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 2023 For the period ended 30 June 2022 2. Results for announcement to the market AUD Revenues down 79% to 2,543,716 Loss from ordinary activities after tax attributable to the owners of Atomo Diagnostics Limited up 74% to (9,957,632) Loss for the period attributable to the owners of Atomo Diagnostics Limited up 82% to (10,069,962) Dividends There were no dividends paid, recommended or declared during the current financial period. Comments 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 Reporting period AUD Cents Previous period AUD Cents 2.02 3.72 Net tangible assets per ordinary security The net tangible assets / (liabilities) per ordinary security is calculated based on 570,890,991 ordinary shares on issue as at 30 June 2023, and 570,890,991 ordinary shares that were on issue as at 30 June 2022. 4. Control gained over entities Not applicable. 5. Loss of control over entities Not applicable. 6. Details of associates and joint venture entities Not applicable. 7. Audit qualification or review The financial statements have been audited and an unmodified opinion has been issued. 8. Attachments The Annual Report of Atomo Diagnostics Limited for the period ended 30 June 2023 is attached. Atomo Diagnostics Limited Appendix 4E Preliminary final report 9. Annual General Meeting Atomo Diagnostics advises that its Annual General Meeting will be held on or about 2 November 2023. 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 13 September 2023. 10. Signed Signed ___________________________ John Keith Chair Sydney Date: 24 August 2023 Atomo Diagnostics Limited ABN 37 142 925 684 Annual Report - 30 June 2023 Atomo Diagnostics Limited Corporate directory For the period ended 30 June 2023 Directors John Keith (Chair & Non-Executive Director) John Kelly (Managing Director) Curt LaBelle (Non-Executive Director) Paul Kasian (Non-Executive Director) Deborah Neff (Non-Executive Director) Cheri Walker (Non- Executive Director) Company secretary Maria Clemente 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 Link Market Services Limited Level 12 680 George Street Sydney NSW 2000 Tel: 1300 554 474 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 2023 The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'group') consisting of Atomo Diagnostics Limited (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled at the end of, or during, the period ended 30 June 2023. All amounts are presented in Australian dollars (AUD) unless otherwise stated. Directors The following persons were directors of Atomo Diagnostics Limited during the whole of the financial period and up to the date of this report, unless otherwise stated: Director John Keith (Chair & Non-Executive Director) John Kelly (Managing Director) Curt LaBelle (Non-Executive Director) Paul Kasian (Non-Executive Director) Deborah Neff (Non-Executive Director) Cheri Walker (Non-Executive Director) Appointed 2 December 2011 1 April 2010 21 October 2016 4 February 2020 15 September 2021 15 November 2022 Resigned n/a n/a n/a n/a n/a n/a The Company Secretary is Maria Clemente who was appointed on 1 March 2023 (Tharun Kuppanda resigned on 1 March 2023). 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 $9,957,632 (30 June 2022: $5,706,854). Revenue of approximately $2.5m comprised $1.56m for HIV sales, $390k for COVID-19 related sales and $591k for other OEM sales. Revenue was significantly lower than FY22 as the COVID-19 pandemic passed and with it, demand ceased for COVID-19 rapid antigen and rapid antibody tests. Cash and cash equivalents at 30 June 2023 amounted to $6.47 million compared to $12.97 million as at 30 June 2022. Ongoing measures were undertaken during the year to reduce operating expenditure and carefully manage capital expenditure. With substantial investment already made in developing and bringing to market Atomo's patent-protected rapid test devices and finished test products, and in installing manufacturing capacity over prior years, the focus has primarily been on investing prudently but strategically in key areas of the business to support market facing and revenue generating activities. This includes focusing on supporting existing and new potential markets for our existing HIV Self-Test product, where a new material contract was entered into during the year with Newfoundland Diagnostics for the UK and European markets, Viatris continues to pursue larger global health tender opportunities in LMIC, and Atomo has focused on growth in sales in the Australian market through direct to consumer pharmacy channels, and continues to work on potential larger State and Federal Government opportunities. The company has obtained the rights from NG Biotech to launch a rapid blood-based pregnancy test on the Atomo Pascal platform under an Atomo brand in Australia, New Zealand, Canada and the US and awaits TGA approval to enable launch in Australia in H1 FY24 with other markets to follow. Preparation is under way to start the regulatory process for approval from the FDA to enable sales in the US, where there is a substantial and growing market for rapid pregnancy testing. Atomo intends to bring further new products to market with an iron deficiency test the next priority following the launch of the pregnancy test. Business development activities continue to focus on re-establishing and growing our OEM business in the postpandemic environment, with NG Biotech growing sales of its blood-based pregnancy test in Europe and launch in Brazil, leading to increased sales of the Atomo Pascal device, and with Lumos Diagnostics successfully obtaining a 510(k) clearance for its FebriDx test on the Atomo Pascal device. This US approval establishes a regulatory precedent for Atomo in that key international market as well as increasing the addressable market where the pascal enabled FebriDX test can be supplied. 2 Atomo Diagnostics Limited Directors' report For the period ended 30 June 2023 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 ● 1,733,332 options issued to executives under the Company's Post-IPO option plan lapsed as the KPIs applicable to the options were not satisfied with respect to the year ended 30 June 2023. ● The Board has exercised its discretion to allocate 934,999 options to executives under the company's post-IPO option plan to reward the diligent execution of the corporate strategy and to ensure retention of the key talent needed to deliver strategic outcomes in the interest of shareholders. ● On 1 July 2023, the board has exercised its discretion to allocated 6,100,000 options to employees, under the company's employee share plan. The option award is in recognition of the performance of key staff throughout the year and to support retention of the key talent needed to deliver on the company’s business objectives. ● On 13 July 2023 Atomo completed a Placement to institutional and sophisticated investors at $0.036 per share to raise $1.25m. A Share Purchase Plan was undertaken with Eligible Shareholders that raised $0.46m at a price of $0.03 per share which closed on 1 August 2023, and an SPP shortfall placement was made to institutional investors on the same terms as the SPP to raise $0.54m. No other matter or circumstance has arisen since 30 June 2023 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 additional funding received from the recently completed Placement, SPP and Shortfall Placement Atomo is well funded moving into FY24 to deliver on its key priorities, including: ● Continued growth in HIV Self-Test sales with increased participation in global health tenders, targeted entry into private sector markets in Asia and the Americas, and growth in higher margin developed markets including Australia, the UK and Europe through retail focused distribution and government engagement. ● Focus on the expansion of Atomo's Point of Care technology 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 and its partners. Recent partnership referral agreements entered into with leading test strip assay development companies that have customers bringing new tests to market are expected to assist with awareness and availability of Atomo’s devices and generate new OEM business development contracts. ● Securing regulatory approvals and launching Atomo’s new rapid test products in key markets. The two new women’s health focused priority markets to be launched in FY24 are for the early detection of pregnancy and for the monitoring of iron deficiency. Business risk The company 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 company 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 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. 3 Atomo Diagnostics Limited Directors' report For the period ended 30 June 2023 ● ● ● ● ● ● Employees and skilled labour: Atomo's business relies on key qualified personnel. Atomo seeks to ensure 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 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 & Remuneration Committee. Interests in shares: 3,261,056 Interests in options: Nil Contractual rights to shares: Nil 4 Atomo Diagnostics Limited Directors' report For the period ended 30 June 2023 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: 999,999 Contractual rights to shares: Nil Name: Title: Experience and expertise: Curt LaBelle Non-Executive Director 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. Dr LaBelle is 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: 65,051,280 (inclusive of the GHIF Holding) Interests in options: Nil Contractual rights to shares: Nil 5 Atomo Diagnostics Limited Directors' report For the period ended 30 June 2023 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) and Non Executive Director of Eco Systems Ltd (appointed October 2019). Former directorships (last 3 years): Executive Chairman of Zecuro Therapeutics Special responsibilities: Chair of the Audit and Risk Committee and member of the People, Culture & Remuneration Committee. Interests in shares: 100,000 Interests in options: Nil Contractual rights to shares: Nil 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 of the University of California, Davis Foundation and also chairs the College of Biological Sciences Leadership Council at the University. 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 member of the Audit Committee for Cytek Biosciences, Inc. Former directorships (last 3 years): Nil Special responsibilities: Chair of the People, Culture & 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 President, Chief Executive Officer, and Director of Rhinostics. 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: Director of Rhinostics Former directorships (last 3 years): Director CellIDx, Director BrickBio Interests in shares: Nil 6 Atomo Diagnostics Limited Directors' report For the period ended 30 June 2023 '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 Maria Clemente is a corporate governance and compliance expert with 15 years of experience in corporate advisory. Prior to joining BoardRoom Pty Ltd as a Company Secretary, Maria was a senior listings adviser at the ASX where she had extensive involvement in the oversight of listed entities and demonstrated solid knowledge of the role of equity markets including capital raisings, mergers and acquisitions and other corporate activities. Ms Clemente is admitted as a lawyer in New South Wales and spent a decade in corporate restructure and turnaround as a senior manager, with specialist experience in conducting formal insolvency appointments, as well as in the areas of commercial disputes, succession, partnership and Corporations Act matters. Ms Clemente was appointed as Atomo’s Company Secretary on 1 March 2023. (Tharun Kuppanda held the position from 25 January 2022 to 1 March 2023). 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 2023, and the number of meetings attended by each director were: Nomination and Remuneration Committee Attended Held^ Full Board Attended Held^ John Keith John Kelly Curt LaBelle Paul Kasian Deborah Neff Cheri Walker1 8 8 7 8 7 5 8 8 8 8 8 8 3 3 3 - 3 3 3 - Audit and Risk Committee Attended Held^ 3 3 3 - 3 3 3 - ^ Represents the number of meetings when the director was eligible to attend as a member of the relevant committee. 1 Cheri Walker was appointed director on 15 November 2022 and therefore did not attend the 3 board meetings held in FY23 prior to her appointment. Dr Walker was subsequently appointed as a member of the Audit & Risk Committee on 22 February 2023. 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 – Founder and Managing Director ● Curt LaBelle – Non-Executive Director ● Paul Kasian – Non-Executive Director ● Deborah Neff – Non-Executive Director ● Cheri Walker – Non-Executive Director (Appointed on 15 November 2022) And the following executives: ● William Souter – Chief Financial Officer ● Chandra Sukumar – Chief Operating Officer 7 Atomo Diagnostics Limited Directors' report For the period ended 30 June 2023 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, shortly prior to listing, the Board established a 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 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. 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. 8 Atomo Diagnostics Limited Directors' report For the period ended 30 June 2023 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 reso