Audited results for the year ended 30 June 2023

CAP-XX Limited

29 September 2023

 

Dissemination of a Regulatory Announcement that contains inside information for the purposes of Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310.

29 September 2023

 

CAP-XX Limited

("CAP-XX" or the "Company")

Audited results for the year ended 30 June 2023

CAP-XX Limited, a world leader in the design and manufacture of supercapacitors and energy management systems, is pleased to announce its audited results for the year ended 30 June 2023.

Key highlights

·      Product sales and total revenue down 35% on last year

·      Gross margin of 43% broadly in line with last year

·      Adjusted EBITDA loss* of A$1.3 million, is up on the previous year (A$0.5 million) primarily due to the costs associated with the change in CEO.

·      Outstanding committed order backlog up by 75% on the same time last year

·      Pipeline of new products and services to meet the changing customer requirements and enhance competitive market position

·      CAP-XX continues to pursue patent infringement action against Maxwell Technologies (which is still a wholly owned subsidiary of Tesla Inc.) and other parties. Operating expenses were negatively impacted by A$1.5 million of associated legal expenditure, down A$1.0 million on prior year

·      Royalty contribution is primarily from AVX, with court proceedings in place to ensure payments reflect what is properly owed

·      CAP-XX cash reserves as at 30 June 2023 were A$2.6 million, which does not include a A$1.1 million revolving line of credit drawdown funded by a A$2.0 million R&D tax rebate which is due during H1 of FY2024

* Adjusted to exclude legal expenses for patent infringement ,CEO transition expenditure, bad debt provision and the amortisation of share-based payment expenses.

Electronic copies of CAP-XX's audited annual report and accounts for the year ended 30 June 2023 will shortly be available from the Company's website: www.cap-xx.com

The Company also announces that its Joint Broker has changed its name to Cavendish Securities plc following completion of its own corporate merger.

For further information contact:

CAP-XX Limited Pat Elliott (Chairman) Lars Stegmann (CEO)	[phone]
Kreab (Financial PR) Robert Speed	[phone]
Allenby Capital (Nominated Adviser and Joint Broker) David Hart / Piers Shimwell (Corporate Finance) Tony Quirke/Stefano Aquilino (Sales and Corporate Broking)	[phone]
Cavendish Securities plc (Joint Broker) Neil McDonald / Pearl Kellie	[phone]

More information is available at www.cap-xx.com

Notes to Editors:

CAP-XX (LSE: CPX) is a world leader in the design and manufacture of supercapacitors and energy management systems used in portable and small-scale electronic devices, and to an increasing extent, in larger applications such as automotive and renewable energy. The unique feature of CAP-XX supercapacitors is their very high-power density and high energy storage capacity in a space-efficient prismatic package. These attributes are essential in power-hungry consumer and industrial electronics and deliver similar benefits in automotive and other transportation applications. For more information about CAP-XX, visit www.cap-xx.com

Chief Executive's review

There is no denying that these have been tough times for our organisation, and I want to acknowledge the hard work and dedication of our entire team in the face of adversity. The past few months have been marked by a volatile market, economic uncertainties and unprecedented challenges. We've seen our revenues decline, and our bottom line has been hit hard. It's not easy to stand before you and admit that we've faced difficulties, but it's important to recognise the reality of our situation.

However, I want to emphasise that even in these trying times, there is a silver lining. The challenges encountered have provided us with invaluable lessons and opportunities for growth. As a company, we've demonstrated resilience and adaptability in the face of adversity. Our team has come together, demonstrating an unwavering commitment to our mission and values.

While our results for the past few months may not be what we had hoped for, I want to assure you that we are well-positioned for a brighter future. We have a strategic plan in place that will help us navigate these turbulent waters and emerge stronger on the other side.

First and foremost, our commitment to innovation remains steadfast. We have a pipeline of exciting new products and services that are set to launch in the coming months. These innovations will not only meet the changing needs of our customers but also give us a competitive edge in the market.

Additionally, we are taking proactive measures to streamline our operations and optimise efficiency. This includes cost-saving initiatives that will help us weather the current economic challenges and position us for sustained profitability in the future.

Furthermore, we are actively diversifying our revenue streams and exploring new markets. We understand the importance of not relying solely on one segment of the market, especially in volatile times. Our expansion into new territories and industries is a strategic move that will mitigate risks and open up new growth opportunities.

One of our greatest assets is our dedicated and talented team. Our employees have shown incredible commitment and adaptability during these challenging times. We will continue to invest in their development and well-being, ensuring that we have the best talent driving our success.

In times like these, maintaining strong relationships with our partners, suppliers and customers is paramount. We are working closely with them to navigate the current market conditions, and these collaborations are critical to our future success. Together, we will find innovative solutions to the challenges we face.

While we cannot predict the exact timeline for a market recovery, we are confident that the positive trends we see on the horizon will lead to improved results in the coming months. We have a clear vision for the future, and we remain unwavering in our commitment to achieving our long-term goals.

In conclusion, I want to express my gratitude to all of our employees, shareholders, customers and partners, for your continued support and dedication. These are undoubtedly difficult times, but they are also times of great opportunity for growth and transformation. Together, we will emerge from this challenging period stronger, more resilient and better positioned for success, and we look forward to achieving great things together in the months and years ahead.

Lars Stegmann

Chief Executive Officer

Chairman's Report

The past year for CAP-XX has been one of major change and developments, which has established the company for short to medium term success. The major change is in the executive leadership of the Company with the appointment of Lars Stegmann as CEO, replacing CAP-XX's founder Anthony Kongats.

Lars brings to CAP-XX an extensive results and customer focussed background in power electronics and international sales and marketing. He has joined CAP-XX as we drive the expansion of our sales and distribution channels. This is the next step as the commissioning of the Seven Hills, Sydney manufacturing facility is largely completed and the plant operating efficiently, albeit with room for further improvement. The need now is to drive volumes to get the full benefit of this expansion and achieve profitable operations after many years of painful losses.

Another significant development was the completion of a capital raising of approximately £2.7 million, via a combination of a placing, subscription and retail offer. The fundraising was completed in two tranches and the final tranche completed in the first week of June 2023, the proceeds to be used for expansion of the current product range, increasing the sales and marketing footprint, litigation expenses, capital expenditure (predominately production equipment) and general working capital. We are grateful for the support of our shareholders through the provision of the necessary capital.

I am pleased to report that the development and broadening of the CAP-XX product range remains broadly on track, with the commissioning of the DMH production line at Seven Hills expected to deliver samples before the end of the current calendar year. We expect volumes to ramp up by early in the next calendar year.  Several customers are in the latter stages of sampling these products for potentially high-volume applications, and feedback on customer evaluation is encouraging. The DMH product is a very thin (0.4 mm) supercapacitor suitable for numerous applications in IoT, Medical, Telecommunications and Industrial sectors.

In addition, the long-awaited 3V supercapacitor product is able to be produced in volume and is currently being evaluated by several potential large volume customers. These are anticipated to be realised in the second half of the current financial year.

Finally, the development work on the cylindrical surface mount device (SMD) is nearing completion with production trials underway. The SMD device offers customers supercapacitor performance in a form factor that is more suitable for many automated manufacturing assembly lines. These new products are expected to deliver significant sales gains as we achieve design wins over the coming year.

To ensure that we maximise the benefits of our existing product range and new products, we have also expanded our distribution network. Digikey was brought on as a distributor in April 2023 and to date has processed over 50 customer enquiries and sales. Numerous other Tier 1 and Tier 2 distributors are also in negotiation to stock the CAP-XX product range. To avoid further delays, we will continue to discuss with Tier 3 and Tier 4 distributors to expand our network and services.

As an integral part of our new distribution strategy, we are ensuring that the customer and their specific requirements are the core focus. The CAP-XX direct sales force is being expanded to ensure that a greater geographic reach is in place while CAP-XX representatives will have smaller regional territories, with a consummate increase in customer communication. To ensure that cash reserves are conserved, the additional sales representatives are being engaged on a commission basis. This has already resulted in driving short-term sales growth and early results are promising. New sales representatives are currently in place in the US (three), Europe, India and South Africa. Negotiations are in the final stages with several other representative organisations which will further expand the sales base.

Seven Hills production is currently operating on a single shift basis, which is matched with current demand and has the capacity to rapidly ramp production to meet the expected increase in demand. The successful commissioning of the new manufacturing lines has resulted in a lower cost of in-house production. An evaluation is underway to determine when the current Seven Hills product range can be expanded in order to reduce the risk of reliance on the contract manufacturer in Penang. During the year delayed COVID issues continued to impact the performance and output of the contract manufacturer in Penang. However, as the travel bans were lifted in the second half of the financial year, our engineers were again able to travel to support this facility. I am pleased to report that output continues to increase, although there is still more remedial work to be done to have this facility performing at historical levels.

CAP-XX continues to pursue a patent infringement action against Maxwell Technologies, a wholly owned subsidiary of Tesla Inc. As previously announced, due to the unavailability of expert witnesses for Maxwell, the trial date was deferred from July 2023 to December 2023. In September 2023, CAP-XX was advised that Tesla had lodged a patent infringement claim against CAP-XX for patent infringement in a Texas court. On the data and evidence lodged to date, CAP-XX is of the opinion that the claim is baseless and that it will be vigorously defended.  CAP-XX remains in dispute with AVX over AVX's contractual performance in relation to the licence agreement granted by CAP-XX to AVX. The Company remains confident that positive outcomes will be reached in both cases in the current financial year.

Total Company sales revenue for the year to 30 June 2023 decreased by 35% to A$3.6 million (2022: A$5.6 million). The largest drop in sales revenue by product category was cylindrical cans which bore the full brunt of the supply chain issues during late 2022 and early 2023, while Seven Hills manufactured products were on par in both volume and dollars compared with the previous year. As reported at the half year, sales were being negatively impacted due mainly to worldwide supply chain issues and customers/distributors being over-stocked. It was also highlighted that it was too early to determine when the recovery would occur although the second half revenue was expected to be higher than the first.  This was achieved, albeit at a lower rate than what was initially expected. Conversely, the fourth quarter revenue of FY23 was by far the best performing quarter of FY23 in terms of sales revenue and, as highlighted earlier, orders are continuing to increase, notably into the first quarter of FY24.  Despite the sharp decrease in top line sales revenue, the reported gross margin decreased by 2.1 percentage points from 45.4% to 43.3% due to the relatively resilient performance of the proprietary prismatic product lines.

The EBITDA loss for the year to 30 June 2023 was a loss of A$3.9 million (2022: loss of A$2.8 million), with the main variances being the gross margin shortfall (A$1.0 million) due to the lower than estimated revenue and the costs associated with the changeover of CEO (A$0.9 million), which was offset by lower legal expenses (A$1.5 million).  When adjusted for these one-off factors, the like for like comparison is an adjusted EBITDA loss of A$1.3 million (2022: loss of A$0.5 million). These results reflect the past and we believe that CAP-XX is through the worst and recovering from the revenue shortfall experienced during 2022/23.

Whilst our FY2023 results are disappointing, we have numerous reasons to believe that CAP-XX is turning around under Lars Stegmann's leadership. Paramount in this is the strong team of employees we have who have embraced and are contributing to the changes that are needed to enable CAP-XX to perform well for its customers and shareholders while meeting or exceeding the necessary standards of ESG. We are indebted to all of our staff.

The Board is confident that with the increased focus on the customer, new distribution strategy and appointment of new sales representatives, will drive the increase in sales required for the Company to achieve its positive EBITDA goal in the shortest possible time frame.

Patrick Elliott

Chairman

29 September 2023

Business Review

Review of Operations and Activities

The reported EBITDA loss for the year to 30 June 2023 was a loss of A$3.9 million (2022: loss of A$2.8 million), with the main variances being the gross margin shortfall (A$1.0 million) due to the lower than estimated revenue and the costs associated with the changeover of CEO ($0.9 million), which was offset by lower legal expenses (A$1.5m).  When adjusted for these one-off factors, the like for like comparison is an adjusted EBITDA loss of A$1.3 million (2022: loss of A$0.5 million).

Cash reserves as at 30 June 2023 were A$2.6 million, up from A$1.6 million as at 30 June 2022. The increase in cash reserves is the direct result of the £2.7 million gross proceeds of the capital raise that was completed in early June 2023.  In addition, the Board anticipates that the Company will be in receipt of a Federal Government R&D tax rebate of approximately A$2.1 million, with these funds expected to be received before the end of the current calendar year, of which A$1.0 million has been drawn down against a revolving line of credit secured by the R&D tax rebate.

The Company is undertaking a full evaluation of the way it analyses and reports its sales pipeline in order to ensure that all nominated opportunities are rigorously evaluated and to ensure a realistic probability of conversion of the orderbook to firm schedules within the short to medium term. This process will be completed before the end of the current calendar year.   The current level of committed orders outstanding totals US$1.4 million, which is up 75% on the same time last year. Historically, CAP-XX received blanket orders, which covered the customer's next 12 months scheduled demand. Over the past two years, customers ordering patterns have changed, mainly as a result of overstocking and overall supply chain issues. Today, customers are typically only willing to provide firm orders which cover the following three months, and it is now uncommon to receive orders which cover a full 12 months. As a result, the orders outstanding are predominately for customer delivery during the period ending December 2023. Sales representatives are reporting that the overstocking issue in the supercapacitor markets are easing, and there is increasing confidence that demand and market confidence is beginning to return.

Total product sales revenue for the year to 30 June 2023 was A$3.3 million (2022: A$5.1 million) which represents a 35% year-on-year decrease. This follows a 44% increase in year-on-year product sales in the previous year. The contributing factors underlying this decrease, as highlighted previously, include the worldwide supply chain issues in the capacitor market, overstocking from previous years by distributors and customers, and a lack of short-term confidence in the electronic component market.

Operational expenditure, excluding the legal costs for patent infringement and direct costs of the Murata project, increased by 15% from A$6.3 million to A$7.2 million. The increase in expenditure is primarily attributable to the costs associated with the change in CEO.

Business Environment

The Board believes that CAP-XX's technology provides a significant competitive advantage over existing supercapacitor manufacturers such as TDK Corporation, Skeleton, Eaton, LSMitron, Nippon Chemicon Corporation and other Chinese and Korean competitors. The Board believes that these companies are unable to match the CAP-XX technology in terms of thinness, power density, energy density and reliability. Most of the Company's competitors only manufacture higher-capacity cylindrical cells used in large package modules and focus on applications where the combination of thinness, energy density and power density are not important considerations for the customer. These competitor products usually prove unsuitable for the various markets collectively labelled the Internet of Things (IoT) market, which is the key area that CAP-XX is targeting with the former Murata products and CAP-XX's existing prismatic products.

As reported previously, IoT applications, one of the fastest growing segments of the electronics market, provide one of the greatest opportunities for CAP-XX's products.  Driven by customer requests, manufacturers are constantly moving to new wireless protocols and adding to the functions and applications available on IoT enabled devices. Some of these new functions require high electrical power within the actual IoT device. Examples are e-locks, drug dispensing, facial recognition, and haptic feedback. Other devices are powered by energy harvesting and are battery-less. Others use low power batteries such as 3 Volt coin cell batteries. All of this means that power management continues to be an increasingly important consideration. The other important factor is size, as devices have tended to become smaller whilst their electrical power demands have increased. The Company continues to be successful in winning new business from a range of these markets, such as industrial actuators, e-locks, agricultural sensors, wireless displays, smart-meters, payment and handheld terminals, medical wearables, automotive dashcams and communication systems.

In the past, CAP-XX has faced competition in various markets from cheaper cylindrical supercapacitors where our thin form factor, high power and long life are not valued as highly as lower initial cost components from competitors. To counteract this, the Company released a range of cylindrical cells. Modest sales revenue for these products was first recorded during FY 2019. Since then, sales have continued to grow strongly, with the Company being successful in winning a number of large volume orders, with large volume opportunities currently being evaluated by customers.

As previously reported, automotive applications such as TruckStart, Stop-Start systems, regenerative energy capture or KERS (Kinetic Energy Recovery Systems), distributed power, hybrid electric vehicles and electric vehicles still present substantial opportunities for large supercapacitors. A number of CAP-XX's competitors are active in these markets, and the Board believes that the Company has significant advantages over the competition in certain applications. Consistent with this strategy the Board took the opportunity to sign an exclusive distribution agreement with an established external partner who have a suite of qualified automotive products ready to market. These products are private label of CAP-XX and are known as CAPMOD and TruckStart. CAPMOD is a range of large high voltage modules intended to support a multitude of large automotive, transportation and renewable energy applications such as wind farms, solar installations. TruckStart is a relaunched version of our previous truck-start product.

During the year we also launched a new range of Lithium-ion supercapacitors which are a hybrid device part lithium ion and part supercapacitor, that have excellent cycle life and very low leakage current. This make these products an attractive alternative to lithium ion batteries are used where high power and long life are needed.

Opportunities

Our customers' markets are constantly evolving as new products and technologies threaten the incumbents. In this environment, CAP-XX needs to always remain alert and be flexible to changing business conditions and market needs. This creates opportunities to offer products that address what our markets want.

CAP-XX is continuing to refine the products that it offers for the various IoT applications and other markets. The Company has introduced its DMF and DMT thin prismatic supercapacitors to address the space-constrained and/or power-hungry needs of many IoT products. These products are already being shipped from the Company's Seven Hills factory. The Company plans to commission and commence shipments of the very thin DMH supercapacitor around Q4 2023. At only 400 microns in thickness, the Board believes that this is the best performing supercapacitor in its class. Customers are already evaluating these parts with pleasing results and large volume orders are expected in the forthcoming months.

The Company also plans to use its 3 Volt chemistry in the DMF products made at Seven Hills. The Company had previously planned to produce 3 Volt products in Malaysia but the ongoing disruptions and travel restrictions caused by COVID made this impractical. The first 3 Volt products from Seven Hills have been sent to customers for evaluation. The development of the 3 Volt product has been targeted to meet demand for small, inexpensive, energy efficient power solutions for thin wearables, key FOBs and other IoT devices, especially those using 3 Volt coin cell lithium ion batteries, such as the CR2032 battery.

In the future, there is an opportunity to migrate this same 3 Volt technology into larger prismatic supercapacitors, automotive modules, and other products for high-energy, high-power applications. As already noted, CAP-XX is concentrating on a small number of automotive opportunities. To further increase the Company's likelihood of success, the Board is investigating a strategy of partnering with automotive and military Tier-1/Tier-2 suppliers, through either a new license agreement or a joint venture, to supply the automotive markets. The Board believes that such partnerships will be beneficial for all parties involved.

The Company intends to continue using its intellectual property to develop additional substantial and recurring income. A significant benefit of the existing licencing agreements is that they validate CAP-XX's technology leadership in the field of supercapacitors and energy storage, and the potential for supercapacitors as a mainstream consumer electronics technology. Our licensees' product lines and sales activities are also increasing our exposure to markets and customers that were previously beyond the Company's reach.  It is also important to note that the strategy of our licensees is to offer product ranges targeted at certain end markets. As such, none of them meet the product type or size requirements for all markets and all applications, leaving scope for CAP-XX to supply these other markets directly using products made by CAP-XX and its contract manufacturers.

Strategies for Growth

Given the high level of market interest in CAP-XX's technology and its high-performance supercapacitors, the Company believes that the IoT markets, in particular, offer significant opportunities for growth and to reach the key strategic objective of CAP-XX achieving profitability and positive cashflow.

The Company continues to engage in discussions aimed at securing business in the IoT space with a significant number of global original equipment manufacturers (OEMs). CAP-XX is strengthening its relationships with these organisations and has regular engineering meetings with design teams, manufacturing groups and contract manufacturers. The Company is unable to comment on specific clients, but the Board is pleased with the overall progress and is confident that the available market for supercapacitors is increasing as manufacturers become more familiar with the technology.

Over the last year, the Company has aligned its marketing activities to specifically focus on a number of different IoT markets, such as asset tracking, automotive, e-locks, medical devices, handheld terminals, smart meters, wearables and wireless sensors. The efforts to date have produced a significant increase in visits to the Company's webpages and sales enquiries. The Board expects this growth to continue. CAP-XX's strong environmental credentials, which have been recognised by the London Stock Exchange providing the Company with its Green Economy Mark, are consistent with this strategy.

The Company will continue to monitor new opportunities to increase its sales, through its current distributors, via direct sales to customers and new product offerings. These offerings may take the form of complementary energy storage devices and modules. The Company is also increasing the size of its own sales force and adding new distributors to ensure that global coverage and penetration is maximised.

It is important that the Company is able to benefit from the large investment made over many years in building its patent portfolio. Where third parties are found to be infringing these patent rights, the Company has and will continue to vigorously defend its rights, even if this means pursuing legal action as it did successfully against Ioxus. 

Research and Development

The markets in which the Company operates are competitive and are characterised by rapid technological change. CAP-XX has a strong competitive position in prismatic supercapacitors in all of its target markets as a result of its capability to produce supercapacitors with a high energy and power density in a small, conveniently sized, flat package. CAP-XX's devices are also lightweight, work over a broad temperature range and have an operating lifetime measured in years.

To stay ahead of the competition, the Company is developing a strong pipeline of new products to follow the DMH and 3 Volt products already discussed. CAP-XX's R&D efforts are focused on a mix of short, medium and long-term opportunities, covering new products, cost reductions and improved product performance. CAP-XX has a research facility within its Seven Hills site in Sydney, Australia, where a team of six scientists work to maintain CAP-XX's leading technology position in electrodes, separators and electrolyte materials and their assembly into supercapacitor devices. This team is supported by 11 engineers. During 2023, significant progress has been made in a number of key areas including improvements on the former coating, DMF and DMT lines, new cell chemistries, improving the life of cells, developing new packaging concepts, reducing the cost per cell and developing new electronics to optimise the performance of the Company's modules. CAP-XX has also signed numerous collaboration agreements with leading research institutions, whilst the Company's Scientific Advisory Board provides CAP-XX with clear direction on commercially relevant technologies for its ongoing R&D programme.

The Company's success depends on its ability to protect and prevent any infringements of its intellectual property. To protect this important asset, the Company has considerable intellectual property embodied in its patents covering the design, manufacture and use of its high-performance supercapacitors. The CAP-XX patent portfolio currently consists of seven patent families, with seven granted national patents with an additional two patent applications pending in various jurisdictions. The Company's intellectual property strategy has been to build value by focusing on opportunities to capture market share and exclude competition, with an IP portfolio capable of generating licensing revenue. The Directors believe that comprehensive embodiments and interlocking patent groups, combined with a 'quick to file, quick to abandon' policy, have given the Company a strong and focused IP portfolio.

Outlook

The major focus for CAP-XX continues to be to become profitable and cashflow positive as soon as possible.  This will be achieved by increasing product sales from the newly installed facilities at Seven Hills, through an increased focus on the customer, new distribution strategy and expansion of the sales force, supplemented by the newly launched product families and the intellectual property which the Company is continuously developing.

CAP-XX Limited

Consolidated statement of profit or loss

For the year ended 30 June 2023

		Consolidated
		2023		2022
Currency: Australian Dollars	Notes	$		$
Revenue from continuing operations	1	3,631,690		5,557,260
Cost of sales	2	(2,060,527)		(3,032,921)
Gross Profit		1,571,163		2,524,339
Other revenue	1	664		3,894
Other income	3	2,165,429		2,272,442
General and administrative expenses		(4,264,901)		(4,478,616)
Process and engineering expenses		(1,357,516)		(1,222,409)
Selling and marketing expenses		(846,536)		(886,494)
Research and development expenses		(1,677,478)		(1,572,421)
Share based payments expense		(613,980)		(1,133,399)
Other expenses	4	(535,972)		(446,196)
Loss before income tax		(5,559,127)		(4,938,860)
Income tax benefit		-		-
Net loss for the year		(5,559,127)		(4,938,860)
Loss attributable to owners of CAP-XX Limited		(5,559,127)		(4,938,860)
Earnings per share for loss attributable to the ordinary equity holders of the Company		Cents	Cents
Basic loss per share	5	(1.1)	(1.0)
Diluted loss per share	5	(1.1)	(1.0)

CAP-XX Limited

Consolidated statement of comprehensive income

For the year ended 30 June 2023

		Consolidated
		2023	2022
Currency: Australian Dollars	Notes	$	$
Loss for the year		(5,559,127)	(4,938,860)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations		(27,433)	(53,490)
Other comprehensive loss for the year, net of tax		(27,433)	(53,490)
Total comprehensive loss for the year attributable to owners of CAP-XX Limited		(5,586,560)	(4,992,350)

CAP-XX Limited

Consolidated statement of financial position

As at 30 June 2023

		Consolidated
		June 30, 2023	June 30, 2022
Currency: Australian Dollars	Notes	$	$
ASSETS
Current assets
Cash and cash equivalents		2,643,810	1,614,714
Receivables		959,515	1,116,902
Inventories		2,201,906	1,836,148
Other		2,429,946	2,143,011
Total current assets		8,235,177	5,248,141
Non-current assets
Property, plant and equipment		2,428,233	2,696,120
Right of use assets		2,193,777	2,549,276
Other		204,808	204,808
Total non-current assets		4,826,818	5,450,204
Total assets		13,061,995	12,160,979
LIABILITIES
Current liabilities
Payables		1,833,557	1,281,367
Lease liabilities		194,888	193,261
Provisions		632,655	868,096
Interest bearing liabilities		1,038,054	-
Total current liabilities		3,699,154	2,342,724
Non-current liabilities
Lease liabilities		2,024,584	2,218,062
Provisions		803,910	757,245
Total non-current liabilities		2,828,494	2,975,307
Total liabilities		6,527,648	5,318,031
Net assets		6,534,347	6,842,948
EQUITY
Contributed equity		119,175,769	114,511,790
Reserves		8,100,320	7,513,773
Accumulated losses		(120,741,742)	(115,182,615)
TOTAL EQUITY		6,534,347	6,842,948

Consolidated statement of cash flows

For the year ended 30 June 2023

		Consolidated
		2023	2022
Currency: Australian Dollars		$	$
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)		3,806,845	5,122,173
Payments to suppliers and employees (inclusive of goods and services tax)		(9,976,681)	(10,604,235)
		(6,169,836)	(5,482,062)
Tax credit received		2,043,384	3,200,660
Interest paid on lease liabilities		(207,787)	(290,873)
Interest received		664	3,894
Net cash (outflow) from operating activities		(4,333,575)	(2,568,381)
Cash flows from investing activities
Payments for property, plant and equipment		(118,166)	(1,89,902)
Contributions from lessor		-	163,000
Net cash (outflow) from investing activities		(118,166)	(26,902)
Cash flows from financing activities
Proceeds from issue of shares (net of costs)		5,074,950	6,106,584
Costs associated with the issue of shares		(410,971)	(456,053)
Proceeds/ (repayment) from borrowings		1,038,054	(1,400,000)
Principal repayments for lease liability		(193,763)	(169,175)
Net cash inflow from financing activities		5,508,270	4,081,356
Net increase in cash and cash equivalents		1,056,529	1,486,073
Cash and cash equivalents at the beginning of the financial year		1,614,714	182,601
Effects of exchange rate changes on cash and cash equivalents		(27,433)	(53,960)
Cash and cash equivalents at the end of the financial year		2,643,810	1,614,714

Notes to the financial statements

Basis of preparation

The financial information included in this announcement does not constitute statutory accounts within the meaning of the Australian Corporations Act 2001.  Whilst the financial information has been computed in accordance with Australian equivalents to International Financial Reporting standards and other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001, this announcement does not itself contain sufficient information to comply with those requirements.

Note 1       Revenue			Consolidated
			2023	2022
			$	$
Sale of Goods			3,288,692	5,069,186
License Fees & Royalties			342,998	488,074
			3,631,690	5,557,260
Other revenue
Interest			664	3,894
			664	3,894

Note 2      Cost of Sale of Goods				Consolidated
				2023	2022
				$	$
Direct materials and labour				1,786,716	2,685,204
Indirect manufacturing expenses				273,811	347,717
				2,060,527	3,032,921

Note 3     Other income		Consolidated
		2023	2022
		$	$
Foreign Exchange Gains - (net) R&D Tax Incentive		22,045 2,143,384	199,308 2,073,134
		2,165,429	2,272,442

Note 4    Other Expenses		Consolidated
		2023		2022
		$		$
Provision for Withholding Tax Diminution		18,274	31,268
Provision for expected credit loss		189,491	120,484
Provision for make good on premises		40,999	-
Interest - lease liabilities		206,663	225,151
Interest - R&D Advance		80,545	69,293
		535,972	446,196

Note 5        Loss per share		Consolidated
		2023		2022
		$		$
Net loss		(5,559,127)	(4,938,860)
Loss per share - undiluted		($0.011)	($0.010)
Weighted Average Shares in Issue during the year		529,010,650	502,535,625

Note 6       AASB16 Reconciliation		Consolidated
		2023		2022
		$		$
Balance from previous year		2,411,323	2,580,498
Additions		-	-
Interest on lease liabilities		206,663	221,580
Repayments on lease liabilities		(398,514)	(390,755)
Balance as at 30 June 2023		2,219,472	2,411,323

Note 7        EBITDA Calculation			Consolidated
			2023	2022
			$	$
Net loss - Reported			(5,559,127)	(4,938,860)
Depreciation			741,552	726,155
Interest Expense			328,207	294,444
Share Based payments			613,980	1,133,399
Interest Income			(664)	(3,894)
EBITDA			(3,876,052)	(2,788,756)
Bad Debt Provision			189,491	-
Patent Infringement expense			1,472,664	2,388,322
CEO Transition			872,122
Adjusted EBITDA			(1,341,775)	(450,434)
Note 8 - Share Options Grant - CEO

The 20,000,000 share options that were granted to Lars Stegmann, Chief Executive Officer, on the 11 May 2023 and originally announced on 12 May 2023 disclosed an incorrect vesting period. The correct vesting period for Mr Stegmann's options are as follows:

·      25% will vest 24 months after the vesting commencement date.

·      6.25% of the total options shall vest on each subsequent quarterly anniversary of the vesting commencement date thereafter.

All other terms remain the same as announced on 12 May 2023.

 

END