Attached files
| file | filename |
|---|---|
| 8-K/A - 8-K/A - PRECIGEN, INC. | xon-20151028x8ka.htm |
| EX-23.1 - EX-23.1 - PRECIGEN, INC. | xon-20151028x8kaxexx231.htm |
| EX-99.1 - EX-99.1 - PRECIGEN, INC. | xon-20151028x8kaxexx991.htm |
| EX-99.3 - EX-99.3 - PRECIGEN, INC. | xon-20151028x8kaxexx993.htm |
Exhibit 99.2
Consolidated Financial Statements Oxitec Limited |
For the six month period ended 30 June 2015 |
Oxitec Limited
Company Information | ||
Directors | H St P Parry Christian Ulrich (Appointed September 4th 2015) Rick Sterling (Appointed September 4th 2015) | |
Registered number | 04512301 | |
Registered office | Second Floor, Park Gate 25 Western Avenue Milton Park Abingdon OXFORD OX14 4SH | |
Independent auditors | PricewaterhouseCoopers LLP One Reading Central 23 Forbury Road READING RG1 3JH | |
Bankers | Santander Corporate & Commercial Banking Santander UK plc 1st Floor, 121 St Aldates OXFORD OX1 1HB HSBC Bank Plc 16 Cornmarket Street OXFORD OX1 3HY | |
Solicitors | Wilmer Hale Second Floor, Park Gate 25 Western Avenue Milton Park OXFORD OX14 4SH | |
Oxitec Limited
Contents
Page(s) | |
Consolidated Profit and Loss Account | 4 |
Consolidated Statement of Total Recognised Gains and Losses | 5 |
Consolidated Balance Sheet | 6 |
Consolidated Cash Flow Statement | 7 |
Reconciliation of Net Cash Flow to Movement in Net Debt | 7 |
Notes to the Consolidated Financial Statements | 8–18 |
Oxitec Limited
Consolidated Profit and Loss Account
For the six month period ended 30 June 2015
Six month period ended 30 June 2015 Unaudited | Six month period ended 30 June 2014 Unaudited | Year ended 31 December 2014 Unaudited | ||||||||
Note | £ | £ | £ | |||||||
Turnover | — | — | — | |||||||
Administrative expenses | 2 | (2,894,409 | ) | (2,131,791 | ) | (4,810,460 | ) | |||
Other operating income | 250,264 | 275,567 | 525,683 | |||||||
Operating loss | (2,644,145 | ) | (1,856,224 | ) | (4,284,777 | ) | ||||
Interest receivable and similar income | 4,412 | 4,154 | 13,004 | |||||||
Interest payable and similar charges | (49,280 | ) | (49,281 | ) | (99,378 | ) | ||||
Loss on ordinary activities before taxation | (2,689,013 | ) | (1,901,351 | ) | (4,371,151 | ) | ||||
Tax credit on loss on ordinary activities | 3 | 529,621 | 379,587 | 379,587 | ||||||
Loss for the financial period | 9 | (2,159,392 | ) | (1,521,764 | ) | (3,991,564 | ) | |||
All results relate to continuing operations.
There are no material differences between the loss on ordinary activities before taxation and the loss for the financial periods stated above and their historical cost equivalents.
The notes on pages 8 to 18 form part of these financial statements.
Page 4
Oxitec Limited
Consolidated Statement of Total Recognised Gains and Losses
For the six month period ended 30 June 2015
Six month period ended 30 June 2015 Unaudited | Six month period ended 30 June 2014 Unaudited | Year ended 31 December 2014 Unaudited | |||||||
£ | £ | £ | |||||||
Loss for the financial period | (2,159,392 | ) | (1,521,764 | ) | (3,991,564 | ) | |||
Exchange losses on foreign currency translation | (83,938 | ) | (10,128 | ) | (79,667 | ) | |||
Total recognised losses relating to the period | (2,243,330 | ) | (1,531,892 | ) | (4,071,231 | ) | |||
The notes on pages 8 to 18 form part of these financial statements.
Page 5
Oxitec Limited
Consolidated Balance Sheet
As at 30 June 2015
Six month period ended 30 June 2015 Unaudited | Year ended 31 December 2014 Unaudited | |||||||||
Note | £ | £ | £ | £ | ||||||
Fixed assets | ||||||||||
Tangible assets Investments | 4 | 805,949 - | 692,793 13,347 | |||||||
805,949 | 706,140 | |||||||||
Current assets | ||||||||||
Debtors | 6 | 951,337 | 527,100 | |||||||
Investments | 5 | 759,000 | 754,142 | |||||||
Cash at bank and in hand | 4,112,268 | 2,676,497 | ||||||||
5,822,605 | 3,957,739 | |||||||||
Creditors: amounts falling due within one year | 7 | (4,461,667 | ) | (4,747,715 | ) | |||||
Net current assets / (liabilities) | 1,360,938 | (789,976) | ||||||||
Total assets less current liabilities | 2,166,887 | (83,836 | ) | |||||||
Net assets / (liabilities) | 2,166,887 | (83,836 | ) | |||||||
Capital and reserves | ||||||||||
Called up share capital | 8 | 7,588 | 6,661 | |||||||
Share premium account | 9 | 25,283,967 | 20,790,841 | |||||||
Profit and loss account deficit | 9 | (23,124,668 | ) | (20,881,338 | ) | |||||
Total shareholders' funds / (deficit) | 10 | 2,166,887 | (83,836 | ) | ||||||
The notes on pages 8 to 18 form part of these financial statements.
Page 6
Consolidated Cash Flow Statement
For the six month period ended 30 June 2015
Six month period ended 30 June 2015 Unaudited | Six month period ended 30 June 2014 Unaudited | Year ended 31 December 2014 Unaudited | |||||||
Note | £ | £ | £ | ||||||
Net cash outflow from operating activities | 11 | (2,844,618 | ) | (1,945,145 | ) | (4,050,558 | ) | ||
Returns on investment and servicing of finance | |||||||||
Interest received | 555 | 4,154 | 9,342 | ||||||
Net cash inflow from returns on investments and servicing of finance | 555 | 4,154 | 9,342 | ||||||
Tax received | - | - | 379,587 | ||||||
Capital expenditure and financial investment | |||||||||
Purchases of tangible fixed assets Increase in investment in Genefirst Limited | (214,219) - | (87,562) - | (552,072) (5,091) | ||||||
Net cash outflow for capital expenditure and financial investment | (214,219 | ) | (87,562 | ) | (557,163 | ) | |||
Net cash outflow before use of liquid resources and financing | (3,058,282 | ) | (2,028,553 | ) | (4,218,792 | ) | |||
Management of liquid resources | |||||||||
Purchases of short term deposits | - | - | (754,142 | ) | |||||
Net cash outflow from management of liquid resources | - | - | (754,142 | ) | |||||
Financing | |||||||||
Issue of ordinary share capital Increase in borrowings | 9 | 4,494,053 - | 6,053,933 - | 6,040,816 177,976 | |||||
Net cash inflow from financing | 4,494,053 | 6,053,933 | 6,218,792 | ||||||
Increase in cash and cash equivalents | 1,435,771 | 4,025,380 | 1,245,858 | ||||||
Reconciliation of net cash flow to movement in net debt | |||||||||
Increase in cash and cash equivalents | 1,435,771 | 4,025,380 | 1,245,858 | ||||||
Movement in liquid resources Movement in borrowings Other non-cash changes | - - (44,422) | - - (49,280) | 754,142 (177,976) (99,378) | ||||||
Change in net debt | 1,391,349 | 3,976,100 | 1,722,646 | ||||||
Net debt at the beginning of the period | (409,318 | ) | (2,131,963 | ) | (2,131,964 | ) | |||
Net term cash/debt at the end of the period | 12 | 982,031 | 1,844,137 | (409,318 | ) | ||||
The notes on pages 8 to 18 form part of these financial statements.
Page 7
Oxitec Limited
Notes to the Consolidated Financial Statements
For the six month period ended 30 June 2015
1. | Accounting policies |
Principal activities
The principal activity of Oxitec Limited (the “Company”) and subsidiaries (“the Group”, “Oxitec”or “we”) during the year was research and development in biotechnology. Oxitec is a pioneer in controlling insects that spread disease and damage crops. Through world class science we have developed an innovative new solution to controlling harmful insect pests.
Basis of preparation of financial statements
These financial statements have been prepared solely for the purpose of meeting the requirements of U.S. Securities and Exchange Commission (“SEC”) Article 11 of Regulation S-X following the acquisition of Oxitec by Intrexon Corporation (“Intrexon”) on 4 September 2015. This financial information is the unaudited consolidated interim financial information (hereafter the ‘Interim Financial Information’) of Oxitec Limited (“the Company”) and its subsidiaries (“the Group, “Oxitec” or “we”) for the six month period ended 30 June 2015. The Interim Financial Information has been prepared in accordance with ASB statement Half Yearly Reports (“the Statement”) and United Kingdom Generally Accepted Accounting Practice applicable to Smaller Entities (UK GAAP for SEs), except where the former requires disclosures which are not required by the latter. Whilst the Statement has been withdrawn by Financial Reporting Council, as the new UK standard for interim reporting (FRS 104) requires compliance with New UK GAAP but the Company and Group are not required to adopt New UK GAAP for the accounting period ending 31 December 2015, it remains the most appropriate framework. The Interim Financial Information does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.
The financial statements are prepared under the historical cost convention. There have been no changes to the accounting policies as contained in the annual consolidated financial statements as of and for the year ended 31 December 2014. In the opinion of management, all adjustments considered necessary for a fair statement of the results for the interim periods presented have been included. Operating results for the six months ended June 30, 2015, are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.
US GAAP
Significant differences exist between United Kingdom Generally Accepted Accounting Practice applicable to Smaller Entities and US Generally Accepted Accounting Principles (US GAAP). The US GAAP results for the period and the effect on Group total shareholders' funds are set out in Note 15.
Consolidation
The consolidated financial statements include the results of the company and its subsidiary undertakings made up to the six month period ending 30 June 2015. Intra-group transactions are excluded on consolidation and sales and profit figures relate to external transactions only. The Consolidated Financial Statements for the year ended 31 December 2014 are included in Intrexon Corporation’s 8-K/A filing dated 28 October 2015.
Going concern
The financial statements have been prepared on a going concern basis which assumes that the Company will continue in operational existence for the foreseeable future. Following the acquisition of the Company by Intrexon,
Page 8
Oxitec Limited
Notes to the Consolidated Financial Statements
For the six month period ended 30 June 2015
1. | Accounting policies (continued) |
the directors have received a letter of support from Intrexon to provide the Company with sufficient resources to meet its liabilities as they fall due. Accordingly, the directors consider that the going concern assumption is appropriate.
2. | Directors' remuneration |
Included within adminstrative expenses are the following amounts relating to directors’ remuneration:
Six month period ended 30 June 2015 Unaudited | Six month period ended 30 June 2014 Unaudited | Year ended 31 December 2014 Unaudited | |||||||
£ | £ | £ | |||||||
Aggregate remuneration | 136,425 | 158,691 | 321,228 | ||||||
No pension contributions were made in respect of directors during the year.
3. | Tax on loss on ordinary activities |
Six month period ended 30 June 2015 Unaudited | Six month period ended 30 June 2014 Unaudited | Year ended 31 December 2014 Unaudited | |||||||
£ | £ | £ | |||||||
Research and development tax credit | 529,621 | 379,587 | 379,587 | ||||||
Unrelieved tax losses of approximately £17,371,000 (June 2014: £13,587,000, December 2014: £15,000,000) remain available for offset against future taxable trading profits, prior to any research and development tax relief claims for the current year. The Group has not recognised any deferred tax asset in respect of these losses due to there being significant uncertainty regarding the recovery of these losses against taxable trading profits in the forseeable future.
Page 9
Oxitec Limited
Notes to the Consolidated Financial Statements
For the six month period ended 30 June 2015
4. | Tangible assets |
Plant & Machinery | Office Equipment | Construction in progress | Total | |||||
£ | £ | £ | £ | |||||
Cost | ||||||||
At 1 January 2015 | 458,197 | 136,396 | 369,474 | 964,067 | ||||
Additions | 183,664 | 30,555 | — | 214,219 | ||||
Transfers | 369,474 | — | (369,474 | ) | — | |||
At 30 June 2015 | 1,011,335 | 166,951 | — | 1,178,286 | ||||
Accumulated depreciation | ||||||||
At 1 January 2015 | 205,257 | 66,017 | — | 271,274 | ||||
Charge for the period | 86,414 | 14,649 | — | 101,063 | ||||
At 30 June 2015 | 291,671 | 80,666 | — | 372,337 | ||||
Net book value | ||||||||
At 30 June 2015 | 719,664 | 86,285 | — | 805,949 | ||||
At 31 December 2014 At 30 June 2014 | 252,940 223,435 | 70,379 73,554 | 369,474 - | 692,793 296,989 | ||||
5.Investments
Current asset investments
At 30 June 2015 Unaudited | At 31 Dec 2014 Unaudited | ||||
£ | £ | ||||
Time deposit investment | 759,000 | 754,142 | |||
The current asset investment balance relates to a short-term time deposit with an original maturity date of more than three months which is due within one year.
Page 10
Oxitec Limited
Notes to the Consolidated Financial Statements
For the six month period ended 30 June 2015
6.Debtors
At 30 June 2015 Unaudited | At 31 Dec 2014 Unaudited | ||||
£ | £ | ||||
Due within one year | |||||
Prepayments and accrued income | 228,707 | 247,750 | |||
R&D Tax credit | 529,621 | — | |||
Other debtors | 193,009 | 279,350 | |||
951,337 | 527,100 | ||||
7.Creditors: amounts falling due within one year
At 30 June 2015 Unaudited | At 31 Dec 2014 Unaudited | ||||
£ | £ | ||||
Convertible loans | 3,889,237 | 3,839,957 | |||
Trade creditors | 213,271 | 183,131 | |||
Taxation and social security | 28,899 | 60,623 | |||
Other creditors | 330,260 | 664,004 | |||
4,461,667 | 4,747,715 | ||||
The convertible loan balance includes £3,127,436, (2014: £3,078,156) principal plus accrued interest, provided by East Hill Venture Fund LP (“East Hill”). Further details of this balance are given in note 13. The remaining £761,801 (2014: £761,801) of convertible loans relates to a loan from the Wellcome Trust which is convertible at the holders option into ordinary shares at a discount of 20% to the most recent funding round. During the period, interest charges of £49,280 (2014: £99,378) were accrued and added to the amount of the outstanding loans. Interest accrues at a fixed interest rate of 4% above six month U.S. dollar LIBOR as at 27 June 2013 and 2% above three month sterling LIBOR as at 3 February 2010 on the East Hill and Welcome Trust loans respectively. Prior to 29 June 2013, interest accrued at a fixed rate of 2% above three month sterling LIBOR as at 27 June 2008 on £1,500,000 of the East Hill loan, and 3% above three month sterling LIBOR as at 2 June 2009 on £750,000 of the East Hill loan.
On 4 September 2015, all of the convertible loans converted into ordinary shares of the Company following the acquisition of all of the issued and to be issued share capital of the Company by Intrexon.
Page 11
Oxitec Limited
Notes to the Consolidated Financial Statements
For the six month period ended 30 June 2015
8.Called up share capital
At 30 June 2015 Unaudited | At 31 Dec 2014 Unaudited | ||||
£ | £ | ||||
Allotted, called up and fully paid | |||||
758,759 (2014: 666,094) Ordinary shares of £0.01 each | 7,588 | 6,661 | |||
During the course of the period, the Company issued of 91,326 ordinary shares in order to provide additional working capital and 1,339 ordinary shares as a result of the exercise of share options. The difference between the total consideration of £4,494,053 and the total nominal value of £927, being £4,493,126, has been credited to the share premium account.
9.Reserves
Share premium account Unaudited | Profit and loss account Unaudited | ||||
£ | £ | ||||
At 1 January 2015 | 20,790,841 | (20,881,338 | ) | ||
Loss for the financial period | — | (2,159,392 | ) | ||
Exchange losses on foreign currency translation | — | (83,938 | ) | ||
Premium on shares issued during the period | 4,493,126 | — | |||
At 30 June 2015 | 25,283,967 | (23,124,668 | ) | ||
£ | £ | ||||
At 1 January 2014 | 14,751,344 | (16,810,107 | ) | ||
Loss for the financial period | — | (1,521,764 | ) | ||
Exchange losses on foreign currency translation | — | (10,128 | ) | ||
Premium on shares issued during the period | 6,052,614 | — | |||
At 30 June 2014 | 20,803,958 | (18,341,999 | ) | ||
Share premium account Unaudited | Profit and loss account Unaudited | ||||
£ | £ | ||||
At 1 January 2014 | 14,751,344 | (16,810,107 | ) | ||
Loss for the financial year | — | (3,991,564 | ) | ||
Exchange losses on foreign currency translation | — | (79,667 | ) | ||
Premium on shares issued during the year | 6,039,497 | — | |||
At 31 December 2014 | 20,790,841 | (20,881,338 | ) | ||
During the second half of 2014, the Company recognised an additional expense of raising equity amounting to £13,117 resulting in a corresponding reduction of share premium.
Page 12
Oxitec Limited
Notes to the Consolidated Financial Statements
For the six month period ended 30 June 2015
10.Reconciliation of movements in shareholders’ funds/(deficit)
At 30 June 2015 Unaudited | At 31 Dec 2014 Unaudited | ||||
£ | £ | ||||
Loss for the financial period | (2,159,392 | ) | (3,991,564 | ) | |
Exchange losses on foreign currency translation | (83,938 | ) | (79,667 | ) | |
Increase in share capital | 927 | 1,319 | |||
Increase in share premium | 4,493,126 | 6,039,497 | |||
Net decrease in shareholders’ deficit | 2,250,723 | 1,969,585 | |||
Opening shareholders’ deficit | (83,836 | ) | (2,053,421 | ) | |
Closing shareholders’ funds/(deficit) | 2,166,887 | (83,836 | ) | ||
11.Reconciliation of operating loss to net cash outflow from operating activities
At 30 June 2015 Unaudited | At 30 June 2014 Unaudited | At 31 Dec 2014 Unaudited | ||||||
£ | £ | £ | ||||||
Operating loss | (2,644,145 | ) | (1,856,224 | ) | (4,284,777 | ) | ||
Decrease / (increase) in debtors | 117,731 | (218,870 | ) | (261,738 | ) | |||
(Decrease) / increase in creditors | (419,267 | ) | 83,977 | 381,525 | ||||
Depreciation expense Loss on disposal of fixed assets | 101,063 - | 45,972 - | 104,795 9,637 | |||||
Net cash outflow from operating activities | (2,844,618 | ) | (1,945,145 | ) | (4,050,558 | ) | ||
Page 13
Oxitec Limited
Notes to the Consolidated Financial Statements
For the six month period ended 30 June 2015
12.Analysis of changes in net debt
Unaudited | At 1 January 2015 | Cash flows | Other changes | At 30 June 2015 | ||||
£ | £ | £ | £ | |||||
Cash and cash equivalents | 2,676,497 | 1,435,771 | — | 4,112,268 | ||||
Convertible loans | (3,839,957 | ) | — | (49,280 | ) | (3,889,237 | ) | |
Current asset investments | 754,142 | — | 4,858 | 759,000 | ||||
Total | (409,318 | ) | 1,435,771 | (44,422 | ) | 982,031 | ||
Unaudited | At 1 January 2014 | Cash flows | Other changes | At 30 June 2014 | ||||
£ | £ | £ | £ | |||||
Cash and cash equivalents | 1,430,639 | 4,025,381 | — | 5,456,020 | ||||
Convertible loans | (3,562,603 | ) | — | (49,280 | ) | (3,611,883 | ) | |
Total | (2,131,964 | ) | 4,025,381 | (49,280 | ) | 1,844,137 | ||
Unaudited | At 1 January 2014 | Cash flows | Other changes | At 31 December 2014 | ||||
£ | £ | £ | £ | |||||
Cash and cash equivalents | 1,430,639 | 1,245,858 | — | 2,676,497 | ||||
Convertible loans | (3,562,603 | ) | (177,976 | ) | (99,378 | ) | (3,839,957 | ) |
Current asset investments | — | 754,142 | — | 754,142 | ||||
Total | (2,131,964 | ) | 1,822,024 | (99,378 | ) | (409,318 | ) | |
Page 14
Oxitec Limited
Notes to the Consolidated Financial Statements
For the six month period ended 30 June 2015
13.Related party transactions
During the year ended 31 December 2008, the Company was provided with a £1,500,000 unsecured convertible loan facility by East Hill, a business which is controlled by L T Clay, a director of Oxitec. During 2009, the Company was provided with and drew down a further £750,000 loan facility from East Hill secured by way of a debenture over the Company's assets. The loan facilities are convertible into ordinary shares at the lesser of £40 per share and the most recent funding round. At 30 June 2015, all £2,250,000 of the loan facilities had been drawn down by the Company. During the period, interest charges of £49,280 (June 2014: £49,280 December 2014: £99,378) were accrued and added to the amount of the outstanding loans. Total accrued interest amounts to £877,436 at 30 June 2015 (June 2014: £778,025 December 2014: £828,156)
Fees totalling £18,690 (June 2014: £22,500 December 2014: £91,788) have been paid to Oxford Capital Partners, a business which is under the control of E D K Mott, a director of Oxitec. Invoices totalling £7,500 (June 2014: £7,500 December 2014: £15,000) for Non Executive Director services provided throughout the six month period ended 30 June 2015 for Oxford Capital Partners LLP (Edward Mott), and invoices totalling £12,148 (June 2014: £12,400 December 2014: £24,000) for provision of services by a company, Talestris Ltd (Christopher Richards) were paid during the six month period ended 30 June 2015. Fees totalling £3,750 (June 2014: £3,750 December 2014: £7,500) were accrued to L T Clay, a director of Oxitec.
14.Post balance sheet events
During July 2015 the Company’s convertible loan facilities with East Hill were amended and the maturity date extended to 27 June 2017.
On 4 September 2015 all of the issued and to be issued share capital of the Company was acquired by Intrexon for total purchase consideration of $160 million which was settled in cash and Intrexon common stock shares.
On 4 September 2015 all of the directors of the Company with the sole exception of Hadyn Parry resigned.
On 4 September 2015 the Company secretary resigned.
On 4 September 2015 Christian Ulrich and Rick Sterling were appointed directors of the Company
On 4 September 2015 all convertible loans were duly converted to a total of 99,769 ordinary shares and subsequently sold on the same date to Intrexon.
On 4 September 2015 all share options in issue, totalling options over 86,670 ordinary shares in Oxitec Ltd were exercised and the shares so issed sold on the same date to Intrexon.
On 4 September 2015 all exercisable warrant instruments in issue, totalling warrants to purchase 62,165 ordinary shares in Oxitec Ltd were exercised and the shares so issued sold on the same date to Intrexon.
Page 15
Oxitec Limited
Notes to the Consolidated Financial Statements
For the six month period ended 30 June 2015
15. | Reconciliation from UK FRSSE to accounting principles generally accepted in the United States of America (“US GAAP”) |
The accompanying consolidated financial statements of Oxitec have been prepared in accordance with the UK FRSSE as described in Note 1. The UK FRSSE differs in certain respects from the requirements of US GAAP. The effects of the application of US GAAP to Oxitec results, as determined under the UK FRSSE, are set out below.
Six month period ended 30 June 2015 Profit & loss account Unaudited | At 30 June 2015 Total shareholders’ funds Unaudited | ||||
£ | £ | ||||
UK FRSSE results | |||||
Loss for the financial period | (2,159,392 | ) | — | ||
Total shareholders’ funds | — | 2,166,887 | |||
US GAAP adjustments: | |||||
a) Share based compensation expense | (106,400 | ) | — | ||
b) Convertible loans | (190,720 | ) | (973,014 | ) | |
Total US GAAP adjustments | (297,120 | ) | (973,014 | ) | |
Results under US GAAP | (2,456,512 | ) | 1,193,873 | ||
Year ended 31 December 2014 Profit & loss account Unaudited | At 31 December 2014 Total shareholders’ deficit Unaudited | ||||
£ | £ | ||||
UK FRSSE results | |||||
Loss for the financial year | (3,991,564 | ) | - | ||
Total shareholders’ deficit | — | (83,836 | ) | ||
US GAAP adjustments: | |||||
a) Share based compensation expense | (217,835 | ) | — | ||
b) Convertible loans | (197,116 | ) | (782,294 | ) | |
Total US GAAP adjustments | (414,951 | ) | (782,294 | ) | |
Results under US GAAP | (4,406,515 | ) | (866,130 | ) | |
Page 16
Oxitec Limited
Notes to the Consolidated Financial Statements
For the six month period ended 30 June 2015
15. | Reconciliation from UK FRSSE to accounting principles generally accepted in the United States of America (“US GAAP”) (continued) |
Six month period ended 30 June 2014 Profit & loss account Unaudited | At 30 June 2014 Total shareholders’ funds Unaudited | ||||
£ | £ | ||||
UK FRSSE results | |||||
Loss for the financial period | (1,521,764 | ) | — | ||
Total shareholders’ funds | — | 2,468,620 | |||
US GAAP adjustments: | |||||
a) Share based compensation expense | (100,027 | ) | — | ||
b) Convertible loans | (192,720 | ) | (777,898 | ) | |
Total US GAAP adjustments | (292,747 | ) | (777,898 | ) | |
Results under US GAAP | (1,814,511 | ) | 1,690,722 | ||
a) | Share based compensation expense |
Under the UK FRSSE, there is no requirement to recognise equity settled share based compensation expense. Under US GAAP, equity classified awards are recognised as compensation expense and are measured at the grant date fair value of the award over the vesting period. The Company has estimated the grant date fair value using the Black-Scholes-Merton option-pricing model.
b) | Convertible loans |
Under the UK FRSSE, financial instruments are classified as a financial liability, a financial asset or an equity instrument in accordance with the substance of the contractual arrangement. Under the UK FRSSE the convertible loans are recognised as a liability at cost. Under US GAAP, the Company has elected to report its convertible loans under the Fair Value Option Subsections of FASB ASC Subtopic 825‑10, Financial Instruments—Overall, with changes in fair value reported in earnings. The profit and loss account adjustment of £190,720 (June 2014: £192,720, December 2014: £197,116) and total shareholders’ funds adjustment of £973,014 (June 2014: £777,898, December 2014: £782,294) reflect the incremental impact of applying a fair basis of measurement to the amounts recorded under the UK FRSSE since the date that the instruments were issued.
Page 17
Oxitec Limited
Notes to the Consolidated Financial Statements
For the six month period ended 30 June 2015
15. | Reconciliation from UK FRSSE to accounting principles generally accepted in the United States of America (“US GAAP”) (continued) |
Cash flow statement for the six month period ended 30 June 2015
The consolidated cash flow statement of Oxitec has been prepared in accordance with UK GAAP. There are certain differences with regard to classification of items within the cash flow statement under US GAAP. Under UK GAAP cash flows are prepared separately for operating activities, returns on investments and servicing of finance, taxation, capital expenditure and financial investment, acquisitions and disposals, and financing. Under UK GAAP, cash is defined as cash in hand and deposits repayable on demand, less overdrafts repayable on demand. Under US GAAP, cash and cash equivalents are defined as cash and investments with original maturities of three months or less. The following table presents cash flows as classified under US GAAP.
Six month period ended 30 June 2015 Unaudited | Six month period ended 30 June 2014 Unaudited | ||||
£ | £ | ||||
Cash flows from operating activities | |||||
Net loss | (2,456,512 | ) | (1,814,511 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||
Depreciation of tangible fixed assets | 101,063 | 45,725 | |||
Share based compensation expense | 106,400 | 100,027 | |||
Unrealised losses on convertible loans measured at fair value | 240,000 | 242,000 | |||
Taxation | (529,621 | ) | (379,587 | ) | |
Other non-cash items | (3,857 | ) | 2 | ||
Changes in operating assets and liabilities: | |||||
Debtors | 117,731 | (218,871 | ) | ||
Creditors | (419,267 | ) | 84,225 | ||
Net cash used in operating activities | (2,844,063 | ) | (1,940,990 | ) | |
Cash flows from investing activities | |||||
Purchases of tangible fixed assets | (214,219 | ) | (87,562 | ) | |
Net cash used in investing activities | (214,219 | ) | (87,562 | ) | |
Cash flows from financing activities | |||||
Proceeds from issuance of shares in a private placement | 4,494,053 | 6,053,933 | |||
Net cash provided by financing activities | 4,494,053 | 6,053,933 | |||
Net increase in cash and cash equivalents | 1,435,771 | 4,025,381 | |||
Cash and cash equivalents | |||||
Beginning of period | 2,676,497 | 1,430,639 | |||
End of period | 4,112,268 | 5,456,020 | |||
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