· On November 4, 2013, the Company granted options to purchase 160,000 ordinary shares to key management personnel under the 2004 Plan (see Note 18)17) in recognition of services rendered to the Company. The options are exercisable at A$0.73 consideration and expire on November 3, 2018. The fair value of the options is A$0.21.
· On December 13, 2013, the Company granted options to purchase 1,200,000 ordinary shares to consultants under the 2004 Plan (see Note 18)17) in recognition of services rendered to the Company. The options are exercisable at A$1.04 consideration and expire on December 11, 2018. The fair value of the options is A$0.36.
· On February 7, 2014, the Company granted options to purchase 300,000 ordinary shares to consultants under the 2004 Plan (see Note 18)17) in recognition of services rendered to the Company. The options are exercisable at A$1.12 consideration and expire on February 5, 2019. The fair value of the options is A$0.64.
· On April 7, 2014, the Company granted options to purchase 1,200,000 ordinary shares to consultants under the 2004 Plan (see Note 18)17 in recognition of services rendered to the Company. The options are exercisable at A$0.25 consideration and expire on April 6, 2018. The fair value of the options is A$0.23.
· On August 5, 2014, the Company granted options to purchase 306,490 ordinary shares to consultants under the 2004 Plan (see Note 18)17) in recognition of services rendered to the Company. The options are exercisable at A$0.66 consideration and expire on August 4, 2018. The fair value of the options is A$0.18.
· On October 2, 2013, the Company granted options to purchase 360,000 ordinary shares to consultants under the 2004 Plan (see Note 18)17) in recognition of services rendered to the Company. The options are exercisable at A$0.66 consideration and expire on October 1, 2018. The fair value of the options is A$0.17.
· On October 3, 2014, the Company granted options to purchase 1,000,000 ordinary shares to key management personnel under the 2004 Plan (see Note 1817) in recognition of services rendered to the Company. The options are exercisable at A$0.34 consideration and expire on October 2, 2018. The fair value of the options is A$0.17.
· On February 19, 2015, the Company granted options to purchase 2,000,000 ordinary shares to consultants under the 2004 Plan (see Note 18)17) in recognition of services rendered to the Company. The options are exercisable at A$0.26 consideration and expire on FebruraryFebruary 18, 2020. The fair value of the options is A$0.08.
· On May 27, 2015, the Company granted options to purchase 1,400,000 ordinary shares to consultants under the 2004 Plan (see Note 18)17) in recognition of services rendered to the Company. The options are exercisable at A$0.27 consideration and expire on May 25, 2020. The fair value of the options is A$0.08.
Year ended June 30, 2016:
None
PRANA BIOTECHNOLOGY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
(c)Movements in Options for ADRs
| Years Ended June 30, | ||||||||||||||||||||||||
| 2016 | 2015 | 2014 | ||||||||||||||||||||||
| Number of Options | Comp. Expense (A$) | Number of Options | Comp. Expense (A$) | Number of Options | Comp. Expense (A$) | |||||||||||||||||||
| Beginning of the year | - | 1,515,434 | - | 1,515,434 | - | 1,515,434 | ||||||||||||||||||
| Expiration of options (1) | - | - | - | - | - | - | ||||||||||||||||||
| End of the year | - | 1,515,434 | - | 1,515,434 | - | 1,515,434 | ||||||||||||||||||
| Years Ended June 30, | ||||||||||||||||||||||||
| 2015 | 2014 | 2013 | ||||||||||||||||||||||
| Number of Options | Comp. Expense (A$) | Number of Options | Comp. Expense (A$) | Number of Options | Comp. Expense (A$) | |||||||||||||||||||
| Beginning of the year | - | 1,515,434 | - | 1,515,434 | 380,000 | 1,515,434 | ||||||||||||||||||
| Expiration of options (1) | - | - | - | - | (380,000 | ) | - | |||||||||||||||||
| End of the year | - | 1,515,434 | - | 1,515,434 | - | 1,515,434 | ||||||||||||||||||
(1) Options exercisable at US5.00 on or before December 17, 2012. These options are convertible to ADRs, 1 ADR = 60 ordinary shares. At time of issue, 1 ADR = 10 ordinary shares. These options expired without being exercised on December 17, 2012.
(d)Movement in Warrants for ADRs
| Years Ended June 30, | ||||||||||||||||||||||||
| 2015 | 2014 | 2013 | ||||||||||||||||||||||
| Number of Warrants | Comp. Expense (A$) | Number of Warrants | Comp. Expense (A$) | Number of Warrants | Comp. Expense (A$) | |||||||||||||||||||
Beginning of the year (1) | - | 453,563 | - | 453,563 | - | 453,563 | ||||||||||||||||||
| Beginning of the year (2) | 612,397 | - | 612,397 | - | 612,397 | - | ||||||||||||||||||
| End of the year | 612,397 | 453,563 | 612,397 | 453,563 | 612,397 | 453,563 | ||||||||||||||||||
| Years Ended June 30, | ||||||||||||||||||||||||
| 2016 | 2015 | 2014 | ||||||||||||||||||||||
| Number of Warrants | Comp. Expense (A$) | Number of Warrants | Comp. Expense (A$) | Number of Warrants | Comp. Expense (A$) | |||||||||||||||||||
Beginning of the year (1) | - | 453,563 | - | 453,563 | - | 453,563 | ||||||||||||||||||
| Beginning of the year (2) | 612,397 | - | 612,397 | - | 612,397 | - | ||||||||||||||||||
| Expired | (612,397 | ) | - | - | - | - | - | |||||||||||||||||
| End of the year | - | 453,563 | 612,397 | 453,563 | 612,397 | 453,563 | ||||||||||||||||||
(1)Warrants exercisable at US8.00 on or before June 4, 2009. These warrants are convertible to ADRs;ADRs; one ADR represents ten ordinary shares. Warrants expired without being exercised on June 4, 2009.
(2) Warrants exercisable at A$0.17 on or before February 25, 2016. These warrants expired without being exercised on February 25, 2016.
(e) Terms and Conditions of Reserves | ||||||||
Options and warrants | ||||||||
| Option holders and warrant holders do not have the right to receive dividends and are not entitled to vote at a meeting of the Company’s shareholders. Options and warrants may be exercised at any time from the date they vest to the date of their expiration. Share options are exercisable into ordinary shares on a one for one basis on the date they are exercised. Options granted under the 2004 ADS Plan are exercisable into ADRs, being one option for one ADR, which equals ten ordinary shares, on the date they are exercised. | ||||||||
In Australia, there is not a set number of authorized shares, shares are not reserved for the exercise of options, and shares do not have a par value.
| (f) Options and Warrants Issued after Reporting Date |
No option issues have occurred after reporting date. There have been no warrants granted after reporting date.
| Years Ended June 30, | ||||||||
| 2016 | 2015 | |||||||
14. ACCUMULATED DEFICIT DURING DEVELOPMENT STAGE | ||||||||
| Balance at beginning of year | (117,145,631 | ) | (111,260,562 | ) | ||||
| Net loss for the year | (7,729,551 | ) | (5,885,069 | ) | ||||
| Balance at end of year | (124,875,182 | ) | (117,145,631 | ) | ||||
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted)
| Years Ended June 30, | ||||||||
| 2015 | 2014 | |||||||
15.ACCUMULATED DEFICIT DURING DEVELOPMENT STAGE | ||||||||
| Balance at beginning of year | (111,260,562 | ) | (97,931,323 | ) | ||||
| Net loss for the year | (5,885,069 | ) | (13,329,239 | ) | ||||
| Balance at end of year | (117,145,631 | ) | (111,260,562 | ) | ||||
| Years Ended June 30, | Years Ended June 30, | |||||||||||||||||||||||
| 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | |||||||||||||||||||
16.CASH FLOW INFORMATION | ||||||||||||||||||||||||
15. CASH FLOW INFORMATION | ||||||||||||||||||||||||
| (a) Reconciliation of Net Loss to Net Cash Flows From Operations | ||||||||||||||||||||||||
| Net loss | (5,885,069 | ) | (13,329,239 | ) | (7,787,242 | ) | (7,729,551 | ) | (5,885,069 | ) | (13,329,239 | ) | ||||||||||||
| Non-cash items | ||||||||||||||||||||||||
| Depreciation of property and equipment | 31,587 | 22,384 | 23,130 | 22,810 | 31,587 | 22,384 | ||||||||||||||||||
| Non-cash issue of equity in consideration of operating expenses | 468,835 | 1,269,857 | 893,477 | (16,500 | ) | 468,835 | 1,269,857 | |||||||||||||||||
| Loss on disposal of plant and equipment | - | - | (150 | ) | ||||||||||||||||||||
| Foreign exchange (gain) loss | (4,952,735 | ) | 581,263 | (110,816 | ) | (950,720 | ) | (4,953,253 | ) | 581,263 | ||||||||||||||
| (Gain) loss on fair value of financial liabilities | (86,322 | ) | 37,473 | 197,898 | - | (86,322 | ) | 37,473 | ||||||||||||||||
| Changes in assets and liabilities | ||||||||||||||||||||||||
| Decrease (increase) in trade and other receivables | 764,255 | (3,761,471 | ) | (1,973,102 | ) | 1,734,389 | 764,255 | (3,761,471 | ) | |||||||||||||||
| Decrease (increase) in other current assets | (63,979 | ) | 15,359 | (43,567 | ) | (115,643 | ) | (63,979 | ) | 15,359 | ||||||||||||||
| (Decrease) increase in trade and other payables | (1,206,343 | ) | 1,582,980 | 817,041 | (403,449 | ) | (1,206,343 | ) | 1,582,980 | |||||||||||||||
| (Decrease) in other current liabilities | - | (33,332 | ) | (17,499 | ) | (12,076 | ) | - | (33,332 | ) | ||||||||||||||
| Increase in provision for employee entitlements | 59,215 | 78,503 | 49,576 | 52,214 | 59,215 | 78,503 | ||||||||||||||||||
| Net cash flows used in operating activities | (10,871,074 | ) | (13,536,223 | ) | (7,951,254 | ) | (7,418,526 | ) | (10,871,074 | ) | (13,536,223 | ) | ||||||||||||
| (b) Reconciliation of Cash and Cash Equivalents | ||||||||||||||||||||||||
| Cash and cash equivalents balance comprises: | ||||||||||||||||||||||||
| - cash and cash equivalents on hand | 34,909,574 | 34,167,018 | 13,346,760 | 28,593,538 | 34,909,574 | 34,167,018 | ||||||||||||||||||
| Closing cash and cash equivalents balance | 34,909,574 | 34,167,018 | 13,346,760 | 28,593,538 | 34,909,574 | 34,167,018 | ||||||||||||||||||
(c)Non-Cash Financing and Investing Activities
During the years ended June 30, 2015 2014 and 2013,2014, the Company issued shares and granted options in connection with non-cash transactions. See Notes 13(b)12(b) and 14(b)13(b).
16. EXPENDITURE COMMITMENTS
The Company has non-cancelable operating leases contracted for but not capitalized in the financial statements. The Company has commitments under these contracts within one year of A$134,272145,610 and greater than one year but less than three years of A$32,776.48,330. The property lease is a non-cancellable lease with an 18 month term, with rent payable monthly in advance. The property lease commenced April 1, 2015 and expires on September 30, 2016. The photocopier lease is a non-cancellable lease with a 48 month term, with rent payable monthly in advance. The photocopier lease commenced April 1, 2012 and expires on March 31, 2016. 2017.
The majority of our contracts for research and development programs have a termination notice period of 30 days. As at June 30, 2015,2016, we had research and development termination commitments approximating A$2.541.45 million. No liability has been recognisedrecognized within our financial statements for this period. In addition, we have the ability to scale down our operations and prioritize our research and development programs in neurology to reduce expenditures.
Details in relation to commitments under employee service agreements with Directors and Key Management Personnel are outlined in Note 21.20.
F - 27 PRANA BIOTECHNOLOGY LIMITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – in Australian dollars (unless otherwise noted) 17. SHARE BASED PAYMENTS |
| (a) Employee and Consultant Plans |
At the Annual General Meeting held on November 17, 2004, the shareholders approved the establishment of employee and consultant plans designed to reward directors, employees and consultants for their contributions to the Company. The plans are to be used as a method of retaining key personnel for the growth and development of the Company. Due to Prana’s U.S. presence, a U.S. plan (the 2004 ADS Plan) and an Australian plan (the 2004 ASX Plan) were developed.
At 30 June 2016 equity had been issued to 1 previous Director, while a Director, under the US plan and 6 Directors, 2 Key Management Personnel, 12 employees and 19 consultants under the Australian Plan. At June 30, 2015, equity had been issued to one former Director under the 2004 ADS Plan and six Directors, three key management personnel, 16 employees and 19 consultants under the 2004 ASX Plan. At June 30, 2014, equity had been issued to one former Director under the 2004 ADS Plan and six Directors, three key management personnel, 16 employees and 19 consultants under the 2004 ASX Plan. At June 30, 2013, equity had been issued to one former Director under the 2004 ADS Plan and six Directors, three key management personnel, 16 employees and 18 consultants under the 2004 ASX Plan.
At the 2004 Annual General Meeting, shareholders authorized the Company to issue in the aggregate up to 12 million ordinary shares under the two plans. This was increased to 22 million ordinary shares at the 2005 Annual General Meeting and further increased to 30 million ordinary shares at the 2007 Annual General Meeting, 45 million ordinary shares at the 2008 Annual General Meeting and 60 million ordinary shares at the 2009 Annual General Meeting. The Share Plan Committee, a sub-committee of the Remuneration Committee administers the two plans and is able to change the terms of the equity issued under them from the default terms.
Under the 2004 ADS Plan, the exercise price must equal or exceed the fair value of the ADS on the date the options are awarded. The option expiration date cannot exceed ten years from the date the options were awarded. The default vesting conditions are 25% per year on the date the options were awarded.
Under the 2004 ASX Plan, the exercise price must be equal or be less than the market value of the ordinary shares on ASX on the date of grant. The option expiration date cannot exceed ten years from the date the options were granted. The default vesting conditions are 25% per year on the date the options were granted.
Information with respect to the number of options granted under the 2004 ASX Plan as follows: