Fair value of Financial Instruments |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value of Financial Instruments | Fair value of Financial Instruments Cash and cash equivalents, accounts receivable (including R&D tax incentive receivable), prepaid expenses and other current assets, accounts payable, accrued expenses and current liabilities are reflected on the consolidated balance sheets at amounts that approximate fair value because of the short-term nature of these financial assets and liabilities. The fair value of the Company’s debt approximates its carrying value and is classified as Level 3 within the fair value hierarchy, as it is derived from discounted cash flows using a current borrowing rate. ELOC Purchase Agreement The Company evaluated the ELOC Purchase Agreement to determine whether it should be accounted for considering the guidance in ASC 815- 40, “Derivatives and Hedging - Contracts on an Entity’s Own Equity” (“ASC 815-40”) and concluded that it is an equity-linked contract that does not qualify for equity classification, and therefore requires fair value accounting as a derivative. The ELOC Purchase Agreement was terminated on March 13, 2025. ELOC Warrant Classification of the ELOC Warrant as a liability instrument was based on management’s analysis of the guidance in ASC 815 and in a statement issued by the staff of the SEC regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies.” Management considered whether the ELOC Warrant displayed the three characteristics of a derivative under ASC 815, and concluded that the ELOC Warrant mets the definition of a derivative. However, the ELOC Warrant failed to meet the equity scope exception in ASC 815-10-15-74(a) and thus is classified as a liability measured at fair value, subject to remeasurement at each reporting period. This is on the basis that the ELOC Warrant included certain cash-settlement features in the event of a tender offer, which is outside the control of the Company, and that the exercise price was denominated in a currency other than the reporting entity’s functional currency, and therefore the instrument is not considered indexed to the reporting entity’s own stock. The Company measures the ELOC Warrant as a liability at fair value as at each reporting period with changes in fair value recognized as other (income) expense, net in the consolidated statements of operations and comprehensive income (loss). The changes in the fair value of the ELOC Warrant liability were a decrease of $0.6 million for the fiscal year ended June 30, 2025. Convertible Debentures The Company has accounted for the Debenture as a financing transaction, wherein the net proceeds that were received were allocated to the financial instruments issued. Prior to making the accounting allocation, the Company evaluated the Convertible Debentures under ASC 815 Derivatives and Hedging (“ASC 815”). ASC 815 generally requires the analysis of embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. The Company evaluated that the convertible right met the definition of a derivative under ASC 815-10-15-83. Further the Company evaluated that the convertible right requires bifurcation from the debt host on the basis that it fails to meet the equity scope exception in ASC 815-10-15-74(a) and thus are classified as a liability measured at fair value, subject to remeasurement at each reporting period. The Company evaluated that the Debenture Warrant was a detachable freestanding instrument. The Debenture Warrant included certain cash-settlement features in the event of a tender offer, which is outside the control of the Company, and that the exercise price was denominated in a currency (USD) other than the reporting entity’s functional currency (AUD), and thus failed to meet the equity scope exception in ASC 815-10-15-74(a). Therefore, the instrument was not considered indexed to the reporting entity’s own stock. As such the Debenture Warrant were classified as a liability and measured at fair value, with changes in fair value each period reported in earnings The proceeds from issuing the Debenture were allocated first to the Debenture Warrant based on its fair value. The proceeds allocated to the debt instrument was then further allocated between the debt host contract and the bifurcated derivative based on the fair value of that derivative as prescribed by ASC 815-15-30-2. Debt discount and the debt issuance costs were capitalized to the carrying amount of the debt. Such costs are presented on the balance sheet as a direct deduction from that debt liability host. The convertible debt was repaid in full on March 13, 2025, including the outstanding principal, interest, amounts and redemption premiums that was due as of February 28, 2025. The convertible rights are derecognized along with the debt repayment. The Company recognized a $1.0 million loss on extinguishment of the debt host contract and the bifurcated derivative. The changes in the fair value of the Debenture Warrants liability were a decrease of $0.2 million for the fiscal year ended June 30, 2025. March 2026 Common Warrants Classification of the March 2026 Common Warrants defined as liability instruments was based on management’s analysis of the guidance in ASC 815 and in a statement issued by the Staff of the SEC regarding the accounting and reporting considerations for warrants issued entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies.” Refer to page F-13 for additional background information regarding the March 2026 Common Warrants. Management considered whether the March 2026 Common Warrants displayed the three characteristics of a derivative under ASC 815 and concluded that the warrant meets the definition of a derivative. However, the March 2026 Common Warrants failed to meet the equity scope exception in ASC 815-10-15-74(a) and thus is classified as a liability measured at fair value, subject to remeasurement at each reporting period. This conclusion is based on the fact that the warrant includes certain cash-settlement features in the event of a tender offer, which is outside the control of the Company. As a result, the instrument is not considered to be indexed to the reporting entity’s own stock. The Company measured the March 2026 Common Warrants as a liability at fair value as at each reporting period with changes in fair value recognized as other (income) expense, net in the consolidated statements of operations and comprehensive income (loss). The March 2026 Common Warrants was classified as a Level 3 financial instrument in the fair value hierarchy and was valued using the BlackScholes option pricing model (“BSOPM”). The following table presents the fair value of the warrant and the valuation assumptions under the BSOPM as of June 30, 2026 and at issuance.
The changes in the fair value of the Warrants liability resulted in an increase of $0.62 million for the fiscal year ended June 30, 2026.
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