Contents
Pages | ||
Directors' Report | 1-2 | |
Financial Report | 3 | |
Condensed Consolidated Statements of Profit or Loss and Other Comprehensive Income (Loss) | 4 | |
Condensed Consolidated Statements of Financial Position | 5 | |
Condensed Consolidated Statements of Changes in Equity | 6 | |
Condensed Consolidated Statements of Cash Flows | 7 | |
Notes to the Condensed Consolidated Financial Statements | 8-27 |
Integrated Media Technology Limited | Interim Report | For the six months ended June 30, 2020 |
Directors' Report
The directors present their report together with the condensed consolidated financial statements on the consolidated entity (referred to hereinafter as the "Group") consisting of Integrated Media Technology Limited (referred to hereinafter as "IMTE" or "Company") and the entities it controlled as of and for the six months ended June 30, 2020.
Directors
The names of the directors in office at any time during the period from January 1, 2020 to June 30, 2020, and up to the date of this report are:
Director | Position | |
Mr. Con UNERKOV | Chairman and Chief Executive Officer | |
Dr. Man Chung CHAN | Independent Non-executive Director | |
Mr. Wuhua ZHANG | Non-executive Director | |
Mr. Uwe Von PARPART | Independent Non-executive Director | |
Dr. Heming CUI | Independent Non-executive Director | (Appointed on June 12, 2020) |
Principal Activities
IMTE is an Australia company engaged in the business of glasses-free 3D (also known as autostereoscopic 3D) display, the manufacture / sale of nano coated plates for air filters and the sale electronic glass. These two new business operations in air filters and electronic glass, form the foundation of our future growth strategy.
Review of Operations and Future Development
General review
The Group's principal activities during the financial period under review was the development, sale and distribution of 3D autostereoscopic display and 3D video wall.
Financial review
During the financial period under review, the Group has recorded revenue from operations of A$444,663 (2019: A$339,451) and recorded losses for the period of A$4,835,240 (2019: loss of A$10,771,946). The slight increase in revenue of the display business for the six months ended June 30, 2020 was primarily due to more contracts concluded and completed in respect of the sales of displays, and a decrease in net loss for the six month ended June 30, 2020 approximately 55.1% from A$10,771,946 loss in 2019 to A$4,835,240 loss for the period was due to no provision for impairment loss of goodwill in 2020 (2019: A$4,486,301, which had been fully impaired in the prior period).
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 1 of 27 |
Directors' Report (Continued)
As of June 30, 2020, the Group has net liabilities of A$2,842,598. The non-current assets amounting to A$5,760,324 consist of fixed assets of A$358,379, intangible assets of A$4,358,825 and development projects A$1,043,120.
During the period, the Company continued to pursue the research of ASD technology in support of our sales of 3D ASD products. Most of our operating expenditures incurred during the period were for research and product development which did not contribute any positive return to our bottom line. With the manufacturing issues of our subcontractors, we were not able to conclude many sales or pursue any media and advertising projects involving sizeable orders for 3D ASD displays. These factors contributed the loss incurred by the Company during the period.
Going forward, the Company will seek to diversify from its 3D ASD business to switchable electronic glass. The Company will seek funding to build or rent a manufacturing facility for our electronic glass lamination lines in 2020 & 2021. If we are successful in securing the funding in second half of 2020, then the Company will be positioned to deliver operational results in the switchable electronic glass business in the near future. The Company will also conduct an overall review of our existing operations with a view to reduce operational costs and to focus on committing operating funds to businesses operations that can deliver consistent sales and profit to the Group.
During the period under review and up to the date of this report, the Company has successfully raised funds by selling shares and convertible bonds in the Company. The Company has also converted certain debts into shares in the Company to decrease its debt burden. In the short term, the Company will continue to raise funds from the equity market to strengthen our capital base. In the longer term, the Company will need to seek funding from both the capital and equity markets to support our capital expenditures and operations.
The Company will be reviewing potential acquisitions that can add value to the Group or bring in steady revenue profit streams. The future development is dependent on the ability to have sufficient resources in funding, technology and human capital to execute our business plans.
On behalf of the Directors,
/S/ Con Unerkov
________________________
Con Unerkov
Director
November 19, 2020
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 2 of 27 |
Financial Report
The financial report covers Integrated Media Technology Limited (“IMTE”) as a consolidated entity, consisting of Integrated Media Technology Limited and the entities it controlled. The financial report is presented in Australian dollars which is IMTE's functional currency.
The financial report consists of the condensed consolidated financial statements, notes to the condensed consolidated financial statements and the directors' declaration.
Integrated Media Technology Limited is a Nasdaq listed public company limited by shares, incorporated and domiciled in Australia, its registered office and the principal place of business are:
Registered Office and Principal Place of Business
Level 7, 420 King William Street
Adelaide SA 5000 Australia
Principal Place of Business
7/F,Siu On Center, 188 Lockhart Road,
Wanchai, Hong Kong
A description of the nature of the Group’s operations and its principal activities are included in the directors' report, which is not part of the financial report.
The financial report was authorized for issue, in accordance with a resolution of directors on November 19, 2020.
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 3 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
CONDENSED Consolidated StatementS of Profit or Loss and Other
Comprehensive Income/ (LOSS)
FOR THE SIX MONTHS ENDED jUNE 30, 2020 AND 2019
Group | ||||||
June 30 2020 | June 30 2019 | |||||
Notes | A$ | A$ | ||||
Revenue, net | 4 | 444,663 | 339,451 | |||
Cost of goods sold | (331,663) | (232,137) | ||||
113,000 | 107,314 | |||||
Interest income | - | 90,406 | ||||
Other income | 5 | 82,561 | 90,111 | |||
195,561 | 287,831 | |||||
EXPENSES | ||||||
Employee benefit expenses | (1,426,738) | (2,010,474) | ||||
Depreciation and amortization | (1,384,151) | (1,696,130) | ||||
Professional and consulting expenses | (831,396) | (1,255,335) | ||||
Travel and accommodation expenses | (33,829) | (188,365) | ||||
Office expenses and supplies | (195,787) | (364,112) | ||||
Rental costs | (194,049) | (399,190) | ||||
Other operating expenses | (385,143) | (60,683) | ||||
Finance costs | 6 | (487,871) | (703,825) | |||
Provision for impairment loss of goodwill | - | (4,486,301) | ||||
Exchange losses | (62,847) | - | ||||
Loss on disposal of subsidiaries | 24 | (28,990) | - | |||
Total expenses | (5,030,801) | (11,164,415) | ||||
LOSS BEFORE INCOME TAX | (4,835,240) | (10,876,584) | ||||
Income tax credit | 7(a) | - | 104,638 | |||
LOSS FOR THE PERIOD | (4,835,240) | (10,771,946) | ||||
OTHER COMPREHENSIVE INCOME | ||||||
Items that may be reclassified subsequently to profit or loss: | ||||||
Exchange difference on translation of financial statements of overseas subsidiaries | 248,419 | 171,542 | ||||
Other comprehensive income for the period, net of tax | 248,419 | 171,542 | ||||
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD | (4,586,821) | (10,600,404) | ||||
Loss for the period attributable to: | ||||||
Owners of the Company | (4,655,833) | (10,207,840) | ||||
Non-controlling interests | (179,407) | (564,106) | ||||
(4,835,240) | (10,771,946) | |||||
Total comprehensive loss for the period attributable to: | ||||||
Owners of the Company | (4,530,186) | (10,049,297) | ||||
Non-controlling interests | (56,635) | (551,107) | ||||
(4,586,821) | (10,600,404) | |||||
Loss per share | ||||||
Basic and diluted | 9 | (1.32) | (3.14) |
The accompanying notes form part of these condensed consolidated financial statements.
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 4 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
as of June 30, 2020 and December 31, 2019
Group | ||||||
June 30 2020 | December 31 2019 | |||||
Notes | A$ | A$ | ||||
ASSETS | ||||||
CURRENT ASSETS | ||||||
Cash and bank balances | 139,174 | 735,724 | ||||
Inventories | 10 | 497,315 | 749,173 | |||
Right of use assets | 19 | - | 682,119 | |||
Trade and other receivables | 11 | 191,563 | 770,958 | |||
Other assets | 12 | 746,244 | 2,291,273 | |||
Total current assets | 1,574,296 | 5,229,247 | ||||
NON-CURRENT ASSETS | ||||||
Plant and equipment | 13 | 358,379 | 729,117 | |||
Right of use assets | 19 | - | 425,773 | |||
Intangible assets and goodwill | 14 | 4,358,825 | 9,950,803 | |||
Development projects | 15 | 1,043,120 | 3,611,336 | |||
Total non-current assets | 5,760,324 | 14,717,029 | ||||
TOTAL ASSETS | 7,334,620 | 19,946,276 | ||||
LIABILITIES | ||||||
CURRENT LIABILITIES | ||||||
Trade and other liabilities | 16 | 6,824,662 | 4,338,495 | |||
Provision for employee benefits | - | 64,135 | ||||
Amounts due to related companies | 17 | 593,150 | 6,684,682 | |||
Borrowings | 18 | - | 1,817,782 | |||
Lease liabilities | 19 | - | 666,868 | |||
Derivative financial instruments | 20 | - | - | |||
Convertible bonds | 21 | - | 4,420,899 | |||
Total current liabilities | 7,417,812 | 17,992,861 | ||||
NON-CURRENT LIABILITIES | ||||||
Lease liabilities | 19 | - | 501,739 | |||
Deferred tax liabilities | 7(b) | 15,325 | 1,372,653 | |||
Derivative financial instruments | 20 | - | - | |||
Convertible promissory note | 22 | 2,744,081 | - | |||
Total non-current liabilities | 2,759,406 | 1,874,392 | ||||
TOTAL LIABILITIES | 10,177,218 | 19,867,253 | ||||
NET CURRENT LIABILITIES | (5,843,516) | (12,763,614) | ||||
NET (LIABILITIES)/ASSETS | (2,842,598) | 79,023 | ||||
CAPITAL AND RESERVES | ||||||
Issued capital (no par value, 3,663,100 ordinary shares issued and outstanding as of June 30, 2020 and 3,377,386 ordinary shares of December 31, 2019) |
23 | 20,309,687 | 18,902,029 | |||
Foreign currency translation reserves | 25 | 860,860 | 735,213 | |||
Other reserves | 25 | 2,704,452 | 4,423,141 | |||
Accumulated losses | (28,724,056) | (25,786,912) | ||||
Equity attributable to owners of the Company |
|
|
| (4,849,057) |
| (1,726,529) |
Non-controlling interests |
|
|
| 2,006,459 |
| 1,805,552 |
TOTAL EQUITY | (2,842,598) | 79,023 |
The accompanying notes form part of these condensed consolidated financial statements.
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 5 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to Owners of the Company | Non-Controlling Interests | Total Equity | ||||||||||||
GROUP | Issued Capital | Retained Earnings / (Accumulated Losses) | Foreign Currency Translation Reserve (Note 25(a)) | Other reserves (Note 25(b)) | Total | |||||||||
A$ | A$ | A$ | A$ | A$ | A$ | A$ | ||||||||
Balance at January 1, 2019 | 18,902,029 | (10,676,713) | 629,383 | 4,959,089 | 13,813,788 | 2,807,963 | 16,621,751 | |||||||
Loss for the period | - | (10,207,840) | - | - | (10,207,840) | (564,106) | (10,771,946) | |||||||
Other comprehensive income, net of tax | - | - | 158,543 |
- | 158,543 | 12,999 | 171,542 | |||||||
Total comprehensive income / (loss) for the period | - | (10,207,840) | 158,543 |
- | (10,049,297) | (551,107) | (10,600,404) | |||||||
Balance at June 30, 2019 | 18,902,029 | (20,884,553) | 787,926 | 4,959,089 | (3,764,491) | 2,256,856 | 6,021,347 | |||||||
Balance at January 1, 2020 | 18,902,029 | (25,786,912) | 735,213 | 4,423,141 | (1,726,529) | 1,805,552 | 79,023 | |||||||
Loss for the period | - | (4,655,833) | - | - | (4,655,833) | (179,407) | (4,835,240) | |||||||
Other comprehensive income, net of tax | - | - | 125,647 | - | 125,647 | 122,772 | 248,419 | |||||||
Total comprehensive income / (loss) for the period | - | (4,655,833) | 125,647 | - | (4,530,186) | (56,635) | (4,586,821) | |||||||
Transfer convertible bond reserve to accumulated loss | - | 1,718,689 | - | (1,718,689) | - | - | - | |||||||
Disposal of subsidiaries | - | - | - | - | - | 257,542 | 257,542 | |||||||
Issuance of new ordinary shares | 1,407,658 | - | - | - | 1,407,658 | - | 1,407,658 | |||||||
Balance at June 30, 2020 | 20,309,687 | (28,724,056) | 860,860 | 2,704,452 | (4,849,057) | 2,006,459 | (2,842,598) |
The accompanying notes form part of these condensed consolidated financial statements.
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 6 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the six months ended June 30, 2020 and 2019
Group | ||||
June 30 2020 | June 30 2019 | |||
Notes | A$ | A$ | ||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net loss before tax | (4,835,240) | (10,876,584) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation and amortization | 1,384,151 | 1,696,130 | ||
Loss on disposal of subsidiaries | 28,990 | - | ||
Interest accrued for lease liabilities | 32,526 | 57,556 | ||
Interest accrued for convertible notes | 122,660 | - | ||
Interest accrued for convertible bonds | - | 608,386 | ||
Net cash flows from changes in working capital | 29 | 796,857 | 244,813 | |
Provision for impairment loss of goodwill | - | 4,486,301 | ||
NET CASH OUTFLOW USED IN OPERATING ACTIVITIES | (2,470,056) | (3,783,398) | ||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Disposal of subsidiaries, net of cash disposal of | 24 | 855,506 | - | |
Development expenditures | (125,520) | (471,497) | ||
Payments for intangible assets | - | (7,283) | ||
Payments for plant and equipment | (2,064) | (1,193,474) | ||
NET CASH INFLOW/ (OUTFLOW) FROM INVESTING ACTIVITIES | 727,922 | (1,672,254) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Proceeds of advances from related parties | 602,834 | 4,003,072 | ||
Proceeds of advances from other payables | 2,357,112 | - | ||
Proceeds from issuance of convertible notes | 2,626,400 | - | ||
Proceeds from bank borrowings | - | 90,049 | ||
Repayment of obligation under finance lease | - | (8,934) | ||
Payment of lease liabilities | (320,851) | - | ||
Repayment for convertible bonds | (4,668,195) | - | ||
Proceeds from shares issued | 1,407,658 | - | ||
NET CASH INFLOW PROVIDED BY FINANCING ACTIVITIES | 2,004,958 | 4,084,187 | ||
NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS | 262,824 | (1,371,465) | ||
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD | (166,758) | 619,705 | ||
Effect of exchange rate changes on cash and cash equivalents | 43,108 | 10,934 | ||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 139,174 | (740,826) | ||
Analysis of cash and cash equivalents: | ||||
Cash and bank balances | 139,174 | 142,381 | ||
Bank overdraft | - | (883,207) | ||
Cash and cash equivalents | 139,174 | (740,826) |
The accompanying notes form part of these condensed consolidated financial statements.
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 7 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. | BASIS OF PREPARATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
The condensed consolidated financial statements are general purpose financial statements, which have been prepared in accordance with International Financial Reporting Standards ("IFRSs") IAS 34 "Interim Financial Reporting".
The condensed consolidated financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these condensed consolidated financial statements are to be read in conjunction with the annual report for the financial year ended December 31, 2019 and any public announcements made by Integrated Media Technology Limited during the interim reporting period.
The condensed consolidated financial statements have been prepared on the accrual basis and are based on historical cost modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.
The Group incurred a net loss of A$4,835,240 (2019: loss of A$10,771,946) during the six months ended June 30, 2020 and, as of that date, the Group's current liabilities exceeded its current assets by A$5,843,516. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern.
Going Concern
The Company’s consolidated financial statements are prepared using International Financial Reporting Standards as issued by the International Accounting Standards Board applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. As of June 30, 2020, the Company had accumulated losses of A$28,724,056 and generated a net loss for the six months ended June 30, 2020 of A$4,835,240 and used cash in operating activities in the amount of A$2,470,056. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease or reduce its operations.
For the period under review until the date of this report, the Company has successfully raised a total of A$5.6 million from the selling of new shares and convertible bonds, and have converted A$3.9 million of debts to equity in the Company. These corporate actions have stabilized the Company’s cashflow in the short term, but the Company will need to continue to build its capital base to fund its business plans.
In order to continue as a going concern, the Company will need continual short-term borrowings for our working and operating capital. In the longer term, the Company is dependent upon its ability, and will continue to attempt, to secure additional equity and/or debt financing until the Company can earn revenue and realize positive cash flow from its operations.
There are no assurances that the Company will be successful in earning revenue and realizing positive cash flow from its operations. Without sufficient financing it would be unlikely that the Company will continue as a going concern.
.
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 8 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. | BASIS OF PREPARATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) |
Based on the Company’s current rate of cash outflows, cash on hand and short term borrowings, management believes that its current cash may not be sufficient to meet the anticipated cash needs for working capital for the next twelve months.
The Company’s plans with respect to its liquidity issues include, but are not limited to, the following:
1) | Continue to raise financing through the sale of its equity and/or debt securities; |
2) | Seek additional capital in the public equity markets to continue its operations as it rolls out its current products in development, respond to competitive pressures, develop new products and services, and support new strategic partnerships. The Company is currently evaluating additional equity financing opportunities and may execute them when appropriate. However, there can be no assurances that the Company can consummate such a transaction, or consummate a transaction at favorable pricing. |
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraphs and eventually secure other sources of financing and achieve profitable operations. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated.
The consolidated financial statements of the Group are presented in Australian Dollars (“A$”), unless otherwise stated.
New, revised or amended Accounting Standards and Interpretations adopted
The IASB has issued a number of new IFRSs and amendments to IFRSs that are first effective for the current accounting period of the Group. Of these, the following developments are relevant to the Group’s financial statements:
IFRS 3 Amendments | Definition of a Business |
IAS 1 and IAS 8 | Definition of Material |
IFRS 9, IAS 39 and IFRS 7 Amendments | Interest Rate Benchmark Reform |
IFRS 16 Amendments | COVID-19 Related Rent Concession |
The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 9 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. | BASIS OF PREPARATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) |
IFRS 3 Amendments clarify and provide additional guidance on the definition of a business. The amendments clarify that for an integrated set of activities and assets to be considered a business, it must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. A business can exist without including all the inputs and processes needed to create outputs. The amendments remove the assessment of whether market participants are capable of acquiring the business and continue to produce outputs. Instead, the focus is on whether acquired inputs and substantive processes together significantly contribute to the ability to create outputs. The amendments have also narrowed the definition of outputs to focus on goods or services provided to customers, investment income or other income from ordinary activities. Furthermore, the amendments provide guidance to assess whether an acquired process is substantive and introduce an optional fair value concentration test to permit a simplified assessment of whether an acquired set of activities and assets is not a business. The Group has implemented IFRS 3 since January 1, 2020 with no material impact on the consolidated financial statement of the Group, nor is there expected to be any future impact to the Group.
Amendments to IAS 1 and IAS 8 provide a new definition of materiality. The new definition states that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions made by the primary users of general purpose financial statements based on those financial statements. The amendments clarify that materiality depends on the nature or magnitude of information. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users. The Group has implemented IAS 1 and IAS 8 since January 1, 2020 with no material impact on the consolidated financial statement of the Group, nor is there expected to be any future impact to the Group.
The amendments to IFRS 9, IAS 39 and IFRS 7 modify some specific hedge accounting requirements. During the period of uncertainty arising from phasing-out of interest-rate benchmarks with an alternative nearly risk-free interest rate (“RFR”), the entities that apply these hedge accounting requirements can assume that the interest rate benchmarks on which the hedged cash flows and cash flows of the hedging instrument are based are not altered as a result of interest rate benchmark reform. The amendments applied retrospectively. The Group has implemented IFRS 9, IAS 39 and IFRS 7 since January 1, 2020 with no material impact on the consolidated financial statement of the Group, nor is there expected to be any future impact to the Group as it does not have any interest rate hedge accounting requirement.
IFRS 16 Amendment provides for rent relief during COVID-19, which provides an exemption for lessees. For lease payments due before June 2021, lessees are not required to apply the guidance on accounting treatment of lease changes in IFRS 16 for rent relief granted due to the impact of COVID-19. The amendment is applicable for annual reporting periods beginning on or after 1 June 2020, and earlier adoption is permitted. The Group has adopted the amendments from 1 January 2020 with no material impact on the consolidated financial statement of the Group, nor is there expected to be any future impact to the Group as the Group has no existing lease due before June 2021.
2. | USE OF JUDGEMENTS AND ESTIMATES |
In preparing these interim condensed consolidated financial statements, management has made judgements and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
The significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements.
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 10 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. | OPERATING SEGMENTS |
Operating segments have been determined on the basis of reports reviewed by the executive director. The executive director is considered to be the chief operating decision maker of the Group. The executive director considers that the Group has assessed and allocated resources on this basis. The executive director considers that the Group has three operating segments for the period ended June 30, 2020 (2019: three), being (1) the development, sale and distribution of autostereoscopic 3D displays, conversion equipment, software and provision of technology solutions, (2) provision of consultancy services, and (3) corporate.
The executive director reviews Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”). The accounting policies adopted for internal reporting to the executive director are consistent with those adopted in the condensed consolidated financial statements.
The information reported to the executive director is on at least a monthly basis.
Intersegment transaction
There are no intersegment transactions. There are no intersegment sales, receivables, payables and loans.
Operating segment information
| Sales and distribution of 3D displays (Remark 1) | Consultancy services | Corporate | Total | |||
Consolidated – 2020 | A$ | A$ | A$ | A$ | |||
For the six months ended June 30, 2020 | |||||||
Revenue | |||||||
Sales to external customers | 444,663 | - | - | 444,663 | |||
Intersegment sales | - | - | - | - | |||
Total sales revenue | 444,663 | - | - | 444,663 | |||
Other revenue | 82,561 | - | - | 82,561 | |||
Total revenue | 527,224 | - | - | 527,224 | |||
EBITDA | (3,451,089) | ||||||
Depreciation and amortization | (1,384,151) | ||||||
Loss before income tax | (4,835,240) | ||||||
Income tax credit | - | ||||||
Loss after income tax | (4,835,240) | ||||||
As at June 30, 2020 | |||||||
Assets | |||||||
Segment assets | 7,134,056 | 23,988 | 176,576 | 7,334,620 | |||
Liabilities | |||||||
Segment liabilities | 5,820,139 | 3,477,146 | 879,933 | 10,177,218 |
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 11 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. | OPERATING SEGMENTS (Continued) |
| Sales and distribution of 3D displays (Remark 1) | Consultancy services | Corporate | Total | |||
Consolidated – 2019 | A$ | A$ | A$ | A$ | |||
For the six months ended June 30, 2019 | |||||||
Revenue | |||||||
Sales to external customers | 322,210 | 17,241 | - | 339,451 | |||
Intersegment sales | - | - | - | - | |||
Total sales revenue | 322,210 | 17,241 | - | 339,451 | |||
Other revenue | 17,903 | - | 162,614 | 180,517 | |||
Total revenue | 340,113 | 17,241 | 162,614 | 519,968 | |||
EBITDA | (4,784,559) | ||||||
Depreciation and amortization | (1,696,130) | ||||||
Provision for impairment loss of goodwill | (4,486,301) | ||||||
Interest income | 90,406 | ||||||
Loss before income tax | (10,876,584) | ||||||
Income tax credit | 104,638 | ||||||
Loss after income tax | (10,771,946) | ||||||
As at June 30, 2019 | |||||||
Assets | |||||||
Segment assets | 22,962,813 | (7,066) | (957,609) | 21,998,138 | |||
Liabilities | |||||||
Segment liabilities | 10,521,695 | 26,600 | 5,428,496 | 15,976,791 |
Remark
1. Development, sale and distribution of 3D displays, conversion equipment, software and provision of technology solutions.
4. | REVENUE |
Group | |||
Period Ended 2020 | Period Ended 2019 | ||
A$ | A$ | ||
Development, sales and distribution of autostereoscopic 3D products and conversion equipment | 444,663 | 322,210 | |
Consultancy and other services income | - | 17,241 | |
444,663 | 339,451 |
5. | OTHER INCOME |
Group | |||
Period Ended 2020 | Period Ended 2019 | ||
A$ | A$ | ||
Government grant | 82,082 | 72,269 | |
Sundry income | 479 | 17,842 | |
82,561 | 90,111 |
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 12 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6. | FINANCE COSTS |
Group | |||
Period Ended 2020 | Period Ended 2019 | ||
A$ | A$ | ||
Bank overdraft and borrowing interest | 37,091 | 36,640 | |
Interest on lease liabilities | - | 57,556 | |
Interest on finance lease liabilities | 32,526 | 1,243 | |
Interest on revolving loan | 109,811 | - | |
Interest on convertible bonds | 185,783 | 608,386 | |
Interest on convertible promissory note | 122,660 | - | |
487,871 | 703,825 |
7. | INCOME TAX CREDIT |
Group | |||
Period Ended 2020 | Period Ended 2019 | ||
A$ | A$ | ||
Current tax expense | - | - | |
Deferred tax benefit | - | 104,638 | |
Income tax credit – Note 7(a) | - | 104,638 |
(a) The prima-facie tax on loss before income tax is reconciled to the income tax benefit / (expense) as follows:
Period Ended 2020 | Period Ended 2019 | ||
A$ | A$ | ||
Numerical reconciliation of income tax benefit / (expense) to prima facie tax payable | |||
Loss before income tax | (4,835,240) | (10,876,584) | |
Income tax benefit on loss before income tax at 30% | 1,450,572 | 3,262,975 | |
Difference in overseas tax rates | (564,245) | (1,845,460) | |
Add / (less) the tax effect of: | |||
Tax losses and temporary differences for the period for which no deferred tax is recognized | (886,327) | (1,312,877) | |
Income tax expense | - | 104,638 |
(b) | Deferred tax assets / (liabilities) arising from temporary differences and unused tax losses can be summarized as follows: |
June 30 2020 | December 31 2019 | ||
A$ | A$ | ||
Balance brought forward | (1,372,653) | (1,244,814) | |
Temporary differences derecognized | - | (117,322) | |
Release of disposal of subsidiaries | 1,380,402 | - | |
Exchange rate difference | (23,074) | (10,517) | |
Total | (15,325) | (1,372,653) |
8. | DIVIDENDS |
No dividends were declared and paid during the six months ended June 30, 2020 (2019: Nil).
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 13 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
9. | LOSS PER SHARE |
Group | ||||
2020 | 2019 | |||
A$ | A$ | |||
Basic and diluted earnings/ (loss) per share | (1.32) | (3.14) | ||
Loss after income tax attributable to shareholders |
| (4,655,833) | (10,207,840) | |
2020 | 2019 | |||
No. of shares | No. of shares | |||
Weighted average number of ordinary shares as at January 1 | 3,377,386 | 3,377,386 | ||
Effect of shares issued | 142,334 | - | ||
Weighted average number of ordinary shares adjusted as at June 30 | 3,519,720 | 3,377,386 |
The loss per share was calculated based on the weighted average of 3,519,720 (2019: 3,377,386) shares outstanding during the financial period.
10. | INVENTORIES |
Inventories consist of the following:
Group | |||
June 30 2020 | December 31 2019 | ||
A$ | A$ | ||
Raw materials | 465,472 | 843,686 | |
Finished goods – displays and other products | 766,084 | 789,984 | |
Provision for inventories obsolescence | (734,241) | (884,497) | |
Total, net of allowance for inventories | 497,315 | 749,173 |
11. | TRADE AND OTHER RECEIVABLES |
Group | |||
June 30 2020 | December 31 2019 | ||
A$ | A$ | ||
Trade receivables | 178,191 | 892,488 | |
Other receivables | 30,238 | 2,390 | |
208,429 | 894,878 | ||
Less: Allowances for doubtful debts | (16,866) | (123,920) | |
Total net of allowance for inventories | 191,563 | 770,958 |
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 14 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12. | OTHER ASSETS |
Group | |||
June 30 2020 | December 31 2019 | ||
A$ | A$ | ||
Prepayments | 111,245 | 311,710 | |
Trade deposits | 634,867 | 1,522,976 | |
Other deposits | - | 262,228 | |
VAT receivable | 132 | 194,359 | |
746,244 | 2,291,273 |
13. | PROPERTY, PLANT AND EQUIPMENT |
Group | Leasehold Improvement | Office Furniture and Equipment | Total | |||
A$ | A$ | A$ | ||||
At December 31, 2019 | ||||||
Cost | 826,997 | 2,888,508 | 3,715,505 | |||
Accumulated depreciation | (743,048) | (2,243,340) | (2,986,388) | |||
Net book amount | 83,949 | 645,168 | 729,117 | |||
Six months ended June 30, 2020 | ||||||
Opening net book amount | 83,949 | 645,168 | 729,117 | |||
Additions | 2,064 | - | 2,064 | |||
Disposals | (80,455) | (203,785) | (284,240) | |||
Depreciation expense | (10,068) | (110,559) | (120,627) | |||
Exchange difference | 4,968 | 27,097 | 32,065 | |||
Closing net book amount | 458 | 357,921 | 358,379 | |||
At June 30, 2020 | ||||||
Cost | 401,261 | 793,857 | 1,195,118 | |||
Accumulated depreciation | (400,803) | (435,936) | (836,739) | |||
Net book amount | 458 | 357,921 | 358,379 |
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 15 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14. | INTANGIBLE ASSETS AND GOODWILL |
Group | Goodwill | Autostereo- scopic 3D Display Technologies and Knowhow | Patents and Trademark | Software and Licence | Total | ||||
A$ | A$ | A$ | A$ | A$ | |||||
At December 31, 2019 | |||||||||
Cost | 14,578,707 | 14,880,322 | 1,283,700 | 531,471 | 31,274,200 | ||||
Accumulated amortization | - | (6,157,872) | (390,491) | (196,327) | (6,744,690) | ||||
Provision for impairment | (14,578,707) | - | - | - | (14,578,707) | ||||
At December 31, 2019 | - | 8,722,450 | 893,209 | 335,144 | 9,950,803 | ||||
Six months ended June 30, 2020 | |||||||||
Opening net book amount | - | 8,722,450 | 893,209 | 335,144 | 9,950,803 | ||||
Additions | - | - | - | - | - | ||||
Amortization expense | - | (860,280) | (58,136) | (45,127) | (963,543) | ||||
Provision for impairment | - | - | - | - | - | ||||
Disposal | - | (4,127,645) | (654,889) | (8,250) | (4,790,784) | ||||
Exchange difference | - | 205,318 | (62,570) | 19,601 | 162,349 | ||||
Closing net book amount | - | 3,939,843 | 117,614 | 301,368 | 4,358,825 | ||||
At June 30, 2020 | |||||||||
Cost | - | 6,971,455 | 265,197 | 545,874 | 7,782,526 | ||||
Accumulated amortization | - | (3,031,612) | (147,583) | (244,506) | (3,423,701) | ||||
Provision for impairment | - | - | - | - | - | ||||
Net book amount | - | 3,939,843 | 117,614 | 301,368 | 4,358,825 |
In 2019, the management considered that the goodwill and certain intangible assets have suffered an impairment loss and record a provision of impairment for goodwill in the amount of A$4,486,301 which then impaired the full value of the goodwill of A$14,578,707.
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 16 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
15. | DEVELOPMENT PROJECTS |
Group | ||
A$ | ||
At December 31, 2019 | ||
Cost | 3,611,336 | |
Accumulated impairment losses | - | |
At December 31, 2019 | 3,611,336 | |
Six months ended June 30, 2020 | ||
Opening net book amount | 3,611,336 | |
Additions | 125,520 | |
Disposal | (2,864,052) | |
Exchange difference | 170,316 | |
Closing net book amount | 1,043,120 | |
At June 30, 2020 | ||
Cost | 1,043,120 | |
Accumulated impairment losses | - | |
Net book amount | 1,043,120 |
Development projects represent the development costs directly attributable to and incurred for several internal technology projects of the Group which are in cooperation with the universities and professional technology institutions in Hong Kong for developing innovative technologies to be applied in the existing and new 3D related products of the Group. The cost model is applied for development projects which require these assets to be carried at cost less any accumulated impairment losses. The Group had performed impairment review for the development projects at the reporting period end and there was no indication that the development projects have suffered an impairment loss.
16. | TRADE AND OTHER LIABILITIES |
Group | |||
June 30 2020 | December 31 2019 | ||
A$ | A$ | ||
Trade payables | 8,847 | 109,746 | |
Accruals | 480,058 | 328,071 | |
Trade deposits | 561,548 | 900,740 | |
Other borrowings | 4,118,421 | 1,761,308 | |
Other payables | 1,655,788 | 1,238,630 | |
6,824,662 | 4,338,495 |
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 17 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
17. | AMOUNTS DUE TO RELATED COMPANIES |
Group | |||
June 30 2020 | December 31 2019 | ||
A$ | A$ | ||
Amounts due to related companies (i) | 10,318 | 6,101,850 | |
Amounts due to ultimate holding company - net (ii) | 582,832 | 582,832 | |
593,150 | 6,684,682 |
(i) | The amounts due to related companies are unsecured, non-interest bearing and repayable on demand. |
(ii) | The amounts due to ultimate holding company is unsecured non-interest bearing and repayable on demand. |
18. | BORROWINGS |
Group | |||
June 30 2020 | December 31 2019 | ||
A$ | A$ | ||
Bank overdraft, unsecured | - | 902,482 | |
Bank borrowings, unsecured | - | 915,300 | |
- | 1,817,782 |
During the period, the Group restructured and disposed of certain subsidiaries which had the bank overdraft and bank borrowings. The details of disposal are listed out in Note 24.
19. | LEASE |
Right of use assets
The carrying amount of the Group’s right of use assets and the movements during the period are as follows:
Group | |||||
Lease Properties A$ | Motor Vehicle A$ | Total A$ | |||
As at January 1, 2020 | 1,064,986 | 42,906 | 1,107,892 | ||
Additions | - | - | - | ||
Depreciation expenses | (287,557) | (12,427) | (299,984) | ||
Disposal | (862,109) | (3,887) | (865,996) | ||
Exchange difference | 84,680 | (26,592) | 58,088 | ||
As at June 30, 2020 | - | - | - | ||
Analyzed into: | A$ | ||||
Current portion | - | ||||
Non-current portion | - | ||||
- |
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 18 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
19. | LEASE(continued) |
Group | |||
June 30 2020 | December 31 2019 | ||
A$ | A$ | ||
Within one year | - | 666,868 | |
Two to five years | - | 501,739 | |
- | 1,168,607 | ||
Less: Amount due within one year shown under current liabilities | - | (666,868) | |
Amount due after one year | - | 501,739 | |
Analyzed into: | - | 666,868 | |
Current portion | - | 501,739 | |
Non-current portion | - | 1,168,607 |
Obligations under finance lease carry interest rates of 2.5% per annum.
20. | DERIVATIVE FINANCIAL INSTRUMENTS |
Group | |||
June 30 2020 | December 31 2019 | ||
A$ | A$ | ||
Derivative financial liabilities | |||
- Put option liability embedded in the convertible bonds issued (Note 21) | - | 126,095 | |
- Fair value change in derivative financial instruments during the six months ended June 30, 2020 / year ended December 31, 2019 | - | (127,551) | |
- Exchange difference | - | 1,456 | |
Carrying value as at period end | - | - |
In connection with the Convertible Bonds as disclosed in Note 21, a Put Option was entered into between the Company and the Bondholder whereby the Bondholder can exercise an option, during the Put Option Exercise Period (means the period of seven days commencing from the day immediately after the date falling two years from the conversion date of the Convertible Bonds or such other date as agreed by the Company and the Bondholder in writing), to have the Company repurchase the MDL Shares converted by the Bondholder at the principal amount of the converted Convertible Bonds.
As at December 31, 2019, the management has determined that the option would not be executed and have written off the derivative financial instruments to the consolidated statement of profit or loss and other comprehensive income (loss).
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 19 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
21. | CONVERTIBLE BONDS |
Group | |||
June 30 2020 | December 31 2019 | ||
A$ | A$ | ||
Face value of convertible bonds issued on January 3, 2018 | - | 3,769,470 | |
Equity component | - | (535,948) | |
Derivatives embedded in the Convertible Bonds issued (Note 20) | - | (772,112) | |
Liability component on initial recognition at January 3, 2018 | - | 2,461,410 | |
Interest accrued but not yet paid for the year ended 2019 | - | 536,216 | |
Interest accrued at effective interest rate during the six months ended June 30, 2020 / year ended December 31, 2019 | - | 1,316,702 | |
Interest paid during the six months ended June 30, 2020 / year ended December 31, 2019 | - | (209,392) | |
Exchange difference | - | 315,963 | |
Carrying value as at period end | - | 4,420,899 |
On January 3, 2018, the Group entered into the following agreements in connection with the issue of HK$23million (equivalent to approximately A$3.8million) Convertible Bonds (“Convertible Bonds”): (i) Subscription Agreement between Marvel Digital Limited, a wholly-owned subsidiary of the Company (the “Issuer” or “MDL”) and an independent third party entity (“Bondholder”) for the Convertible Bonds, (ii) Deed of Guarantee between the Company and the Bondholder to guarantee the payment obligations under the Convertible Bonds and (iii) Put Option between the Company and the Bondholder to repurchase any converted MDL Shares as described below. On the same date, pursuant to the Subscription Agreement, the Convertible Bonds were issued by MDL to the Bondholder as all the terms and conditions in respect of the subscription of the Convertible Bonds were complied with and fulfilled.
Pursuant to the terms of the Convertible Bonds, the Convertible Bonds are convertible in the circumstances set out therein into 75,000 ordinary shares of MDL (“MDL Shares”) at a conversion price of HK$306.67 per share, which is equivalent to 20% of the enlarged issued share capital of MDL as of the date of the above Subscription Agreement. The Bondholder will have the right to convert the whole of their Convertible Bonds into ordinary shares of MDL at any time during the period from January 3, 2018 to January 2, 2020. The period may be extended to a further twelve months subject to the mutual agreement among MDL, the Company and Bondholder. Unless previously redeemed or converted, the Convertible Bonds will be redeemed at 100% of their principal amount on the maturity date which is two years from the Convertible Bonds issue date.
In connection with the Convertible Bonds, the Company also entered into a Deed of Guarantee to guarantee the due and punctual performance and observance by the Issuer of its payment obligations of the bond principal and interest under the Convertible Bonds until all the guaranteed obligations have been fully satisfied, discharged or paid in full. A Put Option was also entered into between the Company and the Bondholder whereby the Bondholder can exercise an option, during the Put Option Exercise Period as defined in Note 20, to have IMTE repurchase the MDL Shares converted by the Bondholder at the principal amount of the converted Convertible Bonds.
In 2020, the Company has repaid the Convertible Bonds in full.
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 20 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
22. | CONVERTIBLE PROMISSORY NOTE |
Group | |||
June 30 2020 A$ | December 31 2019 A$ | ||
Face value of convertible promissory note issued on January 20, 2020 | 2,621,360 | - | |
Equity component | - | - | |
Liability component on initial recognition at January 20,2020 | 2,621,360 | - | |
Interest accrued but not yet paid for the period (Note 6) | 122,660 | - | |
Interest paid during the period | - | - | |
Exchange differences | 61 | - | |
Carrying value as at end of period | 2,744,081 | - |
On January 20, 2020, the Company entered into a Convertible Promissory Note Purchase Agreement ("the CN Agreement"), with an independent third party (“Noteholder”). Pursuant to CN Agreement, the Noteholder will purchase from the Company a 10% convertible promissory note (the "Promissory Note") in the principal amount of HK$14 million (equivalent to approximately A$2.6 million) maturing in two (2) years from the date of the agreement. The Noteholder has the right to convert the principal amount to shares in the Company at a fixed conversion price of US$5.00, subject to adjustment, per share over the term of the Promissory Note.
In October 2020, the Group settled the interest accrued of A$174,811 by issuing 46,741 shares to the Noteholder.
23. | ISSUED CAPITAL |
(a) | Share capital |
Company |
| ||||||
June 30, 2020 | December 31, 2019 | ||||||
Number of shares | A$ | Number of shares | A$ | ||||
Ordinary Shares fully paid | 3,663,100 | 20,309,687 | 3,377,386 | 18,902,029 | |||
(b) | Movements in share capital |
Number of Shares | A$ | |||
December 31, 2019 and January 1, 2020 | 3,377,386 | 18,902,029 | ||
Issue of shares during the period | 285,714 | 1,407,658 | ||
June 30, 2020 | 3,663,100 | 20,309,687 | ||
There is only one class of share on issue being ordinary fully paid shares. Holders of ordinary shares are treated equally in all respects regarding voting rights and with respect to the participation in dividends and in the distribution of surplus assets upon a winding up. The fully paid ordinary shares have no par value.
Subsequent to the period ended and up to the date of this financial report, the Group has issued 2,228,593 shares in a value of A$9,565,096. The material transactions are listed in Note 31.
(c) Options on issue
There were no share options issued and outstanding during and at the end of the financial period.
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 21 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
24. | DISPOSAL OF SUBSIDIARIES |
The detail of the net gain/(loss) on the subsidiaries disposal during the period are set out below:
2020 | 2019 | ||
A$ | A$ | ||
Total disposal consideration | 25,129 | - | |
- | |||
Carrying amount of net asset sold (note(i) below) | (230,294) | - | |
Gain on sales before income tax and reclassification of foreign currency translation reserve | 255,423 | - | |
Reclassification of foreign currency transaction reserve | (26,871) | - | |
Non-controlling interest | (257,542) | - | |
Loss on disposal after income tax | (28,990) | - |
(i) | Net asset disposal: |
2020 | 2019 | ||
A$ | A$ | ||
Plant and equipment | 284,240 | - | |
Development projects | 2,864,052 | - | |
Intangible assets | 4,790,784 | - | |
Right of use assets | 865,996 | - | |
Cash and bank balances | 99,061 | - | |
Inventories | 400,806 | - | |
Trade and others receivable | 603,923 | - | |
Other deposit and prepayment | 1,664,343 | - | |
Trade and other liabilities | (912,580) | - | |
Amount due to a related company | (6,689,290) | - | |
Bank overdraft | (929,438) | ||
Bank loan | (966,747) | ||
Lease liabilities | (925,042) | - | |
Deferred tax liabilities | (1,380,402) | - | |
(230,294) | - |
(ii) | Net cash flows from disposal of subsidiaries |
2020 | 2019 | ||
A$ | A$ | ||
Consideration received, satisfied in cash | 25,129 | - | |
Cash and cash equivalents of subsidiaries disposed of (included cash at bank and bank overdraft) | 830,377 | - | |
855,506 | - |
25. | RESERVES |
(a) | The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations to Australian dollars. |
(b) | Other reserves represent reserve on the capital injection by non-controlling interest. |
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 22 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
26. | CAPITAL COMMITMENTS |
As of June 30, 2020, the Group had internal capital commitments for the investments in one People’s Republic of China (“P.R.C.”) subsidiaries of RMB9,620,859 (approximately A$1,978,177) (2019: A$1,755,456).
27. | CONTROLLED ENTITIES |
Country of Incorporation | Percentage Owned | ||
June 30 2020 | December 31 2019 | ||
Parent Entity: Integrated Media Technology Limited | Australia | ||
Subsidiaries of Integrated Media Technology Limited: | |||
CIMC Marketing Pty. Limited | Australia | 100% | 100% |
Smartglass Limited (formerly known as Dragon Creative Limited) | Hong Kong | 100% | 100% |
Marvel Digital Limited * | Hong Kong | - | 95% (indirect) |
Cystar International Limited (Formerly known as Visumotion International Limited) | Hong Kong | 100% (indirect) | 95% (indirect) |
GOXD Technology Limited * | Hong Kong | - | 76% (indirect) |
Binario Limited | British Virgin Islands | 100% | 100% |
Digital Media Technology Limited | Malaysia | 100% (indirect) | 100% (indirect) |
GOXD Dongguan Limited * | P.R.C. | - | 76% (indirect) |
Marvel Display Technology (Shenzhen) Limited * | P.R.C. | - | 95% (indirect) |
Cystar International (Shenzhen) Limited | P.R.C | 100% (indirect) | - |
Color Investment Limited | Hong Kong | 100% | - |
GOXD International Limited | Hong Kong | 80% (indirect) | - |
* Disposed during the period |
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 23 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
28. | RELATED PARTY TRANSACTIONS |
Transactions with related parties include the following:
(a) Transactions with key management personnel
The total remuneration paid or payable to the directors and senior management of the Group during the period are as follows:
Group | |||
Period Ended June 30 2020 | Period Ended June 30 2019 | ||
A$ | A$ | ||
Short term benefits (Remark 1) | 791,742 | 400,119 | |
Post-employment benefits | 3,532 | - | |
795,274 | 400,119 |
Remark 1: | Included in short term benefits for directors and officers included payments of A$319,772 (US$210,000) to a service company owned by the Company Secretary for the provision of Chief Executive Officer and Chief Financial Officer services during the period. |
(b) Other related party transactions
During the period, the Group has the following material transactions with its related parties:
Group | |||
Period Ended June 30 2020 | Period Ended June 30 2019 | ||
A$ | A$ | ||
General consultancy and management fees paid to a related party (Remark 1) | 282,971 | (281,978) | |
Purchase of products from related parties (Remark 1) | 8,689 | - | |
Purchase of plant and equipment from related parties (Remark 1) | - | 90,334 | |
Company Secretarial, taxation service and CFO fee paid to a related party (Remark 2) | 319,772 | - | |
Purchase of products from a related party (Remark 3) | 274,417 | - |
Remark 1: | Entities controlled over by former director, Dr. Herbert Ying Chiu LEE. The consultancy and management services transactions are carried at the current market value in the ordinary course of business. | ||
Remark 2: | An entity controlled by Mr. Cecil Ho, Company Secretary and CFO for providing professional services. | ||
Remark 3: | An entity controlled by Mr. Zhang Wuhua, our director of the Company. The transactions are carried at the current market value in the ordinary course of business. |
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 24 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
29. | CASH FLOW INFORMATION |
Group | |||
Period Ended June 30 2020 | Period Ended June 30 2019 | ||
A$ | A$ | ||
CASH FLOWS FROM CHANGES IN WORKING CAPITAL | |||
(Increase) / Decrease in assets: | |||
Other assets | 11,029 | 466,799 | |
Inventories | (117,956) | (462,531) | |
Trade and other receivables | (7,001) | 218,000 | |
Increase in liabilities: | |||
Trade and other liabilities | 910,785 | 10,164 | |
Provision for annual leave | - | 4,097 | |
Trade deposits received | - | 8,284 | |
NET CASH FLOWS FROM CHANGES IN WORKING CAPITAL | 796,857 | 244,813 |
30. | RECLASSIFICATION |
Certain amounts in the prior period condensed consolidated financial statements have been reclassified to conform to the presentation of the current period condensed consolidated financial statements. These reclassifications had no effect on the previously reported net loss.
31. | EVENTS OCCURRING AFTER THE REPORTING DATE |
(a) | Compliance with the minimum US$2,500,000 stockholders’ equity requirement for continued listing on The Nasdaq Capital Market |
On June 19, 2020, Integrated Media Technology Limited (the "Company") received a letter from the Listing Qualifications Staff (the "Staff") of The Nasdaq Stock Market LLC ("Nasdaq") notifying the Company that it no longer complied with Nasdaq Listing Rule 5550(b)(1) due to the Company's failure to maintain a minimum of US$2,500,000 in stockholders' equity (or meet the alternatives of market value of listed securities of $35 million or US$500,000 in net income from continuing operations). The notification also stated that the Company would be provided 45 days to submit a plan to regain compliance with the listing requirement. If the plan is accepted, the Company can be granted up to 180 calendar days from the date of the Notice to evidence compliance.
On September 28, the Company announced in a Form 6-K, that it believes that it was compliant as its Shareholders Equity of US$4.5 million. The Company received a letter from Nasdaq dated September 28, 2020 in which it states that the Staff has determined that the Company complies with the Rule. However, if the Company fails to evidence compliance upon filing its next periodic report it may be subject to delisting. At that time, Staff will provide written notification to the Company, which may then appeal Staff’s determination to a Hearings Panel.
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 25 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
31. | EVENTS OCCURRING AFTER THE REPORTING DATE (Continued) |
(b) | Debt Conversion Agreement and Convertible Note with CIMB Limited ("CIMB") for a total of US$2,825,000 |
On July 25, 2020, the Company entered into two transactions with CIMB Limited ("CIMB"), an independent third party, to convert a total of US$2,825,000 of debts owed to CIMB into shares in the Company. The first transaction is a conversion of debt of US$2,100,000 at a price of US$3.00 for a total issuance of 700,000 shares in the Company. The second transaction is the issuance of a convertible note of US$725,000. The Note (the “Note”) is non-interest bearing, cannot be pre-paid and has a term of 2 years from the date of the issuance of the Note. The holder of the Note or the Company can convert the Note at any time into shares in the Company at US$3.00 per share. There is a downward adjustment for any issuance of shares at price lower than the Conversion Price in the next 12 months following the issue of the Note, subject to a floor price of US$1.50 per share. Furthermore, there is a conversion limitation such that no conversion can be effected if after such conversion CIMB would own more than 19.99% in the Company.
On July 28, 2020, the first transaction of issuance of 700,000 shares was completed. The convertible note of US$725,000 was converted into 241,667 shares on October 6, 2020.
(c) | US$3 million funding with Nextglass Technologies Corp ("Nextglass") |
On August 6, 2020, the Company entered into two agreements with Nextglass, an independent third party, to raise a total of US$3,000,000. The first agreement is a placement of 450,000 shares at a share price of US$3.00 per share to raise US$1,350,000. The second agreement is a Convertible Note Purchase Agreement (the "Purchase Agreement"), which Nextglass will invest US$1,650,000 under a convertible note (the "Note") without interest, maturing in two years from the date of the Note. The holder of the Note or the Company has the right to convert the principal into ordinary shares of the Company at a conversion price of US$3.00 per share over the term of the Note. The conversion price is subject to downward adjustment and has a floor price of US$1.50 if the Company sells ordinary shares below the conversion price within 12 months after the date of the Note. The Note cannot be prepaid. The holder of the Note is also entitled to piggyback registration rights. Furthermore, there is a conversion limitation such that no conversion can be effected if after such conversion Nextglass would own more than 19.99% equity interest in the Company.
On September 8, 2020, the placement to Nextglass of 450,000 shares at a price of US$3.00 per share raising US$1,350,000 was closed. Concurrently, the Company has agreed with Nextglass to extend the closing of the US$1,650,000 Convertible Note to September 30, 2020 and this date was further extended to October 20, 2020.
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 26 of 27 |
INTEGRATED MEDIA TECHNOLOGY LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
31. | EVENTS OCCURRING AFTER THE REPORTING DATE (Continued) |
(d) | Sale and Purchase Agreements ("SP Agreements") to purchase a total of 51% interests in Sunup Holdings Limited ("Sunup") for a total of US$1.5 million. |
On August 6, 2020, the Company entered into two conditional SP Agreements to buy 25.5% equity interest in Sunup from each of Nextglass and Teko International Limited ("Teko") for US$750,000 each for a total consideration of US$1,500,000. The two (2) SP Agreements are identical and are summarized below:
The consideration for each of the 25.5% of Sunup is US$750,000 for each of Nextglass and Teko, and each of them will be paid by the issuance of 250,000 shares in the Company (the "Consideration Shares") at US$3.00 per share. There is also a deferred consideration based on 5 times the annualized earnings for the next 2 years less the initial consideration of US$750,000.
From the commencement of the SP Agreements to until the deferred consideration is determined, Nextglass and Teko (individually the "Vendor") shall have the right to purchase the 25% Sunup equity interests back from the Company with their Consideration Shares if the Purchaser and Sunup terminates the directors and officers of Sunup without cause and without the consent of the Vendor, as applicable.
Sunup is engaged in the manufacturing and sale of nano coating plates used in air filters ("Plates"). Sunup has set up its equipment and is expected to be in commercial production in September 2020. Pursuant to an existing Manufacturing and Supply Agreement between Sunup and Nextglass, Nextglass will provide manufacturing services to Sunup under a pre agreed budget every 6 months period. Nextglass also undertakes to provide a minimum sales order to Sunup until certain conditions are met.
On September 12, 2020, the Company completed the acquisition of 25.5% of Sunup from each of Nextglass and Teko for US$750,000 each, for a total acquisition of 51% of Sunup for a total consideration of US$1,500,000 which was paid by the issuance of a total of 500,000 shares at a price of US$3.00 per share.
(e) | Issuing shares on settlement of Interest on Convertible Promissory Note |
In October 2020, the Group settled the interest accrued of A$174,811 by issuing 46,741 shares to the Noteholder of Convertible Promissory Note. The detail of the transaction is set out in Note 22.
Integrated Media Technology Limited | Interim Report | June 30, 2020 | Page 27 of 27 |