Immuron(IMRN) - 2023 Q1 - Quarterly Report

Preliminary Final Report Overview Results for Announcement to the Market Immuron Limited reported a 424.9% increase in revenue from ordinary activities to A$765,193, while net loss attributable to members decreased by 66.0% to A$(2,854,254) Results Summary | Metric | Change | Value (A$) | | :--------------------------------------- | :----- | :--------- | | Revenue from ordinary activities | Up 424.9% | 765,193 | | Loss from ordinary activities after tax | Down (66.0)% | (2,854,254) | | Net loss for the period | Down (66.0)% | (2,854,254) | Distributions No dividends were paid or declared by the company for the current or previous financial year - No dividends have been paid or declared by the company for the current financial year, nor were any paid for the previous financial year[3] Explanation of Results The after-tax loss of A$2,854,254 includes A$657,715 in expensed R&D, with revenue increasing by 424.9% due to easing COVID-19 travel restrictions - The after-tax loss of A$2,854,254 is after fully expensing A$657,715 in research and development expenditure[4] - Gross revenue from contracts with customers increased by 424.9% to A$765,193 (2021: A$145,776) due to the easing of travel restrictions from the Coronavirus (COVID-19) pandemic[5] Financial Position Highlights Cash position decreased to A$22,110,278, while trade and other receivables increased to A$662,896, including future R&D Tax Incentive program receivables Financial Position Summary | Metric | 30 June 2022 (A$) | 30 June 2021 (A$) | | :-------------------------- | :---------------- | :---------------- | | Cash position | 22,110,278 | 25,047,281 | | Trade and other receivables | 662,896 | 334,707 | Net Tangible Assets per Security Net tangible asset backing per security decreased to 10.08 cents in 2022 from 11.39 cents in 2021 Net Tangible Assets per Security | Metric | 2022 (Cents) | 2021 (Cents) | | :------------------------------ | :----------- | :----------- | | Net tangible asset backing (per security) | 10.08 | 11.39 | Changes in Controlled Entities There were no changes in controlled entities during the year ended June 30, 2022 - There have been no changes in controlled entities during the year ended 30 June 2022[8] Other Listing Rule Information No specific details were required or applicable for dividends, distribution reinvestment plans, or associates and joint venture entities - Details of individual and total dividends or distributions, dividend or distribution reinvestment plans, and associates and joint venture entities were not applicable[9] Audit Status The financial statements are currently undergoing audit, with the audited statements and independent auditor's report to be released by September 30, 2022 - The financial statements are currently in the process of being audited, with an audited financial statements along with the independent auditor report for the year end 30 June 2022 to be provided in due course[10] Corporate Information Corporate Directory The corporate directory lists key personnel, registered office, share register, auditor, solicitors, and bankers, with Immuron Limited listed on ASX and NASDAQ - Immuron Limited shares are listed on the Australian Securities Exchange (ASX: IMC) and the National Association of Securities Dealers Automated Quotations (NASDAQ: IMRN)[14] - Key directors include Dr Roger Aston (Independent Non-Executive Chairman), Mr Daniel Pollock, Mr Stephen Anastasiou, Prof. Ravi Savarirayan, and Mr Paul Brennan (appointed 16 March 2022); Mr Phillip Hains serves as Secretary[12] Index to Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income The company reported a loss of A$(2,854,254) in 2022, a significant improvement from 2021, with substantial revenue growth and decreased operating loss Profit or Loss and Other Comprehensive Income Summary | Metric | 2022 (A$) | 2021 (A$) | 2020 (A$) | | :--------------------------------------- | :---------- | :---------- | :---------- | | Revenue from contracts with customers | 765,193 | 145,776 | 2,518,566 | | Gross Profit | 523,502 | 94,705 | 1,829,730 | | Operating loss | (2,869,855) | (8,379,908) | (2,905,575) | | Loss Before Income Tax | (2,854,254) | (8,384,465) | (2,927,206) | | Loss for the Period | (2,854,254) | (8,384,465) | (2,927,206) | | Basic/Diluted Loss per Share (in cents) | (1.25) | (3.79) | (1.66) | Consolidated Statement of Financial Position Total assets decreased to A$24,855,824, primarily due to reduced cash, while total liabilities increased to A$1,678,423, leading to a decrease in net assets Financial Position Summary | Metric | 2022 (A$) | 2021 (A$) | | :-------------------------- | :---------- | :---------- | | Cash and cash equivalents | 22,110,278 | 25,047,281 | | Total Current Assets | 23,672,152 | 25,752,778 | | Total Non-Current Assets | 1,183,672 | 1,300,328 | | TOTAL ASSETS | 24,855,824 | 27,053,106 | | Total Current Liabilities | 1,502,976 | 1,121,853 | | Total Non-Current Liabilities | 175,447 | 36,196 | | TOTAL LIABILITIES | 1,678,423 | 1,158,049 | | NET ASSETS | 23,177,401 | 25,895,057 | Consolidated Statement of Changes in Equity Total equity decreased to A$23,177,401 in 2022, mainly due to the loss for the period and a reduction in reserves from lapsed/expired options/warrants Changes in Equity Summary | Metric | 2022 (A$) | 2021 (A$) | 2020 (A$) | | :-------------------------------- | :---------- | :---------- | :---------- | | Balance as at 1 July | 25,895,057 | 5,643,913 | 7,351,136 | | Loss after income tax expense | (2,854,254) | (8,384,465) | (2,927,206) | | Total comprehensive loss for period | (2,847,546) | (8,399,418) | (2,824,268) | | Shares issued, net of costs | 74,960 | 24,386,005 | 1,652,436 | | Options/warrants issued/expensed | 54,930 | 3,003,060 | 484,680 | | Options/warrants lapsed/expired | (361,861) | 368,000 | (2,251,320) | | Balance as at 30 June | 23,177,401 | 25,895,057 | 5,643,913 | Consolidated Statement of Cash Flows Net cash used in operating activities improved to A$(3,147,793), while financing activities shifted to an outflow, resulting in an overall cash decrease of A$3,178,503 Cash Flow Summary | Metric | 2022 (A$) | 2021 (A$) | 2020 (A$) | | :--------------------------------------- | :---------- | :---------- | :---------- | | Net Cash Flows Used In Operating Activities | (3,147,793) | (4,078,747) | (3,147,328) | | Net Cash Flows From/(Used In) Investing Activities | 11,737 | 2,574 | (864) | | Net Cash Flows (Used In)/From Financing Activities | (42,447) | 26,480,182 | 1,156,952 | | Net (decrease)/increase in cash and cash equivalents | (3,178,503) | 22,404,009 | (1,991,240) | | Cash and Cash Equivalents at the End of the Year | 22,110,278 | 25,047,281 | 3,250,468 | Notes to Consolidated Financial Statements This section provides detailed explanations of accounting policies, critical estimates, and specific financial statement line items, offering further insights into the company's financial performance, position, and cash flows - The notes clarify the basis of financial statement preparation, compliance with IFRS, and significant accounting policies[30][31][35] - Key estimates and judgments include share-based payments, inventory impairment, sales returns, R&D tax incentives, and fair value measurements[105] Note 1. Summary of Significant Accounting Policies This note outlines Immuron Limited's significant accounting policies, covering basis of preparation, consolidation, foreign currency, revenue recognition, and asset/liability measurement, confirming compliance with Australian Accounting Standards and IFRS - Immuron Limited is an Australian-domiciled public company listed on ASX and NASDAQ, primarily engaged in oral immunotherapy research and development and product sales (Travelan and Protectyn)[28][29] - The financial statements are prepared on a historical cost basis, comply with Australian Accounting Standards and IFRS, and are based on a going concern assumption[30][31][32][33] - Revenue from the sale of hyperimmune products is recognized when control of assets is transferred to the customer, with variable consideration for rebates, discounts, and refunds[47][49] Note 2. Critical Accounting Estimates and Judgments This note details critical accounting estimates and judgments, including those for share-based payments, inventory impairment, sales returns, R&D tax incentives, and fair value measurements - The fair value of share options is estimated using the Black-Scholes option pricing model, which requires assumptions regarding exercise price, term, volatility, dividend yield, and risk-free interest rate[106][107] - No finished goods impairment (2021: A$328,833) and no raw materials impairment of inventories (2021: A$430,932) were recognized in FY2022[109] - R&D tax incentive income recognized for the year ended June 30, 2022, was A$257,500 (2021: A$356,209)[114] Note 3. Revenue and Other Income Total revenue from operating activities increased significantly to A$765,193, with other income rising to A$957,725 due to R&D grants, and the company recorded net foreign exchange gains Revenue and Other Income Summary | Metric | 2022 (A$) | 2021 (A$) | 2020 (A$) | | :-------------------------------- | :---------- | :---------- | :---------- | | Revenue from contracts with customers | 765,193 | 145,776 | 2,518,566 | | Australian R&D tax incentive refund | 257,500 | 356,209 | 308,225 | | COVID-19 government assistance | - | 161,600 | 154,904 | | HJF R&D grant | 306,595 | 74,821 | - | | MTEC R&D grant | 369,045 | - | - | | Total Other Income | 957,725 | 617,110 | 473,674 | | Net foreign exchange gains/(losses) | 247,558 | (582,528) | 11,335 | | Net impairment losses | - | (759,765) | - | - No finished goods or raw materials impairment was recognized in FY2022, compared to A$328,833 and A$430,932 respectively in FY2021[121] Note 4. Expenses Total general and administrative expenses decreased significantly to A$3,524,388 due to reduced share-based payments, while R&D expenses also decreased and selling/marketing expenses increased Expense Categories | Expense Category | 2022 (A$) | 2021 (A$) | 2020 (A$) | | :-------------------------------- | :---------- | :---------- | :---------- | | General and administrative expenses | 3,524,388 | 6,094,692 | 3,170,078 | | Research and development expenses | 657,715 | 1,367,054 | 1,178,685 | | Selling and marketing expenses | 416,537 | 287,684 | 871,551 | - Share-based payment expenses decreased significantly from A$2,116,013 in 2021 to A$94,890 in 2022[122] Note 5. Income Tax Expense The company reported no income tax expense for 2022 or 2021, primarily due to unrecognized deferred tax assets from tax losses, which increased to A$12,014,532 Income Tax Expense Summary | Metric | 2022 (A$) | 2021 (A$) | | :------------------------------------------------------- | :---------- | :---------- | | Unused tax losses for which no deferred tax asset recognized | 48,058,129 | 44,178,579 | | Potential tax benefit @ 25% (2021: 26%) | 12,014,532 | 11,486,431 | | Income tax expense | - | - | Note 6. Key Management Personnel Compensation Total Key Management Personnel (KMP) compensation decreased substantially to A$791,220, mainly due to significant reductions in other short-term benefits and share-based payment expenses Key Management Personnel Compensation | Compensation Type | 2022 (A$) | 2021 (A$) | 2020 (A$) | | :------------------------------------------------------- | :---------- | :---------- | :---------- | | Short-term employee benefits | 636,673 | 450,002 | 867,054 | | Other short-term benefits, including consulting services | — | 1,603,747 | — | | Share-based payment expenses to KMP | 94,890 | 2,116,012 | 73,088 | | Total Key Management Personnel Compensation | 791,220 | 4,205,850 | 972,965 | - Mr. Steven Lydeamore was appointed Chief Executive Officer on June 27, 2022, replacing Dr. Jerry Kanellos[126] Note 7. Loss per Share Basic and diluted loss per share improved to (1.25) cents in 2022, with the weighted average number of ordinary shares outstanding increasing to 227,579,684 Loss per Share Details | Metric | 2022 (A$) | 2021 (A$) | 2020 (A$) | | :------------------------------------------------------- | :---------- | :---------- | :---------- | | Basic/Diluted loss per share (in cents) | 1.25 | 3.79 | 1.66 | | Net loss used in calculation of basic and diluted loss per share | 2,854,254 | 8,384,465 | 2,927,206 | | Weighted average number of ordinary shares outstanding | 227,579,684 | 221,062,229 | 176,393,354 | - The impact of potential issuance of shares (options, warrants, and convertible notes) was concluded as anti-dilutive due to the company's loss-making position[126] Note 8. Financial Assets and Financial Liabilities This note details the composition and changes in the company's financial assets and liabilities, including cash, receivables, other current assets, and payables - Cash and cash equivalents decreased to A$22,110,278 in 2022 from A$25,047,281 in 2021[127] - Trade and other receivables increased significantly to A$662,896 in 2022 from A$334,707 in 2021, driven by higher trade receivables and R&D grant receivables[127][128] - Trade and other payables increased to A$1,160,893 in 2022 from A$758,494 in 2021, primarily due to higher trade payables[130] Note 9. Non-Financial Assets and Liabilities This note provides details on the company's non-financial assets and liabilities, including property, plant and equipment, inventories, employee benefit obligations, and leases - Property, plant and equipment net book amount increased to A$226,736 in 2022 from A$33,741 in 2021, primarily due to a lease modification for right-of-use assets[131] - Total inventories decreased to A$1,283,514 in 2022 from A$1,559,119 in 2021; no impairment for finished goods or raw materials was recognized in 2022[132][134] - Lease liabilities increased significantly to A$209,787 in 2022 from A$20,498 in 2021, following a three-year commercial lease modification for office facilities[138][142] Note 10. Controlled Entities Immuron Limited maintains 100% ownership of its subsidiaries: Immuron Inc. (USA), Anadis EPS Pty Ltd (Australia), and IMC Canada Ltd. (Canada) - Immuron Limited holds 100% ownership in its subsidiaries: Immuron Inc. (USA), Anadis EPS Pty Ltd (Australia), and IMC Canada Ltd. (Canada)[145] Note 11. Provision for Sales Returns The provision for sales returns decreased to A$95,931 at June 30, 2022, reflecting sales returns made during the year and management's assessment of distributor stock Provision for Sales Returns | Metric | 2022 (A$) | 2021 (A$) | | :------------------------------------------------ | :---------- | :---------- | | Carrying amount at the start of the year | 213,024 | - | | Sales return provision recognized | 71,025 | 213,024 | | Sales return made during the year | (188,118) | - | | Carrying amount at the end of the year | 95,931 | 213,024 | - The sales return provision is assessed based on external reports of stock held by distributors, with the obligation expected to be settled in the next year for stock expiring within 6 months[145] Note 12. Contingent Liabilities and Commitments The group had no contingent liabilities or commitments as of June 30, 2022, or June 30, 2021 - The group had no contingent liabilities or commitments at June 30, 2022 (2021: Nil)[146] Note 13. Share Capital Issued ordinary share capital increased slightly to A$88,436,263, with the number of fully paid ordinary shares increasing to 227,798,346 due to ESOP and service-related issues Share Capital Details | Metric | 2022 (Shares) | 2021 (Shares) | 2020 (Shares) | | :---------------- | :------------ | :------------ | :------------ | | Ordinary shares | 227,798,346 | 227,246,596 | 178,279,566 | | Ordinary shares (A$) | 88,436,263 | 88,361,303 | 62,426,991 | - Movements in ordinary shares for 2022 included the issue of 333,000 shares under the ESOP Plan and 218,750 shares in lieu of payment for services[148] Note 14. Other Reserves Total other reserves decreased to A$3,166,419, primarily due to lapsed/expired options and warrants, partially offset by new issues and positive currency translation differences Other Reserves Breakdown | Reserve Type | 2022 (A$) | 2021 (A$) | 2020 (A$) | | :------------------------ | :---------- | :---------- | :---------- | | Share-based payments | 3,053,197 | 3,360,128 | 1,011,878 | | Foreign currency translation | 113,222 | 106,514 | 121,467 | | Total other reserves | 3,166,419 | 3,466,642 | 1,133,345 | - The share-based payment reserve records expenses from the valuation of share options and warrants issued to key management personnel, other employees, and eligible contractors[155] - The foreign currency translation reserve accumulates exchange differences arising on the translation of foreign controlled entities[156] Note 15. Segment Reporting The group operates in Research and Development and Hyperimmune Products segments, with Hyperimmune Products generating A$765,193 in revenue and the United States being the largest geographical contributor - The group has identified two reportable segments: Research and Development (R&D) and Hyperimmune Products[164] Segment Performance (2022) | Segment (2022) | Hyperimmune products revenue (A$) | Gross profit (A$) | Operating profit/(loss) (A$) | | :--------------- | :-------------------------------- | :---------------- | :--------------------------- | | Hyperimmune products | 765,193 | 523,502 | (32,537) | | R&D | - | - | 275,425 | Geographical Revenue (2022) | Geographical Region (2022) | Travelan (A$) | Protectyn (A$) | Total (A$) | | :------------------------- | :------------ | :------------- | :--------- | | Australia | 143,378 | 57,415 | 200,793 | | United States | 501,228 | - | 501,228 | | Canada | 63,172 | - | 63,172 | Note 16. Cash Flow Information This note reconciles the net loss for the year to net cash flows used in operating activities, highlighting adjustments for non-cash items and changes in working capital Cash Flow Reconciliation | Adjustment | 2022 (A$) | 2021 (A$) | 2020 (A$) | | :-------------------------------- | :---------- | :---------- | :---------- | | Net Loss for the Year | (2,854,254) | (8,384,465) | (2,927,206) | | Depreciation expense | 26,613 | 43,662 | 44,056 | | Share-based payments (income)/expenses | 94,891 | 2,116,013 | (533,912) | | Change in trade and other receivables | (336,998) | 23,037 | 641,236 | | Change in inventories | 275,605 | 960,920 | (113,635) | | Change in trade and other payables | 285,616 | 586,796 | (362,437) | | Net Cash Flows Used In Operating Activities | (3,147,793) | (4,078,747) | (3,147,328) | Note 17. Share-based Payments The Omnibus Incentive Plan provides long-term incentives, with outstanding share options decreasing to 19,873,877 due to lapsing, and total share-based payment expenses significantly reduced to A$94,890 Share Option Movements | Metric | 2022 (Number of options) | 2021 (Number of options) | 2020 (Number of options) | | :-------------------------------- | :----------------------- | :----------------------- | :----------------------- | | As at 1 July | 45,309,478 | 42,807,118 | 79,463,744 | | Granted during the year | 500,000 | 11,560,000 | 542,600 | | Forfeited/lapsed during the year | (25,935,601) | (5,000,000) | (36,774,386) | | As at 30 June | 19,873,877 | 45,309,478 | 42,807,118 | - Total expenses arising from share-based payment transactions decreased to A$94,890 in 2022 (2021: A$2,116,013)[179] - 1,430,000 unlisted options were granted to Mr. Steven Lydeamore (CEO) on June 27, 2022, exercisable at A$0.12 on or before June 27, 2026[159][176] Note 18. Related Party Transactions The group engaged in transactions with related parties, including purchases of goods and services from KMP-controlled entities and legal services, with total settled amounts increasing to A$154,364 Related Party Transactions | Transaction Type | 2022 (A$) | 2021 (A$) | 2020 (A$) | | :------------------------------------------------------- | :---------- | :---------- | :---------- | | Purchases from entities controlled by KMP | 154,364 | 110,607 | 142,347 | | Legal services by KMP | 20,000 | - | - | - Transactions include rental of office facilities from Wattle Laboratories Pty Ltd and warehousing, distribution, and invoicing services from Grandlodge Capital Pty Ltd, both controlled by KMP[183][184][186] - Current payables to entities controlled by key management personnel were A$77,000 in 2022 (2021: A$70,000)[189] Note 19. Financial Risk Management Objectives and Policies This note outlines the group's financial risk management objectives and policies, focusing on market risk (foreign exchange), credit risk, and liquidity risk, with the Board primarily controlling risk management - The Group's risk management is predominantly controlled by the Board, which monitors policies, approves substantial financial transactions, and reviews internal controls related to market, credit, and liquidity risks[190] Market Risk (Foreign Exchange Risk) The group is exposed to foreign currency risk, primarily from USD/AUD fluctuations, with sensitivity analysis indicating increased impact on profit or loss and equity in 2022 due to higher USD-denominated cash - The Group is primarily exposed to changes in USD/AUD exchange rates, with exposure measured using sensitivity analysis and cash flow forecasting[192][194] Foreign Exchange Risk Sensitivity | Metric | 2022 (A$) | 2021 (A$) | | :------------------------------------------------------- | :---------- | :---------- | | Impact on loss for the period (USD/AUD change by 5.8%/4.9%) | 202,507 | 136,467 | | Impact on other components of equity (USD/AUD change by 5.8%/4.9%) | 6,567 | 5,219 | Credit Risk Credit risk is managed by monitoring credit limits, assessing customer financial stability, and investing surplus funds in highly-rated institutions, applying the IFRS 9 simplified approach for expected credit losses - Credit risk is managed through procedures for approving and monitoring credit limits, assessing the financial stability of significant customers, and investing surplus funds in financial institutions with high credit ratings[198][199] - The group applies the IFRS 9 simplified approach for measuring expected credit losses, using a lifetime expected loss allowance for all trade receivables based on payment profiles and macroeconomic factors[202][203] - Trade receivables are written off when there is no reasonable expectation of recovery, indicated by failure to engage in repayment plans or make contractual payments for over 121 days past due[204] Liquidity Risk Liquidity risk is managed through forward-looking cash flow analyses, diverse funding sources, maintaining a reputable credit profile, and matching financial liability maturities with asset realization profiles - Liquidity risk is managed by preparing forward-looking cash flow analyses, obtaining funding from various sources, maintaining a reputable credit profile, and comparing the maturity profile of financial liabilities with the realization profile of financial assets[208] Financial Liabilities Maturity Profile (30 June 2022) | Financial Liabilities (30 June 2022) | Less than 6 months (A$) | Total contractual cash flows (A$) | Carrying amount (A$) | | :----------------------------------- | :---------------------- | :-------------------------------- | :------------------- | | Trade and other payables | 748,980 | 748,980 | 748,980 | | Lease liabilities | 34,376 | 34,376 | 34,376 | | Total | 783,356 | 783,356 | 783,356 | Note 20. Events Occurring After the Reporting Date No significant events or circumstances occurred subsequent to the reporting period that would materially affect the group's operations, results, or financial state in future financial years - No matter or circumstance has occurred subsequent to period end that has significantly affected, or may significantly affect, the operations of the group, the results of those operations or the state of affairs of the group or economic entity in subsequent financial years[211] Note 21. Parent Entity Financial Information The parent entity, Immuron Limited, reported total assets of A$24,867,419 and total liabilities of A$1,674,281 as of June 30, 2022, with a loss for the year of A$2,781,085 Parent Entity Financial Summary | Metric | 2022 (A$) | 2021 (A$) | | :-------------------- | :---------- | :---------- | | Total assets | 24,867,419 | 26,998,549 | | Total liabilities | 1,674,281 | 1,154,216 | | Loss for the year | 2,781,085 | 8,271,111 | | Total comprehensive loss | 2,781,085 | 8,271,111 | - Investments in subsidiaries are accounted for at cost in the financial statements of Immuron Limited (parent entity)[217] - The parent entity had no guarantees, contingent liabilities, or contractual commitments for the acquisition of property, plant, or equipment[213][214][215] Note 22. Auditors' Remuneration Grant Thornton Audit Pty Ltd billed A$173,631 for audit and review of financial statements in 2022, a slight decrease from A$179,742 in 2021 Auditors' Remuneration | Service | 2022 (A$) | 2021 (A$) | | :------------------------------------ | :---------- | :---------- | | Audit and review of financial statements | 173,631 | 179,742 |