Simavita Limited Annual Report 2020

Annual Report 2020 25 During the year and through to the date of issuance of these financial statements, the Group was successful in: – A placement for $2,920,000 was raised in February 2020 and approved by the shareholders at the Special General Meeting on April 7, 2020. – The Group has completed the next generation of the Smartz™ platform technology, and has continued its commercialization efforts by engaging in meaningful partnership discussions with several distributors. These discussions have included collaboration on the further development of Smartz and potential applications in the market. – Since obtaining CE Mark registration and FCC approval in November 2019, the Group has continued to upgrade those registrations in light of significant design enhancements, including external regulatory testing, as a medical device in Europe, USA, Canada and Australia. – In March and May 2020, amendments were made to the 2018 Convertible Notes Deeds with a face value of $1,400,000 to extend the maturity date to 21 December 2020. Subsequent to 30 June 2020, a holder of $1,000,000 of the 2018 Convertible Note Deeds provided written confirmation to either convert to CDIs by 21 December 2020, or to defer redemption until 30 June 2021. – On June 24, 2019 the Company obtained shareholder approval to convert 2019 Convertible Notes with a face value of $3,140,000 into CHESS Depositary Interests (CDI’s). This was subsequently completed in July 2020. – In October 2020, the Company received written commitment from two investors seeking to invest a total of $650,000. Pricing for the investment is subject to ongoing negotiations. Despite the above, the continuing viability of the Group and its ability to continue as a going concern and meet its debts and commitments as they fall due are dependent upon: – successfully completing the $650,000 subscription by November 30, 2020; – subject to shareholder approval and/ or support, to raise additional funds as may be necessary to enable the Company to fund its on-going operations and execute potential commercialisation agreements and/ or a reorganisation. Such additional funding requirements may be between $2 million and $3 million; and – on an ongoing basis, completing a substantive agreement with one or more commercialisation partners. Such agreement should be achieved 2nd half of FY2021 and will be aimed at supporting Smartz and a meaningful increase to the Company’s revenues into 2021 and beyond. 1. NATURE AND CONTINUANCE OF OPERATIONS Simavita Limited (the “Group”) was incorporated under the laws of the Yukon Territory on May 28, 1968 and continued under the laws of the Province of British Columbia, Canada on December 3, 2013. Simavita’s patented technologies provide sensors for all segments of the USD 64 billion diaper market from extremely low cost alert sensors for everyday use, particularly focused upon the adult and infant markets to the assessment of incontinence needs for the aged and disabled. The alert technology, Smartz™, is addressing the demand for change in the global diaper market. Simavita operates in Australia, Europe and North America where there is a significant and growing demand for products that deliver real clinical and cost benefits to the health care industry. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2a Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and interpretations issued by the Australian Accounting Standards Board. The Group is a for-profit entity for the purpose of preparing the financial statements. The financial statements comprise the consolidated financial statements of the consolidated entity. Accounting Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the financial statements and notes of the Group comply with International Financial Reporting Standards (IFRS). Historical cost convention The financial statements have been prepared on a historical cost bases, except for the following: – certain financial assets and liabilities (including derivative instruments) - measured at fair value. New and amended standards adopted by the group The group has applied the following standards and amendments for the first time for their annual reporting period commencing July 1, 2019. – AASB 16: Leases Going concern The Group has incurred losses before tax of $4,066,402 (2019: $3,934,216) for year ended June 30, 2020 and net cash flows used in operations during the same period of $3,539,952 (2019: $3,506,527). The Group’s cash reserves as at June 30, 2020 were $2,062,844 (2019: $689,462). The Group was in a net current liabilities position as at June 30, 2020 of $3,495,370 (2019: net current liabilities position of $2,319,190). The net liabilities of the group at 30 June 2020 were $3,291,494 (2019: $ 2,154,786). Notes to the Consolidated Financial Statements for the year ended June 30, 2020