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Exhibit 99.1
INDEX TO FINANCIAL STATEMENTS
Page | ||||
Unaudited Interim Consolidated Financial Statements of LumiraDx Limited | ||||
Unaudited Consolidated Statement of Profit and Loss and Comprehensive Loss for the periods ended June 30, 2022 and 2021 | F-1 | |||
Unaudited Consolidated Statement of Financial Position as of June 30, 2022 and December 31, 2021 | F-2 | |||
Unaudited Consolidated Statement of Changes in Equity for the periods ended June 30, 2022 and 2021 | F-3 | |||
Unaudited Consolidated Statement of Cash Flows for the periods ended June 30, 2022 and 2021 | F-4 | |||
Unaudited Notes to Interim Consolidated Financial Statements | F-5 |
LUMIRADX LIMITED
Unaudited Consolidated Statement of Profit and Loss and Comprehensive Loss
SIX MONTHS ENDED JUNE 30, 2021 | SIX MONTHS ENDED JUNE 30, 2022 | |||||||||
Note | (in thousands, except share and per share data) | |||||||||
Revenue | $ | 194,094 | $ | 171,138 | ||||||
Cost of sales | (135,914 | ) | (116,275 | ) | ||||||
Gross Profit | 58,180 | 54,863 | ||||||||
Research and development expenses | (61,003 | ) | (88,769 | ) | ||||||
Selling, marketing and administrative expenses | (64,998 | ) | (78,001 | ) | ||||||
Operating Loss | (67,821 | ) | (111,907 | ) | ||||||
Finance income | 5 | 5,041 | 5,139 | |||||||
Finance expense | 5 | (131,623 | ) | (95,315 | ) | |||||
Net finance expense | (126,582 | ) | (90,176 | ) | ||||||
Loss before Tax | (194,403 | ) | (202,083 | ) | ||||||
Tax expense for the period | 6 | (1,557 | ) | (1,485 | ) | |||||
Loss for the period | $ | (195,960 | ) | $ | (203,568 | ) | ||||
Loss attributable to non-controlling interest | 322 | 139 | ||||||||
Net loss attributable to equity holders of parent—basic and diluted | $ | (196,282 | ) | $ | (203,707 | ) | ||||
Net loss per share attributable to equity holders of parent—basic and diluted | 7 | $ | (1.48 | ) | $ | (0.80 | ) | |||
Weighted-average number of shares used in loss per share—basic and diluted | 7 | 132,204,201 | 253,945,274 | |||||||
Other Comprehensive Loss: | ||||||||||
Items that may be reclassified subsequently to profit or loss | ||||||||||
Foreign currency translation differences - foreign operations | 399 | 34,959 | ||||||||
Total comprehensive loss for the period | $ | (195,561 | ) | $ | (168,609 | ) | ||||
Total comprehensive loss attributable to: | ||||||||||
Equity holders of the parent | (195,883 | ) | (168,748 | ) | ||||||
Non-controlling interest | 322 | 139 | ||||||||
Total | $ | (195,561 | ) | $ | (168,609 | ) | ||||
The accompanying notes are an integral part of these financial statements.
F-1
LUMIRADX LIMITED
Unaudited Consolidated Statement of Financial Position
AS OF DECEMBER 31, 2021 | AS OF JUNE 30, 2022 | |||||||||
Note | (in thousands) | |||||||||
ASSETS | ||||||||||
Non–Current Assets | ||||||||||
Other non-current assets | $ | 569 | $ | 510 | ||||||
Intangibles and goodwill | 8 | 37,048 | 33,088 | |||||||
Right-of-use | 20 | 27,746 | 24,103 | |||||||
Property, plant and equipment | 9 | 173,397 | 160,974 | |||||||
Total Non-Current Assets | 238,760 | 218,675 | ||||||||
Current Assets | ||||||||||
Inventories | 10 | 149,055 | 169,557 | |||||||
Tax receivable | 6 | 15,022 | 15,540 | |||||||
Trade and other receivables | 11 | 109,798 | 64,117 | |||||||
Cash and cash equivalents | 132,145 | 106,450 | ||||||||
Total Current Assets | 406,020 | 355,664 | ||||||||
TOTAL ASSETS | $ | 644,780 | $ | 574,339 | ||||||
LIABILITIES AND EQUITY | ||||||||||
Liabilities | ||||||||||
Non-Current Liabilities | ||||||||||
Debt due after more than one year | 15 | $ | (301,129 | ) | $ | (358,747 | ) | |||
Other long-term liabilities | 1 8 | — | (43,112 | ) | ||||||
Lease liabilities | (25,514 | ) | (22,230 | ) | ||||||
Stock warrants | (10,407 | ) | (5,462 | ) | ||||||
Deferred tax liabilities | (779 | ) | (537 | ) | ||||||
Total Non-Current Liabilities | (337,829 | ) | (430,088 | ) | ||||||
Current Liabilities | ||||||||||
Debt due within one year | 15 | (191 | ) | (118 | ) | |||||
Government and other grants | 18 | (38,941 | ) | (32,216 | ) | |||||
Trade and other payables | 17 | (99,641 | ) | (89,927 | ) | |||||
Lease liabilities due within one year | (5,582 | ) | (6,495 | ) | ||||||
Total Current Liabilities | (144,355 | ) | (128,756 | ) | ||||||
Equity | ||||||||||
Share capital and share premium | 12 | (754,023 | ) | (758,114 | ) | |||||
Foreign currency translation reserve | 19,706 | (15,253 | ) | |||||||
Other reserves | 12 | (104,957 | ) | (104,957 | ) | |||||
Accumulated deficit | 676,223 | 862,513 | ||||||||
Total equity attributable to equity holders of the parent | (163,051 | ) | (15,811 | ) | ||||||
Non-controlling interests | 455 | 316 | ||||||||
Total Equity | (162,596 | ) | (15,495 | ) | ||||||
TOTAL EQUITY AND LIABILITIES | $ | (644,780 | ) | $ | (574,339 | ) | ||||
The accompanying notes are an integral part of these financial statements.
F-2
LUMIRADX LIMITED
Unaudited Consolidated Statement of Changes in Equity
SHARE CAPITAL | SHARE PREMIUM | TRANSLATION RESERVES | OTHER RESERVES | ACCUMULATED DEFICIT | TOTAL | NON- CONTROLLING INTEREST | TOTAL EQUITY | |||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||
Six months ended June 30, 2021 | ||||||||||||||||||||||||||||||||
Balance at January 1, 2021 | $ | — | $ | 152,732 | $ | (19,905 | ) | $ | 99,821 | $ | (607,657 | ) | $ | (375,009 | ) | $ | (207 | ) | $ | (375,216 | ) | |||||||||||
Loss for the period | — | — | — | — | (196,282 | ) | (196,282 | ) | 322 | (195,960 | ) | |||||||||||||||||||||
Other comprehensive loss | ||||||||||||||||||||||||||||||||
Currency translation differences | — | — | 399 | — | — | 399 | — | 399 | ||||||||||||||||||||||||
Total comprehensive loss for the period | — | — | 399 | — | (196,282 | ) | (195,883 | ) | 322 | (195,561 | ) | |||||||||||||||||||||
Equity compensation plans | — | — | — | — | 25,281 | 25,281 | — | 25,281 | ||||||||||||||||||||||||
Issue of other equity instruments | — | (1,968 | ) | — | — | — | (1,968 | ) | — | (1,968 | ) | |||||||||||||||||||||
Transaction with owners, recognized directly in equity | — | (1,968 | ) | — | — | 25,281 | 23,313 | — | 23,313 | |||||||||||||||||||||||
Changes in non-controlling interests | — | — | — | — | (422 | ) | (422 | ) | 422 | — | ||||||||||||||||||||||
Balance at June 30, 2021 | $ | — | $ | 150,764 | $ | (19,506 | ) | $ | 99,821 | $ | (779,080 | ) | $ | (548,001 | ) | $ | 537 | $ | (547,464 | ) | ||||||||||||
Six months ended June 30, 2022 | ||||||||||||||||||||||||||||||||
Balance at January 1, 2022 | $ | — | $ | 754,023 | $ | (19,706 | ) | $ | 104,957 | $ | (676,223 | ) | $ | 163,051 | $ | (455 | ) | $ | 162,596 | |||||||||||||
Loss for the period | — | — | — | — | (203,707 | ) | (203,707 | ) | 139 | (203,568 | ) | |||||||||||||||||||||
Other comprehensive loss | ||||||||||||||||||||||||||||||||
Currency translation differences | — | — | 34,959 | — | — | 34,959 | — | 34,959 | ||||||||||||||||||||||||
Total comprehensive loss for the period | — | — | 34,959 | — | (203,707 | ) | (168,748 | ) | 139 | (168,609 | ) | |||||||||||||||||||||
Equity compensation plans | — | — | — | — | 17,417 | 17,417 | — | 17,417 | ||||||||||||||||||||||||
Shares issued on exercise of share options | — | 4,091 | — | — | — | 4,091 | — | 4,091 | ||||||||||||||||||||||||
Transaction with owners, recognized directly in equity | — | 4,091 | — | — | 17,417 | 21,508 | — | 21,508 | ||||||||||||||||||||||||
Changes in non-controlling interests | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Balance at June 30, 2022 | $ | — | $ | 758,114 | $ | 15,253 | $ | 104,957 | $ | (862,513 | ) | $ | 15,811 | $ | (316 | ) | $ | 15,495 | ||||||||||||||
The accompanying notes are an integral part of these financial statements.
F-3
LUMIRADX LIMITED
Unaudited Consolidated Statement of Cash Flows
SIX MONTHS ENDED JUNE 30, 2021 | SIX MONTHS ENDED JUNE 30, 2022 | |||||||||
Note | (in thousands) | |||||||||
Cash Flows from Operating Activities | ||||||||||
Loss for the period | $ | (195,960 | ) | $ | (203,568 | ) | ||||
Adjustments to reconcile loss for the period to net cash used in operating activities: | ||||||||||
Depreciation | 9 | 7,539 | 15,424 | |||||||
Amortization | 8 | 1,168 | 1,023 | |||||||
Net finance expenses | 5 | 116,059 | 89,637 | |||||||
Equity based share based payment transactions | 13 | 25,281 | 17,417 | |||||||
Increase in tax receivable | (1,373 | ) | (2,035 | ) | ||||||
Accrued preferred shares dividends | 14 | 10,711 | — | |||||||
Changes to working capital: | ||||||||||
Inventories | (88,807 | ) | (32,292 | ) | ||||||
Trade and other receivables | 53,619 | 43,171 | ||||||||
Trade payables and other liabilities | 13,863 | (13,217 | ) | |||||||
Net Cash used in Operating Activities | (57,900 | ) | (84,440 | ) | ||||||
Cash Flows from Investing Activities | ||||||||||
Purchases of property, plant, equipment | 9 | (61,741 | ) | (16,727 | ) | |||||
Cash paid for business acquisitions, net of cash received | (1,968 | ) | — | |||||||
Net Cash used in Investing Activities | (63,709 | ) | (16,727 | ) | ||||||
Cash Flows from Financing Activities | ||||||||||
Proceeds from debt issuance, net of issuance costs | 15 | 361,729 | — | |||||||
Proceeds from issuance of convertible notes, net of issuance costs | 15 | — | 54,009 | |||||||
Proceeds from instrument financing agreement | 18 | — | 41,500 | |||||||
Shares issued on the exercise of share options | 13 | — | 4,091 | |||||||
Repayment of principal portion of lease liabilities | 20 | (2,258 | ) | (2,976 | ) | |||||
Cash interest paid, net of interest received | 5 | (14,627 | ) | (12,251 | ) | |||||
Early extinguishment of debt | 15 | (2,350 | ) | — | ||||||
Repayments of debt | 15 | (140,220 | ) | (119 | ) | |||||
Net Cash generated from Financing Activities | 202,274 | 84,254 | ||||||||
Net (Decrease) / Increase in Cash and Cash Equivalents | 80,665 | (16,913 | ) | |||||||
Movement in Cash and Cash Equivalents | ||||||||||
Cash and cash equivalents at the beginning of the perio d | 161,172 | 132,145 | ||||||||
Exchange loss on cash and cash equivalents | 4,618 | (8,782 | ) | |||||||
Net Increase / (decrease) in cash and cash equivalents | 80,665 | (16,913 | ) | |||||||
Cash and Cash Equivalents at the end of the period | $ | 246,455 | $ | 106,450 | ||||||
The accompanying notes are an integral part of these financial statements.
F-4
LUMIRADX LIMITED
UNAUDITED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
1. GENERAL INFORMATION
These unaudited consolidated financial statements are the interim financial statements of
LumiraDx Limited(“the Company”) and its subsidiaries (“the Group”), for the six-month period ended June 30, 2022 (“the Interim Financial Statements”).
The Company is an exempted company limited by shares incorporated in the Cayman Islands (registered number 314391) with registered offices situated at the offices of Ocorian Trust (Cayman) Limited, PO Box 1350, Windward 3, Regatta Office Park,, Grand Cayman
KY1-1108
.
On April 6, 2021, the Company entered into an initial business combination agreement (“the Merger”) with CA HealthcareAcquisition Corp. (“CAH”), a publicly held special purpose acquisition company. The shareholders of CAH agreed to exchange their interests for new common shares in the share capital of the Company. The Merger completed on September 28, 2021 (the “acquisition date”). At the acquisition date, the Company became the ultimate legal parent of CAH. The Company’s common shares are traded on the NASDAQ Global Market under the ticker symbol LMDX and its warrants are traded under LMDXW. The Company’s A Ordinary shares are not publicly traded.
2. BASIS OF PREPARTION OF FINANCIAL STATEMENTS
The principal accounting policies applied in the preparation of these Interim Financial Statements are set out below. These policies have been consistently applied, unless otherwise stated.
The Interim Financial Statements of LumiraDx Limited have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). These Interim Financial Statements were authorized for issue by the Board on September 13, 2022.
The Interim Financial Statements have been prepared under the historical cost convention and in accordance with IAS 34 “Interim Financial Reporting.” However, they do not include all of the notes that would be required in a complete set of financial statements. Thus, this interim financial report should be read in conjunction with the consolidated financial statements for the year ended December 31, 2021, included in the Company’s Annual Report on Form 20-F, which was filed with the U.S. Securities and Exchange Commission on April 13, 2022 (the “Annual Report”).
The preparation of Interim Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated Financial Statements, are disclosed inof the Annual Report.
Note 3
LumiraDx Limited was incorporated on August 24, 2016. On September 29, 2016, the Company acquired all of the outstanding shares of LumiraDx Holdings Limited in a share for share exchange. LumiraDx Holdings Limited was incorporated on September 1, 2014. The consolidated Financial Statements of LumiraDx Limited have been prepared as if the share exchange had occurred on September 1, 2014 to reflect the continuous operations of the Company.
Going concern
During the
six months
ended June 30, 2022,
the Group incurred a loss of $203,568, and operating cash outflows of $84,440. As ofJune 30, 2022
, the Group had net assets of $15,495. The Group has financed its operations principally through issuances of debt and equity securities, and the Group requires ongoing additional funding to continue to develop its commercial operations and research and development projects for future products.The financial statements have been prepared on a going concern basis which the directors consider to be appropriate for the following reasons.
The directors have prepared cash flow forecasts for a period of at least 12 months from the date of approval of these financial statements which indicate that the Group will have sufficient funds to meet their liabilities as they fall due for that period (the going concern period).
The Group has minimum committed expenses including payroll for current employees, lease and other contractual commitments and interest payments on debt obligations of approximately $13,000 per month; however, the Group will be required to spend considerably more in order to continue to execute on its entire strategic business plan.
F-5
LUMIRADX LIMITED
UNAUDITED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
In
March
2022,
the
56.5Company
entered into privately negotiated subscription agreements with certain investors wherein theCompany
sold and investors purchased $million of Convertible Senior Subordinated Notes due 2027.
The notes bear annual interest of
6%,
payable semi-annually in arrears starting September 1, 2022. The notes mature on
March 1, 2027and are convertible at the holder’s option at an initial conversion rate of approximately $
9.22per share.
In April 2022, the Company consummated the first closing of a
private
placement offering pursuant to which it received an initial investment of $26.1 million in cash and entered into a royalty agreement (the “Instrument Financing Agreement”) with USB Focus Fund LumiraDx 2A, LLC, USB Focus Fund LumiraDx 2B, LLC and certain other related investors (collectively, the “Investors”), and Pear Tree Partners, L.P. The terms of the Instrument Financing Agreement provide that the Investors may invest up to an aggregate maximum amount of $50 million in the Company, or such higher amount as agreed to by the Company and the Investors (the “Invested Amount”), in one or more closings, in order to fund the purchase of additional LumiraDx instruments, allowing the Company to further expand instrument placements. In consideration of such investment, the Company has agreed to pay to the Investors on a semi-annual basis and over a three-year period (subject to extension in certain events), a payment that is equal to 20% of the total gross amount invoiced by the Group in respect of sales of test strips for use in such funded LumiraDx instruments which are allocated to the Invested Amount by the Company in accordance with the terms of the Instrument Financing Agreement (the “Instrument Financing Payments”). In June 2022 the Company closed an additional $15.4 million investment with the Investors.The 2021 Senior Secured Loan matures in March 2024 and contains customary covenants including achieving certain revenue levels for the years ending December 31, 2021, 2022 and 2023 and maintaining minimum liquidity levels. The Group met the 2021 revenue covenant and has met the minimum liquidity levels. For the 2022 revenue covenant and quarterly liquidity levels, the Group’s short-term revenue prospects and liquidity levels will vary with the amount of demand for itsproducts. While the directors believe that the Group’sproducts will continue to remain in high demand as
SARS-CoV-2
SARS-CoV-2
COVID-19
vaccines are available, the continued efficacy of such vaccines or the mitigation of theCOVID-19
pandemic earlier than expected for any other reason could negatively impact demand for the Group’s Platform and sales of its Instrument, test strips and other products. In addition, competitors may produce more accurate tests or tests which receive more favorable demand, both of which may impact the Group’s revenue streams and ability to meet the covenants.On June 17, 2022, the Group entered into a second amendment to the 2021 Senior Secured Loan, to provide for, among other things, immediate revisions to the minimum net sales and the minimum liquidity covenants (the “Amendment”). In July 2022 the Group entered into a third amendment which reduced the definition of Qualifying Financing to be at least $100.0 million (or its equivalent in another currency or currencies).
In July, the Company closed a registered public stock offering. The gross proceeds from the offering were
$75 million. In addition to the shares sold in the public offering, the Company also sold additional common shares to raise gross proceeds of
$25.0 million in a concurrent private placement to one of its existing investors, the Bill & Melinda Gates Foundation. The underwriters of the registered public offering had a
30-day
option to purchase additional common shares at the public offering price and purchased
$7 million of common shares in August. In total, the Company received aggregate net proceeds of approximately
$100 million, after fees and commissions, from the registered public offering and the concurrent private placement.
The directors believe that, if necessary, they will be able to obtain waivers of covenant violations or restructure the existing obligations, although there are no guarantees that these will be achieved. The directors believe the Group and company will be able to meet their liabilities as they fall due for the going concern period and have therefore prepared the financial statements on a going concern basis.
However, these circumstances represent a material uncertainty that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern and therefore, to continue realizing their assets and discharging their liabilities in the normal course of business. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.
Significant Accounting Policies
The accounting policies applied to these Interim Financial Statements are the same as those applied in the Group’s Consolidated Financial Statements as of and for the year ended December 31, 2021, as presented in the Annual Report.
F-6
LUMIRADX LIMITED
UNAUDITED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Management judgements and estimates
The preparation of the Interim Financial Statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of revenues, expenses, assets, liabilities and related disclosures. If in the future such estimates and assumptions, which are based on management’s best judgement at the date of the Interim Financial Statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change. The significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty are the same as those applied in the Group’s Consolidated Financial Statements as of and for the year ended December 31, 2021, as presented in the Annual Report.
Adoption of New Accounting Standards
There have been no recent new accounting standards that have had an impact on the Interim Financial Statements. New accounting standards not listed below were assessed and determined to be either not applicable or did not have a material impact on the Interim Financial Statements or processes.
3. REVENUE
Disaggregation of Revenue
SIX MONTHS ENDED JUNE 30, | ||||||||||||||||||||||||
2021 | 2022 | |||||||||||||||||||||||
REVENUE STREAM | REVENUE FROM CONTRACTS WITH CUSTOMERS | REVENUE FROM OTHER SOURCES | TOTAL | REVENUE FROM CONTRACTS WITH CUSTOMERS | REVENUE FROM OTHER SOURCES | TOTAL | ||||||||||||||||||
Total Revenue | $ | 193,631 | $ | 463 | $ | 194,094 | $ | 170,807 | $ | 331 | $ | 171,138 | ||||||||||||
Revenue from diagnostic products is recognized at the time the performance obligations are met. Service revenue is recognized over the contractual term. Revenue from other sources represents lease revenue on instruments.
Contract Balances
Service revenue is typically billed in advance giving rise to a contract liability balance. The deferred balance as of June 30, 2022, and December 31, 2021, is $1,309 and $1,517, respectively. As the Company generally recognizes revenue as goods are sold for product revenue, the Company does not have other material contract asset or liability balances as of June 30, 2022.
DEFERRED REVENUE | ||||||||
YEAR ENDED DECEMBER 31, 2021 | SIX MONTHS ENDED JUNE 30, 2022 | |||||||
Balance at start of the period | $ | 1,760 | $ | 1,517 | ||||
Recognized revenue from prior years’ invoicing | (1,760 | ) | (1,143 | ) | ||||
Amounts invoiced to be recognized over time | 4,149 | 1,373 | ||||||
Recognized revenue from current year invoicing | (2,703 | ) | (326 | ) | ||||
Foreign exchange impact | 71 | (112 | ) | |||||
Balance at end of the period | $ | 1,517 | $ | 1,309 |
Remaining performance obligations in (partially) unsatisfied long-term contracts:
Remaining performance obligations in (partially) unsatisfied long-term contracts are included in deferred revenue. For contracts that have an original duration of one year or less, the Group has elected the practical expedient to not disclose the transaction price for remaining performance obligations at the end of each reporting period and at which point in time the Company expects to recognize these sales.
F-7
LUMIRADX LIMITED
UNAUDITED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
4. SEGMENTS
Basis for segmentation:
The CEO is the Group’s chief operating decision maker (“CODM”). The regular internal reporting to the CEO, which fulfils the criteria to constitute a segment, is done for the Group as a whole, and therefore the total Group is the company’s only segment.
Revenue from external customers by country, based on the location of the customer is as follows:
SIX MONTHS ENDED JUNE 30, | ||||||||
ANALYSIS OF REVENUE BY COUNTRY: | 2021 | 2022 | ||||||
United States | $ | 110,109 | $ | 101,178 | ||||
Italy | 27,270 | 31,800 | ||||||
United Kingdom | 36,499 | 17,552 | ||||||
Germany | 3,266 | 6,533 | ||||||
Colombia | 6,198 | 5,611 | ||||||
Sweden | 3,260 | 3,233 | ||||||
Brazil | 1,337 | 1,409 | ||||||
Switzerland | 801 | 1,053 | ||||||
Japan | 1,789 | 1,038 | ||||||
Spain | — | 609 | ||||||
Austria | 1,260 | 467 | ||||||
Netherlands | 1,495 | 161 | ||||||
Denmark | 577 | 9 | ||||||
Other | 233 | 485 | ||||||
Total revenue | $ | 194,094 | $ | 171,138 | ||||
Non-current
assets by country are as follows:ANALYSIS OF NON-CURRENT ASSETS BY COUNTRY: | AS OF DECEMBER 31, 2021 | AS OF JUNE 30, 2022 | ||||||
United Kingdom | $ | 199,312 | $ | 179,232 | ||||
United States | 22,537 | 22,900 | ||||||
Italy | 10,600 | 9,796 | ||||||
Colombia | 3,780 | 3,602 | ||||||
Other | 2,531 | 3,145 | ||||||
Total | $ | 238,760 | $ | 218,675 | ||||
F-8
LUMIRADX LIMITED
UNAUDITED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
5. FINANCE INCOME AND FINANCE EXPENSE
SIX MONTHS ENDED JUNE 30, | ||||||||
2021 | 2022 | |||||||
Change in fair value of stock warrants | $ | — | $ | 4,945 | ||||
Interest income | 30 | 6 | ||||||
Foreign exchange gain | 4,828 | — | ||||||
Other | 183 | 188 | ||||||
Finance income | $ | 5,041 | $ | 5,139 | ||||
Interest expense (cash) | $ | (14,657 | ) | $ | (12,257 | ) | ||
Interest expense (non-cash) | (38,446 | ) | (3,669 | ) | ||||
Lease liability interest expense (Note 20) | (1,001 | ) | (1,640 | ) | ||||
Foreign exchange loss | — | (74,721 | ) | |||||
Financing fees | — | (1,416 | ) | |||||
Accretion of instrument financing (Note 18) | — | (1,612 | ) | |||||
Dividend on preferred shares (Note 14) | (10,711 | ) | — | |||||
Debt extinguishment fee (cash) | (2,350 | ) | — | |||||
Debt extinguishment fee (non-cash) | (4,206 | ) | — | |||||
Change in fair value of 2020 convertible notes (Note 15) | (27,255 | ) | — | |||||
Change in fair value of Series B preferred shares (Note 14) | (32,997 | ) | — | |||||
Finance expense | $ | (131,623 | ) | $ | (95,315 | ) | ||
6. INCOME TAXES
SIX MONTHS ENDED JUNE 30, | ||||||||
TAX CREDIT FOR THE PERIOD | 2021 | 2022 | ||||||
Current income credit / (tax) | ||||||||
- Current year | $ | (2,726 | ) | $ | (1,485 | ) | ||
- Prior years | — | — | ||||||
Total current income credit / (tax) | (2,726 | ) | (1,485 | ) | ||||
Deferred income tax credit | ||||||||
- Current year | 1,169 | — | ||||||
- Prior years | — | — | ||||||
Total deferred income credit | 1,169 | — | ||||||
Total income tax credit/(expense) | $ | (1,557 | ) | $ | (1,485 | ) | ||
In 2021, the group transitioned from the small company scheme to the research and development expenditure credit scheme (“RDEC”), see.
Note 18
Reconciliation of effective tax rate:
SIX MONTHS ENDED JUNE 30, | ||||||||
2021 | 2022 | |||||||
Loss for the period before taxation | $ | 194,403 | $ | 202,083 | ||||
Tax benefit at standard U.K. rate at 19% | 36,937 | 38,396 | ||||||
Difference in overseas tax rates | 122 | 402 | ||||||
Expenses not deductible for tax purposes | (4,161 | ) | — | |||||
Tax losses for which no deferred tax asset was recognized | (29,652 | ) | (36,974 | ) | ||||
Share-based payment (not deductible for tax purposes) | (4,803 | ) | (3,309 | ) | ||||
Income tax credit/(expense) | $ | (1,557 | ) | $ | (1,485 | ) | ||
Effective tax rate | -1 | % | -1 | % |
F-9
LUMIRADX LIMITED
UNAUDITED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
In
the March 3, 2021 U.K. budget, it was announced that the U.K. tax rate will increase to
25% from April 1, 2023. This will not have a consequential effect on the Group’s recognized deferred taxes, however the Group has substantial unrecognized U.K. net operating losses.
7. EARNINGS PER SHARE
The calculation of basic and diluted earnings per share has been calculated by dividing the loss for the period attributable to shareholders of $203,707 (2021: $196,282),
by the weighted average number of shares outstanding of
253,945,274 (2021: 132,204,201) during the six months ended June 30, 2022:SIX MONTHS ENDED JUNE 30, | ||||||||||||||||
Loss attributable to shareholders: | 2021 | 2022 | ||||||||||||||
BASIC | DILUTED | BASIC | DILUTED | |||||||||||||
Loss attributable to equity holders of the parent | $ | (196,282 | ) | $ | (196,282 | ) | $ | (203,707 | ) | $ | (203,707 | ) | ||||
Loss attributable to shareholders | (196,282 | ) | (196,282 | ) | (203,707 | ) | (203,707 | ) | ||||||||
Weighted-average number of shares: | ||||||||||||||||
BASIC | DILUTED | BASIC | DILUTED | |||||||||||||
Issued shares at January 1 | 132,204,201 | 132,204,201 | 252,804,218 | 252,804,218 | ||||||||||||
Effect of shares issued | — | — | 1,141,056 | 1,141,056 | ||||||||||||
Weighted-average number of shares | 132,204,201 | 132,204,201 | 253,945,274 | 253,945,274 | ||||||||||||
Loss per share: | ||||||||||||||||
BASIC | DILUTED | BASIC | DILUTED | |||||||||||||
Loss per share | $ | (1.48 | ) | $ | (1.48 | ) | $ | (0.80 | ) | $ | (0.80 | ) | ||||
On February 1, 2021 the Board of Directors of the Company approved a stock split of the issued and outstanding A Ordinary and common shares of the Company on a 220 for 1 basis.
In accordance with IAS 33, the earnings per share calculations have been presented for the stock split retrospectively. In connection with the Merger, in order to achieve an exchange ratio of one LMDX common share for each CAH share, the Company effected a subdivision, immediately prior to the Merger, of all issued, and authorized but unissued, LMDX
A Ordinary
shares and LMDX common shares at a ratio of 1.60806264:1. The denominator has been calculated to reflect the share splits. The Company’s potentially dilutive securities, which include stock options, convertible preferred shares, convertible notes and warrants, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of A Ordinary and common shares outstanding used to calculate both basic and diluted net loss per share attributable to A Ordinary and common shareholders is the same. The Company excluded the following potential A Ordinary shares and common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to ordinary shareholders and common shareholders for the periods indicated because including them would have had an anti-dilutive effect:
SIX MONTHS ENDED JUNE 30, | ||||||||
2021 | 2022 | |||||||
Convertible preferred shares (as converted to A Ordinary shares) | 75,253,881 | — | ||||||
Convertible preferred shares (as converted to common shares) | 12,543,492 | — | ||||||
Options to purchase A Ordinary shares | 90,723,163 | 79,181,915 | ||||||
Options to purchase common shares | — | 14,349,147 | ||||||
Convertible Debt (as converted to common shares) | 27,390,667 | — | ||||||
Warrants to purchase A Ordinary shares | 5,430,781 | 5,373,170 | ||||||
Warrants to purchase common shares | 6,342,403 | 7,828,251 | ||||||
217,684,387 | 106,732,483 | |||||||
F-10
LUMIRADX LIMITED
UNAUDITED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
8. GOODWILL AND INTANGIBLE ASSETS
GOODWILL | PATENTS | CUSTOMER INTANGIBLES | SUPPLIER RELATIONSHIPS | TECHNOLOGY AND SOFTWARE | TOTAL | |||||||||||||||||||
Cost | ||||||||||||||||||||||||
At January 1, 2020 | $ | 15,391 | $ | 18,122 | $ | 8,731 | $ | 2,856 | $ | 11,177 | $ | 56,277 | ||||||||||||
Exchange differences | 600 | 549 | 408 | — | 156 | 1,713 | ||||||||||||||||||
At December 31, 2020 | 15,991 | 18,671 | 9,139 | 2,856 | 11,333 | 57,990 | ||||||||||||||||||
Amortization | ||||||||||||||||||||||||
At January 1, 2020 | — | 2,710 | 4,034 | 1,043 | 6,957 | 14,744 | ||||||||||||||||||
Charge for the period | — | 831 | 951 | 286 | 319 | 2,387 | ||||||||||||||||||
Exchange differences | — | 54 | 62 | — | 20 | 136 | ||||||||||||||||||
At December 31, 2020 | — | 3,595 | 5,047 | 1,329 | 7,296 | 17,267 | ||||||||||||||||||
Net Book Value | ||||||||||||||||||||||||
At December 31, 2020 | $ | 15,991 | $ | 15,076 | $ | 4,092 | $ | 1,527 | $ | 4,037 | $ | 40,723 | ||||||||||||
Cost | ||||||||||||||||||||||||
At January 1, 2021 | $ | 15,991 | $ | 18,671 | $ | 9,139 | $ | 2,856 | $ | 11,333 | $ | 57,990 | ||||||||||||
Exchange differences | (385 | ) | (178 | ) | (278 | ) | — | (48 | ) | (889 | ) | |||||||||||||
At December 31, 2021 | 15,606 | 18,493 | 8,861 | 2,856 | 11,285 | 57,101 | ||||||||||||||||||
Amortization | ||||||||||||||||||||||||
At January 1, 2021 | — | 3,595 | 5,047 | 1,329 | 7,296 | 17,267 | ||||||||||||||||||
Charge for the period | — | 890 | 1,317 | 286 | 334 | 2,827 | ||||||||||||||||||
Exchange differences | — | (16 | ) | (21 | ) | — | (4 | ) | (41 | ) | ||||||||||||||
At December 31, 2021 | — | 4,469 | 6,343 | 1,615 | 7,626 | 20,053 | ||||||||||||||||||
Net Book Value | ||||||||||||||||||||||||
At December 31, 2021 | $ | 15,606 | $ | 14,024 | $ | 2,518 | $ | 1,241 | $ | 3,659 | $ | 37,048 | ||||||||||||
Cost | ||||||||||||||||||||||||
At January 1, 2022 | $ | 15,606 | $ | 18,493 | $ | 8,861 | $ | 2,856 | $ | 11,285 | $ | 57,101 | ||||||||||||
Exchange differences | (998 | ) | (1,410 | ) | (200 | ) | — | (367 | ) | (2,975 | ) | |||||||||||||
At June 30, 2022 | 14,608 | 17,083 | 8,661 | 2,856 | 10,918 | 54,126 | ||||||||||||||||||
Amortization | ||||||||||||||||||||||||
At January 1, 2022 | — | 4,469 | 6,343 | 1,615 | 7,626 | 20,053 | ||||||||||||||||||
Charge for the period | — | 414 | 308 | 144 | 157 | 1,023 | ||||||||||||||||||
Exchange differences | — | (19 | ) | (12 | ) | — | (7 | ) | (38 | ) | ||||||||||||||
At June 30, 2022 | — | 4,864 | 6,639 | 1,759 | 7,776 | 21,038 | ||||||||||||||||||
Net Book Value | ||||||||||||||||||||||||
At June 30, 2022 | $ | 14,608 | $ | 12,219 | $ | 2,022 | $ | 1,097 | $ | 3,142 | $ | 33,088 |
For
the six months ended June 30, 2022, and 2021, amortization of $
942and $
1,080, respectively, has been charged to
Selling
,
marketing,
and administrative expenses. For the six months ended June 30, 2022, and 2021, amortization of $
81and $
88, respectively, has been charged to Research and development expenses.
F-1
1
LUMIRADX LIMITED
UNAUDITED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
9. PROPERTY, PLANT AND EQUIPMENT
LAND AND BUILDINGS | FIXTURES AND FITTINGS | PLANT AND EQUIPMENT | UNDER CONSTRUCTION | TOTAL | ||||||||||||||||
Cost | ||||||||||||||||||||
At January 1, 2020 | $ | 3,054 | $ | 3,115 | $ | 17,287 | $ | 10,432 | $ | 33,888 | ||||||||||
Additions | 3,686 | 1,115 | 25,831 | 33,749 | 64,381 | |||||||||||||||
Transfers | — | (22 | ) | 22 | — | — | ||||||||||||||
Disposals | — | (126 | ) | (137 | ) | (406 | ) | (669 | ) | |||||||||||
Exchange differences | 366 | 64 | 1,799 | 2,090 | 4,319 | |||||||||||||||
At December 31, 2020 | 7,106 | 4,146 | 44,802 | 45,865 | 101,919 | |||||||||||||||
Accumulated Depreciation | ||||||||||||||||||||
At January 1, 2020 | 1,067 | 2,014 | 5,666 | — | 8,747 | |||||||||||||||
Charge for the period | 841 | 618 | 4,258 | — | 5,717 | |||||||||||||||
Transfers | — | (1 | ) | 1 | — | — | ||||||||||||||
Disposals | — | (47 | ) | (135 | ) | — | (182 | ) | ||||||||||||
Exchange differences | 151 | 52 | 352 | — | 555 | |||||||||||||||
At December 31, 2020 | 2,059 | 2,636 | 10,142 | — | 14,837 | |||||||||||||||
Carrying Amount | ||||||||||||||||||||
At December 31, 2020 | $ | 5,047 | $ | 1,510 | $ | 34,660 | $ | 45,865 | $ | 87,082 | ||||||||||
Cost | ||||||||||||||||||||
At January 1, 2021 | $ | 7,106 | $ | 4,146 | $ | 44,802 | $ | 45,865 | $ | 101,919 | ||||||||||
Additions | 28,047 | 4,144 | 72,186 | 1,969 | 106,346 | |||||||||||||||
Transfers | — | 2,137 | (2,137 | ) | — | — | ||||||||||||||
Disposals | (67 | ) | (452 | ) | (91 | ) | — | (610 | ) | |||||||||||
Exchange differences | (562 | ) | (322 | ) | (2,084 | ) | (574 | ) | (3,542 | ) | ||||||||||
At December 31, 2021 | 34,524 | 9,653 | 112,676 | 47,260 | 204,113 | |||||||||||||||
Accumulated Depreciation | ||||||||||||||||||||
At January 1, 2021 | 2,059 | 2,636 | 10,142 | — | 14,837 | |||||||||||||||
Charge for the period | 2,773 | 2,204 | 12,298 | — | 17,275 | |||||||||||||||
Transfers | — | 1,686 | (1,686 | ) | — | — | ||||||||||||||
Disposals | (21 | ) | (366 | ) | (91 | ) | — | (478 | ) | |||||||||||
Exchange differences | (106 | ) | (223 | ) | (589 | ) | — | (918 | ) | |||||||||||
At December 31, 2021 | 4,705 | 5,937 | 20,074 | — | 30,716 | |||||||||||||||
Carrying Amount | ||||||||||||||||||||
At December 31, 2021 | $ | 29,819 | $ | 3,716 | $ | 92,602 | $ | 47,260 | $ | 173,397 | ||||||||||
Cost | ||||||||||||||||||||
At January 1, 2022 | $ | 34,524 | $ | 9,653 | $ | 112,676 | $ | 47,260 | $ | 204,113 | ||||||||||
Additions | 1,781 | 1,277 | 7,532 | 6,137 | 16,727 | |||||||||||||||
Transfers | — | — | — | — | — | |||||||||||||||
Disposals | — | (171 | ) | (515 | ) | — | (686 | ) | ||||||||||||
Exchange differences | (3,340 | ) | (631 | ) | (10,555 | ) | (5,133 | ) | (19,659 | ) | ||||||||||
At June 30, 2022 | 32,965 | 10,128 | 109,138 | 48,264 | 200,495 | |||||||||||||||
Accumulated Depreciation | ||||||||||||||||||||
At January 1, 2022 | 4,705 | 5,937 | 20,074 | — | 30,716 | |||||||||||||||
Charge for the period | 2,200 | 855 | 9,577 | — | 12,632 | |||||||||||||||
Transfers | — | — | — | — | — | |||||||||||||||
Disposals | — | (112 | ) | (504 | ) | — | (616 | ) | ||||||||||||
Exchange differences | (546 | ) | (345 | ) | (2,320 | ) | — | (3,211 | ) | |||||||||||
At June 30, 2022 | 6,359 | 6,335 | 26,827 | — | 39,521 | |||||||||||||||
Carrying Amount | ||||||||||||||||||||
At June 30, 2022 | $ | 26,606 | $ | 3,793 | $ | 82,311 | $ | 48,264 | $ | 160,974 |
For the
six
months ended June 30, 2022, and 2021, depreciation expense of $4,811 and $1,282, respectively has been charged to Research and development expenses and $7,821 and $3,915, has been charged to Selling, marketing and administrative expenses.Assets under construction are comprised of manufacturing equipment to be placed in service in the following year. Commitments related to property, plant and equipment are referenced in
Note 19.
F-12
LUMIRADX LIMITED
UNAUDITED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
10. INVENTORY
AS OF DECEMBER 31, 2021 | AS OF JUNE 30, 2022 | |||||||
Finished goods | $ | 62,410 | $ | 105,539 | ||||
Raw m aterials | 80,606 | 61,866 | ||||||
WIP | 6,039 | 2,152 | ||||||
Total Inventory | $ | 149,055 | $ | 169,557 | ||||
The increase in inventory for the six months ended June 30, 2022 is a result of the building of inventory to meet the continued growth in product demand that has occurred since commercialization of
COVID-19
products.11. TRADE AND OTHER RECEIVABLES
AS OF DECEMBER 31, 2021 | AS OF JUNE 30, 2022 | |||||||
Trade receivables | $ | 75,207 | $ | 33,408 | ||||
Reserves on trade receivables | (1,681 | ) | (5,753 | ) | ||||
Prepaids | 20,349 | 19,773 | ||||||
Other receivables | 9,408 | 10,343 | ||||||
VAT receivable | 6,515 | 6,346 | ||||||
Total trade and other receivables | $ | 109,798 | $ | 64,117 | ||||
12. SHARE CAPITAL, PREMIUM AND OTHER RESERVES
Share capital and share premium
LumiraDx Limited was incorporated on August 24, 2016 with an authorized share capital of 5,000,000 A Ordinary Shares of par value $0.001 each and 5,000,000 Common Shares of par value $0.001 each. On September 29, 2016, the Company acquired 100% of the issued share capital of LumiraDx Holdings Limited following the agreement of an Exchange Offer, which was effective from September 28, 2016. LumiraDx Limited acquired all shares in LumiraDx Holdings Limited, and in exchange LumiraDx Limited issued to the shareholders of LumiraDx Holdings Limited a corresponding number of shares on abasis.
share-for-share
SHARES AUTHORIZED, FULLY PAID AND ALLOCATED | A ORDINARY SHARES | A ORDINARY SHARES | COMMON SHARES | COMMON SHARES | ||||||||||||
FOR THE YEAR ENDED DECEMBER 31, 2021 | FOR THE SIX MONTHS ENDED JUNE 30, 2022 | FOR THE YEAR ENDED DECEMBER 31, 2021 | FOR THE SIX MONTHS ENDED JUNE 30, 2022 | |||||||||||||
In issue at start of period | 373,697 | 207,562,080 | — | 45,241,766 | ||||||||||||
February Subdivision (220:1) | 81,839,643 | — | — | — | ||||||||||||
Issued for cash | 104,200 | 2,159,353 | — | 255,535 | ||||||||||||
Issued in other transactions | — | — | 5,307,607 | — | ||||||||||||
Conversion of A Ordinary Shares to Common Shares | — | (37,090,189 | ) | — | 37,090,189 | |||||||||||
Merger Subdivision at the LMDX Conversion Factor (1.60806264:1) | 78,446,580 | — | 4,796,852 | — | ||||||||||||
Shares issued upon conversion of financial instruments | 46,797,960 | — | 35,137,307 | — | ||||||||||||
In issue at end of period - fully paid and allocated | 207,562,080 | 172,631,244 | 45,241,766 | 82,587,490 | ||||||||||||
On February 1, 2021 the Board of Directors of the Company approved a stock split of the issued and outstanding A Ordinary and common shares of the Company on a 220 for 1 basis.
In connection with the Merger, in order to achieve an exchange ratio of one LMDX common share for each CAH share, the Company effected a subdivision, immediately prior to the Merger, of all issued, and authorized but unissued, LMDX
A Ordinary
shares and LMDX common shares at a ratio of
1.60806264:1.
During September 2021, the Company completed its Merger and all outstanding convertible instruments at the time of the Merger converted into A ordinary and common shares.
F-1
3
LUMIRADX LIMITED
UNAUDITED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
13. SHARE BASED
PA
YMENTSShare options are granted to directors, employees and certain service providers. The share options have a vesting period of
1-
4
years with shares being exercisable pro rata per year from the date of issue. All share options granted have a contractual life of 10 years from the date of grant. Share options are settled in equity.For the employee based share options, if the owner of the share option ceases to be employed by the Company, in most cases the option lapses within a short period of departure of such employee. 7,324,674 share options have been forfeited to date. Management has not anticipated any stock options to be forfeited due to termination of employment prior to the assumed exercise date.
Movements on number of share options and their related exercise price are as follows:
NUMBER OF OPTIONS | WEIGHTED AVERAGE EXERCISE PRICE | |||||||
Outstanding at January 1, 2020 | 54,198,851 | $ | 1.67 | |||||
Granted | 3,073,940 | 9.39 | ||||||
Exercised | (15,920 | ) | (2.56 | ) | ||||
Forfeited | (44,221 | ) | (3.81 | ) | ||||
Outstanding at December 31, 2020 | 57,212,650 | 2.09 | ||||||
Granted | 26,557,293 | 16.45 | ||||||
Exercised | (104,200 | ) | (1.00 | ) | ||||
Forfeited | (92,112 | ) | (9.72 | ) | ||||
Outstanding at December 31, 2021 | 83,573,631 | 6.72 | ||||||
Granted | 12,570,722 | 8.13 | ||||||
Exercised | (2,062,453 | ) | 1.40 | |||||
Forfeited | (550,837 | ) | 6.33 | |||||
Outstanding at June 30, 2022 | 93,531,063 | 6.88 | ||||||
Exercisable at December 31, 2020 | 45,770,544 | 1.44 | ||||||
Exercisable at December 31, 2021 | 66,322,324 | $ | 5.28 | |||||
Exercisable at June 30, 2022 | 66,463,722 | $ | 5.30 | |||||
On February 1, 2021 the Board of Directors of the Company approved a stock split of the issued and outstanding A Ordinary and common shares of the Company on a 220 for 1 basis. In connection with the Merger, in order to achieve an exchange ratio of one LMDX common share for each CAH share, the Company effected a subdivision, immediately prior to the Merger, of all issued, and authorized but unissued, LMDX A Ordinary shares and LMDX common shares at a ratio of 1.60806264:1.
On January 15, 2021, the Company granted “founder options” over
A
rdinary shares to each of the three Founder Directors. Each Founder Director was granted a fully vested option over 5,235,851O
A
rdinary shares. On April 15, 2021, the Company granted each Founder Director a further option over 2,819,577O
A
rdinary shares. These options will vest over a two year period subject to the satisfaction of performance conditions. In each instance, the exercise price of these options is equal an exercise price per ordinary share of $17.05.O
For the six months ended June 30, 2022, 2,062,453 options were exercised at a weighted average exercise price of $1.40. The options outstanding at June 30, 2022 have an exercise price in the range of $0.20 to $17.05 and a weighted average contractual life of 6.57 years.
Share based compensation expense of $4,804 and $1,047 has
been charged to Research and development expenses and share based compensation expense of
$12,614 and $24,234
has been charged to Selling, marketing and administrative expenses for the six months ended June 30, 2022 and 2021, respectively.
F-1
4
LUMIRADX LIMITED
UNAUDITED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
14. PREFERRED SHARES
PREFERRED SHARES | DIVIDENDS | TOTAL | ||||||||||
Balance at January 1, 2020 | $ | 221,927 | $ | 26,713 | $ | 248,640 | ||||||
Issuance, net of related costs | 162,401 | — | 162,401 | |||||||||
Accretion of issuance costs | 7,751 | — | 7,751 | |||||||||
Dividends accrued | — | 23,578 | 23,578 | |||||||||
Fair value adjustment of convertible feature | 9,351 | — | 9,351 | |||||||||
Balance at December 31, 2020 | 401,430 | 50,291 | 451,721 | |||||||||
Accretion of issuance costs | 8,498 | — | 8,498 | |||||||||
Dividends accrued | — | 16,156 | 16,156 | |||||||||
Converted to Share Premium from Merger | (409,928 | ) | (66,447 | ) | (476,375 | ) | ||||||
Balance at December 31, 2021 | $ | — | $ | — | $ | — | ||||||
Series A Preferred Shares
The outstanding Series A Preferred Shares have been treated as a compound instrument in accordance with IFRS 9 as the Company has a contractual obligation to deliver: i) cash upon maturity; and/or ii) a requirement to deliver A Ordinary shares upon conversion. The Series A Preferred Shares are convertible into A Ordinary shares at the option of the holder and mandatorily convertible into A Ordinary shares upon listing on a public market if at a price above the liquidation preference and accrued and unpaid dividends. Each Series A Preferred Share, including any accrued dividends, is convertible into one A Ordinary share.
In accordance with IFRS 9, the redemption feature qualifies as a liability at fair value with the residual proceeds allocated to conversion feature recorded within equity as Other reserves.
The Series A Preferred Shares accrue an 8% cumulative annual dividend until the earlier of (i) the date seven years from their issue (ii) the date the Preferred Shares are converted in accordance with their terms or (iii) the date the Company is liquidated. No dividends will be paid on the A Ordinary Shares for so long as the Preferred Shares are in issue.
The Series A Preferred Shares carry a preferential right to share in the proceeds of a liquidation of the Company, and will rank senior to the A Ordinary shares and the common shares of the Company on liquidation.
Each of the Series A Preferred Shares shall automatically convert to A Ordinary shares in connection with an IPO or sale of the Company, provided that the value of an A Ordinary share at that time is not less than the aggregate of the issue price of such Preferred Share and the dividend accrued on each such Preferred Share. Each Preferred Shareholder may convert their Preferred Shares to A Ordinary shares at any time.
In connection with the September 2021 Merger, all outstanding Series A Preferred Shares converted into A Ordinary shares on a
one to one basis.
Series B Preferred Shares
The Series B Preferred Shares accrue an 8% cumulative annual dividend until the earlier of (i) the date seven years from their issue (ii) the date the Preferred Shares are converted in accordance with their terms or (iii) the date the Company is liquidated. No dividends will be paid on the A Ordinary Shares for so long as the Preferred Shares are in issue.
The Series B Preferred Shares carry a preferential right to share in the proceeds of a liquidation of the Company, and will rank senior to the A Ordinarywith the Series A Preferred Shares on liquidation.
s
hares and thec
ommons
hares of the Company andpari passu
Each of the Series B Preferred Shares shall automatically convert to
c
ommons
hares in connection with an IPO or sale of the Company at a share price not more than the fully diluted share capital divided by $4 billion and not less than the fully diluted share capital divided by $6.4 billion. Each Preferred Shareholder may convert their Preferred Shares toc
ommons
hares at any time.F-1
5
LUMIRADX LIMITED
UNAUDITED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
The variable conversion feature constitutes an embedded derivative as the conversion feature is a component of the host instrument that would allow for the cash flows of the combined instrument to be changed according to the value of a financial variable. In accordance with IFRS 9, the Company has elected to record the entire instrument at fair value through profit or loss. The change in fair value in of $nil (2021: $48,956) has been charged to finance expenses.
In connection with the September 2021 Merger, the outstanding Series B Preferred Shares converted
into
12,543,492c
ommon
s
hares.
15. DEBT
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are measured at amortized cost.
DECEMBER 31, 2021 | JUNE 30, 2022 | |||||||||||||||||||||||||||||||||
CURRENCY | NOMINAL INTEREST RATE | YEAR OF MATURITY | FACE VALUE | CARRYING AMOUNT | FAIR VALUE | FACE VALUE | CARRYING AMOUNT | FAIR VALUE | ||||||||||||||||||||||||||
Unsecured Loan | USD | 2.00% | 2024 | $ | 18,000 | $ | 14,242 | $ | 14,557 | 18,000 | 14,861 | 14,326 | ||||||||||||||||||||||
2022 Convertible Notes | USD | 6.00% | 2027 | — | — | — | 56,500 | 54,172 | 39,744 | |||||||||||||||||||||||||
2021 Senior Secured Loans | USD | 8.00% | 2024 | 300,000 | 286,815 | 283,893 | 300,000 | 289,703 | 277,484 | |||||||||||||||||||||||||
Equipment Financing Loans | EUR | 1.70-2.60% | 2022-2023 | 263 | 263 | 263 | 129 | 129 | 129 |
F-1
6
LUMIRADX LIMITED
UNAUDITED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Balance at December 31, 2020 | 286,972 | |||
Less: Debt due within one year | (147,238 | ) | ||
$ | 139,734 | |||
Changes from financing cash flows | ||||
Proceeds from borrowings, net of issuance costs | ||||
2020 Senior Secured Loan | $ | 34,125 | ||
Incremental term loan | 39,000 | |||
2021 Senior Secured Loan | 288,513 | |||
Equipment Financing Loans | 192 | |||
Repayments of borrowings | ||||
2020 Senior Secured Loan | (100,000 | ) | ||
Incremental term loan | (40,000 | ) | ||
Equipment Financing Loans | (552 | ) | ||
Total changes from financing cash flows | 221,278 | |||
Other changes | ||||
Reclassification of Unsecured Loan amounts to grant liability in accordance with IAS 20 | (3,758 | ) | ||
Warrants | ||||
2021 Senior Secured Loan | (5,136 | ) | ||
Conversion to equity | ||||
Convertible Notes | (61,980 | ) | ||
2021 Convertible Notes | (125,652 | ) | ||
Loss on extinguishment of debt | ||||
2020 Senior Secured Loan | 3,170 | |||
Incremental term loan | 1,000 | |||
Change in fair value | ||||
2021 Convertible Notes | (52,267 | ) | ||
Amortization of debt issuance costs | ||||
2020 Senior Secured Loan | 366 | |||
Convertible Notes | 2,866 | |||
2021 Convertible Notes | 31,075 | |||
2021 Senior Secured Loan | 3,438 | |||
Foreign exchange impact | ||||
Equipment Financing Loans | (52 | ) | ||
Total other changes | (206,930 | ) | ||
Balance at December 31, 2021 | 301,320 | |||
Less: Debt due within one year | (191 | ) | ||
$ | 301,129 | |||
Changes from financing cash flows | ||||
Proceeds from borrowings, net of issuance costs | ||||
2022 Convertible Notes | $ | 54,010 | ||
Repayments of borrowings | ||||
Equipment Financing Loans | (119 | ) | ||
Total changes from financing cash flows | 53,891 | |||
Other changes | ||||
Amortization of debt issuance costs | ||||
Gates Loan | 619 | |||
2021 Convertible Notes | 2,888 | |||
2022 Convertible Notes | 162 | |||
Foreign exchange impact | ||||
Equipment Financing Loans | (15 | ) | ||
Total other changes | 3,654 | |||
Balance at June 30, 2022 | 358,865 | |||
Less: Debt due within one year | (118 | ) | ||
$ | 358,747 | |||
F-1
7
LUMIRADX LIMITED
UNAUDITED NOTES TO INTERIM CONSOLIDATED
FINANCIAL
STATEMENTS(In thousands, except share and per share data)
16. LEASE LIABILITY
AS OF DECEMBER 31, 2021 | AS OF JUNE 30, 2022 | |||||||
Due in less than one year | $ | 5,546 | $ | 6,590 | ||||
Due between one and five years | 25,151 | 25,886 | ||||||
Due in more than five years | 16,301 | 9,849 | ||||||
Total | $ | 46,998 | $ | 42,325 | ||||
17. TRADE AND OTHER PAYABLES
AS OFDECEMBER 31, 2021 | AS OF JUNE 30, 2022 | |||||||
Trade payables | $ | 59,718 | $ | 45,923 | ||||
Accrued expenses and other liabilities | 26,366 | 32,417 | ||||||
Accrued interest | 6,239 | 6,171 | ||||||
Warranty provision | 5,801 | 4,107 | ||||||
Deferred revenue | 1,517 | 1,309 | ||||||
Total trade and other payables | $ | 99,641 | $ | 89,927 | ||||
18. OTHER LIABILITIES
Government and Other Grants
The Group has received grants from government and private entities. These include grants in respect of research and development activities, expansion of manufacturing capabilities and deployment of the Group’s products in certain geographical markets.
The Group has recorded $3,863 and $497 as a reduction in research and development expenses for the six months ended June 30, 2022 and 2021 respectively, to reflect the usage of grant funds and research and development expenditures. The Group had liabilities of $32,216 and $38,941 as of June 30, 2022, and December 31, 2021, respectively, for these unspent grant funds.
As of June 30, 2022, the Group had $24,299 (2021: $26,211) related to a grant for manufacturing equipment. The Group will recognize the grant over the useful life of the equipment. In the six months ended June 30, 2022, the Group reduced manufacturing expenses by $1,999 (2021: 2,771).
Instrument Financing Agreement
On April 27, 2022 the Company consummated the first closing of a private placement offering pursuant to which it received an initial investment of
$26.1
million in cash and entered into an Instrument Financing Agreement with the Investors and Pear Tree Partners, L.P. The terms of the Instrument Financing Agreement provide that the Investors may invest up to an aggregate maximum amount
of $50
million in the Company, or such higher amount as agreed to by the Company and the Investors, in one or more closings, in order to fund the purchase of additional LumiraDx instruments, allowing the Company to further expand instrument placements. In consideration of such investment, the Company has agreed to pay to the Investors on a semi-annual basis and over a three-year period (subject to extension in certain events), a payment that is equal t
o 20%
of the total gross amount invoiced by the Group in respect of sales of test strips for use in such funded LumiraDx instruments which are allocated to the Invested Amount by the Company in accordance with the terms of the Instrument Financing Agreement.
If by the end of the applicable three-year term (the “Expiry Date”), the Investors have not received, in aggregate, Instrument Financing Payments equal to or in excess of two times the Invested Amount (the “Target Return”), the
Company
shall, at its sole discretion, either: (i) issue to the Investors an aggregate amount of theCompany’s
common shares equal in value to the difference between the Target Return and the total Instrument Financing Payments received by the Investors (the “Return Shortfall”), at a price per common share equal to the volume-weighted average price of the common shares forthe
20Nasdaq trading day period immediately following the applicable Expiry Date, but subject to a minimum price per common share o
f $
7.25;
or (ii) pay to the Investors the applicable Return Shortfall in cash.
F-18
LUMIRADX LIMITED
UNAUDITED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
In June 2022 the Company closed an addition
al $15.4
million investment with the Investors.
The ability to pay the
the Return Shortfall, if any,
in common shares constitutes an embedded derivative as it is a component of the host instrument that would allow for the cash flows of the combined instrument to be changed according to the value of a financial variable. In accordance with IFRS 9, the Company has elected to record the entire instrument at a fair value through profit or loss. The change in fair value of $1.6 million has been charged to finance expenses for the six months ended June 30, 2022.
19. COMMITMENTS
Capital Commitments
Capital expenditure contracted for at the end of the reporting period but not yet incurred is as follows:
AS OF DECEMBER 31, 2021 | AS OF JUNE 30, 2022 | |||||||
Capital | $ | 15,641 | $ | 5,620 | ||||
Inventory | 43,573 | 9,871 | ||||||
Total | $ | 59,214 | $ | 15,491 | ||||
The capital commitments relate to contracts to purchase property, plant and
equipment.
20. LEASES—GROUP AS LESSEE
The Group leases various offices and facilities. The lease terms are between
1-10
years.Right-of-use | ||||
Net Carrying Amount | ||||
December 31, 2021 | $ | 27,746 | ||
June 30, 2022 | 24,103 | |||
Depreciation expense for the period ended | ||||
June 30, 2021 | $ | 2,342 | ||
June 30, 2022 | 2,792 |
During the six months ended June 30, 2022, additions to right of use assets amounted to $13,546.
SIX MONTHS ENDED | ||||||||
AMOUNTS RECOGNIZED IN PROFIT AND LOSS | JUNE 30, 2021 | JUNE 30, 2022 | ||||||
Depreciation expense of right-of-use-assets | $ | 2,342 | $ | 2,792 | ||||
Interest expense on lease liabilities | 1,001 | 1,640 | ||||||
$ | 3,343 | $ | 4,432 |
At June 30, 2022 the Group is not committed to any material short-term leases.
Variable lease payment terms are deemed an insignificant portion of the overall liability on June 30, 2022.
The total cash outflows for leases in the
six
monthsended
June 30, 2022, and 2021 amount to $2,976 and $2,258 respectively21. EVENTS AFTER THE REPORTING PERIOD
Public Offering
In July 2022, the Company closed a registered public stock offering. The gross proceeds from the offering w
ere $
75 million. In addition to the shares sold in the public offering, the Company also sold additional common shares to raise gross proceeds of
$
25.0 million in a concurrent private placement to one of its existing investors, the Bill & Melinda Gates Foundation. The underwriters of the registered public offering had
a
30-day
option to purchase additional common shares at the public offering price and purchas
ed $
7million of shares in August 2022. In total, the Group received aggregate net proceeds of approxima
tely $
100 million, after fees and commissions, from the registered public offering and the concurrent private placement.
F-19