Announcement PDF Atomo Diagnostics Limited Appendix 4E Preliminary final report 1. Company details Name of entity: ABN: Reporting period: Previous period: Atomo Diagnostics Limited 37 142 925 684 For the period ended 30 June 2024 For the period ended 30 June 2023 2. Results for announcement to the market AUD Revenues up 61% to 4,086,535 Loss from ordinary activities after tax attributable to the owners of Atomo Diagnostics Limited down 31% to 6,847,803 Loss from the period attributable to the owners of Atomo Diagnostics Limited down 33% to 6,790,717 Basic earnings per share Diluted earnings per share 30 June 2024 AUD Cents 30 June 2023 AUD Cents (1.079) (1.079) (1.744) (1.744) Dividends There were no dividends paid, recommended or declared during the current financial period. Comments The loss for the group after providing for income tax amounted to AUD6,847,803 (30 June 2023: AUD9,957,632). Refer to the 'Operating and Financial Review' within the Directors' Report for further commentary on the full-year's results, financial position and likely developments in future years. 3. Net tangible assets Net tangible asset per ordinary security 30 June 2024 AUD cents 30 June 2023 AUD cents 1.25 2.02 The net tangible assets / (liabilities) per ordinary security is calculated based on 639,202,310 ordinary shares on issue as at 30 June 2024, and 570,890,991 ordinary shares that were on issue as at 30 June 2023. 4. Loss of control over entities Not applicable. 5. Details of associates and joint venture entities Not applicable. Atomo Diagnostics Limited Appendix 4E Preliminary final report 6. Audit qualification or review The financial statements have been audited and an unmodified opinion has been issued. 7. Attachments The Annual Report of Atomo Diagnostics Limited for the period ended 30 June 2024 is attached. 8. Annual General Meeting Atomo Diagnostics advises that its Annual General Meeting will be held on or about 15 November 2024. The time and other details relating to the Meeting will be advised in the Notice of Meeting to be sent to all shareholders and released to ASX immediately after despatch. In accordance with the ASX Listing Rules, valid nominations for the position of director are required to be lodged at the registered office of the Company by 5.00pm (AEDT) on 27 September 2024. 9. Signed Signed ___________________________ John Keith Chair Sydney Date: 29 August 2024 Atomo Diagnostics Limited ABN 37 142 925 684 Annual Report - 30 June 2024 Atomo Diagnostics Limited Corporate directory For the period ended 30 June 2024 Directors John Keith (Chair & Non-Executive Director) John Kelly (Managing Director and CEO) Paul Kasian (Non-Executive Director) Deborah Neff (Non-Executive Director) Cheri Walker (Non- Executive Director) Company secretary Mathew Watkins Registered office Level 1 3 - 5 George Street Leichhardt NSW 2040 Tel: +61 2 9099 4750 Principal place of business Level 1 3 - 5 George Street Leichhardt NSW 2040 Tel: +61 2 9099 4750 Share register Boardroom Pty Limited Level 8 210 George Street Sydney NSW 2000 Auditor BDO Audit Pty Ltd Level 11, 1 Margaret Street Sydney NSW 2000 Solicitors HWL Ebsworth Lawyers Level 14, Australia Square 264 - 178 George Street Sydney NSW 2000 Stock exchange listing Atomo Diagnostics Limited shares are listed on the Australian Securities Exchange (ASX code: AT1) Website www.atomodiagnostics.com Corporate Governance Statement www.atomodiagnostics.com/governance 1 Atomo Diagnostics Limited Directors' report For the period ended 30 June 2024 Principal activities The principal activities of the group during the course of the year were the development and sale of medical devices. There were no significant changes in the nature of the activities of the group during the year. Review of operations The loss for the group after providing for income tax amounted to AUD6,847,803 (30 June 2023: AUD9,957,632). Revenue of approximately $4.1m comprised $3.2m for HIV sales, $730k for OEM sales and remaining $120k for development fees and other revenue. Overall revenue increased by 61% when compared to FY23 revenue results, driven by the growing demand for Atomo’s HIV self-tests globally. Cash and cash equivalents at 30 June 2024 amounted to $3.69m compared to $6.47m as at 30 June 2023. Ongoing measures continued to be undertaken during the period to reduce operating expenditure for the group. Overall operating expenses reduced year on year by $2m, equivalent to 19% when compared to the prior period (excluding oneoff inventory write offs & impairment of intangibles in comparative periods). With investment already made in the development and commercialisation of Atomo's novel patent-protected technology, and with manufacturing capacity installed and validated, capital expenditure has reduced very significantly. The focus continues to investing prudently in key areas of the business to support market facing and revenue generating activities and the business in a position to materially increase sales revenue without requiring corresponding increases in underlying operating costs. Business development activities continue to focus on re-establishing and growing our OEM customer base, with particular focus on the US market following Lumos Diagnostics successfully obtaining a 510(k) clearance for its FebriDx test on the Atomo Pascal device. NG Biotech have launched their blood pregnancy self-test in a number of European countries and in Brazil, further validating the regulatory scope of important existing markets where Pascal supports clearance for selftesting. Significant changes in the state of affairs There were no significant changes in the state of affairs of the group during the financial period. Matters subsequent to the end of the financial period No matter or circumstance has arisen since 30 June 2024 that has significantly affected, or may significantly affect the group's operations, the results of those operations, or the group's state of affairs in future financial years. Likely developments and expected results of operations With approximately $3.69m of cash at bank and no debt, Atomo continues to pursue its key priorities while remaining focused on conserving capital over the medium term. ● Continued rollout of HIV Self-Testing globally, including the UK where the test is now available in Boots and Tesco's and into Eastern Europe, as well supporting national scale up of HIV self-testing via government funded programs. ● Focus on the expansion of Atomo's Point-of-Care (POC) cassette supply business, especially in the US market where the recent FDA 510(k) clearance obtained by Lumos Diagnostics for their test on the Atomo Pascal device opens a pathway for Atomo product and for new Diagnostics partners seeking improved user-friendly solution for POC and selftest markets. ● Growing the emerging development services business where Atomo is being paid to develop products and custom solutions for partners seeking access to Atomo technology and products. Business risk The group has identified the following material business risks that may cause its revenue and profitability to decline and are important to key stakeholders such as investors, consumers, customers, supplier, governments and employees. ● ● Regulatory risk: The group sells medical devices and finished products that require regulatory approvals to be maintained (for existing approved products), and to be obtained (for new products) in multiple jurisdictions. This includes obtaining and maintaining product approvals from the TGA in Australia, the FDA in the US, Health Canada in Canada, comparable bodies in Asia and South America, the World Health Organisation for LMIC global health markets, and compliance with the IVDD and IVDR regimes in Europe. There are risks associated with these regulatory approvals that may impact on the business should approvals be withdrawn for existing products or not obtained for new products. Product quality and safety: Should quality or safety issues arise with Atomo's products, there is the potential for negative financial and or reputational impacts. To mitigate this risk Atomo sources materials from quality suppliers, complies with ISO 13485 Medical Devices Quality Management, and delivers safe products to customers. Atomo aims to adhere to or exceed strict regulatory standards in all jurisdictions that it serves, and investigates all concerns to 2 Atomo Diagnostics Limited Directors' report For the period ended 30 June 2024 ● ● ● ● ● ● ● ● ensure our products maintain the highest quality. We are frequently inspected by independent regulatory authorities auditing compliance with these standards. Compliance: Responsibility to drive compliance with legal and regulatory requirements applicable to our global business. Includes development of policies and controls, communication and training, oversight and continuous improvement. Consequently, compliance affects every aspect of what we do, to deliver quality products to consumers. Supply chain: Responsibility to partners to ensure our product line is free from human rights concerns such as forced labour and trafficking, unsafe labour standards and unfair treatment. Atomo relies on third party manufacturers in certain areas and as such has potential exposure to supply chain disruption risks. The company takes steps to stay closely engaged with its supply chain and ensures sufficient stock on hand to mitigate this risk. Employees and skilled labour: Atomo's business relies on key qualified personnel. Ensuring our employees are appropriately remunerated and work in a safe environment, which meets or exceeds relevant regulatory expectations, addresses health and safety concerns as they arise and mitigates the risk of reoccurrence of incidents. Operational risk: Atomo has international operations, including a manufacturing facility in South Africa and as such is potentially exposed to additional from political, legal, economic and regulatory risk specific to those locations. Atomo operates in a competitive industry: Strategies and initiatives designed to provide diagnostics at competitive prices to ensure it can develop, manufacture and market high-quality generic and branded products, with a particular focus on accessible diagnostics for the global health and Lower and Middle Income markets. Corruption and bribery: Business must be conducted with transparency, and free from unethical persuasion. Ethical business practices relate to every aspect of Atomo's business, from identifying product sources, through the development of diagnostics, transactions with regulatory bodies and sale to customers. Resource use and waste management: Includes energy usage during manufacture and logistics, water usage and waste as a by-product of manufacture, with particular consideration given to the fact that the products are classified as medical waste upon use. Climate risk: The board is considering on an ongoing basis the potential response to climate risk and considering potential implementation of a formal review and policy response in future years. The Board believes that the group has adequate systems in place for the management of its exposure to business risk. The group's operations are not subject to any significant environmental regulation under Australian Commonwealth or State law. Information on directors Name: Title: Experience and expertise: John Keith Non-Executive Chair John Keith has served as a Non-Executive Director of Atomo since December 2011 and became Chair in 2014. Mr Keith is one of the Managing Directors at BNP Paribas, establishing and leading its financial institutions coverage team. Prior to joining BNP Paribas in 2011, Mr Keith held country management and senior business and coverage positions for Nomura Securities in Sydney and Hong Kong. His career comprises working with supranational, sovereign and institutional clients across all areas of investment and institutional banking. Mr Keith holds a Bachelor of Arts (Hons) majoring in Economic History from the Victoria University of Wellington, a Master of Applied Finance from Macquarie University and a Global Executive MBA from the University of Sydney. Other current directorships: Nil Former directorships (last 3 years): Nil Special responsibilities: Member of the Audit and Risk Committee and Member of the People, Culture Nomination & Remuneration Committee. Interests in shares: 3,261,056 Interests in options: Nil Contractual rights to shares: Nil 3 Atomo Diagnostics Limited Directors' report For the period ended 30 June 2024 Name: Title: Experience and expertise: John Kelly Managing Director and CEO John Kelly is the Managing Director and CEO of Atomo. For 25 years Mr Kelly has focused on developing and commercialising innovative healthcare products that enhance usability and performance, having started with CR Bard in Europe developing Class III implantable cardiology products. Prior to co-founding Atomo in 2010, Mr Kelly acted as the Chief Operating Officer (COO) of Unilife Corporation, which was previously an ASX-listed company (ASX:UNS) and subsequent to his departure, a Nasdaq listed company (NASDAQ:UNIS). At Unilife Corporation, he led the global operations team from 2005 to 2008, developing ‘Unifill’, the world’s first glass prefilled drug delivery device with integrated auto retract safety feature, and this technology was successfully licensed to Sanofi Aventis. Prior to joining Unilife in 2005, Mr Kelly spent five years at ResMed where he led the New Product Implementation Group and managed the development of the ground-breaking Mirage Swift and Activa mask systems. Mr Kelly holds an Honours degree in Mechanical Engineering from the University of Liverpool, a Master’s degree in Manufacturing Systems Engineering from Queen’s University Belfast, and an Executive MBA from the University of Sydney, where he was awarded the Business School’s inaugural ‘Excellence in Leadership’ scholarship. Other current directorships: Nil Former directorships (last 3 years): Nil Special responsibilities: Nil Interests in shares: 72,490,248 Interests in options: 666,666 Contractual rights to shares: Nil Name: Title: Experience and expertise: Paul Kasian Non-Executive Director Dr Kasian is an experienced executive director with demonstrated success in both domestic and international companies encompassing senior leadership, strategy, investment and risk roles. His other roles have included Chief Investment Officer and Head of Global Financials at HSBC Asset Management, Founding Director of Accordius and Founding Director of Wallara Asset Management. He holds a PhD in Microbiology and a Master of Business Administration, both from the University of Melbourne, and is a Graduate Member of the Australian Institute of Company Directors. Other current directorships: Dr Kasian is currently Non-Executive Director (appointed 31 August 2016) and Chair (appointed 15 September 2018) of IODM Limited (ASX: IOD). He was appointed a Non Executive Chairman of Diamond Key International on 7 December 2022. He is also Non Executive Chairman of Sedarex (appointed July 2023). Former directorships (last 3 years): Non-Executive Director of Eco Systems Ltd Special responsibilities: Chair of the Audit and Risk Committee and member of the People, Culture, Nomination & Remuneration Committee. Interests in shares: 100,000 Interests in options: Nil Contractual rights to shares: Nil 4 Atomo Diagnostics Limited Directors' report For the period ended 30 June 2024 Name: Title: Experience and expertise: Deborah Neff Non-Executive Director A veteran of the life sciences industry, Deborah has spent most of her career building market-leading global businesses. As principal of DJN Consulting, LLC based in the San Francisco Bay Area, Deborah currently works with several privately held healthcare start-up companies providing strategic business advice and mentoring to the executive management teams. Previously was CEO of Evanostics, LLC, Pathwork Diagnostics Inc, and COO at Complete Genomics following a 15 year career with Becton Dickinson, where she last served as President of BD Biosciences, a major global business unit of the company. She is an executive Trustee and Chair of the Foundation Board at the University of California, Davis. She serves as an independent Director and member of the Governance committee for Guide Dogs for the Blind, Inc. a non-profit organisation. Deborah holds a Bachelor in Science degree from the University of California, Davis. Non-Executive Director and a member of the audit and nominating/governance committees at Cytek Biosciences, Inc. Former directorships (last 3 years): Nil Special responsibilities: Chair of the People, Culture, Nomination & Remuneration Committee and member of the Audit and Risk Committee Interests in shares: Nil Interests in options: Nil Contractual rights to shares: Nil Other current directorships: Name: Title: Experience and expertise: Cheri Walker Non-Executive Director Dr. Walker is an executive with more than twenty-five years of experience working with life science and diagnostic companies. Dr. Walker is currently the Chief Executive Officer of Zeta Corporation. She has previously held senior executive positions at Abcam; Charles River Labs; Qiagen, and Life Technologies, now part of ThermoFisher. Dr. Walker holds a BA in Biology from Swarthmore College and a Ph.D. in Human and Molecular Genetics from Baylor College. Other current directorships: Nil Former directorships (last 3 years): Director CellIDx, Director BrickBio, Director of Rhinostics Special responsibilities: Member of the Audit and Risk Committee Interests in shares: Nil Interests in options: Nil Contractual rights to shares: Nil 5 Atomo Diagnostics Limited Directors' report For the period ended 30 June 2024 Name: Title: Experience and expertise: Curt LaBelle Non-Executive Director (Resigned on 20 December 2023) Curt LaBelle has served as a Non-Executive Director of Atomo since October 2016. Dr LaBelle has been actively involved in the healthcare industry for over 20 years, both operationally and as an investor. Previously, Dr LaBelle was President at the Global Health Investment Fund (GHIF), a social impact investment fund, which manages approximately US$108 million backed by the Gates Foundation, JP Morgan and others. He also serves as a director on the boards of Z Optics, Revelation Bio and Atticus Medical. Prior to joining GHIF, Dr LaBelle was Managing Director at Tullis Health Investors and Vice President at Investor Growth Capital. He is a former chairman of Impulse Monitoring (acquired by Nuvasive), Exagen Inc. (NASDAQ:XGN) and a former director of Sirion Therapeutics (products acquired by Alcon and Bausch), SafeOp Surgical (acquired by AlphaTec) and KAI Pharmaceuticals (acquired by Amgen). As Dr LaBelle is President at GHIF, a substantial shareholder of Atomo, Dr LaBelle is not considered to be an independent Director. Dr LaBelle holds a Bachelor of Economics from Brigham Young University, and MD and MBA degrees from Columbia University. Other current directorships: Director of Eyenovia Inc. (NASDAQ:EYEN) Former directorships (last 3 years): Former chairman of Exagen Inc. (NASDAQ: XGN) Special responsibilities: Nil Interests in shares: Nil Interests in options: Nil Contractual rights to shares: Nil 'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. Company Secretary Mr Watkins is a highly qualified company secretary and member of global financial and corporate services provider, Vistra (Australia) Pty Ltd. He has more than a decade of experience, specialising in the provision of services to ASX-listed and unlisted public companies operating in the mining, biotechnology, and industrial sectors. Mr Watkins is also a member of the Institute of Chartered Accountants of Australia and New Zealand and possesses a Bachelor of Business from Swinburne University of Technology. Mr Watkins was appointed as Atomo’s Company Secretary on 9 June 2024. (Maria Clemente held the position from 1 March 2023 to 4 March 2024 and Sally McDow held the position from 5 March 2024 to 8 June 2024). Meetings of directors The number of meetings of the company's Board of Directors ('the Board') and of each Board committee held during the period ended 30 June 2024, and the number of meetings attended by each director were: People, Culture, Nomination and Remuneration Committee Audit and Risk Committee Attended Held2 Attended Held2 Full Board Attended Held2 John Keith John Kelly Paul Kasian Deborah Neff Cheri Walker Curt LaBelle1 1 2 7 7 7 6 7 1 7 7 7 7 7 4 3 3 3 - 3 3 3 - 3 3 3 2 - Resigned on 20 December 2023 Represents the number of meetings when the director was eligible to attend as a member of the relevant committee. 6 3 3 3 3 - Atomo Diagnostics Limited Directors' report For the period ended 30 June 2024 Remuneration report (audited) The remuneration report details the key management personnel remuneration arrangements for the group, in accordance with the requirements of the Corporations Act 2001 and its Regulations. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors. The key management personnel of the group during the financial year consisted of the following Directors of the Company: ● John Keith – Non-Executive Chair ● John Kelly – Managing Director and CEO ● Paul Kasian – Non-Executive Director ● Deborah Neff – Non-Executive Director ● Cheri Walker – Non-Executive Director ● Curt LaBelle – Non-Executive Director (Resigned on 20 December 2023) And the following executives: ● William Souter – Chief Financial Officer (Resigned on 13 December 2023) ● Chandra Sukumar – Chief Operating Officer The remuneration report is set out under the following main headings: ● Remuneration Governance ● Principles used to determine the nature and amount of remuneration ● Details of remuneration ● Service agreements ● Share-based compensation ● Additional disclosures relating to key management personnel ● Statutory performance indicators Remuneration Governance To assist the Board in fulfilling its responsibilities in respect of remuneration and nomination related matters, the Board established a People, Culture, Nomination and Remuneration Committee to monitor and make recommendations to the Board in relation to: (i) recruitment, retention and termination policies and practices for Executive Directors and direct reports to the Managing Director and the alignment of the policies and practices with the promotion and sustainment of a culture aligned with Atomo's values, the promotion of long term sustainable success and the achievement of the company's business objectives; (ii) people strategies and practices which will instil and reinforce the Company’s purpose and values, ensure health and wellbeing (physical and mental) and support the achievement of the company's long term business objectives; (iii) the development of, and progress in meeting, the Company’s diversity objectives; and (iv) the Company’s performance appraisal processes for the Managing Director and the Managing Director’s direct reports, the Board, Board Committees and individual Non-Executive Directors. During the prior financial year, this Committee was renamed into the ‘People, Culture, Nomination and Remuneration Committee’ (PCNRC) and the Committee Charter was amended to formally delegate the following Board’s nomination responsibilities to PCNRC. The members of the PCNRC at the date of this report are: ● Deborah Neff (Chair) ● John Keith ● Paul Kasian The role and responsibilities, composition, structure and membership requirements of the PCNRC are documented in the People, Culture, Nomination and Remuneration Committee Charter which is available on Atomo’s website at: https://atomodiagnostics.com/governance/. The Committee Charter provides that the Committee should comprise at least three members, all of whom are Non-Executive Directors and a majority of whom are independent Directors and the Chair of the Committee should be an independent Director who is not Chair of the Board. All of the current members of the PCNRC have been assessed by the Board as being independent Non-Executive Directors and the Chair of the Committee is not Chair of the Board. 7 Atomo Diagnostics Limited Directors' report For the period ended 30 June 2024 Principles used to determine the nature and amount of remuneration Non-executive directors remuneration Each of the Non-Executive Directors has entered into appointment letters with Atomo confirming the terms of their appointment and their roles and responsibilities. The appointment letters are on standard commercial terms. The Chair, John Keith, receives an annual fee of $130,000 and each Non-Executive Director receives an annual fee of $50,000. Each Chair of a Board Committee receives an additional amount of $20,000 per annum. The Chair of the Audit and Risk Committee is Paul Kasian. The Chair of the People, Culture Nomination and Remuneration Committee is Deborah Neff. Deborah Neff is also director of Atomo US, Inc effective 30 March 2022, for which she receives an annual fee of $20,000. Directors may also be reimbursed for expenses properly incurred by them in dealing with the Company’s business or in carrying out their duties as a Director. Under the Constitution, the Board decides the amount paid to each Non-Executive Director as remuneration for their services as a Director. However, under the ASX Listing Rules, the total amount of fees paid to all Non-Executive Directors for their services must not exceed in aggregate in any financial year the amount fixed by the Company’s shareholders in general meeting. This amount has been fixed initially in the Company’s Constitution at $500,000 per annum in aggregate and may be varied by ordinary resolution in a general meeting. Executive remuneration The group aims to reward executives based on their position and responsibility, with a level and mix of remuneration which has both fixed and variable components. The executive remuneration and reward framework has four components: ● base pay ● short-term performance incentives ● share-based payments ● other remuneration such as superannuation and long service leave The combination of these comprises the executive's total remuneration. Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the People, Culture, Nomination and Remuneration Committee based on individual and business unit performance, the overall performance of the group and comparable market remunerations. Executives may receive their fixed remuneration in the form of cash or other benefits where it does not create any additional costs to the group and provides additional value to the executive. The short-term incentives ('STI') program is designed to align the targets of the business units with the performance hurdles of executives. STI payments are granted to executives based on specific annual targets and key performance indicators ('KPI's') being achieved. Details of STIs paid to executives during the year can be found under the heading "Amounts of remuneration" below. The long-term incentives ('LTI') include long service leave and share-based payments. Further details in relation to Atomo’s Employee Share Option Plan ('ESOP') can be found under the heading “Share-based compensation” below. Voting and comments made at the company's 2 November 2023 Annual General Meeting ('AGM') At the 2 November 2023 AGM, 32.63% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2023. As such the Company received its first strike in relation to its remuneration report. The Board acknowledges that it received its first strike at its 2023 Annual General Meeting of shareholders. In response to this strike received from shareholders (while there was no specific feedback received in relation to remuneration) the Company advises it has taken the following steps. The Company has not materially increased remuneration of its KMP’s (or larger employee base) during the period. It applied relevant CPI increases to remuneration to reflecting inflation. Non Executive Director fees remain unchanged from when the Company listed. The Company is not intending to issue any LTI’s to KMP’s for the financial year 2025. 8 Atomo Diagnostics Limited Directors' report For the period ended 30 June 2024 The Directors fully acknowledge last year’s strike and would like to confirm to its shareholders that the Company’s remuneration practices remain a focus for the Board in light of the Company’s performance, while continuing to consider market benchmarking. The Company welcomes engagement from shareholders on the remuneration of the Directors and KMP’s. Details of remuneration Amounts of remuneration Details of the remuneration of key management personnel of the group are set out in the following tables. Postemployment Long-term benefits benefits Short-term benefits 30 June 2024 Cash salary and fees AUD Cash bonus AUD Nonmonetary AUD Superannuation AUD Long service leave AUD Sharebased payments Equitysettled AUD Total AUD Non-Executive Directors: John Keith Paul Kasian Deborah Neff Cheri Walker Curt LaBelle1 130,000 63,063 90,000 50,000 25,000 - - 6,937 - - - 130,000 70,000 90,000 50,000 25,000 Executive Directors: John Kelly 406,056 35,000 - 27,399 8,022 - 476,477 143,679 243,395 1,151,193 25,000 60,000 - 12,285 27,399 74,020 2,636 10,658 5,858 5,492 11,350 161,822 303,922 1,307,221 Other Key Management Personnel: William Souter2 Chandra Sukumar 1 2 Resigned on 20