STATEMENT OF CASH FLOWS

For the year ended 31 December 2022

		Year to	Year to
		31 December	31 December
	Note	2022	2021
		US$'000	US$'000
Cash flows from operating activities
Loss for the year		(7,606)	(7,444)
Adjustments for:
Depreciation of property, plant and equipment		285	323
Forgiveness of Paycheck Protection Program Loan			(206)
Gain on sale of tangible assets		(43)	(36)
Foreign exchange loss on short term deposit		562	-
Finance income		(88)	(12)
Finance expense		52	417
Taxation		4	16
Share-based payments expense		614	409
		_________	_________
		(6,220)	(6,533)
(Increase) / decrease in trade and other receivables		128	(569)
(Decrease) / increase in trade and other payables		251	(422)
Income taxes paid		(4)	(16)
		_________	_________
Net cash outflow from operating activities		(5,845)	(7,540)
		_________	_________
Cash flows from investing activities
Purchases of tangible assets		(85)	(47)
Proceeds from sale of tangible assets		43	36
Short term deposits		(73)	(5,411)
Landlord improvement contribution		-	15
Purchase of intangibles		-	(1,800)
		_________	_________
Net cash used in investing activities		(115)	(7,207)
		_________	_________
Cash flows from financing activities
Issue of Convertible Notes		-	1,612
Issue of Common Stock		2	23,444
Expenses of issue of Common Stock		-	(1,000)
Interest received		88	10
Interest paid		(52)	(107)
Repayment of lease liabilities		(207)	(123)
		_________	_________
Net cash (used in) / from financing activities		(169)	23,836
Net (decrease) / increase in cash and cash equivalents		(6,129)	9,089
Cash and cash equivalents at beginning of year		9,217	128
		_________	_________
Cash and cash equivalents at end of year	5	3,088	9,217
		_________	_________

 

 

 

 

Notes forming part of the financial statements For the year ended 31 December 2022
1	General Information

 

LungLife AI, Inc, (the "Company") is a company based in Thousand Oaks, California which is developing a diagnostic test for the early detection of lung cancer. The Company was incorporated under the laws of the state of Delaware, USA, on 30 December 2009.

 

The Company's costs associated with developing and commercialising its test include costs associated with the development of intellectual property optimising the technology, and obtaining  regulatory approval. To complete clinical trials the Company will continue to require additional operating funds. The Company has raised funds through offerings of debt, common stock and Series A Preferred Shares.

 

There are no restrictions on the Company's ability to access or use its assets and settle its liabilities.

 

 

2	Basis of preparation

 

Information in this preliminary announcement does not constitute statutory accounts of the company. The financial information presented in this preliminary announcement is based on, and is consistent with, that in the company's audited financial statements for the year ended 31 December 2022, which will be delivered to shareholders for approval at the Company's Annual General Meeting. The independent auditors have reported on those financial statements and their report is unqualified and unmodified.

 

The financial statements have been prepared in accordance with UK adopted International Accounting Standards ("UK IFRS").

 

These financial statements are prepared in accordance with UK IFRS under the historical cost convention, as modified by the use of fair value for financial instruments measured at fair value. The historical financial information is presented in United States Dollars ("US$") except where otherwise indicated.

 

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

 

(a)  Going concern

 

These financial statements have been prepared on the going concern basis.

 

The directors of the Company have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and for at least one  year from the date of approval of the financial statements. As of 31 December 2022 the Company had total available cash resources of US$8,010,000, split between cash and cash equivalents of US$3,088,000 and monies of short term deposit (with notice of 95 days) of US$4,922,000. The Company will be concluding its clinical trial in early 2023 and together with other operational impacts our expenditure levels are expected to be reduced.  For that reason, they continue to adopt the going concern basis in preparing the Company's financial statements.

 

(b)  New standards, amendments and interpretations

 

New standards are not expected to impact the Company as they are either not relevant to the Company's activities or require accounting which is consistent with the Company's current accounting policies.

 

The Directors have considered those standards and interpretations which have not been applied in these financial statements but which are relevant to the Company's operations that are in issue but not yet effective and do not consider that they will have a material effect on the future results of the Company.

 

(c)      Revenue recognition

 

Sale of goods

Revenue comprises the fair value of the sale of FISH probes used to identify the properties  of blood samples under the terms of a sub license agreement with a third party, net of applicable sales taxes. Revenue is recognised on the sale of goods when the significant risks and rewards of ownership of the goods have passed to the buyer and the amount of revenue can be measured reliably. Revenue on goods delivered is recognised when the customer accepts delivery and on services when those services have been rendered.

 

Royalty income

Under the terms of a patent and technology sub license agreement the company is entitled to receive royalty income at 6% of the quarterly net sales invoiced by the sub licensee in the relevant quarter.  Income is recognised in the period in which the underlying net sales are generated.

 

Cash is received from revenues recognised according to terms of trade within the relevant  contractual relationship, usually in accordance with agreed events such as placing of order, fulfilment of order and delivery.

 

(d)     Intangible assets

 

Research expenditure is recognised as an expense when incurred. Development expenditure is recognised as an expense except those costs incurred on development projects are capitalised as long term assets to the extent that such expenditure is expected to generate future economic benefits. Development expenditure is capitalised only if it meets the criteria for capitalisation under IAS 38. Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses, if any. Development expenditure initially recognised as an expense is not recognised as an asset in future years. Capitalised development expenditure is amortised on a straight-line basis over the estimated useful life of the asset when the asset is available for use.

 

(e)      Property, plant and equipment

 

Owned assets

Items of property, plant and equipment are stated at cost less accumulated  depreciation and impairment losses. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. When parts of an item of property, plant and equipment have different useful lives, those components are accounted for as separate items of property, plant and equipment.

 

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.

 

(e)      Property, plant and equipment (continued)

 

Depreciation

Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows:

 

·      computer and IT equipment - 33 per cent. straight line

·      leasehold improvements - shorter of lease term and useful life

·      plant and machinery - 20 per cent. straight line

·      laboratory equipment - 20 per cent. straight line

 

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, or if there is an indication of a significant change since the last reporting date.

 

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within "other operating income" in the statement of income.

 

(f)      Impairment of non-financial assets

 

Non-financial assets are reviewed for impairment annually in the case of not being available for use, and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are considered at the lowest levels for which there are separately identifiable cash flows (cash- generating units).

 

Non-financial assets other than goodwill that suffered impairment are reviewed for possible  reversal of the impairment at each reporting date.

 

2	Basis of preparation (continued)

 

(g)     Financial assets

 

Classification

The Company classifies its financial assets as loans and receivables. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition.

 

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments. They are initially recognised at fair value and are subsequently stated at amortised cost using the effective interest method.

 

Impairment of financial assets

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay  in payment) that the Company will be unable to collect all of the amounts due under the term's receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired asset.

 

(h)      Cash and cash equivalents

 

Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less.

 

 

 

 

 

2	Basis of preparation (continued)

 

(i)       Financial liabilities

 

Trade and other payables

Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

 

Convertible debt

The proceeds received on issue of the Company's convertible debt are allocated into their  liability and equity components. The amount initially attributed to the debt component equals the discounted cash flows using a market rate of interest that would be payable on a similar debt instrument that does not include an option to convert. Subsequently, the debt component is accounted for as a financial liability measured at amortised cost until extinguished on conversion or maturity of the bond. The remainder of the proceeds is allocated to the conversion option and is recognised in the "Other equity" within shareholders' equity, net of income tax effects.

 

(j)       Borrowings

 

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

 

Borrowings are de-recognised from the statement of financial position when the obligation  specified in the contract is discharged, is cancelled or expires. The difference between the  carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the income statement as other operating income or finance costs.

 

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

 

(k)      Provisions

 

A provision is recognised in the statement of financial position when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre- tax rate that reflects current market assessments of the time value of money and, when appropriate, the risks specific to the liability. The increase in the provision due to the passage of time is recognised in finance costs.

 

(l)       Share capital

 

Ordinary shares are classified as equity. There are various classes of ordinary shares in issue, as detailed in note 19. Incremental costs directly attributable to the issue of new shares are shown in share premium as a deduction from the proceeds.

 

 

2	Basis of preparation (continued)

 

(m)     Net finance costs

 

Finance costs

Finance costs comprise interest payable on borrowings, direct issue costs and dividends on preference shares, and are expensed in the period in which they are incurred.

 

Finance income

Finance income comprises interest receivable on funds invested, and foreign exchange gains.

 

Interest income is recognised in the income statement as it accrues using the effective interest method.

 

(n)      Leases

 

All leases are accounted for by recognising a right-of-use asset and a lease liability except  for:

 

·      Leases of low value assets; and

·      Leases with a duration of 12 months or less.

 

Lease liabilities are measured at the present value of the contractual payments due to the  lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Company's incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.

 

On initial recognition, the carrying value of the lease liability also includes:

 

·      amounts expected to be payable under any residual value guarantee

·      the exercise price of any purchase option granted in favour of the Company if it is reasonably certain to assess that option

·      any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.

 

Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

 

·      lease payments made at or before commencement of the lease

·      initial direct costs incurred; and

·      the amount of any provision recognised where the Company is contractually required to dismantle, remove or restore the leased asset (typically leasehold dilapidations - see note 19).

 

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.

 

2	Basis of preparation (continued)

 

(n)      Leases (continued)

 

When the company revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised) it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted using a revised discount rate. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised, except the discount rate remains unchanged. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease  term. If the carrying amount of the right-of-use asset is adjusted to zero, any further reduction is recognised in profit or loss.

 

(o)     Income tax

 

Income tax for the years presented comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the statement of financial position date, and any adjustment to tax payable in respect of previous years.

 

Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts.

 

The following temporary differences are not recognised if they arise from (a) the initial recognition of goodwill; and (b) for the initial recognition of other assets or liabilities in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. The amount of deferred tax provided is based  on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the statement of financial position date.

 

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

 

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

 

(p)      Foreign currency translation

 

i)   Function and presentational currency

Items included in the financial statements of the Company are measured using USD, the currency of the primary economic environment in which the entity operates ('the functional currency'), which is also the Company's presentation currency.

 

ii)  Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates, of monetary assets and liabilities denominated in foreign currencies to USD, are recognised in the income statement.

 

 

3	Critical accounting judgements and estimates

 

The preparation of the Company's historical financial information under UK IFRS requires the directors to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

 

The Directors consider that the following estimates and judgements are likely to have the most significant effect on the amounts recognised in the financial information.

 

Carrying value of intangible assets, property, plant and equipment

In determining whether there are indicators of impairment of the Company's assets, the directors make a number of estimates in relation to assets including the economic viability and expected future financial performance of the asset and when it relates to the intangible assets arising on a business combination, the expected future performance of the business acquired.

 

Classification of the Mount Sinai License as an intangible asset

As set out in note 13, on 18 June 2021, the Company entered into the Mount Sinai License Agreement, pursuant to which Mount Sinai granted an option to the Company to obtain a licence, on a non-exclusive basis, to use certain information held by Mount Sinai. After considering the criteria in IAS38 the directors have judged that the recognition criteria therein have been met and classified the Mount Sinai license as an intangible asset.

 

 

4	Segment analysis

 

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Company that are regularly reviewed by the chief operating decision maker (which takes the form of the Board of Directors) as defined in IFRS 8, in order to allocate resources to the segment and to assess its performance.

 

The chief operating decision maker has determined that the Company has one operating  segment, the development and commercialisation of its lung cancer early detection test. Revenues are reviewed based on the products and services provided.

 

The Company operates in the United States of America. Revenue by origin of geographical  segment is as follows:

		Year to 31 December  2022	Year to 31 December 2021
		US$'000	US$'000
	Revenue
	People's Republic of China	24	195
		________	________
		24	195
		________	________

 

 

4	Segment analysis (continued)
		2022	2021
		US$'000	US$'000
	Non-current assets
	United States of America	6,397	6,597
		________	________
		6,397	6,597
		________	________
		Year to  31 December  2022	Year to 31 December  2021
		US$'000	US$'000
	Product and service revenue
	Royalty income	24	88
	Consumable items	-	107
		________	________
		24	195
		________	________

 

 

5	Financial instruments - Risk management

 

The Company is exposed through its operations to the following financial risks:

 

-     Credit risk

-     Foreign exchange risk and

-     Liquidity risk

 

The Company is exposed to risks that arise from its use of financial instruments.  This note describes the Company's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

 

(i) Principal financial instruments

 

The principal financial instruments used by the Company, from which financial instrument risk arises, are as follows:

 

-     Cash and cash equivalents

-     Short term cash deposits

-     Trade and other payables

 

5	Financial instruments - Risk management (continued)

 

(ii) Financial instruments by category

 

Financial asset

 

		Amortised	Amortised
		cost	cost
		2022	2021
		US$'000	US$'000
	Cash and cash equivalents*	3,088	9,217
	Short term cash deposits*	4,922	5,411
	Trade and other receivables	607	741
		_________	_________
	Total financial assets	8,617	15,369
		_________	_________

 

 

* Comparative amounts at 31 December 2021 have been re-presented to reflect the reclassification of fixed term deposits of $5,411,000 with a maturity date of greater than three months at inception. There were no fixed term deposits at 31 December 2020.

 

Financial liabilities

 

		Amortised	Amortised
		cost	cost
		2022	2021
		US$'000	US$'000
	Trade and other payables	1,055	804
		_________	_________
	Total financial liabilities	1,055	804
		_________	_________

 

(iii) Financial instruments not measured at fair value

 

Financial instruments not measured at fair value includes cash and cash equivalents, trade and other receivables, and trade and other payables.

 

Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, and trade and other payables approximates their fair value.

 

See note 16 for information on lease liabilities.

 

 

5	Financial instruments - Risk management (continued)

 

(iv) Financial instruments

 

General objectives, policies and processes

 

The Board has overall responsibility for the determination of the Company's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Company's finance function. 

 

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company's competitiveness and flexibility.  Further details regarding these policies are set out below:

 

Credit risk

 

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Due to the current low level of revenue, the Company's exposure to credit risk is on cash at bank.  The Company only deposits cash with major banks with high quality credit standing.

 

Cash in bank and short-term deposits

 

The credit quality of cash has been assessed by reference to external credit rating, based on Standard and Poor's long-term / senior issuer rating:

 

		2022	2022	2021	2021
	Cash in bank		Cash		Cash
		Rating	at bank	Rating	at bank
			US$'000		US$'000
	Bank A	A+	981	A+	8,140
	Bank B	BBB+	2,002	BBB+	1,015
	Bank C	A+	105	A+	62
			_________		_________
			3,088		9,217
			_________		_________

 

 

		2022	2022	2021	2021
	Short term deposits
		Rating		Rating
			US$'000		US$'000
	Bank B	BBB+	4,922	BBB+	5,411
			_________		_________
			4,922		5,411
			_________		_________

 

5	Financial instruments - Risk management (continued)

 

Foreign exchange risk

 

Foreign exchange risk arises when the Company enters into transactions denominated in a currency other than its functional currency.  The Company's policy is, where possible, to settle liabilities denominated in its functional currency. Currently the Company's liabilities are either US dollar or UK sterling.  No forward contracts or other financial instruments are entered into to hedge foreign exchange movements, with funds raised in the UK being transferred to fund US operations using spot rates. 

 

As at 31 December 2022 assets held in Sterling amounted to US$5,275,000 (2021 - US$6,488,000) and liabilities held in Sterling amounted to US$65,000 (2021 - US$66,000). 

 

The effect of a 5% strengthening of the Sterling against US dollar at the reporting date on the Sterling denominated net assets carried at that date would, all other variables held constant, have resulted in a decrease in post-tax loss for the year and increase of net assets of US$260,000 (2021 - US$321,000).  A 5% weakening in the exchange rate would, on the same basis, have increased post-tax loss and decreased net assets by US$260,000 (2021 - US$321,000).

 

Liquidity risk

 

Liquidity risk is the risk that the Company will encounter difficulty in meeting its financial obligations as they fall due.  This risk is managed by the production of annual cash flow projections.  The Company's continued future operations depend on its ability to raise sufficient working capital through the issue of share capital and generating revenue.

 

The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities which can all be met from the cash resources currently available:

 

			Between
		Up to 3	3 and 12
		months	months
	At 31 December 2022	US$'000	US$'000
	Trade and other payables	371	-
		_________	_________
	Total	371	-
		_________	_________

 

			Between
		Up to 3	3 and 12
		months	months
	At 31 December 2021	US$'000	US$'000
	Trade and other payables	275	-
		_________	_________
	Total	275	-
		_________	_________

 

 

5	Financial instruments - Risk management (continued)

 

Capital Disclosures

 

The Company monitors its capital which comprises all components of equity (i.e., share capital, share premium, and accumulated losses).

 

The Company's objectives when maintaining capital are to safeguard the entity's ability to continue as a going concern.

 

 

6	Expenses by nature
		Year to	Year to
		31 December	31 December
		2022	2021
		US$'000	US$'000
	Employee benefit expenses (see note 8)	3,264	1,760
	Share-based payments charge - non-employee and directors	37	87
	Depreciation of property, plant and equipment	285	323
	Gain on disposal of equipment	(43)	(36)
	Research and development expenditure	1,981	1,343
	Professional costs	643	720
	Legal settlement	-	687
	Foreign exchange losses	659	97
	Other costs	938	1,210

 

Other operating income is claims made for Employee Retention Credits.  Other operating income for the prior year represented forgiveness of the Paycheck Protection Program Loan.

 

7	Auditors' remuneration

 

During the year the Company obtained the following services from the Company's auditor:

 

		Year to	Year to
		31 December	31 December
		2022	2021
		US$'000	US$'000
	Fees payable to the Company's auditor for the audit of the Company	48	48
	Fees payable to the Company's auditor for other services:
	Services in connection with listing	-	108
		_________	_________
	Total	48	156
		_________	_________

 

 

 

8	Employee benefit expenses
		Year to	Year to
		31 December	31 December
		2022	2021
		US$'000	US$'000
	Employee benefit expenses (including Directors) comprise:
	Wages and salaries	2,262	1,304
	Benefits	164	75
	Share-based payments expense	577	323
	Social security contributions and similar taxes	177	53
	Pension	84	5
		_________	_________
		3,264	1,760
		_________	_________

 

Key management personnel compensation

 

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, including the Directors of the Company.

		Year to	Year to
		31 December	31 December
		2022	2021
		US$	US$
	Salary	696	599
	Share based payment expense	495	313
		_________	_________
		1,191	912
		_________	_________

 

The average number of employees (including Directors) in the Company in the year was 18 (2021 - 14).

 

 

9	Net finance costs
		Year to	Year to
		31 December	31 December
		2022	2021
		US$'000	US$'000
	Finance expense
	Interest expense on lease liabilities	52	108
	Interest expense on liabilities measured at amortised cost	-	309
		_________	_________
	Total finance expense	52	417
		_________	_________

 

9	Net finance costs (continued)
		Year to	Year to
		31 December	31 December
		2022	2021
		US$'000	US$'000
	Finance income
	Bank interest	88	12
		_________	_________
	Total finance income	88	12
		_________	_________

 

 

10	Tax expense
		Year to	Year to
		31 December	31 December
		2022	2021
		US$'000	US$'000
	Current tax expense
	Current tax on loss for the year	-	-
	Withholding tax on royalties	4	16
		_________	_________
	Total current tax	4	16
	Deferred tax asset
	On losses generated in the year	-	-
		_________	_________
		4	16
		_________	_________

 

10

Tax expense (continued)

 

There were no charges to current corporation taxation due to the losses incurred by the Company in the year.  The reasons for the difference between the actual tax charge for the year and the US federal income tax rate of 21% and state of California income tax rate of 8.84% are as follows:

 

		Year to	Year to
		31 December	31 December
		2022	2021
		US$'000	US$'000
	Loss for the year	(7,606)	(7,428)
		_________	_________
	Tax using 29.84%	(2,270)	(2,217)
	Expenses not deductible for tax purposes	34	689
	Unrecognised deferred tax assets for losses carried forward	2,236	1,528
		_________	_________
	Total tax expense	-	-
		_________	_________

 

 

The unrecognised deferred tax is based on Federal taxable losses carried forward of US$53,485,000 (2021 - US$49,393,000) and a Federal capital loss of US$4,583,333 (2021 - US$4,583,333).  No deferred tax asset is recognised for these losses due to early stage in the development of the Company's activities.  Of the total Federal losses carried forward US$35,281,000 (2021 - US$35,281,000) expire in 2030 and can only be used against trading profits from the same trade.  Losses of US$18,204,000 (2021 - US$14,112,000) do not expire but can only offset against 80% of taxable profits from the same trade.

 

 

11	Loss per share
		Year to	Year to
		31 December	31 December
		2022	2021
		Total	Total
	Numerator	US$	US$
	Loss for the year used in basic EPS	(7,605,585)	(7,444,188)
	Denominator
	Weighted average number of ordinary shares used in basic EPS	25,481,800	15,870,143
	Resulting loss per share	(US$0.298)	(US$0.469)

 

The Company has one category of dilutive potential ordinary share, being share options (see note 21). The potential shares were not dilutive in the year as the Company made a loss per share in line with IAS 33.  As described in note 19, between 2 July 2021 and 7 July 2021 the Company implemented a pre-Admission reorganisation of its capital which included the conversion of Series A and B Preferred Shares into Common Shares and a reverse share split by way of the issue of one new Common Share and Preferred Share for every 18 old Common Shares and Preferred Shares held.

 

As required by IAS33, the number of shares presented as the denominator in calculating loss per share has been adjusted from 1 January 2020, the beginning of the earliest period for which loss per share information is presented in order to maintain comparability.

 

 

 

12	Tangible assets
			Furniture	Computers
		Leasehold	and	and IT	Plant &
		improvements	equipment	equipment	machinery	Total
		US$'000	US$'000	US$'000	US$'000	US$
	Cost or valuation
	At 1 January 2021	982	56	50	1,051	2,139
	Landlord contribution	(15)	-	-	-	(15)
	Additions	349	-	35	258	642
		________	________	________	_________	_________
	At 31 December 2021	1,316	56	85	1,309	2,766
	Additions	-	-	31	54	85
		________	________	________	________	________
	At 31 December 2022	1,316	56	116	1,363	2,851
		________	________	________	________	________
	Accumulated depreciation and impairment
	At 1 January 2021	712	56	50	859	1,677
	Depreciation	233	-	3	87	323
		________	________	________	________	________
	At 31 December 2021	945	56	53	946	2,000
	Depreciation	140	-	19	126	285
		________	________	________	________	________
	At 31 December 2022	1,085	56	72	1,072	2,285
		________	________	________	________	________
	Net book value
	At 31 December 2022	231	-	44	291	566
		________	________	________	________	________
	At 31 December 2021	371	-	32	363	766
		________	________	________	________	________

 

 

Included in leasehold improvements at 31 December 2022 are right of use assets with a cost of $1,282,052 (2021 - $1,282,052) and accumulated depreciation of $1,042,261 (2021 - $911,119).

13	Intangible assets
		License	Total
		US$'000	US$'000
	Cost
		_________	_________
	At 31 December 2021 and 2022	5,818	5,818
		_________	_________
	Accumulated amortisation and impairment
	At 1 January 2021	-	-
	Amortisation charge	-	-
		_________	_________
	At 31 December 2021	-	-
	Amortisation charge
		_________	_________
	At 31 December 2022	-	-
		_________	_________
	Net book value
	At 31 December 2022	5,818	5,818
		_________	_________
	At 31 December 2021	5,818	5,818
		_________	_________

 

On 18 June 2021, the Company entered into the Mount Sinai Licence Agreement, pursuant to which the Icahn School of Medicine at Mount Sinai ("Mount Sinai") granted an option to the Company to obtain a licence, on a non-exclusive basis, to use certain information held by Mount Sinai. The Mount Sinai Licence Agreement automatically became effective on Admission. Exercise of the option contained in the Mount Sinai Licence Agreement is conditional on: (i) Admission; (ii) clearance by Mount Sinai's information security team; and (iii) IRB, data security and data use approvals. Mount Sinai is under an obligation to use commercially reasonable efforts to obtain such clearances and approvals (other than Admission). Pursuant to the Mount Sinai Licence Agreement, Mount Sinai has granted the Company an option to obtain a licence, on a non-exclusive basis, to use certain information held by Mount Sinai to be able to develop future products.