INTELLIGENT BIO SOLUTIONS INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Interim Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Annual Report on Form 10-K, and have concluded that, based on such evaluation, our disclosure controls and procedures were not effective due to the material weakness in our internal control over financial reporting as of June 30, 2022 as described below. 50 Notwithstanding the conclusion that our disclosure controls and procedures were not effective as of the end of the period covered by this report, we believe that our consolidated financial statements and other information contained in this annual report on Form 10-K present fairly, in all material respects, our business, financial condition and results of operations for the periods presented. Material Weakness The Company completed the IPO in December 2020. Prior to the IPO, the Company was a private corporation with limited accounting personnel and other supervisory resources necessary to adequately execute its accounting processes and address its internal controls over financial reporting requirements. As a result, previously existing internal controls are no longer sufficient, and the Company is in the process of updating these controls. The design and implementation of internal control over financial reporting for the Company’s post-IPO has required and will continue to require significant time and resources from management and other personnel. As part of this updating process, our management identified a material weakness in its internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness identified relates to the fact that the Company has not yet designed and maintained an effective control environment commensurate with its financial reporting requirements, including a) has not yet completed the formally documented policies and procedures with respect to the review, supervision and monitoring of the Company’s accounting and reporting functions, b) lack of evidence to support the performance of controls and the adequacy of review procedures, including the completeness and accuracy of information used in the performance of controls and c) as an emerging growth company we currently have limited accounting personnel and other supervisory resources necessary to adequately execute the Company’s accounting processes and address its internal controls over financial reporting. Remediation Plan Management is committed to continuing with the steps necessary to remediate the control deficiencies that constituted the above material weakness. Since the IPO, we made the following enhancements to our control environment: a. We added accounting and finance personnel to provide additional individuals to allow for segregation of duties in the preparation and review of schedules, calculations, and journal entries that support financial reporting, to provide oversight, structure and reporting lines, and to provide additional review over our disclosures; b. We enhanced our controls to improve the preparation and review over complex accounting measurements, and the application of GAAP to significant accounts and transactions, and our financial statement disclosures; and, c. We are in the process of engaging outside consultants to assist us in our evaluation of the design, implementation, and documentation of internal controls that address the relevant risks, and that provide for appropriate evidence of performance of our internal controls (including completeness and accuracy procedures). Under the direction of the audit committee of the board of directors, management will continue to take measures to remediate the material weakness in 2023. As such, we will continue to enhance corporate oversight over process-level controls and structures to ensure that there is appropriate assignment of authority, responsibility, and accountability to enable remediation of our material weakness. We believe that our remediation plan will be sufficient to remediate the identified material weakness and strengthen our internal control over financial reporting. As we continue to evaluate, and work to improve, our internal control over financial reporting, management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary. 51 Inherent Limitation on the Effectiveness of Internal Controls The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, in designing and evaluating the disclosure controls and procedures, management recognizes that any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting Management’s Report on Internal Control Over Financial Reporting This Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by the rules of the SEC for newly public companies. Changes in Internal Control Over Financial Reporting There have been no changes to the Company’s internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d 15(f) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION Not applicable. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information about Directors and Executive Officers Board of Directors The current number of directors on our Board of Directors is five. Under our bylaws, the number of directors on our Board will not be less than one, nor more than ten, and is fixed, and may be increased or decreased by resolution of the Board. There are no family relationships among any of our directors or executive officers. Our business is managed under the direction of our Board, which currently consists of the individual listed below: Director Age Position(s) with the Company Director Since Steven Boyages 64 Interim CEO & Chairman of the Board July 2020 Lawrence Fisher* 83 Director August 2020 Jonathan Hurd* 52 Director April 2018 George Margelis* 61 Director June 2019 Christopher Towers* 36 Director August 2020 * Independent 52 Steven Boyages MB BS PhD Dr. Steven Boyages is a practicing clinician in diabetes and endocrinology with more than 31 years’ experience in medicine, including multiple executive positions. Dr. Boyages previously held the position of Chief Executive of the Sydney West Area Health Service (SWAHS) from February 2002 to May 2011, which is now known as Western Sydney Local Health District, covering a population of approximately 1.2 million people, SWAHS employed more than 15,000 staff and had a gross operating budget of $2 billion, managing $1.6 billion worth of assets. Dr. Boyages has also served as Medical Director for eHealth New South Wales and was the founding Chief Executive of the Clinical Education and Training Institute (CETI) New South Wales, Australia, set up to ensure the development and the delivery of clinical education and training across the NSW public health system. Previous to this, Dr. Boyages was the Director of Diabetes and Endocrinology at Westmead Hospital, from February 1990 to December 1999. During this time, Dr. Boyages’ major achievements were to define the pathophysiology of thyroid hormone deficiency on brain development secondary to iodine deficiency; to develop prevention strategies in iodine deficient communities in China, India, Indonesia and Northern Italy; to define the impact of Growth Hormone excess and deficiency in adults and to develop innovative population health models of care for people with diabetes. Dr. Boyages continues an active research career in a range of fields, but mostly in the pursuit of better models of chronic disease prevention and management. Dr. Boyages was the founding director of the Centre for Research and Clinical Policy in NSW Health in 1999, during which he established the Priority Health Programs (receiving $15 million in funding per annum), doubled the Research Infrastructure Grants Program, established the Quality Branch of NSW Health and was appointed as Clinical Advisor to the Director General to implement the Government Action Plan for Health Reform. Additionally, Dr. Boyages was instrumental in establishing and securing funding for the NSW biotechnology strategy, BioFirst, a $150 million investment. We believe that Dr. Boyages is well-qualified to serve on our Board of Directors due to his medical expertise and research and development experience. He also has extensive experience in financial management, board and corporate governance, government relations and regulatory affairs. Lawrence Fisher Lawrence Fisher, 83, has been a member of our Board since August 2020. Mr. Fisher has practiced as a securities lawyer in New York City for more than 40 years, and retired in 2002. He is a graduate of Columbia College and Columbia University Law School, and a Research Fellow of the London School of Economics. Lawrence has extensive experience representing public companies and investment banking firms in connection with Initial Public Offerings. During his career, he was a partner at Orrick, Herrington & Sutcliffe law firm for 11 years and partner at Kelley, Drye & Warren law firm for 10 years, and Parker, Chapin & Flattau for 20 years, serving on all firms’ Executive Committees. Furthermore, he is experienced in various board positions, including Audit Committee of Viking Energy Group since August 2018, a member of the Board and Audit Committee of National Bank of New York City for more than 20 years to December 2018, and Financial Federal Corporation (NYSE listed) for over five years until February 2010. We believe that Mr. Fisher is well-qualified to serve on our Board of Directors due to his extensive experience as a lawyer in the field of capital markets and will assist with understanding the legal and compliance issues pertaining to publicly listed companies. Jonathan S. Hurd Mr. Hurd, 52, has been a member of our Board of Directors since April 2018. He previously served as our Chairman of the Board from August 2018 to November 2019. Mr. Hurd has expertise in broker-dealer and investment advisory regulations and is well versed in FINRA and SEC rules and regulations. Mr. Hurd has served as Founder and CEO at Asgard Regulatory Group, or “Asgard,” since founding the firm in 2008. Asgard provides consulting, advisory and risk management services to broker-dealer, investment adviser, hedge funds, private equity, and banking clients both domestically and abroad. Prior to starting Asgard, Mr. Hurd was the Chief Compliance Officer for several financial institutions. His experience involved full-service broker-dealers, investment advisory firms, bank-broker-dealers and mortgage-backed securities. Mr. Hurd also served on the Board of Directors for many of these companies. Prior to working at these financial institutions, Mr. Hurd was a Supervisor of Examiners at FINRA, previously NASD, in the New York District Office. While with FINRA, he supervised routine examinations of FINRA member firms, and conducted large-scale enforcement cases jointly with the Justice Department and Federal Bureau of Investigations. Mr. Hurd also assisted the District Office with its ongoing training of new examiners. In addition, from 2005 to 2011, Mr. Hurd was a Senior Adjunct Professor in the Townsend School of Business at Dowling College, where he instructed MBA students in matters relating to the United States securities markets and financial institutions. He was responsible for introducing students to the subjects of financial derivatives, foreign stock exchange, hedge transactions and risk management. Mr. Hurd is also a Certified Anti-Money Laundering Specialist (CAMS) and holds the Series 7, 14, 24, 27, 53, 57, 63, 66, 79 and 99 licenses as well as his NYS Life and Health Insurance licenses. We believe Mr. Hurd is well-qualified to serve on our Board of Directors due to his substantial experience in corporate finance, his expertise in the regulation and functioning of securities markets and his widespread relationships in the financial industry. 53 George Margelis, MB BS, M.Optom. Dr. Margelis, 61, has been a member of our Board of Directors since June 2019. He is a medical practitioner who has been deeply involved in technology for the last 31 years. In 2019, he was appointed independent chair of the Aged Care Industry Information Technology Council in Australia. Since November 2013, he also has been a board member and the medical advisor of Multicultural Care, an aged care provider in Sydney. In June 2013, he was appointed an Adjunct Associate Professor at the University of Western Sydney with the TeleHealth Research & Innovation Laboratory. From July 2013 to August 2018, he served as a member of Ignition Labs, a start-up incubator in the health space, where he acted as a mentor and adviser to selected start-ups, assisting them in developing their initial products and taking a small initial investment. From 2005 to 2011, he was Health Industry Lead ANZ at Intel, and then General Manager Asia-Pacific at Intel-GE Innovations as it spun off in 2011. In 2014, he returned to Intel serving as its Health & Life Sciences Lead until 2016. During this time he also acted as senior adviser to HIMSS, the international peak body for health technology, and as Asia Pacific chair of the Continua Alliance, an industry consortium for developing interoperability standards for health technology products that was later renamed the Personal Connected Health Alliance. From 2002 to 2005, he was Chief Information Officer of Macquarie Health Corporation, a private hospital group, and also managed an innovative software development team at Macquarie that produced a number of online health applications. In 2014 he was appointed to the IT in Aged Care Hall of Fame for his work in the use of technology in aged care. Dr. Margelis originally trained as an optometrist with a Master’s degree from the University of New South Wales, Australia and later graduated from the University of Sydney with a Bachelor of Medicine and Bachelor of Surgery. We believe that Dr. Margelis is well-qualified to serve on our Board of Directors due to his medical expertise and his extensive experience with information technology systems in the healthcare sector. Christopher Towers BSc CPA Christopher Towers, 36, has been a member of our Board of Directors since August 2020 and chairs the Company’s Audit Committee. Mr. Towers is a Certified Public Accountant with 14 years’ experience in auditing, accounting, and financial reporting. Mr. Towers is Chief Accounting Officer of Katapult Holdings, Inc. (NASDAQ: KPLT) since February 2021 and was previously EVP, Chief Accounting Officer and Principal Financial Officer of Newtek Business Services Corp. (NASDAQ: NEWT) from September 2014 to February 2021. Prior to Newtek, Mr. Towers held previous roles with Pall Corporation and PwC. His expertise includes auditing, SEC reporting, US GAAP, experience in leading equity & debt raisings, due diligence on business mergers & acquisitions, SOX compliance, FP&A, treasury, and tax. He holds a Bachelor of Science from Hofstra University and is a member of the American Institute of Certified Public Accountants. We believe that Mr. Towers is well-qualified to serve on our Board of Directors due to his extensive experience and expertise in financial reporting to capital markets and an understanding of compliance and the audit process. Corporate Governance Overview We set high standards for the Company’s employees, officers, and directors. Implicit in this philosophy is the importance of sound corporate governance. We regularly monitor developments in the area of corporate governance and review our processes, policies and procedures in light of such developments. Key information regarding our corporate governance initiatives can be found on the Governance section of our website, www.gbs.inc , including our Corporate Governance Guidelines, our Code of Business Conduct and Ethics (“Code of Ethics”) and the charters for our Audit, Compensation and Nominating Committees. We believe that our corporate governance policies and practices, including the majority of independent directors on our Board, empower our independent directors to effectively oversee our management—including the performance of our Interim Chief Executive Officer—and provide an effective and appropriately balanced board governance structure. 54 Committees Our Board of Directors has established an Audit Committee, a Compensation Committee, and a Nominating Committee. The following table provides the current membership information for each of the Board committees: Name Audit Committee Compensation Committee Nominating Committee Steven Boyages Lawrence Fisher X X Jonathan S. Hurd X X (Chairperson) Dr. George Margelis X X (Chairperson) X Christopher Towers X (Chairperson) X Below is a description of each committee of the Board of Directors. The Board has adopted written charters for each of the committees, which are available in the Investors Relations section of our website at https://investors.gbs.inc/corporate-governance/corporate-governance. Audit Committee We have established an Audit Committee of the Board of Directors in accordance with Section 3(a)58(A) of the Exchange Act, which consists of Mr. Fisher, Mr. Towers and Dr. Margelis, each of whom is an independent director under the Nasdaq listing standards applicable to audit committees. Christopher Towers qualifies as an “audit committee financial expert” as defined in the rules and regulations established by the SEC. Our Audit Committee oversees our corporate accounting, financial reporting practices and the audits of financial statements. The Audit Committee’s duties, which are specified in the Audit Committee Charter, include, but not be limited to: ● reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the Board of Directors whether the audited financial statements should be included in our Form 10-K; ● discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements; ● discussing with management major risk assessment and risk management policies; ● monitoring the independence of the independent auditor; ● verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law; ● reviewing and approving all related-party transactions; ● inquiring and discussing with management our compliance with applicable laws and regulations; ● pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed; ● appointing or replacing the independent auditor; 55 ● determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; and ● establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies. Nominating Committee and Stockholder Nomination of Directors We have established a Nominating Committee of the Board of Directors that consists of Mr. Hurd, Dr. Margelis and Mr. Fisher, each of whom is an independent director under the NASDAQ Stock Market listing standards applicable to nominating committees. The Nominating Committee is responsible for identifying individuals qualified to become members of the Company’s Board of Directors and accordingly recommends director nominees for the annual meeting of stockholders. The Nominating Committee also recommends and implements policies and procedures intended to assist the Board operations and all obligations to the Company and its stockholders. The Nominating Committee will consider nominees for the Board recommended by stockholders in accordance with the Company’s Bylaws (the “Bylaws”). Stockholders wishing to propose Director candidates for consideration by the Nominating Committee may do so by writing, by deadlines specified in the Bylaws, to the Secretary of the Company and providing information concerning the nominee and his or her proponent(s) required by the Bylaws. The Bylaws set forth further requirements for stockholders wishing to nominate Director candidates for consideration by stockholders including, among other things, that a stockholder must give timely written notice of an intent to make such a nomination to the Secretary of the Company. Code of Business Conduct and Ethics The Company has adopted a written Code of Business Conduct and Ethics that applies to all officers, directors, and employees, including our principal executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions. The Code of Business Conduct and Ethics is available in the Investor Relations section of our website at www.gbs.inc. If the Company makes any substantive amendments to the Code of Business Conduct and Ethics or grants any waiver from a provision of the Code of Business Conduct and Ethics to any executive officer or director, the Company will promptly disclose the nature of the amendment or waiver on its website. Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. To the Company’s knowledge, based on a review of the copies of such reports furnished to the Company and written representations, during the fiscal year ended June 30, 2022, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied, other than the inadvertent late filings by LSBD of ten reports reporting 11 transactions and by Mr. Sakiris of one report reporting one transaction. 56 Executive Officers The names of our executive officers, their ages, their positions with the Company, and other biographical information as of June 30, 2022, are set forth below. Name Age Positions Officer Since Steven Boyages 64 Interim Chief Executive Officer Chairman October 2021-Present (1) July 2020-Present (1) Spiro Sakiris 60 Chief Financial Officer April 2019 - Present Harry Simeonidis 54 President Asia Pacific, Sales and Marketing Chief Executive Officer President October 2021- Present (2) January 2020- October 2021 (2) September 2017- October 2021 (2) (1) Dr. Boyages was appointed to the additional position of Interim Chief Executive Officer of the Company effective October 29, 2021. He has served as both a director of the Company and Chairman of the Board since July 2020. (2) Mr. Simeonidis, who served as CEO and President of the Company, vacated these positions prior to Dr. Boyages’ appointment as Interim CEO and was appointed to the position of President Asia Pacific, Sales and Marketing, effective October 29, 2021. Steven Boyages Dr. Boyages’ biographical information is provided above in the section entitled “ Information about Directors and Executive Officers - Board of Directors ”. Spiro Sakiris Mr. Spiro Sakiris has served as our Chief Financial Officer since April 2019. He is a member of the Institute of Chartered Accounts of Australia & New Zealand. He also served as the Special Projects Lead at The iQ Group Global from January 2018 to April 2019, and was a registered Series 28 principal with IQ Capital (USA) LLC, a registered broker-dealer with FINRA, from November 2016 to August 2021, and continues as a Responsible Manager for Australian Financial Services License held by iQX Investment Services Pty Ltd. From 2013 to December 2017, Mr. Sakiris served as Chief Financial Officer and Chief Operating Officer for listed entities at The iQ Group Global. He worked at Economos Chartered Accountants from 1986 to 2013, which included 23 years as a partner where he was instrumental in the development of the firm’s practice. During his 33 years of experience, Mr. Sakiris has been involved in advising businesses in the areas of accounting and taxation, business advisory, initial public offerings and capital raising, business risks identification and management and business systems designs across many industries, including the application of IFRS and U.S. GAAP for the life science industry. Mr. Sakiris is also well versed in dealings with companies based in overseas jurisdictions such as Asia, Europe and the United States. He is also a registered company auditor experienced in United States reporting under Public Company Accounting Oversight Board in the United States and a registered tax agent in Australia. Harry Simeonidis Mr. Harry Simeonidis has served as our President Asia Pacific, Sales and Marketing since October 2021. Mr. Simeonidis has also served as our President and a member of our Board of Directors since September 2017 until October 2021, and Chief Executive Officer from January 2020 till October 2021. Mr. Simeonidis has more than 26 years of experience in senior management roles in healthcare, pharmaceutical and life sciences businesses across the APAC Region. Previously, from March 2017 to December 2019, he served as the General Manager of FarmaForce Limited, an Australian company listed on the Australian Stock Exchange From April 2015 to March 2017, Mr. Simeonidis operated a private consulting firm, offering services predominantly to clients from the healthcare sector in Australia. From 2013 to April 2015, Mr. Simeonidis was General Manager of Surgery, Asia Pacific, at GE Healthcare. From 2003 to 2012, Mr. Simeonidis was the CEO for Australia and New Zealand at GE Healthcare. 57 ITEM 11. COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS Summary Compensation Table The following table provides information regarding the compensation earned during the fiscal years ended June 30, 2022 and 2021 by (i) individuals serving as our principal executive officer during the fiscal year ended June 30, 2022, (ii) our two other highest compensated executive officers (other than our principal executive officer) who were serving as executive officers as of June 30, 2022, and (iii) up to two additional individuals for whom disclosure would have been provided pursuant to the preceding clause (ii) but for the fact that the individual was not serving as an executive officer of the Company at the end of the fiscal year ended June 30, 2022 (the “Named Executive Officers”). Name and principal position Year Salary ($) All other compensation ($) Total ($) Steven Boyages 2022 29,032 42,408 (1)(2) 71,440 Interim Chief Executive Officer and Chairman 2021 - 20,507 20,507 Spiro Sakiris Chief Financial Officer 2022 210,482 81,973 (2)(4) (6) 292,455 2021 233,204 32,380 265,584 Harry Simeonidis Former Chief Executive Officer and President (Current position – President Asia Pacific, Sales and Marketing) 2022 249,535 105,179 (2)(3)(5)(7) 354,714 2021 240,466 62,133 302,599 1) Includes the directors’ fees paid to Dr. Boyages of $36,363. He was compensated since March 22 for his additional responsibility as an Interim Chief Executive Officer. 2) Includes the contributions that are mandatory in Australia to a retirement fund known in Australia as a superannuation fund for each of Dr. Boyages, Mr. Sakiris and Mr. Simeonidis, at the applicable rate of 10%. 3) Includes the directors’ fees paid to Mr. Simeonidis of $11,557 until October 29, 2021, the date of his resignation as a director. 4) Includes an annual automobile allowance of $14,516. 5) Includes an annual automobile allowance of $17,419. 6) Includes performance-based cash bonus of $42,096. 7) Includes performance-based cash bonus of $46,744. Outstanding Equity Awards at Fiscal Year End Our Named Executive Officers did not hold any outstanding equity awards as of June 30, 2022. Employment and Related Agreements ● During the fiscal year ended June 30, 2019, we, through our 99% owned subsidiary, Glucose Biosensor Systems (APAC) Pty Ltd (“GBS Pty Ltd.”), entered into an employment agreement with each of Messrs. Simeonidis and Sakiris. Mr. Simeonidis’ and Mr. Sakiris’ employment agreements provide for them to serve as President and Chief Financial Officer, respectively, of our majority-owned subsidiary, and in accordance with their respective agreements. The company entered into a revised agreement in July 2022 with each of Messrs. Simeonidis and Sakiris after the revision in their respective salaries, as approved by the Compensation Committee. ● In March 2022, we, through our 99% owned subsidiary, GBS (APAC) Pty Ltd (formerly Glucose Biosensor Systems (APAC) Pty Ltd) entered into an employment agreement with Interim Chief Executive Officer Steven Boyages to compensate him for his additional responsibility to oversee the operations of the Company as approved by the Compensation Committee. Messrs. Boyages, Sakiris and Simeonidis In accordance with their respective employment agreement, Dr. Boyages, Mr Sakiris and Mr Simeonidis receives an annual salary of $82,668, $248,004, and $282,449 respectively. 58 In addition, each of Mr. Simeonidis and Mr. Sakiris is eligible to receive an annual bonus of up to 20% of his gross base salary, of which 50% will be based on meeting company objectives and the remainder will be based on meeting mutually agreed employee objections or as otherwise determined by the Company. We also make certain contributions that are mandatory in Australia to a retirement fund for each of Dr. Boyages, Mr. Sakiris and Mr. Simeonidis, known in Australia as a superannuation fund, currently at the rate of 10.5% subject to contribution cap of $18,944 per annum. We also provide an annual automobile allowance to Mr. Sakiris of $13,778 and an annual car allowance to Mr. Simeonidis of $16,534. Dr. Boyages also receives annual directors’ fees of $40,000. Mr. Simeonidis’ employment agreement is terminable on six months’ notice and Mr. Sakiris’ employment agreement – on six month’s notice either by our subsidiary or by the executive upon six months’ notice. However, we may terminate either executive without notice if he engages in serious or willful misconduct, is seriously negligent in the performance of his duties, commits a serious or persistent breach of his employment agreement, brings our company into disrepute or is convicted of a criminal offense. Each employment agreement contains provisions protecting our confidential information and intellectual property. Each employment agreement also contains provisions restricting each executive’s ability to compete with us during his employment and for a period of up to six months thereafter in a specified geographic region. The non-compete provisions will generally impose restrictions on inducing our employees to leave our employment or soliciting clients of our company. Pursuant to each employment agreement, each executive must devote all of his time, attention and skill to the performance of his duties, and neither executive may engage in any other business outside GBS without our prior written consent. Superannuation Fund As required by Australian law, we contribute to standard defined contribution superannuation funds on behalf of all our Australian employees at an amount required by law, currently 10.5% of each such employee’s salary subject to a contribution cap of $18,944 per annum. Superannuation is a compulsory savings program whereby employers are required to pay a portion of an employee’s remuneration to an approved superannuation fund that the employee is typically not able to access until they are retired. We permit employees to choose an approved and registered superannuation fund into which the contributions are paid. 2019 Long Term Incentive Plan (“2019 Plan”) The 2019 Plan was adopted by the Board and approved by the Company’s stockholders on June 18, 2019. The purpose of the 2019 Plan is to enable us to offer our employees, officers, directors and consultants whose past, present and/or potential future contributions to us have been, are, or will be important to our success, an opportunity to acquire a proprietary interest in us. The various types of incentive awards that may be provided under the 2019 Plan are intended to enable us to respond to changes in compensation practices, tax laws, accounting regulations and the size and diversity of our business. Administration The 2019 Plan is administered by the Compensation Committee. Subject to the provisions of the plan, the Compensation Committee determines, among other things, the persons to whom from time to time awards may be granted, the specific type of awards to be granted, the number of shares subject to each award, share prices, any restrictions or limitations on the awards, and any vesting, exchange, surrender, cancellation, acceleration, termination, exercise or forfeiture provisions related to the awards.. 59 Stock Subject to the 2019 Plan 500,000 shares of our common stock are available for issuance under the 2019 Plan. Shares of stock subject to other awards that are forfeited or terminated will be available for future award grants under the 2019 Plan. If a holder pays the exercise price of a stock option by surrendering any previously owned shares of common stock or arranges to have the appropriate number of shares otherwise issuable upon exercise withheld to cover the exercise price or tax withholding liability associated with the stock option exercise, the shares surrendered by the holder or withheld by us will not be available for future award grants under the plan. Under the 2019 Plan, in the event of a change in the number of shares of our common stock as a result of a dividend on shares of common stock payable in shares of common stock, common stock forward split or reverse split or other extraordinary or unusual event that results in a change in the shares of common stock as a whole, the committee will determine whether such change equitably requires an adjustment in the terms of any award in order to prevent dilution or enlargement of the benefits available under the plan or the aggregate number of shares reserved for issuance under the plan. Eligibility We may grant awards under the 2019 Plan to employees, officers, directors, and consultants of GBS and our subsidiaries and affiliates who are deemed to have rendered, or to be able to render, significant services to us or our subsidiaries or affiliates and who are deemed to have contributed, or to have the potential to contribute, to our success. An incentive stock option may be granted under the plan only to a person who, at the time of the grant, is an employee of ours or our subsidiaries. Based on the current number of employees and consultants to the Company and on the current size of our Board of Directors, we estimate that approximately 20 individuals are eligible for awards under the 2019 Plan. Types of Awards Options . The 2019 Plan provides both for “incentive” stock options as defined in Section 422 of the Internal Revenue Code of 1986, as amended, or the “ Code ,” and for options not qualifying as incentive options, both of which may be granted with any other stock based award under the plan. The committee determines the exercise price per share of common stock purchasable under an incentive or non-qualified stock option, which may not be less than 100% of the fair market value on the day of the grant or, if greater, the par value of a share of common stock. However, the exercise price of an incentive stock option granted to a person possessing more than 10% of the total combined voting power of all classes of our stock may not be less than 110% of the fair market value on the date of grant. The aggregate fair market value of all shares of common stock with respect to which incentive stock options are exercisable by a participant for the first time during any calendar year (under all of our plans), measured at the date of the grant, may not exceed $100,000. An incentive stock option may only be granted within 10 years from the effective date of the 2019 Plan. An incentive stock option may only be exercised within ten years from the date of the grant, or within five years in the case of an incentive stock option granted to a person who, at the time of the grant, owns common stock possessing more than 10% of the total combined voting power of all classes of our stock. Subject to any limitations or conditions the committee may impose, stock options may be exercised, in whole or in part, at any time during the term of the stock option by giving written notice of exercise to us specifying the number of shares of common stock to be purchased. The notice must be accompanied by payment in full of the purchase price, either in cash or, if provided in the agreement, in our securities or in a combination of the two. Generally, stock options granted under the plan may not be transferred other than by will or by the laws of descent and distribution and all stock options are exercisable, during the holder’s lifetime, only by the holder, or in the event of legal incapacity or incompetency, the holder’s guardian or legal representative. However, a holder, with the approval of the committee, may transfer a non-qualified stock option by gift to a family member of the holder or by domestic relations order to a family member of the holder or may transfer a non-qualified stock option to an entity in which more than 50% of the voting interests are owned by family members of the holder or the holder. 60 Generally, if the holder is an employee, no stock options granted under the plan may be exercised by the holder unless he or she is employed by us or one of our subsidiaries or affiliates at the time of the exercise and has been so employed continuously from the time the stock options were granted. However, in the event the holder’s employment is terminated due to disability or normal retirement, the holder may still exercise his or her vested stock options for a period of 12 months, or such other greater or lesser period as the committee may determine, from the date of termination or until the expiration of the stated term of the stock option, whichever period is shorter. Similarly, should a holder die while employed by us or one of our subsidiaries or affiliates, his or her legal representative or legatee under his or her will may exercise the decedent holder’s vested stock options for a period of 12 months from the date of his or her death, or such other greater or lesser period as the Board or committee may determine, or until the expiration of the stated term of the stock option, whichever period is shorter. If the holder’s employment is terminated for any reason other than death, disability or normal retirement, the stock option will automatically terminate, except that if the holder’s employment is terminated by us without cause, then the portion of any stock option that is vested on the date of termination may be exercised for the lesser of three months after termination of employment, or such other greater or lesser period as the committee may determine but not beyond the balance of the stock option’s term. Stock Appreciation Rights . Under the 2019 Plan, we may grant stock appreciation rights to participants who have been, or are being, granted stock options under the plan as a means of allowing the participants to exercise their stock options without the need to pay the exercise price in cash, or we may grant them alone and unrelated to an option. In conjunction with non-qualified stock options, stock appreciation rights may be granted either at or after the time of the grant of the non-qualified stock options. In conjunction with incentive stock options, stock appreciation rights may be granted only at the time of the grant of the incentive stock options. A stock appreciation right entitles the holder to receive a number of shares of common stock having a fair market value equal to the excess fair market value of one share of common stock over the exercise price of the related stock option, multiplied by the number of shares subject to the stock appreciation rights. The granting of a stock appreciation right in tandem with a stock option will not affect the number of shares of common stock available for awards under the plan. In such event, the number of shares available for awards under the plan will, however, be reduced by the number of shares of common stock acquirable upon exercise of the stock option to which the stock appreciation right relates. Restricted Stock and Restricted Stock Units. Under the 2019 Plan, we may award shares of restricted stock and restricted stock units. Restricted stock units are the right to receive at a future date share of common stock, or an amount in cash or other consideration determined by the committee to be of equal value as of such settlement date, in accordance with the terms of such grant. The committee determines the persons to whom grants of restricted stock or restricted stock units are made, the number of shares to be awarded, the price (if any) to be paid for the restricted stock or restricted stock units by the person receiving the stock from us, the time or times within which awards of restricted stock or restricted stock units may be subject to forfeiture, the vesting schedule and rights to acceleration thereof, and all other terms and conditions of the awards. Restrictions or conditions could also include, but are not limited to, the attainment of performance goals. A holder of restricted stock units will have no rights of a stockholder with respect to shares subject to any restricted stock unit award unless and until the shares are delivered in settlement of the award, except to the extent the committee provides for the right to receive dividend equivalents. Other Stock-Based Awards . Under the 2019 Plan, we may grant other stock-based awards, subject to limitations under applicable law that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, shares of common stock, as deemed consistent with the purposes of the plan. These other stock-based awards may be in the form of purchase rights, shares of common stock awarded that are not subject to any restrictions or conditions, convertible or exchangeable debentures or other rights convertible into shares of common stock and awards valued by reference to the value of securities of, or the performance of, one of us or one of our subsidiaries. These other stock-based awards may include performance shares or options, whose award is tied to specific performance criteria. These other stock-based awards may be awarded either alone, in addition to, or in tandem with any other awards under the 2019 Plan or any of our other plans. Accelerated Vesting and Exercisability If any one person, or more than one person acting as a group, acquires the ownership of our stock that, together with the stock held by such person or group, constitutes more than 50% of the total fair market value or combined voting power of our stock, and the Board of Directors does not authorize or otherwise approve such acquisition, then the vesting periods of any and all stock options and other awards granted and outstanding under the 2019 Plan shall be accelerated and all such stock options and awards will immediately and entirely vest, and the respective holders thereof will have the immediate right to purchase and/or receive any and all common stock subject to such stock options and awards on the terms set forth in the plan and the respective agreements respecting such stock options and awards, and all performance goals will be deemed achieved at 100% of target levels. An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which we acquire our stock in exchange for property is not treated as an acquisition of stock. 61 In the event of an acquisition by any one person, or more than one person acting as a group, together with acquisitions during the 12-month period ending on the date of the most recent acquisition by such person or persons, of assets from us that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of our assets immediately before such acquisition or acquisitions, or if any one person, or more than one person acting as a group, acquires the ownership of our stock that, together with the stock held by such person or group, constitutes more than 50% of the total fair market value or combined voting power of our stock, which has been approved by the Board of Directors, the committee may (i) accelerate the vesting of any and all stock options and other awards granted and outstanding under the 2019 Plan, (ii) require a holder of any award granted under the plan to relinquish such award to us upon the tender by us to the holder of cash in an amount equal to the repurchase value of such award, and/or (iii) terminate all incomplete performance periods in respect of awards in effect on the date the acquisition occurs, determine the extent to which performance goals have been met based upon such information then available as it deems relevant and cause to be paid all or the applicable portion of the award based upon the committee’s determination. For this purpose, gross fair market value means the value of our assets, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. Term and Amendments Unless terminated by the Board, the 2019 Plan will continue to remain effective until no further awards may be granted, and all awards granted under the plan are no longer outstanding. Notwithstanding the foregoing, grants of incentive stock options may be made only until ten years from the initial effective date of the plan. The Board may at any time, and from time to time, amend the plan or any award agreement, but no amendment will be made that would impair the rights of a holder under any agreement entered pursuant to the plan without the holder’s consent. Securities Authorized for Issuance Under Equity Compensation Plans Equity Compensation Plan Information As of June 30, 2022 Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding shares reflected in column (a)) (c) Equity compensation plans approved by security holders        -        - 500,000 (1) Equity compensation plans not approved by security holders - - - Total - - 500,000 (1) Securities remaining available for issuance under the 2019 Plan. The Company filed a registration statement (Form S-8) on August 5, 2022 for the registration of 500,000 shares of the Company’s common stock at $0.001 par value per share, issuable pursuant to the GBS Inc. 2019 Long Term Incentive Plan. 62 Director Compensation The table below sets forth the compensation earned by our non-employee directors for service on our Board of Directors during the year ended June 30, 2022. Compensation paid to Messrs. Steven Boyages, our Interim Chief Executive Officer and Chairman and Harry Simeonidis, our ex-director, President Asia Pacific, Sales and Marketing for his service on the Board of Directors is set forth in Summary Compensation Table for named executive officers. Name Fees earned or paid in cash ($) All other compensation ($) Total ($) Lawrence Fisher 30,000 — 30,000 Jonathan Hurd 30,000 — 30,000 Leon Kempler(1) 24,657 — 24,657 George Margelis 30,000 — 30,000 Tom Parmakellis(2) 22,172 — 22,172 Jonathan Sessler(3) 20,000 — 20,000 Christopher Towers 40,000 — 40,000 (1) Resigned from the Board of the Directors on April 27, 2022 (2) Resigned from The Board of Directors on March 19, 2022 (3) Resigned from The Board of the Directors on February 22, 2022 Non-Employee Director Compensation Arrangements Our non-employee directors are entitled to cash fees of $30,000 (plus $10,000 each for the Chairman of the Board and Financial Expert/Chair of the Audit Committee) per year of service on our Board of Directors. Service rendered on any of the committees of the Board do not entitle our non-employee directors to any additional compensation. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information regarding the ownership of our common stock as of September 15, 2022 by: (i) each director and nominee for director; (ii) each of the executive officers named in the Summary Compensation Table; (iii) all executive officers and directors of the Company as a group; and (iv) all those known by us to be beneficial owners of more than five percent of our common stock. This table is based upon information supplied by officers and directors as well as Schedules 13D or 13G filed with the SEC by beneficial owners of more than five percent of our common stock. Unless otherwise indicated in the footnotes to this table and subject to community property laws, where applicable, we believe that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based on 14,889,904 shares of our common stock outstanding on September 15 2022. Beneficial ownership is determined in accordance with the rules of the SEC, which generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities and includes shares of our common stock issuable pursuant to the exercise of stock options, warrants, or other securities that are immediately exercisable or convertible or exercisable or convertible within 60 days of September 15 2022. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them. 63 Unless otherwise indicated, the address of each person listed below is WeWork c/o GBS Inc., 142 West, 57 th Street, 11 th Floor, New York, NY 10019. Name of Beneficial Owner Shares of Common Stock Beneficially Owned Percentage of Common Stock Beneficially Owned Executive officers and directors: Dr. Steven Boyages 0 * Lawrence Fisher 0 * Jonathan S. Hurd 0 * Dr. George Margelis 0 * Spiro Sakiris (1) 51,707 * Harry Simeonidis (2) 600 * Christopher Towers (3) 800 * All Executive Officers and Directors as a group (7 persons) 53,107 * * Less than 1%. (1) Consists of 50,228 shares of common stock and currently exercisable Series A Warrants to purchase 1,479 shares of the common stock. Does not include 3,000 of common stock that will be issuable upon exercise of the pre-IPO warrants held by Mr. Sakiris during the one-year period commencing on the second anniversary of the consummation of December 2020 IPO. (2) Consists of 600 shares of common stock. (3) Consists of 800 shares of common stock. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Independence of the Board of Directors Our Board of Directors has determined that each of our director nominees standing for election, except Dr. Boyages, is an independent director (as currently defined in Rule 5605(a)(2) of the NASDAQ listing rules). In determining the independence of our directors, the Board of Directors considered all transactions in which the Company and any director had any interest, including those discussed under “Certain Related-Person Transactions” below. Our independent directors together constitute a majority of our full Board of Directors. The independent directors meet as often as necessary to fulfil their responsibilities and will have regularly scheduled meetings at which only independent directors are present. Related-Person Transactions Our code of ethics will require that we avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved by the Board of Directors. Related party transactions are defined under SEC rules as transactions in which (1) the aggregate amount involved will or may be expected to exceed the lesser of  $120,000 or one percent of the average of our total assets for the last two completed fiscal years, (2) we or any of our subsidiaries is a participant, and (3) any (a) executive officer, director or nominee for election as a director, (b) greater than 5% beneficial owner of our shares of common stock, or (c) immediate family member, of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A conflict-of-interest situation can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits as a result of his or her position. 64 All future and ongoing related party transactions (as defined under SEC rules) will require prior review and approval by the Audit Committee, which will have access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction without the approval of the Audit Committee. The Audit Committee will consider all relevant factors when determining whether to approve a related party transaction, including whether the related party transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related party’s interest in the transaction. No director may participate in the approval of any transaction in which he is a related party, but that director is required to provide the other members of the board with all material information concerning the transaction. Additionally, we require each of our directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related party transactions. These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee, or officer. Certain Related-Person Transactions The following is a summary of certain relationships and transactions, including transactions since July 1, 2021 and any currently proposed transactions, to which we were or are to be a participant, in which (1) the amount involved exceeded or will exceed the lesser of (i) $120,000 or (ii) 1% of the average of our total assets for the last two completed fiscal years, and (2) any of our directors, executive officers or holders of more than 5% of any class of our capital stock, or any affiliate or member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest, other than compensation and other arrangements which are described in the sections titled “Executive Compensation” and “Director Compensation” in this Proxy Statement. Transactions . We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were, unless otherwise noted below, comparable to terms available or the amounts that we would pay or received, as applicable, in arm’s-length transactions. ● Under the employee sharing arrangements, which have not been pursuant to any written agreement, the Licensor has allocated a portion of its general office expenses, rent and wages to us based on our percentage usage of the Licensor’s office and personnel resources. From 1 July 2021 to November 30, 2021, we incurred to the Licensor a total of $145,733 in relation to overhead and general administration expenses. ● Since the end of the Fiscal Year ended June 30, 2022, to the date of this filing GBS has incurred a total of nil to its Licensor in connection with rent, other occupancy costs and shared labor recharges. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The following table represents aggregate fees billed to the Company for the fiscal years ended June 30, 2021, and June 30, 2022, by BDO Audit Pty Ltd, the Company’s independent registered public accounting firm. 65 Pre-Approval Policies and Procedures. The Audit Committee has procedures in place for the pre-approval of audit and non-audit services rendered by the Company’s independent registered public accounting firm, BDO Audit Pty Ltd. The Audit Committee generally pre-approves specified services in the defined categories of audit services, audit-related services, and tax services. Pre-approval may also be given as part of the Audit Committee’s approval of the scope of the engagement of the independent auditor or on an individual, explicit, case-by-case basis before the independent auditor is engaged to provide each service. The pre-approval of services may be delegated to one or more of the Audit Committee’s members, but the decision must be reported to the full Audit Committee at its next scheduled meeting. Principal Accountant Fees and Services The following table represents aggregate fees billed to the Company for the fiscal years ended June 30, 2021 and June 30, 2022, by BDO Audit Pty Ltd, the Company’s independent registered public accounting firm. June 30, 2022 June 30, 2021 Audit Fees (1) 210,128 297,428 Audit-Related Fees (2) - - Tax Fees (3) 9,073 16,735 All Other Fees (4) 31,211 - Total Fees 250,412 314,163 (1) Audit fees relate to professional services rendered in connection with the audit of annual financial statements, quarterly review of financial statements, and audit services provided in connection with other statutory and regulatory filings. (2) Audit-related fees relate to professional services that are reasonably related to the performance of the audit or review of financial statements. (3) Tax fees relate to professional services rendered in connection with tax compliance and preparation relating to tax returns and tax audits, as well as for tax consulting and planning services. (4) All other fees relate to professional services not included in the categories above, including services related to other regulatory reporting requirements. The Audit Committee has determined that the rendering of services other than audit services by BDO Audit Pty Ltd is compatible with maintaining the principal accountant’s independence. 66 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES (a) Documents filed as part of this Annual Report on Form 10-K: (1) Financial Statements. The financial statements required to be included in this Annual Report on Form 10-K are listed in the Table of Contents to Financial Statements appearing immediately after the signature page of this Form 10-K and are included herein by reference. (2) Financial Statement Schedules. All schedules are omitted because they are not applicable, or the required information is shown in the Financial Statements or notes thereto. (3) See attached Exhibit Index of this Annual Report on Form 10-K. (b) The following exhibits are provided as required by Item 601 of Regulation S-K Exhibit No. Description 3.1 Amended and Restated Certificate of Incorporation ((incorporated by reference to Exhibit 3.4 to the Company’s Amended Registration Statement on Form S-1/A (File No. 333-232557) filed with the Commission on December 21, 2020) 3.2 Amended and Restated By-laws, as amended (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No.001-39825) filed with the Commission on July 21, 2022) 3.3. Certificate of Designation of Series B Preferred Stock ((incorporated by reference to Exhibit 3.3 to the Company’s Amended Registration Statement on Form S-1/A (File No. 333-232557) filed with the Commission on October 20, 2020.) 4.1 Specimen Common Stock Certificate ((incorporated by reference to Exhibit 4.1 to the Company’s Amended Registration Statement on Form S-1/A (File No. 333-232557) filed with the Commission on September 19, 2019.) 4.2 Form of Series A Warrant ((incorporated by reference to Exhibit 4.2 to the Company’s Amended Registration Statement on Form S-1/A (File No. 333-232557) filed with the Commission on October 20, 2020.) 4.3 Form of Series B Warrant ((incorporated by reference to Exhibit 4.3 to the Company’s Amended Registration Statement on Form S-1/A (File No. 333-232557) filed with the Commission on October 20, 2020.) 4.4 Form of Warrant Agency Agreement ((incorporated by reference to Exhibit 4.4 to the Company’s Amended Registration Statement on Form S-1/A (File No. 333-232557) filed with the Commission on October 20, 2020.) 4.5 Form LSBD Warrant ((incorporated by reference to Exhibit 4.6 to the Company’s Amended Registration Statement on Form S-1/A (File No. 333-232557) filed with the Commission on December 21, 2020) 67 4.6 # Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. 10.1* 2019 Incentive Equity Plan ((incorporated by reference to Exhibit 10.1 to the Company’s Amended Registration Statement on Form S-1/A (File No. 333-232557) filed with the Commission on August 2, 2019) 10.2 Amended and Restated License Agreement between the Company and Life Science Biosensor Diagnostics Pty Ltd. ((incorporated by reference to Exhibit 10.2 to the Company’s Amended Registration Statement on Form S-1/A (File No. 333-232557 ) filed with the Commission on October 13, 2020) 10.3* Form of Employment Agreement between the Company and Mr. Simeonidis (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on September 15, 2022 10.4* Form of Employment Agreement between the Company and Mr. Sakiris (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on September 15, 2022). 68 10.5 Technology License Agreement between the Company and Life Science Biosensor Diagnostics Pty Ltd. ((incorporated by reference to Exhibit 10.13 to the Company’s Amended Registration Statement on Form S-1/A (File No. 333-232557 ) filed with the Commission on October 13, 2020) 10.6 Form of Exchange Agreement ((incorporated by reference to Exhibit 10.15 to the Company’s Amended Registration Statement on Form S-1/A (File No. 333-232557) filed with the Commission on December 21, 2020) 10.7 Form of Registration Rights Agreement ((incorporated by reference to Exhibit 10.16 to the Company’s Amended Registration Statement on Form S-1/A (File No. 333-232557) filed with the Commission on December 21, 2020) 10.8 Form of Purchase and Assignment Agreement ((incorporated by reference to Exhibit 10.16 to the Company’s Amended Registration Statement on Form S-1/A (File No. 333-232557) filed with the Commission on December 21, 2020) 10.9 Option Agreement ((incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 2, 2021). 10.10 Bridge Facility Agreement, dated as of June 16, 2022, between the Company and Intelligent Fingerprinting Limited. 14.1 Code of Ethics ((incorporated by reference to Exhibit 14.1 to the Company’s Amended Registration Statement on Form S-1/A (File No. 333-232557) filed with the Commission on August 6, 2020) 21.1 # List of Subsidiaries 31.1 # Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 69 31.2 # Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 # Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 # Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS # XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 101.SCH # XBRL Taxonomy Extension Schema Document. 101.CAL # XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF # XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB # XBRL Taxonomy Extension Label Linkbase Document. 101.PRE # XBRL Taxonomy Extension Presentation Linkbase Document. 104 # Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) * Indicates management contract or compensatory plan. # Filed herewith. ITEM 16. FORM 10-K SUMMARY. None. 70 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GBS Inc. Date: September 22, 2022 By: /s/ Steven Boyages STEVEN BOYAGES INTERIM CHIEF EXECUTIVE OFFICER AND CHAIRMAN (Principal Executive Officer) Date: September 22, 2022 By: /s/ Spiro Sakiris SPIRO SAKIRIS CHIEF FINANCIAL OFFICER (Principal Financial Officer) Pursuant to the requirements of the Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Steven Boyages Interim Chief Executive Officer, Chairman and Director September 22, 2022 Steven Boyages (Principal Executive Officer) /s/ Spiro Sakiris Chief Financial Officer September 22, 2022 Spiro Sakiris (Principal Financial Officer) /s/ Jonathan Hurd Jonathan Hurd Director September 22, 2022 /s/ George Margelis Dr. George Margelis Director September 22, 2022 /s/ Lawrence Fisher Lawrence Fisher Director September 22, 2022 /s/ Christopher Towers Christopher Towers Director September 22, 2022 71 GBS Inc. Index to the Consolidated Financial Statements REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (BDO Audit Pty Ltd, Sydney, Australia, PCAOB ID # 02256 ) F-2 CONSOLIDATED BALANCE SHEETS F-3 CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS F-4 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY F-5 CONSOLIDATED STATEMENTS OF CASH FLOWS F-6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-7 F- 1 Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors GBS Inc. New York, New York Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of GBS Inc. (the ‘Company’) as of June 30, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the ‘consolidated financial statements’). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at June 30, 2022 and 2021, and the results of its operations and its cash flows for the years then ended , in conformity with accounting principles generally accepted in the United States of America. Substantial doubt about the Company’s ability to continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 2 to the consolidated financial statements, the Company has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ BDO Audit Pty Ltd We have served as the Company’s auditor since 2017. Sydney, Australia September 21, 2022 F- 2 GBS Inc. Consolidated Balance Sheets June 30, 2022 June 30, 2021 ASSETS Current assets: Cash and cash equivalents $ 8,238,301 $ 12,573,685 Grant receivable, current portion 1,529,882 2,098,884 Research and development tax incentive receivable 353,048 1,025,455 Other current assets 746,761 2,509,017 Total current assets 10,867,992 18,207,041 Long-term grant receivable 1,092,773 3,148,328 Construction in progress 391,408 - Other non-current assets - 504,000 TOTAL ASSETS $ 12,352,173 $ 21,859,369 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 1,625,089 $ 1,467,968 Related party payables - 13,323 Current portion of deferred grant income 2,836,582 2,098,884 Current employee benefit liabilities 201,332 102,475 Total current liabilities 4,663,003 3,682,650 Employee benefit liabilities 50,626 21,770 Long-term deferred grant income 1,092,773 3,148,328 Total liabilities 5,806,402 6,852,748 Commitments and contingencies (Note 10) - - Shareholders’ equity: Preferred stock, $ 0.01 par value, 10,000,000 shares authorized, 0 and 1,300,000 shares issued and outstanding at June 30, 2022 and June 30, 2021, respectively - 13,000 Common stock, $ 0.01 par value, 100,000,000 shares authorized, 14,889,904 and 13,582,122 shares issued and outstanding at June 30, 2022 and June 30, 2021, respectively 148,899 135,821 Additional paid-in capital 38,440,011 38,440,089 Accumulated deficit ( 31,175,853 ) ( 22,869,803 ) Accumulated other comprehensive loss ( 788,135 ) ( 661,260 ) Total consolidated GBS Inc. equity 6,624,922 15,057,847 Non-controlling interest ( 79,151 ) ( 51,226 ) Total shareholders’ equity 6,545,771 15,006,621 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 12,352,173 $ 21,859,369 The accompanying notes are an integral part of these consolidated financial statements. F- 3 GBS Inc. Consolidated Statements of Operations and Other Comprehensive Loss Year Ended June 30, 2022 2021 Revenue: Other income: Government support income $ 437,146 $ 1,980,484 Total revenue and other income 437,146 1,980,484 Operating expenses: General and administrative expenses 4,920,103 3,359,065 Development and regulatory approval expenses 3,853,919 3,835,703 Prospectus and capital raising expenses - 359,198 Total operating expenses 8,774,022 7,553,966 Loss from operations ( 8,336,876 ) ( 5,573,482 ) Other income (expense): Interest expense ( 7,539 ) ( 1,093,608 ) Loss from unconsolidated equity method investment - ( 135,692 ) Realized foreign exchange loss ( 3,987 ) ( 271,225 ) Interest income 14,426 13,806 Total other income (expense) 2,900 ( 1,486,719 ) Net loss ( 8,333,976 ) ( 7,060,201 ) Net loss attributable to non-controlling interest ( 27,925 ) ( 22,915 ) Net loss attributable to GBS Inc. $ ( 8,306,051 ) $ ( 7,037,286 ) Other comprehensive loss, net of tax: Foreign currency translation loss $ ( 126,875 ) $ ( 297,309 ) Total other comprehensive loss ( 126,875 ) ( 297,309 ) Comprehensive loss ( 8,460,851 ) ( 7,357,510 ) Comprehensive loss attributable to non-controlling interest ( 27,925 ) ( 22,915 ) Comprehensive loss attributable to GBS Inc. $ ( 8,432,926 ) $ ( 7,334,595 ) Net loss per share, basic and diluted $ ( 0.57 ) $ ( 0.68 ) Weighted average shares outstanding, basic and diluted 14,665,263 10,414,886 The accompanying notes are an integral part of these consolidated financial statements. F- 4 GBS Inc. Consolidated Statements of Changes in Shareholders’ Equity Total Additional Other Non- shareholders’ Preferred stock Common stock paid in Accumulated comprehensive controlling equity Shares Amount Shares Amount capital deficit loss interest (deficit) Balance, June 30, 2020 2,370,891 $ 23,709 8,630,000 $ 86,300 $ 10,899,942 $ ( 15,832,517 ) $ ( 363,951 ) $ ( 28,311 ) $ ( 5,214,828 ) Issuance of convertible preferred shares 439,299 4,393 - - 3,290,352 - - - 3,294,745 Issuance of common stock at initial public offering - - 1,270,589 12,706 21,587,307 - - - 21,600,013 Issuance cost of common stock at initial public offering - - - - ( 3,867,565 ) - - - ( 3,867,565 ) Cancellation of common stock in exchange for preferred shares 3,000,000 30,000 ( 3,000,000 ) ( 30,000 ) - - - - - Conversion of convertible notes into common stock at initial public offering - - 710,548 7,105 5,126,601 - - - 5,133,706 Conversion of convertible preferred shares into common stock at initial public offering ( 2,810,190 ) ( 28,102 ) 2,810,190 28,102 - - - - - Beneficial conversion feature - - - - 905,948 - - - 905,948 Series A warrants exercised to purchase common shares - - 59,800 598 507,702 - - - 508,300 Series B warrants exercised to purchase common shares - - 1,400,995 14,010 ( 14,010 ) - - - - Series A and B warrants acquired - - - - 3,812 - - - 3,812 Conversion of convertible preferred shares into common stock ( 1,700,000 ) ( 17,000 ) 1,700,000 17,000 - - - - - Foreign currency translation loss - - - - - - ( 297,309 ) - ( 297,309 ) Net loss - - - - - ( 7,037,286 ) - ( 22,915 ) ( 7,060,201 ) Balance, June 30, 2021 1,300,000 $ 13,000 13,582,122 $ 135,821 $ 38,440,089 $ ( 22,869,803 ) $ ( 661,260 ) $ ( 51,226 ) $ 15,006,621 Balance 1,300,000 $ 13,000 13,582,122 $ 135,821 $ 38,440,089 $ ( 22,869,803 ) $ ( 661,260 ) $ ( 51,226 ) $ 15,006,621 Series B warrants exercised to purchase common shares - - 7,782 78 ( 78 ) - - - - Conversion of convertible preferred shares into common shares ( 1,300,000 ) ( 13,000 ) 1,300,000 13,000 - - - - - Foreign currency translation loss - - - - - - ( 126,875 ) - ( 126,875 ) Net loss - - - - - ( 8,306,051 ) - ( 27,925 ) ( 8,333,976 ) Balance, June 30, 2022 - $ - 14,889,904 $ 148,899 $ 38,440,011 $ ( 31,175,853 ) $ ( 788,135 ) $ ( 79,151 ) $ 6,545,771 Balance - $ - 14,889,904 $ 148,899 $ 38,440,011 $ ( 31,175,853 ) $ ( 788,135 ) $ ( 79,151 ) $ 6,545,771 The accompanying notes are an integral part of these consolidated financial statements. F- 5 GBS Inc. Consolidated Statements of Cash Flows Year Ended June 30, 2022 2021 Cash flows from operating activities: Net loss $ ( 8,333,976 ) $ ( 7,060,201 ) Adjustments to reconcile net loss to net cash used in operating activities: Non-cash (loss) gain on foreign currency translation, net ( 3,987 ) ( 271,225 ) Loss on investment in affiliate - 135,692 Contingent beneficial conversion feature on convertible notes - 905,948 Non-cash research and development charge 2,600,000 - Non cash refund of R&D expenditure claims ( 50,958 ) - Non-cash other operating activities ( 8,179 ) ( 66,055 ) Changes in operating assets and liabilities: Grant receivable 1,828,891 - Research and development tax incentive receivable 672,407 ( 1,025,455 ) Other current assets ( 333,743 ) ( 2,459,955 ) Other non-current assets - ( 504,000 ) Accounts and other payables 255,978 782,974 Accounts payable - related party ( 13,323 ) ( 1,755,970 ) Other long-term liabilities 28,856 21,770 Net cash used in operating activities ( 3,358,034 ) ( 11,296,477 ) Cash flows from investing activities: Issuance of note receivable ( 500,000 ) - Amount invested on construction in progress ( 380,221 ) - Net cash used in investing activities ( 880,221 ) - Cash flows from financing activities: Proceeds from issuance of warrants - 3,812 Proceeds from warrant holders for common shares - 508,300 Proceeds from issuance of preferred stock - 3,294,745 Proceeds from initial public offering - 21,600,013 Payment of equity issuance costs - ( 2,003,952 ) Net cash provided by financing activities - 23,402,918 Effect of foreign exchange rates on cash and cash equivalents ( 97,129 ) 39,971 (Decrease) increase in cash and cash equivalents ( 4,335,384 ) 12,146,412 Cash and cash equivalents, beginning of period 12,573,685 427,273 Cash and cash equivalents, end of period $ 8,238,301 $ 12,573,685 Non-cash investing and financing activities Reclassification of deferred charges to additional paid in capital upon completion of initial public offering $ - $ 1,863,613 Conversion of notes to common shares at initial public offering - 5,133,706 Cancellation of common stock in exchange for preferred shares - 30,000 Conversion of preferred shares into common shares 13,000 45,102 Supplemental disclosure of cash flow information: Cash paid for interest $ - $ 185,301 The accompanying notes are an integral part of these consolidated financial statements. F- 6 GBS Inc. Notes to the Consolidated Financial Statements NOTE 1. ORGANIZATION AND DESCRIPTION OF THE BUSINESS GBS Inc. and its wholly owned subsidiary, GBS Operations Inc. were formed on December 5, 2016 under the laws of the state of Delaware. Glucose Biosensor Systems (Greater China) Pty Ltd (“GBSPL”) was formed on August 4, 2016 under the laws of New South Wales, Australia and was renamed to GBS (APAC) Pty Ltd on October 14, 2020. Glucose Biosensor Systems (Japan) Pty Ltd and Glucose Biosensor Systems (APAC) Pty Ltd were formed under the laws of New South Wales, Australia on February 22, 2017 and February 23, 2017 respectively. These companies (collectively, the “Company”) were formed to provide a non-invasive, pain free innovation to make it easier for people to manage diabetes using the Company’s Saliva Glucose Biosensor (“SGB” and, together with the software app that interfaces the SGB with the Company’s digital information system, the “SGT”). We are a biosensor diagnostic technology company operating across the Asia-Pacific Region (“APAC”) region and an interest in the North America Region with the biosensor platform comprising of biochemistry, immunology, tumor markers, hormones, and nucleic acid diagnostic modalities, and worldwide with our COV2 test. We were incorporated under the laws of Delaware on December 5, 2016. Our headquarters are located in New York, New York. Our objective is to introduce and launch initially the Saliva Glucose Biosensor (referred to as the “SGB”), the diagnostic test that stems from the Biosensor Platform that we license, in our regions and the COV2 test globally. This will be followed by developing the platform to its full capacity testing across the diagnostic modalities of Immunology, Hormones, Chemistry, Tumor markers and Nucleic Acid tests. Initial public offering On December 28, 2020, the Company closed its initial public offering (“IPO”) and sold 1,270,589 units, consisting of (a) one share of the Company’s common stock (or, at the purchaser’s election, one share of Series B Convertible Preferred Stock), (b) one Series A warrant (the “Series A Warrants”) to purchase one share of the Company’s common stock at an exercise price equal to $ 8.50 per share, exercisable until the fifth anniversary of the issuance date, and (c) one Series B warrant (the “Series B Warrants”) to purchase one share of the Company’s common stock at an exercise price equal to $ 17.00 per share, exercisable until the fifth anniversary of the issuance date and subject to certain adjustment and cashless exercise provisions. The public offering price of the shares sold in the IPO was $ 17.00 per unit. In aggregate, the units issued in the offering generated $ 17,732,448 in net proceeds, which amount is net of $ 1,714,001 in underwriters’ discount and commissions, and $ 2,153,564 in offering costs. Offering costs include underwriters’ warrants to acquire up to 63,529 shares with an exercise price of $ 18.70 per share, exercisable until the fifth anniversary of the issuance date. The Company also issued to the underwriter an option, exercisable one or more times in whole or in part, to purchase up to 190,588 additional shares of common stock and/or Series A Warrants to purchase up to an aggregate of 190,588 shares of common stock and/or Series B Warrants to purchase up to an aggregate of 190,588 shares of common stock, in any combinations thereof, from us at the public offering price per security, less the underwriting discounts and commissions, for 45 days after the date of the IPO to cover over-allotments, if any (the “Over-Allotment Option”). Upon the closing of the IPO, all shares of preferred stock then outstanding were automatically converted into 2,810,190 shares of common stock, and all convertible notes then outstanding were automatically converted into 710,548 shares of common stock. Pre-IPO preferred shareholders were issued warrants following the Company’s completed IPO, that allows the holder to acquire 2,736,675 shares of common stock at the IPO price during year two through to year three following the completion of the IPO. At exercise date, the shareholder must hold, for each warrant to be exercised, the underlying common share to exercise the warrant. The warrants are not transferable and apply to the number of shares that were subscribed for. F- 7 NOTE 2. LIQUIDITY The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements - Going Concern (ASC 205-40) requires management to assess an entity’s ability to continue as a going concern within one year of the date of the financial statements are issued. In each reporting period, including interim periods, an entity is required to assess conditions known and reasonably knowable as of the financial statement issuance date to determine whether it is probable an entity will not meet its financial obligations within one year from the financial statement issuance date. Substantial doubt about an entity’s ability to continue as a going concern exists when conditions and events, considered in the aggregate, indicate it is probable the entity will be unable to meet its financial obligations as they become due within one year after the date the financial statements are issued. The Company is an emerging growth company and has not generated any revenues to date. As such, the Company is subject to all of the risks associated with emerging growth companies. Since inception, the Company has incurred losses and negative cash flows from operating activities. The Company does not expect to generate positive cash flows from operating activities in the near future until such time, if at all, the Company completes the development process of its products, including regulatory approvals, and thereafter, begins to commercialize and achieve substantial acceptance in the marketplace for the first of a series of products in its medical device portfolio. The Company incurred a net loss of $ 8,306,051 for the year ended June 30, 2022 (net loss of $ 7,037,286 for the year ended June 30, 2021). As of June 30, 2022, the Company had shareholders’ equity of $ 6,545,771 , working capital of $ 6,204,989 , and an accumulated deficit of $ 31,175,853 . In the near future, the Company anticipates incurring operating losses and does not expect to experience positive cash flows from operating activities and may continue to incur operating losses until it completes the development of its products and seeks regulatory approvals to market such products. The Company has evaluated whether there are conditions and events, considered in agreement that raise the substantial doubt about its ability to continue as going concern within one year after the date of signing of the consolidated financial statements. The Company expects that its cash and cash equivalents as of June 30, 2022, of $ 8.23 million, may be insufficient to allow the Company to fund its current operating plan through at least the next twelve months from the issuance of these financial statements, taking into the accounts the proposed acquisition of Intelligent Fingerprinting Limited (IFP). Should revenue not be generated during this period to cover expenses, then these conditions may raise substantial doubt about the Company’s ability to continue as a going concern for a period of at least one year from the date these financial statements are issued. Accordingly, it appears that the Company may be required to raise additional funds during the next 12 months. The company is currently evaluating potential raising additional funds through private placements and or public equity financing. However, there can be no assurance that, in the event that the Company requires additional financing, such financing will be available on terms which are favorable to us, or at all. If we are unable to raise additional funding to meet our working capital needs in the future, we will be forced to delay or reduce the scope of our research programs and/or limit or cease our operations. Accordingly, there appears to be substantial doubt about our ability to continue as a going concern unless we can successfully raise additional capital. The report from our independent registered public accounting firm for the year ended June 30, 2022, includes an explanatory paragraph stating that our losses from operations and required additional funding to finance our operations may raise substantial doubt about our ability to continue as a going concern for a period of one year after the date the financial statements are issued. Company’s consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities should the Company be unable to continue as a going concern. NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) as of June 30, 2022 and 2021. Principles of consolidation These consolidated financial statements as of and for the years ended June 30, 2022 and 2021 include the accounts of the Company, all wholly-owned and majority-owned subsidiaries in which the Company has a controlling voting interest and, when applicable, variable interest entities (“VIEs”) in which the Company has a controlling financial interest or is the primary beneficiary. Investments in affiliates where the Company does not exert a controlling financial interest are not consolidated. All significant intercompany transactions and balances have been eliminated upon consolidation. F- 8 Equity offering costs The Company complies with the requirements of ASC 340 with regards to offering costs. Prior to the completion of an offering, offering costs were capitalized as deferred offering costs on the consolidated balance sheets. The deferred offering costs were charged to shareholders’ equity (deficit) upon the completion of an offering. Use of estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates. Revenue recognition Revenue from contracts with customers is recognized when, or as, the Company satisfies its performance obligations by delivering the promised goods or service deliverables to the customers. A good or service deliverable is transferred to a customer when, or as, the customer obtains control of that good or service deliverable. Deferred grant income On June 30, 2021, the Company executed a definitive grant agreement with the Australian Government to assist with building a manufacturing facility. The grant has a total value of up to $ 4.7 million upon the achievement of certain milestones. Proceeds from the grant will be used primarily to reimburse the Company for costs incurred in the construction of the manufacturing facility. Accounting for the grant does not fall under ASC 606, Revenue from Contracts with Customers , as the Australian Government will not benefit directly from our manufacturing facility. As there is no authoritative guidance under U.S. GAAP on accounting for grants to for-profit business entities, we applied International Accounting Standards 20 (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance by analogy when accounting for the Australian Government grant to the Company. The Australian Government grant proceeds, which will be used to reimburse construction costs incurred, meet the definition of grants related to assets as the primary purpose for the payments is to fund the construction of a capital asset. Under IAS 20, government grants related to assets are presented in the statement of financial position either by setting up the grant as deferred income that is recognized in the statement of operation on a systematic basis over the useful life of the asset or by deducting the grant in arriving at the carrying amount of the asset. Either of these two methods of presentation of grants related to assets in financial statements are regarded as acceptable alternatives under IAS 20. The Company has elected to record the grants received initially as deferred income and deducting the grant proceeds received from the gross costs of the assets or CIP and deferred grant income liability. Under IAS 20, government grants are initially recognized when there is reasonable assurance the conditions of the grant will be met and the grant will be received. As of June 30, 2021, management concluded that there was reasonable assurance the grant conditions will be met and all milestone payment received. The total grant value of $ 4.7 million was recognized as both a grant receivable and deferred grant income on the grant effective date. The grant receivable was reduced by $ 2.1 million for payments received during the twelve months ended June 30, 2022 (no payments were received during the three months ended June 30, 2022) and $ 2.6 million remains in grant receivable on the Condensed Consolidated Balance Sheets. After initial recognition, under IAS 20, government grants are recognized in earnings on a systematic basis in a manner that mirrors the manner in which the Company recognizes the underlying costs for which the grant is intended to compensate. Further, IAS 20 permits for recognition in earnings either separately under a general heading such as other income, or as a reduction of the cost of the asset. The Company has elected to recognize government grant income separately within other income for operating expenditures. Similarly, for capital expenditures, the carrying amount of assets purchased or constructed out of the grant funds are presented net by deducting the grant proceeds received from the gross costs of the assets or CIP and deferred grant income liability. A total of $ 51,258 deferred grant income was recognized within other income during the current period. F- 9 Development and regulatory approval costs Expenditures relating to R&D are expensed as incurred and recorded in development and regulatory approval in the Consolidated Statements of Operations and Other Comprehensive Loss. R&D expenses include external expenses incurred under arrangements with third parties; salaries and personnel-related costs; license fees to acquire in-process technology and other expenses. The Company recognizes the benefit of refundable R&D tax refunds as a R&D tax refund income when there is reasonable assurance that the amount claimed will be recovered (refer to the R&D tax refund discussion below). Intellectual property acquired for a particular research and development project and that have no alternative future uses (in other research and development projects or otherwise) are expensed in research and development costs at the time the costs are incurred. In certain circumstances, the Company may be required to make advance payments to vendors for goods or services that will be received in the future for use in R&D activities. In such circumstances, the non-refundable advance payments are deferred and capitalized, even when there is no alternative future use for the R&D, until the related goods or services are provided. In circumstances where amounts have been paid in excess of costs incurred, the Company records a prepaid expense. R&D tax refund The Company measures the R&D grant income and receivable by considering the time spent by employees on eligible R&D activities and R&D costs incurred to external service providers. The R&D tax refund receivable is recognized as the Company believes that it is probable that the amount will be recovered in full through a future claim. A total of $ 385,888 and $ 1,850,175 of R&D tax refund income is recognized in other income during the years end June 30, 2022, and 2021, respectively. Foreign currency translation Assets and liabilities of foreign subsidiaries are translated from local (functional) currency to reporting currency (U.S. dollar) at the rate of exchange in effect on the consolidated balance sheets date; income and expenses are translated at the average rate of exchange prevailing during the year. The functional currency of GBS is the United States dollar. Foreign currency movements resulted a loss of $ 126,875 and $ 297,309 for the years ended June 30, 2022 and 2021, respectively. Income taxes In accordance with the provisions of FASB ASC 740, Income Taxes , tax positions initially need to be recognized in the consolidated financial statements when it is more likely than not that the positions will be sustained upon examination by taxing authorities. It also provides guidance for de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. As of June 30, 2022, and 2021, the Company had no uncertain tax positions that qualified for either recognition or disclosure in the consolidated financial statements. Additionally, the Company had no interest and penalties related to income taxes. The Company accounts for current and deferred income taxes and, when appropriate, deferred tax assets and liabilities are recorded with respect to temporary differences in the accounting treatment of items for financial reporting purposes and for income tax purposes. Where, based on the weight of all available evidence, it is more likely than not that some amount of the recorded deferred tax assets will not be realized, a valuation allowance is established for that amount that, in management’s judgment, is sufficient to reduce the deferred tax asset to an amount that is more likely than not to be realized. F- 10 Licensing rights During the first quarter of the fiscal year ended June 30, 2020, the Company purchased the license right procurement assets from LSBD for an amount of $ 976,308 in relation to the development and approval process for the Glucose Biosensor Technology. The Company recorded the license at the historical carrying value in the books of LSBD which was $nil and recorded the amount paid as a deemed dividend. The Company has agreed to pay royalties of sales & milestones payments as defined. On September 12, 2019, the Company entered into an amended and restated license agreement for Saliva Biosensor Technology. On June 23, 2020, the Company entered into a license agreement with LSBD for the worldwide rights to SARS-CoV-2 application of the Saliva Glucose Biosensor. In relation to these licenses, there is no set expiration date for the license. However, the exclusivity of the license granted under the license agreement runs until the expiration of the patent portfolio covered by the agreement which is currently until 2033. No royalties have been incurred through to June 30, 2022 (June 30, 2021: $nil). On March 31, 2021, the Company entered into an agreement with LSBD to provide the Company an option to acquire an exclusive license to use LSBD’s intellectual property in the Saliva Glucose Biosensor in North America (the “Option Agreement”). The Option Agreement has a term of two years and the exercise price for the option is $ 5,000,000 . The fee of $ 500,000 incurred for the option was expensed in the period incurred. Trade, note and other receivables Trade, note and other receivables are recorded net of allowances for uncollectible accounts. The Company evaluates the collectability of its accounts receivable based on various factors including historical experience, the length of time the receivables are past due and the financial health of the customer. The Company reserves specific receivables if collectability is no longer reasonably assured. Based upon the assessment of these factors, the Company did not record an allowance for uncollectible accounts as of June 30, 2022, and 2021. Net loss per share attributable to common shareholders (“EPS”) The Company calculates earnings per share attributable to common shareholders in accordance with ASC Topic 260, Earning Per Share . Basic net loss per share attributable to common shareholders is calculated by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is calculated by dividing net loss attributable to common shareholders by weighted average common shares outstanding during the period plus potentially dilutive common shares, such as share warrants. Potentially dilutive common shares shall be calculated in accordance with the treasury share method, which assumes that proceeds from the exercise of all warrants are used to repurchase common share at market value. The number of shares remaining after the proceeds are exhausted represents the potentially dilutive effect of the securities. As the Company has incurred net losses in all periods, certain potentially dilutive securities, including convertible preferred stock, warrants to acquire common stock, and convertible notes payable have been excluded in the computation of diluted loss per share as the effects are antidilutive. F- 11 Property, Plant and Equipment (PPE) & Construction in Progress (CIP) In accordance with the ASC 360, Property, Plant, and Equipment , the Company’s PPE, except land, is stated at cost net of accumulated depreciation and impairment losses, if any. Land is stated at cost less any impairment losses. Costs incurred to acquire, construct, or install PPE, before the assets is ready for use, are capitalized in CIP at historical cost. The carrying amount of assets purchased or constructed out of the grant funds are presented net by deducting the grant proceeds received from the gross costs of the assets or CIP. Construction in progress is not depreciated until such time when the asset is substantially completed and ready for its intended use. Recently issued but not yet effective accounting pronouncements As the Company is an emerging growth company, we have elected to defer the adoption of new accounting pronouncements until they would apply to private companies. In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2021-10, Government Assistance (“ASU 2021-10”). This update requires annual disclosures about transaction with a government that are accounted for by applying a grant or contribution accounting model by analogy. Required disclosures include (1) information about the nature of the transactions and the related accounting policy used to account for the transactions, (2) the line items on the balance sheet and income statement that are affected by the transactions, and the amounts applicable to each financial statement line item, and (3) significant terms and conditions of the transactions, including commitments and contingencies. ASU 2021-10 is applicable for fiscal years beginning after December 15, 2021, with early adoption permitted. The Company has not early adopted and continues to evaluate the impact of the provisions of ASU 2021-10 on its consolidated financial statement disclosures. In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, as if it had originated the contracts. Prior to this ASU, an acquirer generally recognized contract assets acquired and contract liabilities assumed that arose from contracts with customers at fair value on the acquisition date. The ASU is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The ASU is to be applied prospectively to business combinations occurring on or after the effective date of the amendment. The Company has not early adopted and continues to evaluate the impact of the provisions of ASU 2021-08 on its consolidated financial statements. In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (“ASU 2020-06”), which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt and will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that is within the scope of ASU 2020-06. Also, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and treasury stock method will be no longer available. ASU 2020-06 is applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company has not early adopted and continues to evaluate the impact of the provisions of ASU 2020-06 on its consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects of the accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. This standard is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The Company adopted ASU 2019-12 as of July 1, 2021 and the adoption did not have a material impact on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13 (Topic 326), Financial Instruments – Credit Losses (“ASU 2016-13”). This update (i) significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model which will be based on an estimate of current expected credit loss (“CECL”) (ASC 326-20); and (ii) provides for recording credit losses on available-for-sale (“AFS”) debt securities through an allowance account (ASC 326-30). The standard also requires certain incremental disclosures. Subsequently, the FASB issued several ASUs to clarify, improve, or defer the adoption of ASU 2016-13. ASU 2016-13, as amended by ASU 2019-10, is applicable for Smaller Reporting Companies (“SRCs”) for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company has not early adopted the standard and continues to evaluate the impact. F- 12 In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). This update requires all leases with a term greater than 12 months to be recognized on the balance sheet through a right-of-use asset and a lease liability and the disclosure of key information pertaining to leasing arrangements. This new guidance is effective for fiscal years beginning after December 15, 2021, and interim period within fiscal years beginning after December 15, 2022, as amended by ASU 2020-05 with early adoption permitted. The Company has not early adopted the standard and continues to evaluate the impact. Concentration of credit risk The Company places its cash and cash equivalents, which may at times be in excess of the Australia Financial Claims Scheme or the United States’ Federal Deposit Insurance Corporation insurance limits, with high credit quality financial institutions and attempts to limit the amount of credit exposure with any one institution. Fair value of financial instruments The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1 -Quoted prices in active markets for identical assets or liabilities. Level 2 -Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 -Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The carrying amounts of cash equivalents, prepaid and other assets, accounts payable and accrued liabilities are representative of their respective fair values because of the short-term nature of those instruments. NOTE 4. OTHER CURRENT ASSETS Other current assets consist of the following: SCHEDULE OF OTHER CURRENT ASSETS June 30, 2022 June 30, 2021 Intelligent Fingerprinting Limited note receivable $ 500,445 $ — Prepayments 116,525 2,424,143 Goods and services tax receivable 57,746 83,278 Deposits 46,602 — Other receivables 25,443 1,596 Total $ 746,761 $ 2,509,017 On June 16, 2022, the Company entered into an agreement with Intelligent Fingerprinting Limited (“IFP”), providing the Company with the exclusive right, until December 31, 2022, to evaluate and negotiate a transaction to acquire IFP or its assets. In consideration for this exclusivity, on June 16, 2022, the Company provided IFP with an unsecured term loan facility in the amount of $ 500,000 , which is payable by IFP on the earliest of the consummation of an acquisition, 30 days following the termination of exclusivity under the exclusivity agreement, an event of default under the term loan facility agreement, or December 31, 2022. This $ 500,000 short term note receivable bears an interest rate of 2 % per annum above the Sterling Barclays Bank Base Rate from time to time. As of the year ended June 30, 2021, the Company made $ 2,600,000 in prepayments for research and development. Of the total prepayments, $ 504,000 was recorded as a non-current asset based on the expected outflow of the budgeted research and development costs. Under the terms of the R&D agreement with BiosensX North America Inc., dated April 20, 2021, in which LSBD also committed to fund $ 2,600,000 as a direct 50 % shareholder in BiosensX North America Inc., the Company would have the right to apply any differences in contributions between LSBD and the Company towards any amounts owing between the Company and LSBD, including the exercise price of the option ($ 5,000,000 ) as included in the Option Agreement dated March 31, 2021 with LSBD (see Note 3). During the year ended June 30, 2022, the Company assessed the current status of the R&D activities and determined that the most likely outcome of the prepaid R&D contribution would be to be application against the exercise price in the Option Agreement and/or future royalty payments due for the Glucose Biosensor intellectual property. As this payment for the license of the Glucose Biosensor intellectual property occurred prior to regulatory approval and there is no alternative future use, the prepayment of $ 2,600,000 has been expensed as development and regulatory approval costs in the Consolidated Statements of Operations and Other Comprehensive Loss during the year ended June 30, 2022. NOTE 5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consist of the following: SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES June 30, 2022 June 30, 2021 Accounts and other payables $ 715,902 $ 1,355,894 Accruals 909,187 112,074 Total $ 1,625,089 $ 1,467,968 As on June 30, 2022 the company accrued $ 909,187 of which $ 634,518 relates to development and regulatory approval expenses, legal & consulting fees $ 136,324 , audit and accounting service fees $ 99,454 , and other general and administrative expenses $ 38,891 . F- 13 NOTE 6. CONVERTIBLE NOTES PAYABLE The Company’s previously outstanding notes mandatorily converted, at a conversion price equal to 85 % of 50 % of the unit offering price of the IPO (or $ 7.23 ), for an aggregate of 710,548 shares based on $ 5,133,706 of principal and zero accrued interest outstanding at the date of conversion. The convertible notes had a contingent Beneficial Conversion Features (“BCF”), with the contingency being the event of IPO. As such, a financing cost of $ 905,948 was recognized as interest expense in the consolidated statements of operations and other comprehensive loss in relation to this contingent BCF during the year ended June 30, 2021. NOTE 7. SHAREHOLDERS’ EQUITY As of June 30, 2022, 1,401,377 Series A warrant and 52,400 Series B warrants were held by certain shareholders, respectively. Each warrant is convertible into 1 share of the Company’s common stock. On January 1, 2022, and September 9, 2021, the Company issued 7,382 and 400 shares, respectively, of common stock as a result of Series B warrants that were exercised pursuant to the cashless exercise provision offered during the December 2020 IPO (see Note 1) and converted into common stock. On August 31, 2021, all 1,300,000 Series B Convertible Preferred Stock was converted into common stock. Each share of Series B Convertible Preferred Stock was converted into 1 share of the Company’s common stock. A total of 59,800 Series A warrants and 1,400,995 Series B warrants were exercised and converted into common stock during the period from the initial public offering to June 30, 2022. A total of 1,700,000 Series B Convertible Preferred Stock was also converted into common stock as of June 30, 2021. Each share of Series B Convertible Preferred Stock was converted into 1 share of the Company’s common stock. On December 28, 2020, the Company completed its initial public offering. See Note 1. On December 18, 2020, the Company entered into an Exchange Agreement (the “EA”) with LSBD to exchange 3,000,000 shares of its common stock held by LSBD for 3,000,000 shares of the Company’s Series B Convertible Preferred Stock (“Exchange”). In addition, the parties to the Exchange Agreement entered into a Registration Rights Agreement (the “RRA”) pursuant to which the Company agreed to prepare and file within 30 days following the closing of the IPO with the Securities and Exchange Commission a registration statement to register for resale the shares of Common Stock issuable upon conversion of the Series B Convertible Preferred Stock. If and to the extent the Company fails to, among other things, file such resale registration statement or have it declared effective as required under the terms of the RRA, the Company will be required to pay to the holder of such registration rights partial liquidated damages payable in cash in the amount equal to the product of 1.0% multiplied by the aggregate purchase price paid by such holder pursuant to the EA. The EA and the RRA contain customary representations, warranties, agreements and, indemnification rights and obligations of the parties. The common stock acquired in the Exchange was immediately retired. Each share of Series B Convertible Preferred Stock is convertible into 1 shares of the Company’s common stock, subject to proportional adjustment and beneficial ownership limitations. In the event of the Company’s liquidation, dissolution or winding up, holders of Series B Convertible Preferred Stock will participate pari passu with any distribution of proceeds to holders of the Company’s common stock. Holders of Series B Convertible Preferred Stock are entitled to receive dividends on shares of Series B Preferred equal (on an as converted to common stock basis) to and in the same form as dividends actually paid on the Company’s common stock. Shares of Series B Convertible Preferred Stock generally have no voting rights, except as required by law. On December 14, 2020, the Company agreed to issue to LSBD, in consideration of LSBD’s contribution towards the research and development of applications other than glucose and COVID-19 applications to a maximum of $ 2 million over a 5 -year period, a 5 -year non-transferable warrant to purchase 3,000,000 shares of the Company’s common stock at the exercise price of $ 17.00 per share. As this was a transaction between entities under common control, the $ 2 million receivable due from LSBD has been recognized as contra-equity. F- 14 NOTE 8. RELATED PARTY TRANSACTIONS The Company completed certain financing transactions with, LSBD as described in Note 7. Sales to, and purchases from, related parties are made at normal market prices and on normal commercial terms. The following transactions occurred with LSBD during the period July 1, 2021, to June 30, 2022 (FY 2021: July 1, 2020 to June 30, 2021): The Company incurred a total of $ 0 (FY 2021: $ 523,767 ) towards the services in connection with development and regulatory approval pathway for the technology, including payments made or expenses incurred on behalf of the Company. Fiscal year 2021 includes a fee of $ 500,000 that was paid to acquire an option and has been recognized as an expense within development and regulatory approval expenses. On March 31, 2021, GBS entered into an Option Agreement with LSBD to provide GBS the option to acquire an exclusive license for LSBD’s intellectual property. For further details, refer to Note 4. The Company incurred a total of $ 145,733 (FY 2021: $ 212,032 ) towards overhead cost reimbursement which includes salaries, rents and other related overheads directly attributable to the Company which are included in general and administration expenses. During the year ended June 30, 2022, the Company contributed a total of $ 2,600,000 towards budgeted development and commercialization costs to be incurred by BiosensX (North America) Inc. relating to the development and preparation for submission of the Saliva Glucose Biosensor connected with regulatory approval for the U.S. market by the U.S. Food & Drug Administration. For further details, refer to Note 4. As of June 30, 2022, $ 9,054 (June 30, 2021: $ 13,323 ) remains payable to LSBD in relation to overhead reimbursements detailed above. NOTE 9. INVESTMENT IN AFFILIATE On May 29, 2020, LSBD, issued 14,000,000 common shares of BiosensX (North America) Inc. to the Company at par value of $ 0.001 per share. This transaction provided the Company with a 50 % interest in BiosensX (North America) Inc., the holder of the technology license for the North America region. The investment in BiosensX (North America) Inc. is accounted for by use of the equity method in accordance with ASC 323, Investments - Equity Method and Joint Ventures . At the date of this transaction, LSBD was the parent of both the Company and BiosensX (North America) Inc., the transfer of BiosensX shares to the Company was deemed to be a common control transaction. As a result of the share transfer, the Company has significant influence over BiosensX (North America) Inc. During the year ended June 30, 2022, LSBD sold all its shares in GBS. GBS determined whether it has a controlling financial interest in BiosensX (North America) Inc. by first evaluating whether the entity is a voting interest entity or a VIE under GAAP. Voting interest entities are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities. The Company consolidates voting interest entities in which it has all, or at least a majority of, the voting interests. As defined in applicable accounting standards, VIEs are entities that lack one or more of the characteristics of a voting interest entity. A controlling financial interest in a VIE is present when an enterprise has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The enterprise with a controlling financial interest, known as the primary beneficiary, consolidates the VIE. We concluded that GBS does not have a controlling financial interest in BiosensX (North America) Inc., hence it continues to recognize its investments in BiosensX (North America) Inc. using the equity method. F- 15 The following table summarizes the amount recorded in the consolidated financial statements: SUMMARY OF AMOUNT RECORDED IN THE CONSOLIDATED FINANCIAL STATEMENTS June 30, 2022 June 30, 2021 Investment value $ — $ 135,692 Loss from the affiliate — ( 135,692 ) Carrying amount $ — $ — NOTE 10. CONSTRUCTION IN PROGRESS During the period ending June 30, 2022, the Company incurred costs of $ 782,816 towards the construction of a building at the University of Newcastle. The Australian government reimbursed the Company 50 % of the incurred costs. Therefore, the Company deducted the total cost incurred by the amount of grant proceeds received to arrive at the carrying amount of CIP as of June 30, 2022. The following table summarizes the amount of CIP recorded in the Consolidated Balance Sheets: SUMMARY OF AMOUNT RECORDED IN THE CONSOLIDATED BALANCE SHEETS June 30, 2022 June 30, 2021 Investments in construction in progress $ 782,816 $ — Less: 50 % contributed under government grant ( 391,408 ) — Carrying amount $ 391,408 $ — NOTE 11. COMMITMENTS AND CONTINGENCIES On January 21, 2021, the Company entered into a sponsored research agreement with Johns Hopkins Bloomberg School of Public Health to accelerate the development of next-generation saliva-based diagnostic tests. The Company is collaborating with the Bloomberg School of Public Health to optimize the collection of saliva and monitoring of diverse biomarkers across a number of modalities including clinical chemistry and infectious diseases. Johns Hopkins intend to utilize biosensor products to conduct in-field epidemiological studies. The Company agreed to pay Johns Hopkins a total amount of $ 423,589 as a part of this sponsored research agreement of which $ 0 remains payable as of June 30, 2022. During February 2021 the Company signed a deed of confirmation and variation with the University of Newcastle for the research and development of the Saliva Glucose Biosensor and the SARS-CoV-2 Antibody Biosensor. The Company agreed to pay the University of Newcastle $ 2,054,880 of which $ 517,502 remains payable as of June 30, 2022. The Company has no material future minimum lease commitments or purchase commitments. From time to time, the Company may become a party to various legal proceedings arising in the ordinary course of business. Based on information currently available, the Company is not involved in any pending or threatened legal proceedings that it believes could reasonably be expected to have a material adverse effect on its financial condition, results of operations or liquidity. However, legal matters are inherently uncertain, and the Company cannot guarantee that the outcome of any potential legal matter will be favorable to the Company. NOTE 12. INCOME TAX We compute income taxes using the asset and liability method in accordance with FASB ASC Topic 740, Income Taxes . Under the asset and liability method, we determine deferred income tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities and measure them using currently enacted tax rates and laws. We provide a valuation allowance for deferred tax assets that, based on available evidence, are more likely than not to be realized. Realization of our net operating loss carry forward was not reasonably assured as of June 30, 2022 and 2021, and we have recorded a valuation allowance of $ 6,064,025 and $ 5,946,731 , respectively, against deferred tax assets in excess of deferred tax liabilities. F- 16 The components of net deferred taxes are as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES June 30, 2022 June 30, 2021 Deferred tax assets (liabilities): Net operating loss - U.S. 4,321,600 $ 4,742,347 Net operating loss - Foreign 1,682,879 1,179,984 Employee benefits 59,546 24,400 Total deferred tax assets, net 6,064,025 5,946,731 Less: valuation allowance ( 6,064,025 ) ( 5,946,731 ) Net deferred taxes $ — $ — Our statutory income tax rate is expected to be approximately 21 %. The provision for income taxes consisted of the following: SCHEDULE OF PROVISION FOR INCOME TAXES 2022 2021 Year Ended June 30, 2022 2021 Current $ — Deferred — Total $ — $ — The reconciliation between the income tax expense (benefit) calculated by applying statutory rates to net loss and the income tax expense reported in the accompanying consolidated financial statements is as follows: SCHEDULE OF RECONCILIATION OF INCOME TAX EXPENSE (BENEFIT) 2022 2021 Year Ended June 30, 2022 2021 U.S. federal statutory rate applies to pretax income (loss) ( 1,770,915 ) $ ( 1,452,905 ) Different tax rate of subsidiary ( 106,634 ) ( 87,360 ) State taxes, net of federal benefit — Permanent differences 117,039 281,730 Benefit of federal operating loss carryforwards — Cumulative adjustment to deferred taxes 1,643,216 ( 512,847 ) Change in state tax rates and other — Change in valuation allowance ( 117,294 ) ( 1,771,382 ) Total $ — $ — As of June 30, 2022, and 2021, we had federal and foreign income tax net operating loss carry forwards of approximately $ 27,310,563 and $ 19,291,293 , respectively, which expire at various dates ranging from 2038 through unlimited expiration . NOTE 13. LOSS PER SHARE Basic loss per common share is computed by dividing net loss allocable to common shareholders by the weighted average number of shares of common stock or common stock equivalents outstanding. Diluted loss per common share is computed similar to basic loss per common share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock. SCHEDULE OF BASIC LOSS PER COMMON SHARE POTENTIAL DILUTIVE SECURITIES 2022 2021 Year Ended June 30, 2022 2021 Net loss attributable to GBS Inc. $ ( 8,306,051 ) $ ( 7,037,286 ) Basic and diluted net loss per share attributed to common shareholders $ ( 0.57 ) $ ( 0.68 ) Weighted-average number of shares outstanding 14,665,263 10,414,886 The following outstanding warrants, options and preferred shares were excluded from the computation of diluted net loss per share for the periods presented because their effect would have been anti-dilutive: SCHEDULE OF ANTI-DILUTIVE WARRANTS 2022 2021 Year Ended June 30, 2022 2021 Warrants - Series A 1,401,377 1,401,377 Warrants - Series B 52,400 60,182 Warrants issued to underwriters 63,529 63,529 Pre IPO warrants 2,736,675 2,736,675 Warrants issued to parent entity 3,000,000 3,000,000 Preferred stock - Series B - 1,300,000 Anti-dilutive securities - 1,300,000 NOTE 14. SUBSEQUENT EVENTS The Company filed a registration statement (Form S-8) on August 5, 2022, for the registration of 500,000 shares of the Company’s common stock at $ 0.001 par value per share, issuable pursuant to the GBS Inc. 2019 Long Term Incentive Plan. However, the Company has not issued these shares to its employees and directors as of the date of filing these accounts. F- 17