53 Annual Report 2022 2022Movement Goodwill $ Patents $ Trademarks $ hTERT $ Molecular NETS $ SubB2M $ Total $ Balance at the beginning of the year 11,030,560 314,526 11,897 2,536,566 11,102,473 1,150,000 26,146,022 Additions – 99,656 26,420 – – – 126,076 Lapsed – (79,950) (1,278) – – – (81,228) Amortisation – (34,354) – (389,066) (1,288,342) – (1,711,762) Impairment* (11,030,560) – – (1,790,842) – – (12,821,402) Effect of FX translation – 7,850 – – – – 7,850 Balance at the end of the year – 307,728 37,039 356,658 9,814,131 1,150,000 11,665,556 2021Movement Goodwill $ Patents $ Trademarks $ hTERT $ Molecular NETS $ SubB2M $ Total $ Balance at the beginning of the year - - - - - - - Additions 13,919,779 351,246 11,897 2,896,772 15,686,495 1,150,000 34,016,189 Lapsed - - - - - - - Amortisation - (36,735) - (360,206) (152,194) - (549,135) Impairment* (2,889,219) - - - (4,431,828) - (7,321,047) Effect of FX translation - 15 - - - - 15 Balance at the end of the year 11,030,560 314,526 11,897 2,536,566 11,102,473 1,150,000 26,146,022 * Impairment Testing and Key Assumptions The Group’s intangible asset and goodwill impairment testing procedures are described in Note 2 (xi) and (xii). Management determines the carrying value of the Group’s purchased intellectual property and goodwill on acquisition. Discounted cash flowmodels are produced when testing assets for impairment. These models are based upon management estimates of future revenues, corporate tax rates as well as discount rates. Forecasted gross margins from product sales anticipates growth frommarket penetration and the evolution of products. A summary of the parameters used to value intangible assets and impair test these assets is provided in the following table: Intangible Asset ValuationMethod Years of Cash FlowProjection Discount Rate % hTERT Relief fromRoyalty 7.5^ 20% Molecular NETs Relief fromRoyalty 12.5# 25% ^ F orecast revenue includes a decline frompeak revenue in years 6 & 7. Product revenue is supported by patents in keymarkets during this period. # Forecast revenue matches the life of patents in key markets. Forecast revenue includes a decline from peak revenue in years 9 to 12, which is why this period has been used. To provide further support for the carrying value of the Molecular NETs asset an independent third party was engaged to provide a report comparing the values of companies who own exoso0mal extraction assets and operate in the same industry as INOVIQ. This report concluded that the Molecular NETs book value is not unreasonable and the carried amount for the IP is likely to be recoverable. For the comparative period a non-cash impairment charge of $4,431,828 was recorded for the Molecular NETs asset, the result of a reduction in forecast revenue for Molecular NETs. For the financial year ended 30 June 2022, INOVIQ recognised a non-cash impairment loss of $1,790,842 (2021: Nil) for the hTERT asset, the result of a reduction in forecast revenue. SubB2M, which is in the research phase and therefore pre-revenue, was assessed for impairment using the replacement cost method. Management determined that no impairment indicators were present at balance date. 10 INTANGIBLE ASSETS AND GOODWILL (CONTINUED)
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