Annual Report 2022 31 The fair value of assets and liabilities classified as level 3 is determined by the use of valuation models. These include discounted cash flow analysis or the use of observable inputs that require significant adjustments based on unobservable inputs. The consolidated entity’s finance team performs valuations of financial items for financial reporting purposes, including Level 3 fair values, in consultation with third party valuation specialists for complex valuations. Valuation techniques are selected based on the characteristics of each instrument, with the overall objective of maximising the use of market-based information. The valuation techniques used for instruments categorised in levels 1 and 3 are described below: Valuation of investment in Nyrada Inc. Nyrada Inc. ordinary shares (level 1): The 33,373,245 Nyrada ordinary shares held by the consolidated entity were valued at fair value, using the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market. The price used for valuing these ordinary shares was the ASX price of 13.5 cents. Nyrada Inc. performance shares (level 3): The 12,000,600 Nyrada performance shares were externally valued considering Level 3 hierarchy fair value inputs such as - the spot price of 13.5 cents, a risk free interest rate of 2.762% (based on Australian government bond rate as a proxy), a historical volatility factor of 78.01% and the Monte Carlo approach for estimating the probability of the market based vesting conditions being achieved. The milestones to be achieved for each tranche is as follows: Tranche 1: i) The trading price for Nyrada Chess Depositary Interests (CDI’s) on the ASX achieving at least $0.40 for 5 consecutive trading days; and ii) The Scientific Advisory Board to the Company determining that, based on in-vivo data, the final lead neuroprotectant drug candidate is ready to proceed to pre-clinical safety and toxicology studies (“non-CDI price-based milestone”). Tranche 2: i) The trading price for Nyrada Chess Depositary Interests (CDI’s) on the ASX achieving at least $0.40 for 5 consecutive trading days; and ii) The Scientific Advisory Board to the Company determining that, based on in-vivo data, the final lead peripheral neuropathic pain drug candidate is ready to proceed to pre-clinical safety and toxicology studies (“non-CDI price-based milestone”). Note 3. Operating segments The consolidated entity continues to operate in one segment, being the clinical development in the field of both oncology and non-oncology in the pan-pacific region. The segment details are therefore fully reflected in the body of the annual report. Note 4. Revenue and other income Consolidated 2022 $ 2021 $ Interest income 46,944 139,472 Federal Government Grants 25,000 50,000 R&D tax incentives 5,367,646 5,592,251 Research Service Fees 36,000 16,000 Revenue and other income 5,475,590 5,797,723
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