EX-99.1 2 s117296_ex99-1.htm EXHIBIT 99-1

Exhibit 99.1

Immuron Limited

ABN 80 063 114 045

Interim financial report

for the half-year 31 December 2018

Immuron Limited ABN 80 063 114 045

Interim financial report - 31 December 2018

Contents
	Page
Corporate directory	1
Financial statements	3
Notes to the condensed consolidated financial statements	7

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2018 and any public announcements made by Immuron Limited.

Immuron Limited
Corporate directory

Directors	Dr. Roger Aston
	Independent Non-executive chairman
	Mr. Peter Anastasiou
	Executive vice chairman
	Mr. Daniel Pollock
	Independent non-executive director
	Mr. Stephen Anastasiou
	Independent non-executive director
	Prof. Ravi Savarirayan
	Independent non-executive director
	Mr. Richard Berman (appointed 1 July 2018)
	Independent non-executive director
Secretary	Mr. Phillip Hains
Chief Executive Officer	Dr. Gary S Jacob (appointed 16 November 2018)
Registered Office	Level 3, 62 Lygon Street
	Carlton VIC 3053
	Australia
	Telephone: +61(0)3 9824 5254
	Facsimile: +61(0)3 9824 5254
Principal Place of Business	Unit 10, 25 - 37 Chapman Street
	Blackburn North VIC 3130
	Australia
	Telephone: +61 (0)3 9824 5254
	Facsimile: +61 (0)3 9822 7735
Share Registry - United States	Bank of New York
	225 Liberty Street
	New York, NY 102286
	United States of America
	Telephone: +1 212 495 1784
Share Registry - Australia	Security Transfer Registrars Pty Ltd
	770 Canning Highway
	Applecross WA 6153
	Australia
	Telephone: +61 (0)8 9315 2333
	Facsimile: +61 (08) 9315 2233
Auditor - Australia and United States	Grant Thornton Audit Pty Ltd
	Collins Square, Tower 5 727 Collins Street
	Melbourne VIC 3008
	Australia
	Telephone: +61 (0)3 8320 2222
Solicitors - Australia	Francis Abourizk Lightowlers (FAL)
	Level 14, 114 William Street
	Melbourne VIC 3000
	Australia
	Telephone: +61 (0)3 9642 2252

Immuron Limited 1

Immuron Limited
Corporate directory
(continued)

Solicitors - United States	Carter Ledyard and Milburn LLP
	2 Wall Street
	New York NY 10005
	United States of America
	Telephone: +1 212 238 8605
	Sheppard Mullin
	30 Rockefeller Plaza
	New York NY 10112-0015
	United States of America
	Telephone: +1 212 653 8700
Bankers	National Australia Bank (NAB)
	330 Collins Street
	Melbourne VIC 3000
	Australia
Securities exchange listings	Australian Securities Exchange (Code: IMC)
	NASDAQ Exchange (Code: IMRN)
Websites	www.immuron.com.au
	www.travelan.com.au

Immuron Limited 2

Immuron Limited

Condensed consolidated statement of comprehensive income

For the half-year 31 December 2018
(unaudited)

						Consolidated entity
			Notes				31 December 2018 $				31 December 2017 $
Revenue from continuing operations
Sales of goods			7				978,233				919,138
Total operating revenue							978,233				919,138
Cost of goods sold							(231,479	)			(195,356	)
Gross profit							746,754				723,782
Direct selling costs
Sales and marketing costs							(198,652	)			(145,150	)
Freight costs							(133,659	)			(89,125	)
							414,443				489,507
Other income			7				310,436				1,387,039
Expenses
Research and development							(514,388	)			(1,540,436	)
Marketing and promotion							(246,520	)			(238,192	)
Consulting, employee and director							(1,068,378	)			(815,232	)
Other corporate administrative							(385,455	)			(829,999	)
Travel and entertainment expenses							(89,391	)			(174,987	)
Depreciation							(2,646	)			(2,277	)
Finance fee costs							—				(3,767	)
Impairment of inventory							—				(163,600	)
Loss before income tax							(1,581,899	)			(1,891,944	)
Income tax expense							—				—
Loss from continuing operations							(1,581,899	)			(1,891,944	)
Other comprehensive income
Item that may be reclassified to profit or loss
Exchange differences on translation of foreign operations			2	(b)			(112,270	)			28,281
Total comprehensive loss for the period							(112,270	)			28,281
Total comprehensive income for the period is attributable to:
Owners of Immuron Limited							(1,694,169	)			(1,863,663	)
							Cents				Cents
Earnings per share for profit attributable to the ordinary equity holders of the Company:
Basic loss per share			9				(1.2	)			(1.5	)
Diluted loss per share			9				(1.2	)			(1.5	)

The above condensed consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

Immuron Limited  3

Immuron Limited

Condensed consolidated balance sheet

As at 31 December 2018

						Consolidated entity
			Notes				31 December 2018 (unaudited) $				30 June 2018 $
ASSETS
Current assets
Cash and cash equivalents							4,190,259				4,727,430
Trade and other receivables							643,206				1,683,305
Inventories			8				530,495				497,902
Other current assets							239,695				141,800
Total current assets							5,603,655				7,050,437
Non-current assets
Property, plant and equipment							17,737				20,384
Inventories			8				2,075,683				2,171,867
Total non-current assets							2,093,420				2,192,251
Total assets							7,697,075				9,242,688
LIABILITIES
Current liabilities
Trade and other payables							403,521				689,326
Employee benefit obligations							117,713				114,012
Total current liabilities							521,234				803,338
Total liabilities							521,234				803,338
Net assets							7,175,841				8,439,350
EQUITY
Issued capital			2	(a)			58,442,043				58,372,043
Reserves			2	(b)			2,756,727				2,606,722
Accumulated losses							(54,022,929	)			(52,539,415	)
Total equity							7,175,841				8,439,350

The above condensed consolidated balance sheet should be read in conjunction with the accompanying notes.

Immuron Limited  4

Immuron Limited

Condensed consolidated statement of changes in equity

For the half-year 31 December 2018
(unaudited)

		Attributable to owners of Immuron Limited
Consolidated entity		Issued capital $				Reserves $				Accumulated losses $				Total equity $
Balance at 1 July 2017			53,632,995				2,470,417				(49,528,486	)			6,574,926
Loss for the period			—				—				(1,891,944	)			(1,891,944	)
Other comprehensive income			—				28,281				—				28,281
Total comprehensive income for the half-year			—				28,281				(1,891,944	)			(1,863,663	)
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs			213,396				—				—				213,396
Options and warrants issued/expensed			—				59,512				—				59,512
			213,396				59,512				—				272,908
Balance at 31 December 2017			53,846,391				2,558,210				(51,420,430	)			4,984,171
Balance at 1 July 2018 as originally presented			58,372,043				2,606,722				(52,539,415	)			8,439,350
Loss for the period			—				—				(1,581,899	)			(1,581,899	)
Other comprehensive income			—				(112,270	)			—				(112,270	)
Total comprehensive income for the half-year			—				(112,270	)			(1,581,899	)			(1,694,169	)
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs			70,000				—				—				70,000
Options and warrants issued/expensed			—				360,660				—				360,660
Lapse of unexercised options			—				(98,385	)			98,385				—
			70,000				262,275				98,385				430,660
Balance at 31 December 2018			58,442,043				2,756,727				(54,022,929	)			7,175,841

The above condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Immuron Limited  5

Immuron Limited

Condensed consolidated statement of cash flows

For the half-year 31 December 2018
(unaudited)

Condensed consolidated statement of cash flows

						Consolidated entity
			Notes				31 December 2018 $				31 December 2017 $
Cash flows from operating activities
Receipts from customers (inclusive of GST)							1,138,524				1,184,856
Payments to suppliers and employees (inclusive of GST)							(2,753,669	)			(4,367,410	)
Interest received							39				43
Other - R&D tax concession refund and other government grants							1,190,205				—
Interest and other costs of finance paid							—				(3,767	)
Net cash outflow from operating activities							(424,901	)			(3,186,278	)
Cash flows from investing activities
Payments for property, plant and equipment							—				(2,180	)
Net cash outflow from investing activities							—				(2,180	)
Cash flows from financing activities
Repayment of borrowings							—				(243,950	)
Capital raising costs							—				(1,934	)
Net cash outflow from financing activities							—				(245,884	)
Net (decrease) in cash and cash equivalents							(424,901	)			(3,434,342	)
Cash and cash equivalents at the beginning of the financial year							4,727,430				3,994,924
Effects of exchange rate changes on cash and cash equivalents							(112,270	)			28,281
Cash and cash equivalents at end of the half-year							4,190,259				588,863

The above condensed consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Immuron Limited  6

Immuron Limited

Notes to the condensed consolidated financial statements

31 December 2018

1 Segment and revenue information

(a) Description of segments

The entity has identified its operating segments based on the internal reports that are reviewed and used by the executive management team in assessing performance and determining the allocation of resources.

The executive management team considers the business from both a product and a geographic perspective and has identified three reportable segments.

Research and Development (R&D)	Income and expenses directly attributable to the Company’s research and development projects performed in Australia, Israel and United States.
HyperImmune Products	Income and expenses directly attributable to Travelan activities which occur in Australia, New Zealand, US and Canada. In 2018, the Company earned 67%, 1% and 32% of its revenues from customers located in Australia, Canada and US, respectively. In 2017, the Company earned 66%, 0% and 34% of its revenues from customers located in Australia, Canada and US, respectively.

(b) Segment results

		Research & Development				HyperImmune Products				Unallocated Corporate				Total
Consolidated entity 31 December 2018 (unaudited)
			$				$				$				$
Segment revenue and other income
Revenue from external customers			—				978,233				—				978,233
R&D tax concession refund			310,166				—				—				310,166
Interest income			—				—				270				270
Segment revenue and other income			310,166				978,233				270				1,288,669
Segment expenses
Depreciation and amortisation			—				—				(5,047	)			(5,047	)
Share-based payments			—				—				(360,660	)			(360,660	)
Other operating expenses			(403,521	)			(563,790	)			(1,537,550	)			(2,504,861	)
Segment expenses			(403,521	)			(563,790	)			(1,903,257	)			(2,870,568	)
Income tax expense			—				—				—				—
(Loss)/Profit for the period			(93,355	)			414,443				(1,902,987	)			(1,581,899	)
Segment assets			310,990				2,718,889				4,667,196				7,697,075
Total assets			310,990				2,718,889				4,667,196				7,697,075
Segment liabilities			(71,903	)			(11,974	)			(437,357	)			(521,234	)
Total liabilities			(71,903	)			(11,974	)			(437,357	)			(521,234	)

Immuron Limited  7

Immuron Limited

Notes to the condensed consolidated financial statements

31 December 2018

(continued)

1 Segment and revenue information (continued)

(b) Segment results (continued)

		Research & Development				HyperImmune Products				Unallocated Corporate				Total
Consolidated entity 31 December 2017 (unaudited)
			$				$				$				$
Segment revenue and other income
Revenue from external customers			—				919,138				—				919,138
R&D tax concession refund			1,386,790				—				—				1,386,790
Interest income			—				—				43				43
Other income			—				206				—				206
Total segment revenue and other income			1,386,790				919,344				43				2,306,177
Segment expenses
Depreciation and amortisation			—				—				(2,277	)			(2,277	)
Finance costs			—				—				(3,767	)			(3,767	)
Share-based payments			—				—				(59,512	)			(59,512	)
Other operating expenses			(1,540,436	)			(429,631	)			(2,162,498	)			(4,132,565	)
Total segment expenses			(1,540,436	)			(429,631	)			(2,228,054	)			(4,198,121	)
Income tax expense			—				—				—				—
(Loss)/Profit for the period			(153,646	)			489,713				(2,228,011	)			(1,891,944	)
Segment assets			2,884,901				2,536,093				736,997				6,157,991
Total assets			2,884,901				2,536,093				736,997				6,157,991
Segment liabilities			(481,023	)			(154,886	)			(537,911	)			(1,173,820	)
Total liabilities			(481,023	)			(154,886	)			(537,911	)			(1,173,820	)

2 Equity securities issued

(a) Issued capital

		31 December 2018 (unaudited) No.				31 December 2018 (unaudited) $				30 June 2018 No.				30 June 2018 $
Fully paid			143,215,706				58,442,043				142,778,206				58,372,043

(i) Movements in ordinary shares:

		Note				Number of shares				Total $
Details
Opening balance 1 July 2018							142,778,206				58,372,043
Shares issued during the year							437,500				70,000
Balance 31 December 2018 (unaudited)							143,215,706				58,442,043

(ii) Rights of each type of share

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of shares held. On a show of hands every holder of ordinary shares present at a meeting or by proxy, is entitled to one vote. upon a poll every holder is entitled to one vote per share held. The ordinary shares have no par value.

Immuron Limited  8

Immuron Limited

Notes to the condensed consolidated financial statements

31 December 2018

(continued)

2 Equity securities issued (continued)

(b) Reserves

The following table shows a breakdown of the balance sheet line item ‘other reserves’ and the movements in these reserves during the period. A description of the nature and purpose of each reserve is provided below the table.

Consolidated entity		No. of Options Qty				Amount $				Foreign currency translation $				Total other reserves $
At 1 July 2018			71,349,180				2,650,039				(43,317	)			2,606,722
Options/warrants issued during the year			3,300,000				360,660				—				360,660
Lapse of unexcercised options			(50,000	)			(98,385	)			—				(98,385	)
Other comprehensive loss for the period			—				—				(112,270	)			(112,270	)
At 31 December 2018 (unaudited)			74,599,180				2,912,314				(155,587	)			2,756,727

3 Share-based payments

The following share-based payment arrangements were entered into during the half-year 31 December 2018 due to new options granted and vested:

Grant date		Expiry date		Balance at start of year				Exercise price ($)				Granted				Exercised				Vested				Balance at end of year
02-Jul-2018		01-Jul-2021			—				0.50				1,300,000				—				1,300,000				1,300,000
19-Nov-2018		30-Jun-2020			—				0.50				2,000,000				—				2,000,000				2,000,000

For the options granted during the half-year 31 December 2018, the valuation model inputs used to determine the fair value at the grant date are outlined below:

Grant date		Expiry date		Share price at grant date ($)				Exercise price ($)				Expected volatility				Dividend yield				Risk-free interest rate				Fair value at grant date ($)
02-Jul-2018		01-Jul-2021			0.32				0.50				92	%			0	%			2.09	%			204,100
19-Nov-2018		30-Jun-2020			0.28				0.50				92	%			0	%			2.02	%			164,400

4 Contingencies

The Company had no contingent liabilities and at 31 December 2018 (2017: nil).

5 Events occurring after the reporting period

No other matter or circumstances has arisen since 31 December 2018 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

Immuron Limited  9

Immuron Limited

Notes to the condensed consolidated financial statements

31 December 2018

(continued)

6 Related party transactions

(a) Transactions with other related parties

The following transactions occurred with related parties:

Premises rental services received from Wattle Laboratories Pty Ltd to Immuron Limited:		31 December  2018 (unaudited)				31 December  2017 (unaudited)
Wattle Laboratories Pty Ltd (Wattle) is an entity part-owned and operated by Immuron Directors Peter and Stephen Anastasiou.   Commencing on 1 January 2016, Immuron executed a Lease Agreement with Wattle whereby Immuron will lease part of their Blackburn office facilities for Immuron’s operations at an arms-length commercial rental rate of $38,940 per annum, payable in monthly instalments. The rental agreement is subject to annual rental increases, and effective 1 January 2017, the annual rent was increased to $39,525.   The lease is for a 3 year term with an additional 3 year option period.   The lease is cancellable by either party upon 6 months written notice of termination of the agreement.
Rental fees paid to Wattle Laboratories Pty Ltd during the year through the issue of equity:		$	Nil			$	Nil
Total paid by the Company to Wattle Laboratories Pty Ltd during the year:		$	22,151			$	9,881
At the period end the Company owed Wattle Laboratories Pty Ltd:		$	17,374			$	Nil

Immuron Limited   10

Immuron Limited

Notes to the condensed consolidated financial statements

31 December 2018

(continued)

6 Related party transactions (continued)

(a) Transactions with other related parties (continued)

Service rendered by Grandlodge Capital Pty Ltd to Immuron Ltd:		31 December  2018 (unaudited)				31 December  2017 (unaudited)
Grandlodge Capital Pty Ltd (Grandlodge) is an entity part-owned and operated by Immuron Directors Peter and Stephen Anastasiou. Mr David Plush is also an owner of Grandlodge, and its associated entities.   Grandlodge, and its associated entities, are marketing, warehousing and distribution logistics companies.   Commencing on 1 June 2013, Grandlodge was contracted on commercial market arms-length terms to provide warehousing, distribution and invoicing services for Immuron’s products for $70,000 per annum. These fees will be payable in new fully paid ordinary shares in Immuron Limited at a set price of $0.16 per share representing Immuron Limited’s share price at the commencement of the agreement.   The shares to be issued to Grandlodge, or its associated entities, as compensation in lieu of cash payment for the services rendered under this agreement have been subject to the approval of Immuron shareholders at Company shareholder meetings held over the past 18 months.   Grandlodge will also be reimbursed in cash for all reasonable costs and expenses incurred in accordance with their scope of works under the agreement, unless both parties agree to an alternative method of payment.   The agreement is cancellable by either party upon providing the other party with 30 days written notice of the termination of the agreement.
Service fees paid to Grandlodge Pty Ltd during the year through the issue of equity:		$	70,000			$	140,000
Total paid by the Company to Grandlodge Pty Ltd during the year:		$	70,000			$	Nil
At the period end the Company owed Grandlodge Pty Ltd:		$	Nil			$	Nil

7 Revenue

The Company derives the following types of revenue:

		Consolidated entity   (unaudited)
		31 December				31 December
		2018				2017
			$				$
Revenue from operating activities
Sales of good			1,083,805				1,010,919
Less: discounts and rebates			(105,572	)			(91,781	)
Total revenue from operating activities			978,233				919,138
Other income
Interest on financial assets held as investments			39				43
Other items			231				207
R&D tax concession refund			310,166				1,386,789
Total other income			310,436				1,387,039

Immuron Limited   11

Immuron Limited

Notes to the condensed consolidated financial statements

31 December 2018

(continued)

8 Inventories

			Consolidated entity
			31 December				30 June
			2018 (unaudited)				2018
			$				$
Raw materials - Colostrum			294,769				198,585
Work in progress			—				33,625
Finished goods - Travelan and Protectyn			235,726				265,692
Total of inventories classified under current asset			530,495				497,902

			Consolidated entity
			31 December				30 June
			2018 (unaudited)				2018
			$				$
Colostrum Inventory - Non Current			2,075,683				2,171,867
Total of inventories classified under non-current asset			2,075,683				2,171,867

There was no impairment of inventories recognised during financial year 2018 (2017: $163,600 for stock obsolescence in the Statement of Profit or Loss and Other Comprehensive Income.

During the current financial period, management have performed an assessment on its raw materials and its utilisation within 12 months from reporting date and have determined $294,769 of raw materials relating to Colostrum will be consumed within 12 months and remaining balance of $2,075,683 will be consumed after 12 months from reporting date.

9 Loss per share

(a) Basic/diluted loss per share

		Consolidated entity
		(unaudited)
		31 December				31 December
		2018				2017
		Cents				Cents
From continuing operations attributable to the ordinary equity holders of the company			(1.2	)			(1.5	)

(b) Reconciliation of earnings used in calculating earnings per share

		Consolidated entity (unaudited)
		31 December				31 December
		2018				2017
			$				$
Basic/diluted loss per share
Loss attributable to the ordinary equity holders of the Company used in calculating basic/diluted earnings per share:
From continuing operations			(1,581,899	)			(1,891,944	)

Immuron Limited   12

Immuron Limited
Notes to the condensed consolidated financial statements

31 December 2018

(continued)

9 Loss per share (continued)

(c) Weighted average number of shares used as denominator

		Consolidated entity (unaudited)
		2018			2017
		Number			Number
Weighted average number of ordinary shares used as the denominator in calculating basic/diluted loss per share		136,365,586			130,086,505

The Company is currently in a loss making position and thus the impact of any potential shares is concluded as anti-dilutive which includes the Company’s options and Convertible Note payable and warrants. Treasury shares are excluded from the calculation of weighted average number of ordinary shares.

10 Basis of preparation of half-year report

This condensed consolidated interim financial report for the half-year reporting period ended 31 December 2018 have been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting.

These interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2018 and any public announcements made by Immuron.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period and the adoption of the new and amended standards as set out below.

(i) Compliance with IFRS

The consolidated financial statements of Immuron Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

(a) New and amended standards adopted by the Company

A number of new or amended standards became applicable for the current reporting period and the Company had to change its accounting policies and applying the modified retrospective method where required as a result of adopting the following standards:

● AASB 9 Financial Instruments, and

● AASB 15 Revenue from Contracts with Customers.

The impact of the adoption of these standards and the new accounting policies are disclosed in note below. The other standards did not have any impact on the Company’s accounting policies and did not require retrospective adjustments.

(b) Impact of new and amended standards adopted by the Company

(i) AASB 9 Financial Instruments

AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: recognition and measurement requirements. It makes major changes to the previous guidance on the classification and measurement of financial assets and introduces an ‘expected credit loss’ model for impairment of financial assets.

While this represents significant new guidance, the implementation of the new guidance did not have a material impact on trade receivables. As such, the Company has elected not to restate prior periods and have not recognised differences in opening retained earnings as at 1 July 2018.

(ii) AASB 15 Revenue from Contracts with Customers

The Company has adopted AASB 15 Revenue from Contracts with Customers from 1 July 2018 which did not result in changes in the accounting policies and adjustments to the amounts recognised in the financial statements.

Immuron Limited   13

Immuron Limited
Notes to the condensed consolidated financial statements

31 December 2018

(continued)

10 Basis of preparation of half-year report (continued)

(c) Impact of standards issued but not yet applied by the entity

(i) AASB 16 Leases

AASB 16 was issued in February 2016. It will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases.

The standard will affect primarily the accounting for the group’s operating leases. As at the reporting date, the group has non-cancellable operating lease commitments of $39,525. However, the group has not yet determined to what extent these commitments will result in the recognition of an asset and a liability for future payments and how this will affect the group’s profit and classification of cash flows.

The standard is mandatory for first interim periods within annual reporting periods beginning on or after 1 January 2019. The Company does not intend to adopt the standard before its effective date.

(d) Changes in accounting policies

(I) AASB 9 Financial Instruments – Accounting policies applied from 1 January 2018

Impairment of financial assets

For trade receivables under AASB 9 the Company applies a simplified approach of recognising lifetime expected credit losses as these items do not have a significant financing component.

(II) AASB 15 Revenue from Contracts with Customers – Accounting policies applied from 1 January 2018

Revenue is earned from the sale of Travelan and Protectyn.

The Company ’s revenue from contracts with customers arise from the sale of goods within Australia, USA and other world markets, through a variety of avenues including pharmacies, clinics and the internet.

Based on the Company’s revenue recognition process and the nature of the Company’s revenue stream from contracts with customers, the Company recognises revenue at a point in time when the performance obligation is satisfied upon the delivery of goods to customers.

11 Summary of significant accounting policies

(a) Going concern

Some of the risks inherent in the development of pharmaceutical products include the uncertainty of patent protection and proprietary rights, whether patent applications and issued patents will offer adequate protection to enable product development or may infringe intellectual property rights of other parties, and obtaining the necessary drug clinical regulatory authority approvals. Furthermore, a particular project may fail the research and the clinical development process through lack of efficacy or safety, or may be stopped or abandoned due to strategic imperatives including an assessment that the projects will not deliver a sufficient return on investment or have been superseded by newer competitive products or technologies. There is a risk that the Company will be unable to find suitable development or commercial partners for its projects, and that these arrangements may not generate a material return for the Company.

Based on current budget forecast assumptions, the Company is in a position to meet future commitments in the current business cycle and pay its debts as and when they fall due. Furthermore, the Company is able to progress its research and development programs for at least the next 12 months.

The interim financial report has been prepared on a going concern basis. Accordingly, the interim financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts, or the amounts and classification of liabilities that might be necessary should the Company not continue as a going concern.

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