iQNovate Ltd Preliminary Final Report FY 2017 (2017.09.13 ... · Final dividend in respect of the...

DearShareholders

iQN,sinceitsinceptionin2011,hasbeenapureplaycompanyfocusedondevelopingearlystagelifescienceassets for its clients or for itself and taking advantageof risk by establishing a sustainable “risk advantage”whichisasimportantfortheentryintheinvestmenttodayascreatinganexitinthefuture.

OverthelastthreeyearsiQN’sfinancialshaveimprovedasthechartsinthefollowingcommentaryonresultssection signifies, however still sustaining an operational cash burn of $6.5million. Despite this cash burn, Ibelieve the intrinsic value of the company remainsmultiple times higher than themarket capitalisation of$37.3milliontoday.

This intrinsic value is ascribed to the company by the assets it owns and develops aswell as its subsidiaryentitiesFarmaForce(FFC)andClinicalResearchCorporation(CRC).

My focus in this year’s operational review will bemore about the development programs the company isrunningthanthesubsidiaryentitieswhichareconsolidatedintothisreport.

iQN’s revenue is generated through three separate streams– commercial sales, capital gains, andResearchandDevelopment.

• SalesofethicalpharmaceuticalsandmedicaldevicestophysiciansandotherhealthcarepractitionersonbehalfofourglobalBiopharmaclientsthroughFFC;

• ResearchandDevelopment,clinicalandmedicalservicestoclientglobalBiopharmacompanies;• IncubationanddevelopmentofIntellectualpropertyonbehalfofclients;and• CapitalgainsfromownershipofIP.

Over the past four years, through a teamof scientists, economists, analysts and external collaborators,wehave been sourcing, identifying and validating discovery stage life science IP. In a field requiring themosthighlyskilled labourandscientific innovationtobringproducts tomarket,atanygiventime, thenumberof“good”opportunitiestodeploycapitalthatwillbesuccessfulandofferasuperior investmentreturnisfinitehencewehavesetveryrigidandspecificcriteriaofwhatwelookfor:

• Accesstheassetnotthelicense;wehavebeenlookingtoassignassignmentoftheIPasopposedtolicensetheIP.(AnassignmentofIPisatransferofownershipwhereasanIPlicenseallowsthecompanytousetheworkwithouttransferringownership).It’sfarmorecomplicatedtoexecuteanassignmentthanitistolicensee.g.in2014inAustralia,732licensingagreementswereachievedandonly10assignments.

• Createvehiclesthataccessthebiotechthemesforwhichbenefitsaccruetothecompanies,andbyextensiontheshareholders,asopposedtojustthecustomers.

• Correlatethescientificmilestonestothebusinessmilestones,addingvaluetotheprojectsthroughthecreationofearlyfinancialexits.

• MinimizeIPacquisitioncost,acquiringtheassetatrealisticpricegiventhedevelopmentriskandinvestmentnecessarytode-riskandcommenceexitprocess.

Inthepast,spikesofenthusiasmforthebiotechmarketshaveresultedinaveryrapidadvanceinassetspricesunjustifiedbythestageofdevelopmentandtherapeuticarea,denotingadistortionintheperceptionoftimeby investors in their chase for outsized returns. Today a lot of the investors chasing returns in thebiotechnologysectoraredoingsobecauseoftheperformanceofthepast5yearsandnotbecausetheyhavea

firmgraspofthescience,theeconomicchallengesinvolvedortheearningspotentialgoingforward,andaretakingona lotmoreriskthantheyassumetheyare. iQNactivelyseekstotakesomeoftheriskawayby itsinvestmentthesis.

After screening hundreds of early stage developments during the past few years IQN has a valuable andsustainabletherapeuticanddiagnosticportfolio.

DiagnosticPortfolio

The diagnostic platform we have acquired and are developing, creates an entire portfolio of diagnostic,screeningandprognostictests,forprofessionaluse,self-testingandpointofcareatclinic.

Ourcurrentdevelopmentstagepipelineincludes:

• hormones• immunology• biochemistry• tumormarkers• communicablediseases• nucleicacids

Asignificantfranchiseforourcompanyisdiabetes,andweareapproachingthecommercialisationstagewiththis asset. This non-invasive glucose test has the potential to become the substitute for every patient thatcurrentlyneedstodothefingerpricktestseveraltimesperday.

This innovationenablesapatienttomonitorglucosewithoutprickingtheir fingerand ithasthepotentialtoaddress415millionadultsthatcurrentlyhavediabetes.By2040thisnumberwillriseto642million.(IDFAtlas7thEdition).

Theentireglucoseself-monitoringmarket,accordingtoGlobalData,willreach$12.2billionbytheyear2017.

TherapeuticPortfolio

IQN is also undertaking a therapeutic research anddevelopment programof a first in class, novelmodeofaction, biologic compound for breast cancer. It is anticipated that following compilation of the completedpreclinicaldatafile,thecompanywillsubmittotheFDAaninvestigativenewdrugapplicationtocommencehumanclinical trials. Following thispilot submission,weareexpecting that separate INDA’swill be filed forotheroncologyindications.

• BreastCancer• ProstateCancer• Melanoma• LungCancer

ItisforecastthattheglobalbreastcancertherapeuticsmarketissettoincreaseinvaluefromA$10.4billionin2014 to $17.2 billion by 2021, at a Compound Annual Growth Rate (CAGR) of 7.3%, according to businessintelligenceproviderGBIResearch.

DrGeorgeSyrmalisChairandGroupCEO

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NSX-PreliminaryFinalReport

Nameofentity: IQNOVATELTDACN: 149731644ReportingPeriod: Twelvemonthsending30June2017PreviousCorrespondingPeriod: Twelvemonthsending30June2016

Resultsforannouncementtothemarket

Revenueandnetprofit

Movement Percentagechange

2017

Revenuefromordinaryactivities up 75% 4,670,912

Lossfromordinaryactivitiesaftertax up 34% (9,881,006)

Lossfromordinaryactivitiesaftertaxattributabletoowners up 39% (9,223,710)

Dividends

Dividend Amountper

security

Frankedamountpersecurity

Finaldividendinrespectofthetwelvemonthsending30June2017:

NIL NIL NIL

Nettangibleassetspersecurity 2017 2016

Nettangibleassetspersecurity(centspersecurity) (10.71) (1.27)

Commentaryonresults

Commentary for thepreliminary final report for thetwelvemonthsending30June2017 iscontained in theNationalSecuritiesExchange(NSX)releaseandonpage2ofthisannouncement.

Additionalinformation

Thisreportisbasedonunauditedfinancialstatementswhicharecurrentlyintheprocessofbeingaudited.Thefinancialstatementsincludedinthe2017AnnualReportarelikelytocontainanunqualifiedindependentauditreport.

AdditionalPreliminaryFinalReportrequirementscanbefoundonpages2to25ofthisannouncement.

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Commentaryonresults

• Recordsalesrevenueof$4.7millionincreasing75%ontheprioryear;

• $0.8millionincreaseingrossprofit;• Increasedmarketshare,revenue,and

profitabilityofcontractsalesbusinessunit(FarmaForce).

$Amillions FY17 FY16 Change

Revenue 4.7 2.7 2.0

Grossprofit 0.8 (0.0) 0.8

Lossaftertax (9.9) (7.4) (2.5)

Cashusedinoperations (6.5) (6.8) 0.3

AboutiQnovate

IQnovateisascientificallydrivenlifescienceassetmanagementorganisation.Ithasexceptionalorganicresearchanddevelopmentcapability.ThisenablesiQnovatetoconceptualise,source,validateandcommercialisebiotechnologyassetsthathaveextraordinaryandpotentiallydisruptiveoutcomes,thusadvancinghumanhealth.iqnovate.com

AboutFarmaForce

FarmaForceisacontractsalesorganisationofferinginnovativesalessolutionstotheAustralianpharmaceuticalindustry.farmaforce.com.au

AboutClinicalResearchCorporation(CRC)

CRCprovidescontractmedicalaffairsservicestothepharmaceuticalindustrythroughoutthedruglifecycle.crcaustralia.com

AboutTheiQGroupGlobal

TheiQGroupGlobalprovidesaturnkeysolutionforlifesciencescompanies,spanningcorporateadvisoryandinvestmentbanking,throughtoresearch,development,commercialisationandsales.TheGroupfacilitatesanendtoendsolutionalongthedruglifecyclecreatingthemedicinesoftomorrow.theiqgroupglobal.com

IQNOVATELTDANDCONTROLLEDENTITIESCONSOLIDATEDSTATEMENTOFPROFITORLOSSFORTHEYEARENDED30JUNE2017

PRELIMINARYFINALREPORT

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Indollars Note 2017 2016^

Revenue 4 4,670,912 2,670,362

Costofsales (3,837,759) (2,670,861)

Grossprofit 833,153 (499)

Otherincome 5(a) 118,807 91,711

Employeebenefitsexpense 5(c) (3,871,647) (2,965,529)

Depreciationandamortisationexpense (151,095) (92,668)

Overheadsharingcosts (880,242) (980,036)

Shareoptionexpense - (117,840)

Otherexpenses 5(d) (4,991,057) (2,779,059)

Financecosts 5(b) (1,141,188) (550,431)

Shareoflossofassociatedcompaniesnetoftax (115,919) -

Lossbeforeincometax (10,199,188) (7,394,351)

Incometaxbenefit 318,182 -

Lossfortheperiod (9,881,006) (7,394,351)

Lossattributabletomembersoftheparent (9,235,949) (6,613,719)

Lossattributabletonon-controllinginterest (645,057) (780,632)

Totallossattributed (9,881,006) (7,394,351)

LosspersharefortheperiodattributabletotheordinaryequityholdersoftheCompany:

Note 2017 2016

Basiclosspershare(centspershare) 17 (7.60) (6.49)

Dilutedlosspershare(centspershare) 17 (7.60) (6.49)

^Comparativeinformationhasbeenrestatedtoreflectachangeinclassificationof:(a)otherincome,furtherdetaildisclosedinnote4;and(b)Otherexpenses,furtherdetailsofwhichisdisclosedinnote5.

Theaboveconsolidatedstatementofprofitorlossshouldbereadinconjunctionwiththeaccompanyingnotestotheconsolidatedfinancialstatements.

IQNOVATELTDANDCONTROLLEDENTITIESCONSOLIDATEDSTATEMENTOFOTHERCOMPREHENSIVEINCOMEFORTHEYEARENDED30JUNE2017

PRELIMINARYFINALREPORT 4

Indollars Note 2017 2016

Netlossfortheperiod (9,881,006) (7,394,351)

Othercomprehensiveincome

Exchangedifferencesontranslationofforeignoperations,netoftax 12,239 -

Othercomprehensivelossfortheperiod,netoftax 12,239 -

Totalcomprehensivelossfortheperiod (9,868,767) (7,394,351)

Comprehensivelossattributabletomembersoftheparent (9,223,710) (6,613,719)

Comprehensivelossattributabletonon-controllinginterest (645,057) (780,632)

Totalcomprehensivelossattributed (9,868,767) (7,394,351)

The above consolidated statement of comprehensive income should be read in conjunction with theaccompanyingnotestotheconsolidatedfinancialstatements.

IQNOVATELTDANDCONTROLLEDENTITIESCONSOLIDATEDSTATEMENTOFFINANCIALPOSITIONASAT30JUNE2017


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Indollars Note 2017 2016^

AssetsCurrentassets

Cash 6 298,937 2,159,311Tradeandotherreceivables 7 594,443 497,898Prepayments 116,637 164,997Othercurrentassets - 918,826Currenttaxreceivable - 916Totalcurrentassets 1,010,017 3,741,948Non-currentassets Tradeandotherreceivables - 63,278

Property,plantandequipment 8 625,149 662,065

Intangibleassets 9 4,257,740 1,891Investmentinassociate 18 440,226 538,000Deferredtaxassets 1,233,364 877,275Totalnon-currentassets 6,556,479 2,142,509TotalAssets 7,566,496 5,884,457LiabilitiesCurrentliabilities

Tradeandotherpayables 10 3,415,617 1,498,373Provisions 11 27,049 -Employeebenefitliabilities 12 850,545 205,700

Deferredrevenue 233,003 54,980

Borrowings 13 5,853,688 5,421,844

Derivativefinancialinstruments 14 884,788 -Deferredtaxliability 35,718 -Totalcurrentliabilities 11,300,408 7,180,897Non-currentliabilities Borrowings 13 4,954,814 -Employeebenefitliabilities 12 49,489 -Totalnon-currentliabilities 5,004,303 -Totalliabilities 16,304,711 7,180,897Netassets (8,738,215) (1,296,440)Equity Contributedequity 11,491,837 10,930,743Reserves 16 1,778,410 142,605Accumulatedlosses (22,134,491) (12,910,781)

Totalequityattributabletoholdersofthecompany (8,864,244) (1,837,433)Totalequityattributabletonon-controllinginterests (126,029) 540,993Totalequity (8,738,215) (1,296,440)

^ Comparative information has been restated to reflect a change in classification of Other Current Assets,DeferredRevenue,andEmployeeBenefitLiabilities.

Theaboveconsolidatedstatementoffinancialpositionshouldberead inconjunctionwiththeaccompanyingnotestotheconsolidatedfinancialstatements.

IQNOVATELTDANDCONTROLLEDENTITIESCONSOLIDATEDSTATEMENTOFCHANGESINEQUITYFORTHEYEARENDED30JUNE2017


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Indollars

Contributedequity

Accumulatedlosses

Reserves Non-controlling

interest

Total

Balanceat1July2016 10,930,743 (12,910,781) 142,605 540,993 (1,296,440)Totalcomprehensivelossfortheperiod Lossfortheperiod - (9,223,710) - (645,057) (9,881,006)Othercomprehensiveprofitfortheperiod

- - (12,239) - -

Totalcomprehensiveprofitfortheperiod

- (9,223,710) (12,239) (645,057) (9,881,006)

Transactionswithownersrecordeddirectlyinequity Convertiblenotesissued/reconfiguredduringtheyear

681,669 - 2,243,700 526,300 3,451,669

Capitalraisingcosts (120,575) - (595,656) (296,207) (1,012,438)Totaltransactionswithownersrecordeddirectlyinequity

561,094 - 1,648,044 230,093 2,439,231

Balanceat30June2017 11,491,837 (22,134,491) 1,778,410 126,029 (8,738,215) Balanceat1July2015 6,730,660 (7,347,681) 24,765 - (592,256)Totalcomprehensivelossfortheperiod Lossfortheperiod - (6,613,719) - (780,632) (7,394,351)Othercomprehensiveincomefortheperiod

- - - - -

Totalcomprehensiveloss - (6,613,719) - (780,632) (7,394,351)Transactionwithownersrecordeddirectlyinequity

Sharesissuedduringtheperiod 5,459,544 - - - 5,459,544Issueofconvertiblenotesduringtheperiod

2,903,960 - - - 2,903,960

Convertiblenotesreconfiguredduringtheperiod

(797,788) - - - (797,788)

Non-controllinginterest (2,372,246.5) 1,050,619 - 1,321,625 -Capitalraisingcosts (993,389) - - - (993,389)Sharebasedtransactions - - 117,840 - 117,840Balanceat30June2016 10,930,743 (12,910,781) 142,605 540,993 (1,296,440)Theaboveconsolidatedstatementofchangesinequityshouldbereadinconjunctionwiththeaccompanyingnotestotheconsolidatedfinancialstatements.

IQNOVATELTDANDCONTROLLEDENTITIESCONSOLIDATEDSTATEMENTOFCASHFLOWSFORTHEYEARENDED30JUNE2017


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Indollars Note 2017 2016

Cashflowsfromoperatingactivities

Receiptsfromcustomers 5,220,563 1,863,306

Paymentstosuppliersandemployees (11,590,104) (8,702,381)

Interestreceived 2,980 42,711

Interestpaid (99,055) (14,057)

Incometaxpaid - (916)

Netcashusedinoperatingactivities 21 (6,465,616) (6,811,337)

Cashflowsfrominvestingactivities

Purchaseofproperty,plantandequipment (97,115) (384,340)

Investmentinassociates (18,145) (538,000)

Purchaseofintangibleassets (2,841,338) -

Netcashusedininvestingactivities (2,956,598) (922,340)

Cashflowsfromfinancingactivities

Proceedsfromcontributedequity 902,887 4,466,155

Proceedsfromtheissueofconvertiblenotes 6,658,953 2,934,715

Netcashgeneratedfrom/(usedin)financingactivities 7,561,840 7,400,870

Netdecreaseincashandcashequivalents (1,860,374) (332,807)

Cashandcashequivalentsatthebeginningoftheperiod 2,159,311 2,492,118

Effectofmovementsinexchangeratesoncashheld - -

Cashandcashequivalentsattheendoftheperiod 6 298,937 2,159,311

Theaboveconsolidatedstatementofcashflowsshouldbereadinconjunctionwiththeaccompanyingnotestotheconsolidatedfinancialstatements.

IQNOVATELTDANDCONTROLLEDENTITIESNOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTSFORTHEYEARENDED30JUNE2017


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1. REPORTINGENTITY

iQNovateLtd (“iQN”or the“Company”) isa for-profit company limitedbyshareswhich is incorporatedanddomiciledinAustralia.Theseconsolidatedfinancialstatements(“financialstatements”)asatandfortheyearended30June2017compriseoftheCompanyanditssubsidiaries(collectivelyreferredtoasthe“Group”).

ThesefinancialstatementswereauthorisedforissuebytheBoardofDirectorson11September2017.

2. SIGNIFICANTACCOUNTINGPOLICIES

Thissectionsetsoutthesignificantaccountingpoliciesuponwhichthefinancialstatementsarepreparedasawhole. Specific accounting policies are described in their respective notes to the financial statements. Thissectionalsoshowsinformationonnewaccountingstandards,amendmentsandinterpretations,andwhethertheyareeffectiveinthecurrentorlateryears.

Basisofpreparation

ThesefinancialstatementsarepresentedinAustraliandollars,whichistheCompany’sfunctionalcurrency.

The Company is of a kind referred to in ASIC Corporations Instrument 2016/191 dated 1 April 2016 and inaccordancewiththatinstrument,allfinancialinformationpresentedinAustraliandollarshasbeenroundedtothenearestdollarunlessotherwisestated.

Thefinancialstatementshavebeenpreparedunderthehistoricalcostconvention,exceptfor,therevaluationof available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss, andderivativefinancialinstruments.

Theaccountingpolicieshavebeenconsistentlyappliedtoallperiodspresentedinthesefinancialstatements,unlessotherwisestated.

Basisofconsolidation

SubsidiariesareentitiescontrolledbytheGroup.TheGroupcontrolsanentitywhen it isexposedto,orhastherightsto,variablereturnsfromits involvementwiththeentityandhastheabilitytoaffectthosereturnsthrough its powerover theentity. The financial statements of subsidiaries are included in the consolidatedfinancialstatementsfromthedateonwhichcontrolcommencesuntilthedateonwhichcontrolceases.

Intercompanytransactions,balancesandunrealisedgainsontransactionsbetweenentitiesintheconsolidatedentity are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensureconsistencywiththepoliciesadoptedbytheconsolidatedentity.

Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement ofprofitor lossandothercomprehensive income,statementof financialpositionandstatementofchanges inequity of the consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controllinginterestinfull,evenifthatresultsinadeficitbalance.

Foreignoperations

TheassetsandliabilitiesofforeignoperationsaretranslatedintoAustraliandollars(AUD)attheexchangerateatthereportingdate.TheincomeandexpensesofforeignoperationsaretranslatedintoAUDattheaverageexchangerateofthemonthinwhichthetransactionoccurs.

Foreigncurrencydifferencesare recognised inothercomprehensive incomeandaccumulated in the foreigncurrencytranslationreserve.

Whena foreignoperation isdisposedof in itsentiretyorpartially such that control, significant influenceorjoint control is lost, the cumulative amount in the translation reserve related to that foreign operation isreclassifiedtoprofitorlossaspartofthegainorlossondisposal.

IQNOVATELTDANDCONTROLLEDENTITIESNOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTS(CONTINUED)FORTHEYEARENDED30JUNE2017


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‘2.SIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)

GoodsandServicesTax(“GST”)andValueAddedTax(“VAT”)

Revenues,expensesandassetsarerecognisednetoftheamountofrespectiveGSTorVAT,exceptwheretheamountofGSTorVATincurredisnotrecoverablefromtherelevanttaxationauthority.Inthesecircumstances,theGSTorVATisrecognisedaspartofthecostofacquisitionoftheassetoraspartoftheexpense.

Receivables and payables are stated inclusive of the amount of GST or VAT receivable or payable. The netamountofGSTorVATrecoverablefrom,orpayableto,thetaxationauthorityisincludedwithotherpayablesintheconsolidatedstatementoffinancialposition.

Cashflowsarepresentedonagrossbasis.TheGSTorVATcomponentsofcashflowsarisingfrominvestingorfinancingactivitieswhicharerecoverablefrom,orpayabletotherelevanttaxationauthority,arepresentedasoperatingcashflowsintheconsolidatedstatementofcashflows.

Usesofjudgementsandestimates

Inpreparingthesefinancialstatements,managementhasmadejudgements,estimatesandassumptionsthataffecttheapplicationoftheGroup’saccountingpoliciesandthereportedamountsofassets,liabilities,incomeand expenses. Actual results may differ from these estimates. Estimates and underlying assumptions arereviewedonanongoingbasis.Revisionstoaccountingestimatesarerecognisedprospectively.

(i) Judgements

Significantjudgementhasbeenmadeinrespecttotheelectionofcommoncontrolaccountingasopposedtoaccountingforbusinesscombinationsatfairvalueatacquisitiondate.

(ii) Estimates

Informationaboutcriticaljudgementsinapplyingaccountingpoliciesthathavethemostsignificanteffectontheamountsrecognisedinthefinancialstatements,includingaboutassumptionsandestimationuncertaintiesthat have a significant risk of resulting in a material adjustment within the year ending 30 June 2017 areincludedinthefollowingnotes:

• Note18–Investments;• Note11–Provisions;• Note20–Contingencies.

(iii) Measurementoffairvalues

AnumberoftheGroup’saccountingpoliciesanddisclosuresrequirethemeasurementoffairvalues,forbothfinancialandnon-financialassetsandliabilities.

TheGrouphasanestablishedcontrolframeworkwithrespecttothemeasurementoffairvalues.

The financial reporting team regularly reviews significant unobservable inputs and valuation adjustments. Ifthirdparty information isused tomeasure fair values,managementassess theevidenceobtained from thethirdpartiestosupporttheconclusionthatsuchvaluationsmeettherequirementsofIFRS,includingthelevelinthefairvaluehierarchyinwhichsuchvaluationsshouldbeclassified.

Whenmeasuring the fair value of an asset or a liability, the Group usesmarket observable data as far aspossible.Fairvaluesarecategorisedintodifferentlevelsinafairvaluehierarchybasedontheinputsusedinthevaluationtechniquesasfollows:

• Level1:quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities.

• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset orliability,eitherdirectly(i.e.asprices)orindirectly(i.e.derivedfromprices).

• Level3: inputsfortheassetor liabilitythatarenotbasedonobservablemarketdata(unobservableinputs).



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‘2.SIGNIFICANTACCOUNTINGPOLICIES(CONTINUED)

Useofjudgementsandestimates(continued)

‘(iii)Measurementoffairvalues(continued)

Iftheinputsusedtomeasurethefairvalueofanassetoraliabilitymightbecategorisedindifferentlevelsofthefairvaluehierarchy,thenthefairvaluemeasurementiscategorisedinitsentiretyinthesamelevelofthefairvaluehierarchyasthelowestlevelinputthatissignificanttotheentiremeasurement.

TheGroupcategorisestransfersbetweenlevelsofthefairvaluehierarchyattheendofthereportingperiodduringwhichthechangehasoccurred.

Newstandardsandinterpretationsnotyetadopted

Anumberofnewstandards, amendments to standardsand interpretationsareeffective for annualperiodsbeginningafter1July2017,andhavenotbeenappliedinpreparingthesefinancialstatements.ThosewhichmayberelevanttotheGrouparesetoutbelow.TheGroupdoesnotplantoadoptthesestandardsearly.

(i) AASB9FinancialInstruments

AASB 9 Financial Instruments becomes mandatory for the Group’s 2019 financial statements and includeschangestotheclassificationandmeasurementoffinancialassets,includinganewexpectedcreditlossmodelfor calculating impairment. It also includes a new hedge accounting model to simplify hedge accountingrequirementsandmorecloselyalignhedgeaccountingwithriskmanagementactivities.

(ii) AASB15Revenuefromcontractswithcustomers

AASB15RevenuefromContractsbecomesmandatoryfortheGroup’s2019financialstatementsandoutlinesasingle comprehensive model for entities to use in accounting for revenue arising from contracts withcustomers; and replaces AASB 111 Construction Contract, AASB 118 Revenue, Interpretation 13 CustomerLoyaltyPrograms,Interpretation15AgreementsforConstructionofRealEstate, Interpretation18TransferofAssetsfromCustomersandInterpretation131Revenue-BarterTransactionsinvolvingAdvertisingServices.Thecore principle is that an entity recognises revenue to depict the transfer of promised goods or services tocustomersinanamountthatreflectstheconsiderationtowhichtheentityexpectstobeentitledinexchangeforthosegoodsorservices.

(iii) AASB16Leases

AASB16LeasesbecomesmandatoryfortheGroup’s2020financialstatementsandremovestheclassificationofleasesbetweenfinanceandoperatingleases,effectivelytreatingallleasesasfinanceleasesforthelessee.Thepurposeistoprovidegreatertransparencyofalessee’sfinancialleverageandcapitalemployed.

The Group has not yet determined the potential effect of these standards on the Group’s future financialstatements.

3. GOINGCONCERN

The financial statementshavebeenpreparedon thegoing concernbasis,which contemplates continuityofnormal business activities and the realisation of assets and discharge of liabilities in the normal course ofbusiness.

Asdisclosed in the financial statements, theGroup incurreda lossof$9,868,767andhadnetcashoutflowsfromoperatingactivitiesof$6,465,616fortheyearended30June2017.Asatthatdatethecompanyhadnetcurrentliabilitiesof$10,290,391andnetliabilitiesof$8,738,215.

Thesefactorsmayprimafacieindicatethepotentialofamaterialuncertaintywhichmayresult insignificantdoubtastowhethertheGroupwillcontinueasagoingconcernandthereforewhetheritwillrealiseitsassetsandextinguishitsliabilitiesinthenormalcourseofbusinessandattheamountsstatedinthefinancialreport.However, the Directors have determined that treatment as a going concern is appropriate, due to thefollowingfactors:



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‘3.GOINGCONCERN(CONTINUED)

• The Group will continue its expansion and development of its portfolio of life science assetsintellectual property assets by external project based capital raising as it has demonstrated it hasdonepreviously;

• ThefundswillbeutilisedwiththeultimateobjectivetoincreasethevalueoftheassetsasdiscussedintheReviewofOperations

• ForthetradingdivisionsoftheGroup,thecontinuedtrendofincreasingmarketshareasindicatedinthefinancialstatementsisresultinginadditionalcustomercontractsonhandimprovingnetoperatingcashflow;

• Liabilities include total convertible notes with a face value of $11,475,624 (current liabilities:$6,520,810,plusnon-currentliabilities$4,954,814)convertibletoequitybythecompany,hencenotrequiringfundingfromcashflowtoextinguishtheseliabilities;

Accordingly, theDirectors believe that theGroupwill be able to continue as a going concern and that it isappropriatetoadoptthegoingconcernbasisinthepreparationofthefinancialreport.

The financial report does not include any adjustments relating to the amounts or classification of recordedassetsorliabilitiesthatmightbenecessaryiftheGroupwerenottooperateasagoingconcern.

4. REVENUE

Indollars 2017 2016^

Contractandservicefeerevenue 4,255,622 2,320,215

Officeandsharedservicesrevenue 415,290 350,147

Totalrevenue 4,670,912 2,670,362

^ The comparative informationhasbeen restated to reflect a change in classificationof the following itemsfromrevenuetootherincome:(a)financeincome$42,711;and(b)Rebatesandoffsets$49,000.

Significantaccountingpolicies

Revenueismeasuredatthefairvalueoftheconsiderationreceivedorreceivableaftertakingintoaccountanytradediscountsandvolumerebatesallowed.

TheGroup recognises revenuewhen the amount of revenue can be reliablymeasured, it is probable that futureeconomicbenefitsassociatedwiththetransactionwillflowtotheGroupandspecificcriteriarelatingtothetypeofrevenueasnotedbelow,hasbeensatisfied.

Any consideration deferred is treated as the provision of finance and is discounted at a rate of interest that isgenerallyacceptedinthemarketforsimilararrangements.Thedifferencebetweentheamountinitiallyrecognisedandtheamountultimatelyreceivedisinterestrevenue.

Renderingofservices

Revenueinrelationtorenderingofservicesisrecogniseddependingonwhethertheoutcomeoftheservicescanbeestimatedreliably.Iftheoutcomecanbeestimatedreliablythenthestageofcompletionoftheservicesisusedtodeterminetheappropriatelevelofrevenuetoberecognisedintheperiod.

Iftheoutcomecannotbereliablyestimatedthenrevenueisrecognisedtotheextentofexpensesrecognisedthatarerecoverable.



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5. INCOMEANDEXPENSES

(a) Otherincome


Rebatesandoffsets 110,717 49,000Financeincome 7,200 42,711Foreigncurrencygains 890 -Totalotherincome 118,807 91,711

(b) Financecosts

Indollars 2017 2016

Bankfees 7,960 5,000Interestonconvertiblenotes 985,317 536,374Otherinterestexpense 147,911 9,057Totalfinancecosts 1,141,188 550,431

(c) Employeebenefitsexpenses


Wagesandsalaries 3,389,205 2,653,647

Compulsorysuperannuationcontributions 361,933 249,294Increaseinliabilityforannualleave 71,020 62,588Increaseinliabilityforlongserviceleave 49,489 -Totalemployeebenefitsexpense 3,871,647 2,965,529

(d) Otherexpenses


Accountingfees 91,708 135,828Advertisingandmarketing 276,118 333,018Exchangeandlistingfees 99,069 178,665Insurance 78,055 69,914Legalandconsultingfees 890,006 360,366Occupancycosts 371,276 191,222Projectsourcingandevaluationcosts 1,559,239 -Recruitmentfees 255,439 329,088Softwarelicensingandsubscriptions 202,452 286,617Travelandaccommodation 140,698 154,528Other 1,026,997 739,813Totalotherexpenses 4,991,057 2,779,059

^ Thecomparativeinformationhasbeenrestatedtoreflectachangeinclassificationofthefollowingexpensesfromotherexpensetoemployeebenefitexpense:workerscompensation,FBT,payrolltax.



13

6. CASH

Indollars 2017 2016

Bankbalances 298,937 2,159,311

7. TRADEANDOTHERRECEIVABLES

Indollars 2017 2016

Tradereceivables 327,229 216,415

Otherreceivables 241,182 108,527

Relatedpartyreceivables 26,032 236,234

Totaltradeandotherreceivables 594,443 561,176

Current 594,443 497,898

Non-current - 63,278

Totaltradeandotherreceivables 594,443 561,176


Trade receivables are recognised initially at fair value and subsequentlymeasured at amortised cost using theeffective interest method, less provision for impairment. Trade receivables are generally due for settlementwithin 30-60 days. They are presented as current assets unless collection is not expected for more than 12monthsafterthereportingdate.

Collectabilityoftradereceivablesisreviewedonanongoingbasis.Debtswhichareknowntobeuncollectablearewrittenoffbyreducingthecarryingamountdirectly.Thelossisrecognisedinprofitorlosswithinotherexpenses.Subsequentrecoveriesofamountspreviouslywrittenoffarecreditedagainstotherexpensesintheprofitorloss.

Otherreceivablesarerecognisedatamortisedcost,lessanyprovisionforimpairment.


Cashand cash equivalents includes cashonhand, deposits heldat callwith financial institutions,other short-term, highly liquid investmentswithoriginalmaturitiesof threemonthsor less thatare readilyconvertible toknownamountsofcashandwhicharesubjecttoaninsignificantriskofchangesinvalue.Forthestatementofcash flows presentation purposes, cash and cash equivalents also includes bank overdrafts,which are shownwithinborrowingsincurrentliabilitiesonthestatementoffinancialposition.



14

8. PROPERTY,PLANTANDEQUIPMENT

Cost

Indollars

Plantandequipment

Furniture,fixturesand

fittings

Leaseholdimprovements

Total

Balanceat1July2015 164,607 43,809 224,389 432,805

Additions 49,339 66,555 268,446 384,340

Balanceat30June2016 213,946 110,364 492,835 817,145

Additions 58,251 19,630 27,049 104,929

Balanceat30June2017 272,197 129,994 519,884 992,074

Accumulateddepreciation

Indollars

Plantandequipment


fittings


Total

Balanceat1July2015 31,264 7,096 24,615 62,975

Depreciationexpense 44,640 9,292 38,173 92,105

Balanceat30June2016 75,904 16,388 62,788 155,080

Depreciationexpense 54,948 13,277 73,620 141,845

Balanceat30June2017 130,852 29,665 136,408 296,925

Carryingamount

Indollars

Plantandequipment


fittings


Total

Carryingbalanceat30June2016 138,042 93,976 430,047 662,065

Carryingbalanceat30June2017 141,345 100,328 383,476 625,149



15

’8.PROPERTY,PLANTANDEQUIPMENT(CONTINUED)


Carryingvalue

All property, plant and equipment is stated at historical cost less depreciation and impairment. Historical costincludesexpenditurethatisdirectlyattributabletotheacquisitionoftheitems.

Subsequentcostsareincludedintheasset’s carryingamountorrecognisedasaseparateasset,asappropriate,onlywhenitisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtothebusinessandthecostoftheitemcanbemeasuredreliably.Thecarryingamountofanycomponentaccountedforasa separateasset isderecognisedwhenreplaced.Allotherrepairsandmaintenancearecharged totheprofitor lossduringthereportingperiod.

Depreciation

Depreciation of assets is calculated using the straight-linemethod to allocate their cost, net of their residualvalues, over their estimated useful lives or, in the case of leasehold improvements, the shorter lease term asfollows:

• Leaseholdimprovements–5to10years• Plantandequipment–5to10years• Furniture,fittingsandequipment–10to20years

Impairment

Anasset’scarryingamountiswrittendownimmediatelytoitsrecoverableamountiftheasset’scarryingamountisgreaterthanitsestimatedrecoverableamount.

Gainsandlossesondisposal

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These areincludedinprofitorloss.



16

9. INTANGIBLEASSETS

Cost

Indollars

AcquiredIP

Developmentexpenditure

Websiteand

software

Total

Balanceat1July2015 - - 2,536 2,536

Additions - - - -

Balanceat30June2016 - - 2,536 2,536Additions 1,871,614 2,169,946 231,354 4,272,914Balanceat30June2017 1,871,614 2,169,946 233,890 4,275,450

Amortisation

Indollars

AcquiredIP


Websiteand

software

Total

Balanceat1July2015 - - 82 82

Amortisationexpense - - 563 563

Balanceat30June2016 - - 645 645Amortisationexpense - - 17,064 17,064Balanceat30June2017 - - 17,709 17,709

Carryingamount

Indollars

AcquiredIP


Websiteand

software

Total

Carryingbalanceat30June2016 - - 1,891 1,891

Carryingbalanceat30June2017 1,871,614 2,169,946 216,181 4,257,740



17

‘9.INTANGIBLEASSETS(CONTINUED)


Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assetsacquiredinabusinesscombinationistheirfairvalueatthedateofacquisition.

Following initial recognition, intangible assets are carried at cost less any accumulated amortisation andaccumulatedimpairmentlosses.Internallygeneratedintangibles,excludingcapitaliseddevelopmentcosts,arenotcapitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure isincurred.

Gainsorlossesarisingfromde-recognitionofanintangibleassetaremeasuredasthedifferencebetweenthenetdisposalproceedsandthecarryingamountoftheassetandarerecognisedinthestatementofprofitor lossandothercomprehensiveincomewhentheassetisderecognised.

Amortisation

Intangible assetswith finite lives are amortised over the useful economic life. The amortisation period and theamortisation method for an intangible asset with a finite useful life are reviewed at least at the end of eachreportingperiod.Changesintheexpecteduseful lifeortheexpectedpatternofconsumptionoffutureeconomicbenefitsembodiedintheassetareconsideredtomodifytheamortisationperiodormethod,asappropriate,andaretreatedaschangesinaccountingestimatesandadjustedonaprospectivebasis.Theamortisationexpenseonintangibleassetswithfinitelivesisrecognisedinthestatementofprofitorlossandothercomprehensiveincomeastheexpensecategorythatisconsistentwiththefunctionoftheintangibleassets.

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, eitherindividuallyoratthecash-generatingunitlevel.Theassessmentofindefinitelifeisreviewedannuallytodeterminewhethertheindefinitelifecontinuestobesupportable.Ifnot,thechangeinusefullifefromindefinitetofiniteismadeonaprospectivebasis.

Impairment

Intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually forimpairment,ormorefrequentlyifeventsorchangesincircumstancesindicatethattheymightbeimpaired.Otherassetsaretestedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable. Animpairmentloss isrecognisedfortheamountbywhichtheasset’scarryingamountexceedsitsrecoverableamount.Therecoverableamountisthehigherofanasset’sfairvaluelesscoststosellandvalueinuse.

Websiteandsoftware

Costsincurredinacquiringwebsitesoftwareandlicensesthatwillcontributetofuturefinancialbenefitsthroughrevenuegenerationand/orcostreductionarecapitalisedtosoftwareandsystems.Costscapitalisedincludeexternaldirectcostsof materials and service and direct payroll and payroll related costs of employees’ time spent on the project.Amortisationiscalculatedonastraight-linebasisoverperiodsgenerallyrangingfromthreetofiveyears

Websitedevelopmentcosts includeonly thosedirectlyattributable tothedevelopmentphaseandareonlyrecognisedfollowingcompletionoftechnicalfeasibilityandwherethebusinesshasanintentionandabilitytousetheasset.

Researchanddevelopmentcosts

Researchexpenditureisrecognisedasanexpenseasincurred.

Development costs include externally acquired and internally generated costs ofmaterials and services,which can bedirectlyattributabletothedevelopmentactivitiesofacquiringorgeneratinganintangibleasset.

Costs incurredon development projects (relating to the design and testingof newor improved intangible assets) arerecognisedonlywhen it isprobablethatthefutureeconomicbenefitsthatareattributabletotheassetwillflowtotheGroup, thecostof theassetcanbemeasuredreliably, technical andcommercial feasibilityof theasset forsaleorusehavebeenestablished,andtheGroupintendsandisabletocompletetheintangibleassetandeitheruseitorsellit.

Capitaliseddevelopment costs are recordedas an intangible asset andamortised from the point at which the asset isreadyforuseonastraight-linebasisoveritsusefullife.Developmentcostspreviouslyrecognisedasanexpensearenotrecognisedasanassetinasubsequentperiod.



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10. TRADEANDOTHERPAYABLES

Indollars 2017 2016

Tradepayables 1,835,060 455,465

Sundrypayablesandaccruedexpenses 269,781 324,661

Relatedpartypayables 1,310,776 718,247

Totaltradeandotherpayables 3,415,617 1,498,373

Current 3,415,617 1,498,373

Non-current - -

Totaltradeandotherpayables 3,415,617 1,498,373

11. PROVISIONS

Indollars Makegood Total

Balanceat1July2016 - -

Provisionsmadeduringtheperiod 27,049 27,049

Totalprovisionsat30June2017 27,049 27,049


ProvisionsarerecognisedwhentheGrouphasapresentobligation(legalorconstructive)asaresultofapastevent,itisprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligationandareliableestimatecanbemadeoftheamountoftheobligation.WhentheGroupexpectssomeorallofaprovisiontobereimbursed,forexample,underaninsurancecontract,thereimbursementisrecognisedasaseparateasset,butonlywhenthereimbursementisvirtuallycertain.Theexpenserelatingtoaprovisionispresentedinthestatementofprofitorlossandothercomprehensiveincomenetofanyreimbursement.

Make-goodprovisions

Amakegoodprovisionisrecognisedforthecostsofrestorationorremoval inrelationtoplantandequipmentandsiteleaseswherethereisalegalorconstructiveobligation.Theprovisionisinitiallyrecordedwhenareliableestimatecanbedeterminedanddiscountedtopresentvalue.Theunwindingoftheeffectofdiscountingontheprovisionisrecognisedasafinancecost.

Provisionsaremeasuredatthepresentvalueofmanagement’sbestestimateoftheexpenditurerequiredtosettlethepresentobligationattheendofthereportingperiod.Thediscountrateusedtodeterminethepresentvalueisapre-taxratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtheriskspecifictotheliability.Theincreaseintheprovisionduetothepassageoftimeisrecognisedasinterestexpense.


Tradeandotherpayablesrepresentliabilitiesforgoodsandservicesprovidedtothebusinesspriortotheendofthefinancialyearwhichareunpaid.Theamountsareunsecuredandareusuallypaidwithin30daysofrecognition.Tradeandotherpayablesarepresentedascurrentliabilitiesunlesspaymentisnotduewithin12monthsfromthereportingdate.Theyarerecognisedinitiallyattheirfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod.



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12. EMPLOYEEBENEFITLIABILITIES

Indollars 2017 2016

Liabilityforannualleave 334,022 205,700

Liabilityforsuperannuation 237,876 -

Liabilityforlongserviceleave 49,489 -

Liabilityforpayroll 278,647 -

Totalemployeebenefitliabilities 900,034 205,700

Current 850,545 205,700

Non-current 49,489 -

Totalemployeebenefitliabilities 900,034 205,700

13. BORROWINGS

Indollars 2017 2016

Current:Convertiblenotes 5,853,688 5,421,844

Non-Current:Convertiblenotes 4,954,814 -


Employeebenefitsrepresentsamountsaccruedforemployeepayroll,superannuation,annualleaveandlongserviceleave.

The current portion for this provision includes the total amount accrued for annual leave entitlements and theamounts accrued for long service leave entitlements that have vested due to employees having completed therequiredperiodofservice.BasedonpastexperiencetheGroupdoesnotexpectthe fullamountofannual leaveorlong service leave balances classified as current liabilities to be settled in the next 12 months. However, theseamountsmust beclassifiedascurrent liabilities since theGroupdoesnothavean unconditional right todefer thesettlementoftheseamountsintheeventemployeeswishtousetheirleaveentitlement.

TheGrouprecognisesa liabilityfor longserviceleaveandannual leavemeasuredasthepresentvalueofexpectedfuture payments to be made in respect of services provided by employees up to the reporting date using theprojected unit credit method. Consideration is given to expected future wage and salary levels, experience ofemployeedepartures,andperiods toservice.Expected future paymentsare discounted usingmarketyieldsat thereporting date on national government bonds with terms to maturity and currencies that match, as closely aspossible,theestimatedfuturecashoutflows.


Convertiblenotesareseparatedintoliabilityandequitycomponentsbasedonthetermsofthecontract.

Onissuanceoftheconvertiblenotes,thefairvalueoftheliabilitycomponentisestimatedusingamarketrateforanequivalent non-convertible instrument. This amount is classified as a financial liability at amortised cost (net oftransactioncosts)untilitisextinguishedonconversionorredemption.

The remainder of the proceeds is allocated to the conversion option that is recognised and included in equity.Transaction costsare deducted fromequity.The carryingamountof the conversionoption is not re-measured insubsequentyears.

Transactioncostsareapportionedbetweentheliabilityandequitycomponentsof theconvertiblenotesbasedontheallocationofproceedstotheliabilityandequitycomponentswhentheinstrumentsareinitiallyrecognised.



20

14. DERIVATIVEFINANCIALINSTRUMENTS

Indollars 2017 2016

DiscountonPre-IPOconvertiblenotes 884,788 -

15. SHARECAPITAL

Numberof

shares$

Inissueat1July2015 41,243,390 4,697,661

Sharesplitduringthereportingperiod 203,000 -

Inissueat30June2016 41,446,390 4,697,661

Sharedissuedfromsharesplit 82,892,780 -

Inissueat30June2017 124,339,170 4,697,661

AllordinarysharesrankequallywithregardtotheCompany’sresidualassets.Theholdersofthesesharesareentitledtoreceivedividendsasdeclaredfromtimetotime,andareentitledtoonevotepershareatgeneralmeetingsoftheCompany.TheCompanydoesnothaveauthorisedcapitalorparvalueinrespectofitsshares.Allissuedsharesarefullypaid.

Dividends

NodividendsweredeclaredorpaidbytheCompanyfortheyear(2016:nil).


Ordinarysharesareclassifiedasequity.Incrementalcostsdirectlyattributabletotheissueofnewsharesoroptionsareshowninequityasadeduction,netoftax,fromtheproceeds.Transactioncostsarethecoststhatareincurreddirectlyinconnectionwiththeissueofthoseequityinstrumentsandwhichwouldnothavebeenincurredhadthoseinstrumentsnotbeenissued.


Derivatives are initially recognised at fair value on the date a derivative contact is entered into and subsequentlyremeasuredtotheirfairvalueateachreportingdate.Theaccountingforsubsequentchangesinfairvaluedependsonwhetherthederivativeisdesignatedasahedginginstrument,andifso,thenatureoftheitembeinghedged.



21

16. RESERVES

Indollars

Subscriptionsforequity

Optionsreserve

Foreigntranslation

Total

Balanceat1July2015 - 24,765 - 24,765

Sharebasedtransactions - 117,840 - 117,840

Balanceat30June2016 - 142,605 - 142,605

Subscriptionsforequityissued 1,648,044 - - 1,648,044

Reportingtranslationdifferences (12,239) (12,239)

Balanceat30June2017 1,648,044 142,605 (12,239) 1,778,410

17. EARNINGSPERSHARE(EPS)

The calculation of basic earnings per share has been based on the following loss attributable to ordinaryshareholdersandweighted-averagenumberofordinarysharesoutstanding.

Lossattributabletoordinaryshareholders

Indollars 2017 2016

LossfortheperiodattributabletoownersofiQNovateLtd (9,235,949) (6,613,719)

Weighted-averagenumberofordinaryshares

Innumberofshares 2017 2016

Weighted-averagenumberofordinarysharesatendoftheperiod 121,386,824 101,981,095

Weighted-averagenumberofsecuritiesifoutstandingoptionsexercised

121,386,824 101,981,095

Earningspershare

Incentspershare 2017 2016

Basiclosspershare (7.61) (6.49)

Dilutedlosspershare (7.61) (6.49)

Basic earnings per share is calculated as earnings for the period attributable to the Company over theweightedaveragenumberofshares.

DilutedearningspershareiscalculatedasearningsfortheperiodattributabletotheCompanyovertheweightedaveragenumberofshareswhichhasbeenadjustedtoreflectthenumberofshareswhichwouldbeissuedifoutstandingoptionsandperformancerightsweretobeexercised.However,duetothestatutorylossattributabletotheCompanyforboththefinancialyearended30June2017andthecomparativeperiodended30June2016,theeffectoftheseinstrumentshasbeenexcludedfromthecalculationsofdilutedearningspershareforbothperiodsastheywouldreducethelosspershare.



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18. INVESTMENTS

Thepercentageownershipinterestisequivalenttothepercentagevotingrightsforallinvestments.

(a) Interestsinsubsidiaries,associates,andjointventure

Entityname Countryofincorporation

Ownershipinterest2017

Ownershipinterest2016

Subsidiaries

FarmaForceLimited Australia 70.6% 70.6%

ClinicalResearchCorporationPtyLtd Australia 100% 100%

LifeScienceBiosensorDiagnosticsPtyLtd Australia 81% 81%

GlucoseBiosensorSystems(GC)Inc USA 81% 81%

GlucoseBiosensorSystems(GC)PtyLtd Australia 81% 81%

AntisomaTherapeuticsPtyLtd Australia 100% 200%

Associates1

NewFrontierHoldingsLLC(“NewFrontier”) USA 34.1% 34.1%

NereidEnterprisesPtyLtd Australia 34.1% 34.1%

NereidEnterprisesLLC USA 34.1% 34.1%

1Percentageshownisnetofnon-controllinginterest.

(b) Investmentinassociatesaccountedforusingequitymethod

Indollars 2017 2016

Reconciliationtocarryingamount

Netassetbalanceatstartofperiod 1,243,277 -

Netassetatacquisition - 1,345,000

Lossfortheperiod (142,712) (101,723)

Othercomprehensiveincome - -

Netassetbalanceatendofperiod 1,100,565 1,243,277

Consolidatedentity’ssharein% 40% 40%

Consolidatedentity’sshareatacquisition 440,226 497,311

Adjustmentpostedinfollowingperiod - 40,689

Consolidatedentity’sshareatreportingdate 440,226 538,000



23

’18.INVESTMENTS(CONTINUED)

19. OPERATINGLEASES

TheGroupleasesanumberofofficefacilitiesunderoperatingleases.Theleasesarenon-cancellableandrunforaperiodof1 to4years,withanoption to renewthe leaseafter thatdate.Contingent rentalprovisionswithin the leaseagreement require that theminimum leasepaymentsshallbe increasedby4%perannum.Theleaseallowsforsublettingofallleaseareas.

Futureminimumleasepayments

Asat30June2017,thefutureminimumleasepaymentsundernon-cancellableleaseswerepayableassetoutinthefollowingtable.

Indollars 2017 2016

Lessthanoneyear 112,165 159,137

Betweenoneandfiveyears - 107,496

Morethanfiveyears - -

Totalfutureminimumleasepayments 112,165 266,633

20. CONTINGENCIES

TheGrouphasnocontingentliabilitiesorassetsasatthereportingdate(2016:None).


Subsidiaries

Subsidiaries are all entities (including structured entities) over which the parent has control. Control isestablishedwhentheparent isexposedto,orhasrightstovariableratesofreturnsfromits involvementwiththe entityand has theability toaffect those returns through its power todirect the relevantactivitiesof theentity.

Associates

Associates are all entities over which the Group has significant influence but not control, generallyaccompanying a shareholding between 20%and 50%of the voting rights. Investments in associates and jointventures are accounted for in theGroup’s financial statements using the equitymethodof accounting, afterinitiallybeingrecognisedatcost.

TheGroup’sshareoftheassociatespost-acquisitionprofitsorlossesarerecognisedinthestatementofprofitorloss, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative postacquisitionmovementsareadjustedagainstthecarryingamountoftheinvestment.Dividendsreceivablefromassociatesreducethecarryingamountoftheinvestment.

When theGroup’s shareof losses inanassociate equalsorexceeds its interest in theassociate, includinganyunsecuredreceivables,theGroupdoesnotrecognisefurtherlosses,unless ithasincurredobligationsormadepaymentsonbehalfoftheassociate.

.



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21. RECONCILIATIONOFCASHFLOWSFROMOPERATINGACTIVITIES

Indollars 2017 2016

Cashflowsfromoperatingactivities

Lossfortheperiod (10,199,188) (7,394,351)

Adjustmentsfor:

Depreciation 151,095 92,668

Sharebasedpayments - 117,840

Interestonconvertiblenotes 985,317 536,374

Shareoflossfromassociatedcompanies 115,919 -

(8,946,857) (6,647,469)

Changesin:

Tradeandotherreceivables (33,267) (979,329)

Prepayments 48,360 -

Tradeandotherpayables 1,913,246 965,040

Incomeinadvance 178,023 (149,579)

Employeebenefits 694,334 -

Deferredtaxliability 35,718 -

Deferredtaxasset (355,173) -

2,481,241 (163,868)

Netcashusedinoperatingactivities (6,465,616) (6,811,337)


25

CORPORATE DIRETORY

ACN149731644

Directors

DrGeorgeSyrmalis,ChairandGroupChiefExecutiveOfficer

ConTsigounis

PeterBuchananSimpson

Companysecretary

GerardoIncollingoChiefExecutiveOfficerDrGeorgeSyrmalis

Registeredoffice

Level3,222ClarenceStreet

Sydney,NSW2000

Principalplaceofbusiness

Level3,222ClarenceStreet

Sydney,NSW2000

Shareregister

BoardroomPtyLimited

Level12,225GeorgeStreet

SydneyNSW2000

StockexchangelistingsIQNovateLtdsharesarelistedontheNationalSecuritiesExchange(NSX:IQN).Websiteaddresswww.iqnovate.com

iQNovate Ltd Preliminary Final Report FY 2017 (2017.09.13 ... · Final dividend in respect of the...

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